What is Production Volume Variance?
Production volume variance is a measure of the difference between the actual cost of producing a certain number of units of output and the budgeted cost of producing that output. It is a type of overhead variance, which is a variance that arises from the difference between the actual cost of overhead and the budgeted […]
What Are Joint Products and By-Products?
In cost accounting, joint products and by-products are two types of products that are produced from the same manufacturing process. Joint Products Joint products are two or more products that are produced simultaneously from a common input or process, each having a significant relative sale value. They are also known as co-products or primary products. […]
What is Meant by Goodwill in Accounting?
Goodwill, within the context of accounting, is a somewhat intricate concept. From a conceptual standpoint, goodwill refers to the intangible value attached to a business entity, which encompasses reputation, customer loyalty, brand recognition, and other intangible assets. Goodwill is a term often used in the field of accounting, but its meaning may not be immediately […]
What is Abnormal Process Loss? Causes and Impacts
Process loss in manufacturing and production refers to the decrease of expected output due to wastage, defects, or other inefficiencies in the process at the time of production. This can result from many causes including the malfunctioning of machines, human error, or environmental conditions. Abnormal process loss is a specific kind of process loss wherein […]
Benefits of Issuing Shares as Source of Capital
In the world of business, having access to sufficient capital is crucial for growth and expansion. However, traditional methods of raising capital, such as taking on debt or securing loans, may not always be the most suitable or sustainable option for every business. That is where issuing shares comes to the forefront as a powerful […]
What are non-current assets? Meaning and Examples
In simple terms, non-current assets are resources owned by a company that are not expected to be easily converted into cash within the next year. These assets are typically held for a more extended period, generally over a year. They form a crucial part of a company’s long-term investment strategy and contribute significantly to its […]
5 Types of Assets That Are Written Off At Some Point of Time
Asset write-offs are an integral part of financial accounting for businesses and organizations. They involve recognising and removing assets from the balance sheet when they no longer hold any economic value. While write-offs may seem like a negative occurrence, they are a necessary step to accurately reflect the true financial position of an entity. In […]
What is a Forward Exchange Contract?
A Forward Exchange Contract is a financial agreement where two parties agree to exchange currencies at a predetermined rate on a future date. FECs allow individuals and businesses to lock in exchange rates for future transactions, providing certainty in an unpredictable international market. These contracts specify a fixed exchange rate and a predetermined maturity date, […]
What is the difference between a merger and a demerger?
A merger and a demerger are two different processes in corporate restructuring that involve the redistribution of assets, liabilities, and ownership of companies. But both terms have some fundamental differences from each other which we will try to understand in this post. What is a Merger? A merger is a business strategy where two or […]
What is the Swap Ratio?
A swap ratio is a term commonly used in mergers and acquisitions to determine the exchange ratio of shares between the acquiring and target companies. It is essentially the proportionate value at which the stocks of one company will be traded for the stocks of another company during a merger or acquisition. The swap ratio […]