What are Avoidable and Unavoidable Costs?
In business and financial planning, knowing avoidable and unavoidable costs is critical to budgeting, cost control, and profitability analysis. Avoidable costs are those that a business can avoid by making certain business decisions, like stopping a product line or contracting out services. Unavoidable costs, on the other hand, are fixed costs that a business has […]
What is Labour Efficiency Variance? Meaning and Example
Labour Efficiency Variance is also known as Labour Time Variance. It is that portion of the Labour Cost Variance which arises due to the difference between the standard labour hours specified and the actual labour hours spent. It quantifies the difference between these two measures and highlights whether a business is utilising its labour force […]
What is the Time Value of Money?
The Time Value of Money (TVM) is a fundamental principle in finance that states a dollar today is worth more than a dollar tomorrow. This is because money has the potential to grow over time when invested in a variety of opportunities. The TVM concept can be used to compare investments of different sizes and […]
Meaning, Pros and Cons of Process Costing
The process is a series of stages that must be followed in order to finish a given task. The method of preserving cost records for each procedure is referred to as costing. It refers to the cost accounting approach in which expenses are accrued for all interdependent processes. After going through a series of processes, […]
ECO-14 Accountancy II – Solved IGNOU Assignment
Assignment Code: ECO-14/TMA/2021-22 What are the different types of branches? Explain various methods of keeping branch accounts in the books of the Head Office. From an accounting standpoint, branches may be categorised as follows: Domestic Branches The branches opened in various regions of the country where the parent enterprise is registered are known as inland […]
Differences Between Rights and Bonus Issues of Shares
When firms are attempting to raise new capital or distribute earnings to current shareholders, they issue extra shares in rights issues or bonus issues. In spite of distributing new shares as a method behind both approaches, they differ based on intent as well as shareholders’ effects. A rights issue enables existing shareholders to buy extra […]
Meaning, Benefits and Drawbacks of ABC Analysis
ABC analysis is a widely used inventory management technique that categorizes inventory into three groups: A, B, and C, based on relative importance. This method helps businesses prioritize their inventory based on its importance and significance, leading to several benefits. Also referred to as “Selective Inventory Control.” Strategies based on an ABC analysis: The ABC […]
What is an Income Statement? Components and Elements
An income statement is a financial statement that shows a company’s revenues and expenses for a specific period of time. The Income Statement analyses the success of a company’s activities; it provides investors and creditors with the information they need to determine a business’s profitability and creditworthiness. When total sales surpass total expenses, a business […]
What is the Statement of Retained Earnings?
Statement of Retained Earnings The Statement of Retained Earnings reconciles the Retained Earnings account from the beginning to the finish of the fiscal year. Retained earnings represent the amount of profit a business reinvests in itself (i.e., the profit that is not used to pay back debt or distributed to shareholders as a dividend). It […]
Some Basic Accounting Questions You Should Be Aware of
General Accounting Concepts If you are an accounting student, these questions must be helpful in ensuring that you know basic accounting concepts. 1. In business terminology, what does the term assets mean? Assets are resources. They are things that a business can put to good use. Cash, commodities, and even entire buildings are some examples. […]