What are Direct Expenses in Costing? – Meaning and Examples
A direct expense is an expenditure that can be easily traced back to a specific cost centre within a company. Direct expenses are also known as chargeable expenses. Direct expenses are typically incurred due to operational activity and include items such as raw materials, direct labour, and other factory-related overhead costs. While direct expenses are […]
Direct Materials- Meaning and Examples
Direct Materials are those materials that can be identified in the product, measured and directly charged to the product to the product. Thus, these materials directly enter production and form a part of the finished product. For example, timber in furniture, cloth in dressmaking and bricks in building a house. The following are normally classified […]
Primary Market and Secondary Market
In order to make it easier to buy and sell securities, the primary market and secondary market are two crucial elements of the financial ecosystem. Although they both involve trading in financial instruments, they run differently. The primary market is where new securities are first issued, enabling businesses to raise money by offering shares or […]
Treatment of Goodwill in a Business Purchase
The treatment of goodwill in a business purchase is a crucial aspect that can impact the overall financial picture and success of the transaction. Goodwill represents the intangible assets of a business, such as its reputation, brand, and customer relationships. While it’s a valuable asset, the treatment of goodwill can be complex when it comes […]
What do you mean by Systematic Risk
Systematic risks are market risks or undiversifiable risks, and the essential characteristic is that these are inherent risks that have an effect on the whole financial market or at least a large segment of it. Unlike those risks attributed to individual companies or industries, systematic risks impact all companies and sectors, though to different extents, […]
What Are Accounting Principles, Concepts and Conventions?
Accounting is a fundamental aspect of running a business. It involves recording, analyzing, and interpreting financial transactions to provide an accurate picture of the company’s financial health. However, following certain principles, concepts, and conventions is essential to ensure that accounting information is consistent and reliable. This article will explore the basics of accounting principles, concepts, […]
Accounting Policies, Selection and Changes in Accounting Policies
Accounting policies are the specific policies and procedures used by a company to prepare its financial statements. These include the methods, measurement systems and procedures for presentation and disclosures. Accounting policies vary from accounting principles in that the principles are the rules and the policies are a company’s way of adhering to the rules. The […]
What is the Accrual Concept in Financial Accounting?
The accrual concept is an accounting method used to record revenue and expenses when they occur rather than when they are paid. This means that revenues and expenses are recognised on the income statement in the period they are generated or incurred, regardless of when the cash is received or paid. This is the case […]
What Are the Differences between IFRS and GAAP?
Financial reporting standards are important to provide transparency, consistency, and comparability of financial statements among businesses. International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) are two of the most popular accounting frameworks globally. While IFRS is a worldwide standard adopted by most countries, GAAP is mainly applied in the United States. The […]
What are various types of sales variances in cost accounting
Sales variance can be defined as the difference between the standard or expected revenue and the actual revenue. It is different from cost variances because cost variances occur when costs deviate from the budgeted amounts. Investigation of what caused the variance is crucial to understand to make management decisions such as buying or making a […]