What is a Cost Plus Contract?
Cost plus contract, which is also known as a cost-reimbursement contract, pays a contractor for all permitted expenses up to a predetermined limit plus an additional sum to cover profit on top of that. Contracts with a fixed price that pay the contractor the agreed-upon sum regardless of costs incurred are also known as cost-reimbursement […]
Write a note on accounting for payroll
Accounting for payroll is a fundamental aspect of managing human resources and ensuring accurate financial records. This procedure entails keeping track of all costs associated with employee salaries, benefits, and taxes. Businesses may comply with legal and regulatory requirements, maintain openness in financial reporting, and make wise decisions about their personnel by correctly accounting for […]
Bank Overdraft as a Source of Finance
Bank overdraft is a common source of finance used by businesses, individuals and even governments to meet their short-term cash flow needs. An overdraft is essentially an agreement between a bank and its customer, which allows the customer to withdraw funds exceeding their account balance up to a pre-agreed limit. Advantages of Bank Overdraft Quick […]
What is a Production Budget and Its Components?
A production budget is a financial plan that outlines the estimated costs associated with creating and delivering a product or service. The production budget serves as a guide for businesses to allocate resources effectively, plan their expenses, and manage costs throughout the production cycle. It provides insight into the financial requirements of producing and delivering […]
Difference between Spoilage and Defectives in Cost Accounting
In cost accounting, spoilage and defectives refer to different types of quality issues that arise during the production process. While both terms indicate a deviation from the desired product standards, there are distinct differences between spoilage and defectives. Spoilage Spoilage refers to products that do not meet the required specifications or quality standards but cannot […]
A Short Note on the LIFO Method of Inventory Valuation
The LIFO method, or last-in, first-out, is one of the most popular and widely used inventory valuation methods in cost accounting. Under this approach, the cost of goods sold (COGS) and ending inventory are determined based on the assumption that the most recently acquired or produced items are sold or used first. In other words, […]
What is meant by annual holding cost in costing?
Annual Holding Cost or carrying cost refers to the total expense a business incurs to store and manage inventory over a year. It encompasses expenses like warehousing, insurance, depreciation, security, and obsolescence, and the opportunity cost of capital invested in unsold goods. Excessive holding costs can put a strain on a company’s finances, lowering profitability, […]
What is Economic Order Quantity and Its Assumptions?
Economic Order Quantity (EOQ) is a formula used in inventory management to determine the optimal quantity of goods that should be ordered at one time. EOQ takes into account various factors such as ordering costs, carrying costs, and the demand for the product. By finding that sweet spot where the cost of ordering and holding […]
Differences Between Equity and Preference Shares
Equity shares and preference shares are both types of stocks or shares that represent ownership in a company. However, they differ in terms of rights, dividend payments, and risk profiles. This article will disclose the difference between equity shares & preference shares in detail to give our readers a better understanding of the subject. To […]
What Are the Differences between Accounting and Auditing
Accounting involves tracking, reporting, and analyzing financial transactions. It covers everything from preparing individual tax returns to preparing financial statements for multinational corporations and is considered a fundamental discipline within the field of accounting. Auditors come in behind accountants and verify the work they do. They examine the financial statements prepared by accountants and ensure […]