At the end of each financial year, business organizations need to make some adjustments from different kinds of financial transactions occurred during the financial year in an organization, these adjustments are known as adjusting journal entry. Adjusting journal entries are usually made at the time of preparing financial statements at the end of financial year …
Category Archive: Financial Accounting
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Jan 25
Limitations of Break Even Analysis
Break even analysis is done before a product or service to be offered to the market. It provides an overall idea about how many units of a product to manufacture, what will be the price of a product and which advertising channel will be used for marketing purpose. Every manufacturing organization conducts break even analysis …
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Nov 17
Advantages and Disadvantages of Standard Costing
Advantages: Standard Costing provides a valuable guidance to management in several management functions for example, formulating policies and determining prices. The standards set act as yardsticks against which actual costs are compared. Thus, standard costing facilitates effective cost control and provides the information required for cost reduction. Measurement and analysis of variances help detecting mistakes and …
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Nov 15
Difference between Fixed Costs and Variable Costs
Fixed Costs: Fixed costs are those costs which do not vary with volume of output and therefore fixed costs are defined in terms of daily, weekly, monthly and even yearly. These remain constant throughout the relevant range. For example if fixed cost of a company is $5000 and company produces whether 10000 units or 20000 units, …
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Nov 15
Difference between Financial Depreciation and Physical Depreciation
Financial Depreciation: Financial depreciation is the normal loss in the value of assets due to their usage in the production process. Generally this method often applies to different kinds of fixed assets for example, equipment, vehicles and machinery. Financial depreciation also applies to buildings and other physical assets. Companies measure financial depreciation for its financial reporting …
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Nov 09
Functions of Capital Market
Capital market is one of the major influential economic factors of every financial market. Capital market is a market for financial assets which deal with short term and long term securities. Capital market is an institutional arrangement to borrow and lend money for a longer maturity. Capital market provides long term debt and equity finance …
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Nov 09
What are the Types of Factory Overhead
As manufacturing business becoming more competitive and more customers focused services therefore it is important that management not only control its overhead but also understand how it is assigned to products and ultimately reported on the company’s financial statements. Factory overhead refers to the cost pool used to accumulate all indirect manufacturing costs (excluding selling, …
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Nov 08
Steps in Preparing a Bank Reconciliation Statement
A bank reconciliation statement is a schedule explaining any differences between the balance shown in the bank statement and the balance shown in the depositor’s accounting records. It is commonly assumed that both the bank and the depositor are maintaining independent records of the deposits, the checks, and the current balance of the bank account. …
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Nov 08
What Types of Accounting Information Needed by Merchandising Company
Accounting information systems is called the language of business and without proper accounting systems, no business can be organized. Accounting information is an integral part of the business environment and an understanding of accounting information is an essential tool in the process of making business decisions. For a merchandising company there are many types of …
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Nov 07
Why Chart of Accounts is Necessary
Accounting information systems is called the language of business and without proper accounting systems, no business can be organized. Chart to accounts is one of the major elements to design the corporation’s own accounting system in order to get the maximum customization benefits from using the chart of accounts. Corporations can dispense with many of …
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