What is Bin Card in Cost Accounting?
In cost accounting, bin cards are physical or electronic records used to track inventory levels in a stockroom, warehouse, or another storage facility. The card typically contains the item’s stock number, description, location, current inventory level, and minimum and maximum levels that should be maintained. Bin cards can be used to track inventory levels manually […]
What is the Difference Between Cost and Financial Accounting?
Financial accounting and cost accounting are two different types of accounting that are used to track and report the financial performance of a business. While both financial and cost accounting provide insights into a company’s financial position, there are several key differences between the two. Financial accounting focuses on the big picture. Financial accounting is […]
What is a Cost Centre in Costing? Purpose and Benefits
Cost centres refer to specific divisions and departments, that are responsible for managing their own expenses and can have costs assigned to them. In cost accounting, a cost centre is any department or function within an organisation for which costs are incurred. Cost centres are utilised to separate financial activity according to the nature of […]
What is Abnormal Loss in Cost Accounting?
An abnormal loss is a cost accounting term that refers to a situation where the expected output of a production process is not achieved due to factors beyond the control of management. This can lead to an increase in the cost of goods sold and, ultimately, a decrease in profits. Let’s try to understand in […]
What is the Owner’s Capital in Accounting?
In accounting, the owner’s capital refers to the owners’ equity in the business. This can be calculated by subtracting the liabilities from the assets. The owners’ equity is what is left over after the business liabilities have been paid. It represents the owner’s investment in the business and is also known as the owners’ contribution […]
What is Working Capital? Why is it Necessary for Businesses?
Working capital refers to the difference between a company’s current assets and current liabilities showing the liquidity strength of a company. Here current assets include cash, accounts receivable and inventory that can be converted into cash within one year. Current liabilities refer to any obligations due within 12 months – accounts payable, wages payable and […]
What is Cost Accounting? Definition and Objectives
Cost Accounting is a term used in management accounting to track and analyze the costs incurred in the production process of goods or services. It involves collecting, recording, and analyzing various types of costs to provide valuable information for decision-making purposes. The main goal of Cost Accounting is to determine the true cost of producing […]
What is the Impact of Big Data on the Accounting Profession?
Big data has had far-reaching effects on the accounting industry, and these effects are probably not exclusive to accounting. As with so many other aspects of Big Data, there is no shortage of “what if” stories of how Big Data might impact the accounting profession. As a result, the accounting profession has adapted to reflect […]
Why internal control is necessary for accounting system
Internal control procedures in accounting are the policies and procedures implemented by a company to ensure the reliability of financial reporting, safeguard assets, and promote operational efficiency. These controls are designed to prevent fraud, errors, and irregularities in the financial reporting process. In this blog post, we will explore why internal control is necessary for […]
Pros and Cons of the Traditional Method of Calculating Overhead
Calculating overhead is an essential part of determining the true cost of goods and services in a business. Overhead costs are indirect costs, such as rent, utilities, and insurance, necessary to keep a business running. The traditional method of calculating overhead allocates these costs to products or services based on a predetermined rate, such as […]