Budgeting and Appraisal Techniques [Quiz]
Q1. Choose the best statement regarding non-financial performance indication: a. it is short-sighted to consider that human resources might factor in as an indicator of performance b. absenteeism in the workplace probably indicates the work systems and the environment is stimulating c. being an employer of choice is an excellent example of a non-financial performance […]
What Are Relevant Costs – Meaning and Types
Relevant costs are those costs that will be incurred as a result of a decision and thus should be considered when making that decision. In cost accounting, relevant costs are costs that will contribute to achieving the organisation’s revenue-generating objectives. For an organisation to achieve its profit objectives, the revenues must exceed the relevant costs. […]
Fixed Overhead Variances in Cost Accounting
Fixed overhead variance refers to the difference between the actual fixed production overheads and the absorbed fixed production overheads over a period of time. The variance can either be caused by a difference in the fixed overheads at a given level of activity or because of a difference in the number of units produced (which […]
When changes in accounting policies are permitted?
Though ‘consistency’ is a fundamental accounting assumption, it does not imply that accounting policies adopted once cannot be altered ever in the future. Changes in accounting policies may sometimes be required to maintain the quality and comparability of data. Changes in accounting policies are permitted and justified in the following cases: Notably, accounting policy changes […]
What Are the Assumptions and Limitations of CVP Analysis?
Cost-Volume-Profit (CVP) analysis is a method for assessing the links between selling prices, total sales revenue, and the volume of production, expenses, and profit. CVP analysis can be critical in providing management with information about financial results when a specified level of activity or volume fluctuates, the relative profitability of the company’s various products, and […]
What are non-manufacturing costs or period costs?
Period Costs Period costs, also referred to as nonmanufacturing costs, are expenses that a business incurs to maintain its operations but are not directly associated with the manufacturing process. These costs are not directly tied to the production of goods or services, but rather to the overall operation of the company. Examples of period costs […]
Purpose of Financial Accounting, Cost Accounting, GAAP, and IFRS
Accounting is also vital in making business decisions through providing transparency, accuracy, and conformity with financial laws. Financial accounting deals with recording and reporting the financial transactions of a company to external parties, while cost accounting assists firms in monitoring and managing costs for improved efficiency. To maintain consistency in financial reporting, accounting frameworks like […]
What are fundamental accounting principles?
Accounting is integral to any organization’s success, and fundamental accounting principles serve as a foundation for accurate financial reporting. Fundamental accounting principles are a set of rules that govern how financial information should be recorded, reported, and analyzed. These principles provide a standard framework for financial reporting, enabling businesses to convey their financial position to […]
Ethical Perspectives in the Accounting Profession
Accountants have a significant responsibility to the public. This responsibility exists because outside shareholders, creditors, employees, and others rely on financial statements in making various business decisions. Internal accountants are employed by businesses to prepare financial statements. These financial statements are then audited by an independent CPA company. Both internal accountants and external auditors are […]
Key Users of Financial Statements for Decision-Making
Financial statements are an essential source of financial information for a wide range of users and decision-makers. These statements provide a comprehensive overview of a company’s financial position, performance, and cash flows. But who are the various users of financial statements who rely on these accounting records prepared by accountants? Let’s talk about them in […]