Management Accounting
Example of Ledger and Preparing Ledger Accounts: Learning Objectives: How are ledger accounts prepared? Journalise the following transactions and post them to the ledger accounts concerned: 1991 Jan. 1 Purchased goods for cash 2,000 Jan. 3 Sold goods to Karim 500 Jan. 10 Received
Definition, Explanation and Characteristics of “Depreciation” or “Accounting Depreciation”: Learning Objectives: Define and explain the terms “depreciation” or “accounting depreciation”. The value of assets gradually reduces on account of use. Such reduction in value is known as depreciation. Different authors have given different definitions
Equivalent Units of Production: Definition and Explanation of Equivalent Units of Production: After materials, labor and overhead costs have been accumulated in a department, the department’s output must be determined so that unit cost can be computed. A department usually has some partially completed
Bills Payable Book: Learning Objectives: Define and explain bills payable book. Prepare a bills payable book and post into ledger. Definition and Explanation: Bills payable book is used to record bill accepted by us. When a bill drawn by our creditor is accepted particulars
Cash Flow Statement Definition: Cash flow statement is a financial statement that highlights the major activities that directly and indirectly impact cash flows and hence affect the overall cash balance.
Accounting Cycle Learning Objective: Define and explain accounting cycle. Accounting cycle refers to a complete sequence of accounting procedures which are required to be repeated in same order during each accounting period. Accounting cycle includes: Recording: First, all transactions should be recorded in the
Definition and Explanation of Consignment: Learning Objectives: Define and explain the terms consignment, consignor and consignee. The word consignment can be generally defined as the act of sending a quantity of goods by the manufacturers and producers of one country or place to their
Equivalent Units of Production Definition: The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units one could obtain from the materials and effort contained in
Proprietary Ratio or Equity Ratio: Definition: This is a variant of the debt-to-equity ratio. It is also known as equity ratio or net worth to total assets ratio. This ratio relates the shareholder’s funds to total assets. Proprietary / Equity ratio indicates the long-term
Bill of Exchange for Collection: Learning Objectives: Make journal entries in the books of creditor, debtor, and that of bank when a bill of exchange is sent to the bank for collection. When a person receives a bill, he may keep it till the
Accounting Conventions Learning Objectives: What are accounting conventions? Explain important accounting conventions. The term “conventions” includes those customs or traditions which guide the accountants while preparing the accounting statements. The following are the important accounting conventions. Convention of Disclosure Convention of Materiality Convention of
Environmental Uncertainty Definition: The degree of change and degree of complexity in an organization’s environment.
Definition and explanation of cash flow statement. The purpose of the statement of cash flows is to highlight the major activities that directly and indirectly impact cash flows and hence affect the overall cash balance. Managers focus on cash for a very good
Bill of materials Definition: Bill of materials is a document that shows the type and quantity of each major item of materials required to make a product.
Absorption Costing Definition: Cash equivalents are short-term, highly liquid investments such as treasury bills, commercial paper, and money market funds that are made solely for the purpose of generating a return on funds that are temporarily idle.
Environmental Complexity Definition: The number of components in an organization’s environment and the extent of the organization’s knowledge about those components.
Definition and Explanation of Bill of Exchange: A bill of exchange has been defined as an unconditional order in writing addressed by one person to another; signed by the person giving it, requiring, the person to whom it is addressed to pay on demand
Accounting For Bills of Exchange: Learning Objectives: Define and explain bills of exchange. What are its advantages? How does a bill differ from a promissory note? How a bill of exchange functions? What are the accounting treatments of drawing, accepting, discounting, and paying a