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Bank Overdraft is a facility provided by bank to its clients such as corporations and companies to withdraw funds from the business accounts in excess of the balance available in the account. There is always a fee associated with bank overdraft and interest is
Following is the difference between job costing and process costing , below table is meant to make the difference between the two costing systems more clear. Job Costing Process costing 1 Application Where different products having peculiar specifications are produced against customers’ orders. Where single
Process costing system is employed by industries possessing following characteristics: There is mass production of a single product or two or more products in successive runs of scheduled duration e.g., vegetable canning or fruit juice bottling. . All units of output are exactly similar
Standard cost means what the cost should be. Standard cost is predetermined cost of a unit of product, or an operation or a department or a process. Standard cost is the cost target to be achieved. Such cost targets are scientifically determined after consultation with
Opportunity cost is a concept used for evaluation of alternative uses of resources. Decision makers select that alternative use of resources from which they expect the maximum net return. Opportunity cost is the net return that could be obtained from the second best alternative
Differential costs assist decision makers while making a choice between different alternatives. Differential costs are those items of total costs of two or more alternatives which have different magnitude under each alternative. Items of differential costs may be variable cost items or fixed cost
This cost concept is designed to fix responsibility of cost control for various levels of management. Therefore, it is always associated with a designated level in organizational hierarchy. Controllability of a cost means the degree of influence that a specific manager can exert over the
This classification is based on cost behaviour. It is one of the most useful classifications f.r the purpose of cost planning and control. Cost behaviour means how a cost will react or respond to changes in the level of business activity. Fixed Cost. A
Cost which is not related to production and is matched against revenues on a time period basis is called period cost, non manufacturing cost or non-inventoriable cost. Period cost includes marketing or selling cost and administrative cost. Marketing or Selling Cost. Marketing or selling
Product cost –includes costs incurred– for manufacturing or for purchasing goods. In case of manufacturing business product cost consists of direct materials, direct labour and factory overhead. In case of trading business, product cost involves purchase price plus transportation in plus other costs associated with
There are different measures of costs for different purposes. Therefore, costs are classified in a number of ways. An organization does not record costs by all possible classifications. However, in this modern age, computers have made it possible to record costs on multiple classification
Generally speaking by cost we mean total amount of money or other resources foregone or sacrificed to procure something or to achieve some objective. Word expense is also used to denote almost the same meaning. The difference between these two is that when benefit
Following is the difference between Financial Accounting and Cost Accounting Financial Accounting Cost Accounting 1.Provides information to external 1.Provides information to internal users. 2. Provides general purpose financial statementsand reports 2. Provides special purpose statements 3. Must conform to generally accepted accounting principles 3.
Cost accounting is now used not only by manufacturing organizations but by service and trading organizations as well, both in profit and non profit sectors of economy. It is used as an aid for planning and control of ongoing operations, for evaluation of alternatives
Limitations from which financial accounting suffers may be summarized as follow: 1. Historical And Monetary Nature. Emphasis of financial accounting is on recording transactions revenues only after they have occurred, then summarizing and reporting this information at the end of accounting year in the form
Original financial accounting model based on double entry system of book keeping, developed by an Italian merchant named Lucas Pacioli, is basically to fulfil managerial requirements of a trading business. Financial accounting can measure results of a merchandising business on the basis of departments
Management accounting uses both cost and financial info to advise management in planning and controlling the organization. Management accounting is used for providing information the organization people. Management accountants design specific purpose reports to serve needs of decision makers. Because internal decision makers are primarily concerned with impact
Cost accounting uses information provided by financial accounting together with much more details of operations of cost accounting is collection, processing and evaluation of operating, data. e.g. cost of products, operations, processes, jobs, quantities of materials consumed, labour time used etc. for internal planning and control
