Indirect Method of Preparing Cash-Flow Statement
A cash flow statement is a crucial financial statement that provides insights into a company’s liquidity and its ability to generate cash. When it comes to preparing a cash flow statement, there are two methods: direct and indirect. In this article, we will focus on the indirect method and explore its significance in reconciling net […]
What is the Capital Adequacy Ratio?
In finance, stability is a key determinant for keeping the public trust and economic activities smooth. One of the critical measures that regulators and banks rely on to measure such stability is the Capital Adequacy Ratio (CAR). Often called the backbone of prudent banking, this metric plays a significant role in determining a bank’s financial […]
What Are Joint Products and By-Products?
In cost accounting, joint products and by-products are two types of products that are produced from the same manufacturing process. Joint Products Joint products are two or more products that are produced simultaneously from a common input or process, each having a significant relative sale value. They are also known as co-products or primary products. […]
What is Meant by Goodwill in Accounting?
Goodwill, within the context of accounting, is a somewhat intricate concept. From a conceptual standpoint, goodwill refers to the intangible value attached to a business entity, which encompasses reputation, customer loyalty, brand recognition, and other intangible assets. Goodwill is a term often used in the field of accounting, but its meaning may not be immediately […]
What is Abnormal Process Loss? Causes and Impacts
Process loss in manufacturing and production refers to the decrease of expected output due to wastage, defects, or other inefficiencies in the process at the time of production. This can result from many causes including the malfunctioning of machines, human error, or environmental conditions. Abnormal process loss is a specific kind of process loss wherein […]
What are non-current assets? Meaning and Examples
In simple terms, non-current assets are resources owned by a company that are not expected to be easily converted into cash within the next year. These assets are typically held for a more extended period, generally over a year. They form a crucial part of a company’s long-term investment strategy and contribute significantly to its […]
5 Types of Assets That Are Written Off At Some Point of Time
Asset write-offs are an integral part of financial accounting for businesses and organizations. They involve recognising and removing assets from the balance sheet when they no longer hold any economic value. While write-offs may seem like a negative occurrence, they are a necessary step to accurately reflect the true financial position of an entity. In […]
What is the Meaning and Scope of Accounting
Accounting is a fundamental aspect of any business, big or small. It involves the recording, analysis, and interpretation of financial information to make informed decisions. In this blog post, we will explore the meaning and scope of accounting, understanding its significance in finance and business operations. Meaning and Scope of Accounting According to the American […]
What is the Double Entry System of Book-Keeping?
The Double Entry System of bookkeeping is an accounting method where every financial transaction is recorded in at least two accounts. In the double entry system, each transaction is accounted for separately in the books, called the debit and credit. All these entries are shown on both sides of the ledger, usually in two columns, […]
What is Batch Costing? How is it Different From Job Costing?
Batch costing is a form of specific order costing in which costs are attributed to batches of products. A batch might also be called a ‘production run’. A batch is a group of related but distinctively different products that are produced at the same time. Each batch costs exactly the same as a job and […]