Definition of Cost Object in Cost Accounting
A cost object is anything for which a separate measurement of costs is desired. It may be a project, a customer, an activity or a department. The concept of cost objects is more comprehensive. It also includes a group of products, services, departments, customers suppliers and so on. Any item to which cost can be […]
What is Contribution Margin? Meaning and Calculation
The contribution margin can be defined as the amount by which the selling price of a product exceeds its total variable unit costs. This difference between the selling price and the variable cost per unit is known as the contribution margin, as it represents the per-unit contribution towards paying fixed costs. Therefore, the contribution margin […]
What Are Perpetual and Periodic Stock Systems?
Efficient inventory management is a cornerstone of any successful business, whether it operates in retail, manufacturing, or distribution. Among the various approaches to managing stock, two widely used systems—perpetual inventory system and periodic stock system—stand out as essential tools for tracking and controlling inventory. These systems are pivotal for ensuring smooth operations, optimising stock levels, […]
Markowitz Model of Risk-Return Optimization | Assumptions
Markowitz model is an optimal financial investment strategy to maximize the expected return for an investor while maintaining a desired level of risk. The Markowitz model of risk-return optimisation is a portfolio selection model that derives a set of weights for an investment portfolio that minimises the total variance of returns, subject to an initial […]
What are the Various Functions of IASB?
The International Accounting Standards Board (IASB) is a not-for-profit organization that develops and sets accounting standards to be followed by companies in different countries. The IASB’s goal is to establish a common set of financial reporting standards that are globally accepted, making it easier for investors and other stakeholders to compare the financial performance of […]
What are the benefits of self-balancing systems?
Effective book-keeping is vital for companies to ensure accuracy and avoid discrepancies in their accounts. A self-balancing system is a sophisticated method of book-keeping that provides each ledger account with its own balanced records, minimizing the likelihood of errors and ease of reconciliation. This system is especially useful for large organizations with various departments, as […]
The role of auditors in a Limited Company
Auditors play a crucial role in public companies, and their responsibilities may vary depending on the company. In some cases, auditors may be responsible for checking financial statements and other reports to make sure they are accurate. Other times, auditors may be responsible for reviewing products or services offered by public companies to ensure they […]
Cost-Volume-Profit Analysis: Advantages and Disadvantages
Cost-Volume-Profit analysis is a financial management tool helping firms understand the relationship between costs, sales volume, and profitability. By analysing how changes in costs and sales levels affect a company’s profit, CVP analysis supports strategic decision-making related to pricing, cost control, product mix, and market expansion. In this post, you will learn about the disadvantages […]
Meaning of Purchase Consideration [Amalgamation Accounting]
In business purchase accounting, the meaning of purchase consideration is the price that is paid for the acquisition of another company. This price can be paid in cash, shares, or other assets. The purchase consideration is used to determine the value of the assets and liabilities acquired in the purchase. Limited liability companies often purchase […]
Spa Equipment Leasing as a Financial Business Solution
The beauty salon industry is on the rise as many individuals prefer to visit these places regularly to maintain their hairstyles, hair colouring, nails, etc. Modern beauty spas are laced with advanced technology such as machines to use for manicures and pedicures, shampooing and hair massaging, shaving, and much more. Due to the emerging needs […]