IFRS 4 – Insurance Contracts, Scope and Applicability
Overview IFRS 4 is the IASB’s first advice on insurance contract accounting – but not the last. A detailed study of insurance contracts is now being conducted. Scope and Applicability The main objective of IFRS 4 is to provide a consistent framework for recognising and measuring insurance contracts. This is important because entities would account […]
What is Marginal Cost Equation | Practical Application
The marginal cost of an additional unit of output is often referred to as the “prime cost plus variable overhead.” It encompasses all costs that vary according to the amount of output. To determine the marginal cost, a comparison between the cost of manufacturing one unit and the cost of creating the next one must […]
Integrated Accounting System of Cost Accounting
Integrated accounting is defined by the Chartered Institute of Management Accountants (CIMA) as “a collection of accounting records that offers financial and cost accounts using a common data input for all accounting purposes.” Method of Maintaining Books in Integrated Accounting System This method requires the maintenance of a single set of accounting records. The costing […]
What is a Non-Integrated Accounting System?
The non-integrated accounting system is an accounting method whereby accountants keep separate ledgers for cost and financial accounts. In such a system, the cost accounts are limited to just tracking transactions that are related to the good or service being offered. Therefore, expenses related to sales, production, or indeed any other expenses that fall within […]
Introduction to Contract Costing – Meaning and Types
The term ‘contract’ refers to the agreement between two parties to do a particular task within a given time frame. Typically, a contract involves a substantial amount of money and is performed on-site. A contract involves two parties, namely the contractor and the contractee. The individual or entity implementing the terms and conditions of the […]
What is Job Costing? Advantages and Disadvantages
Job costing is a cost accounting system that allocates the costs of producing a good or service to the particular products and services of the company that created them. This gives management a clear picture of where money is being wasted and helps them make more informed decisions about which products and services to produce […]
IFRS 3 – Business Combinations, Scope and Disclosure Requirements
Overview IFRS 3 Business Combinations describes how an acquirer accounts for the purchase of control of a business (e.g. an acquisition or merger). These business combinations are accounted for using the ‘acquisition method,’ which usually requires the purchase of assets and the assumption of liabilities to be valued at their fair values at the acquisition […]
The Sarbanes-Oxley Act of 2002 | Accounting and Ethics
The Sarbanes-Oxley Act of 2002 is a significant legislation aimed at increasing accountability and transparency in U.S. corporations. It was implemented in response to notable accounting scandals that shook the business world, with the intention of preventing similar incidents in the future. The Act also placed corporate governance requirements on public companies, such as Sarbanes-Oxley. […]
Introduction to Operating Costing in Cost Accounting
Operating Costing in Cost Accounting Operating costing provides information about the cost of operating a company’s production facilities. It includes the costs of raw materials, labour, and other expenses incurred in the production process. This information is used to determine the selling price of the company’s products and to assess the profitability of its operations. […]
What are zero coupon bonds and why do people invest in them?
What is a Bond? A bond is an obligation of a government, a company or an individual to pay a sum of money back to you at some time in the future, often with interest. Normally this sum would be repaid in small amounts on a regular basis, for example, a weekly payment. A bond […]