What Are the Assumptions and Limitations of CVP Analysis?
Cost-Volume-Profit (CVP) analysis is a method for assessing the links between selling prices, total sales revenue, and the volume of production, expenses, and profit. CVP analysis can be critical in providing management with information about financial results when a specified level of activity or volume fluctuates, the relative profitability of the company’s various products, and […]
What are non-manufacturing costs or period costs?
Period Costs Period costs, also referred to as nonmanufacturing costs, are expenses that a business incurs to maintain its operations but are not directly associated with the manufacturing process. These costs are not directly tied to the production of goods or services, but rather to the overall operation of the company. Examples of period costs […]
Purpose of Financial Accounting, Cost Accounting, GAAP, and IFRS
Accounting is also vital in making business decisions through providing transparency, accuracy, and conformity with financial laws. Financial accounting deals with recording and reporting the financial transactions of a company to external parties, while cost accounting assists firms in monitoring and managing costs for improved efficiency. To maintain consistency in financial reporting, accounting frameworks like […]
What are fundamental accounting principles?
Accounting is integral to any organization’s success, and fundamental accounting principles serve as a foundation for accurate financial reporting. Fundamental accounting principles are a set of rules that govern how financial information should be recorded, reported, and analyzed. These principles provide a standard framework for financial reporting, enabling businesses to convey their financial position to […]