The Infamous Enron Accounting Scandal
In the late 1990s, Enron was one of the largest companies in the United States. It was an energy company with a high-flying stock price and a reputation for being innovative and forward-thinking. In 2001, it all came crashing down. Enron was revealed to be a fraud. The company had been overstating its earnings and […]
The Meaning of Consignment Accounting
Consignment refers to selling the goods manufactured by a company through an agent. This sales method is especially popular among businesses located abroad who want to sell their products in your country. For example, if a US-based company wants to sell its phones in India, it can hire a local agent who will sell the […]
What are various methods of valuation of goodwill?
Goodwill is an intangible asset that represents the value of a business’s reputation, customer base, brand recognition, and other non-physical assets. Valuing goodwill can be challenging because it does not have a physical existence or a straightforward way to measure its worth. However, it is an essential element in determining the overall value of a […]
What are Direct Expenses in Costing? – Meaning and Examples
A direct expense is an expenditure that can be easily traced back to a specific cost centre within a company. Direct expenses are also known as chargeable expenses. Direct expenses are typically incurred due to operational activity and include items such as raw materials, direct labour, and other factory-related overhead costs. While direct expenses are […]
Direct Materials- Meaning and Examples
Direct Materials are those materials that can be identified in the product, measured and directly charged to the product to the product. Thus, these materials directly enter production and form a part of the finished product. For example, timber in furniture, cloth in dressmaking and bricks in building a house. The following are normally classified […]
Primary Market and Secondary Market
In order to make it easier to buy and sell securities, the primary market and secondary market are two crucial elements of the financial ecosystem. Although they both involve trading in financial instruments, they run differently. The primary market is where new securities are first issued, enabling businesses to raise money by offering shares or […]
Treatment of Goodwill in a Business Purchase
The treatment of goodwill in a business purchase is a crucial aspect that can impact the overall financial picture and success of the transaction. Goodwill represents the intangible assets of a business, such as its reputation, brand, and customer relationships. While it’s a valuable asset, the treatment of goodwill can be complex when it comes […]
What do you mean by Systematic Risk
Systematic risks are market risks or undiversifiable risks, and the essential characteristic is that these are inherent risks that have an effect on the whole financial market or at least a large segment of it. Unlike those risks attributed to individual companies or industries, systematic risks impact all companies and sectors, though to different extents, […]
What Are Accounting Principles, Concepts and Conventions?
Accounting is a fundamental aspect of running a business. It involves recording, analyzing, and interpreting financial transactions to provide an accurate picture of the company’s financial health. However, following certain principles, concepts, and conventions is essential to ensure that accounting information is consistent and reliable. This article will explore the basics of accounting principles, concepts, […]
Accounting Policies, Selection and Changes in Accounting Policies
Accounting policies are the specific policies and procedures used by a company to prepare its financial statements. These include the methods, measurement systems and procedures for presentation and disclosures. Accounting policies vary from accounting principles in that the principles are the rules and the policies are a company’s way of adhering to the rules. The […]