Management Accounting
Continuous or Perpetual Budget Definition: A 12-month budget that rolls forward one month as the current month is completed. Recommended Books ! Or Download E accounting book in MS-word format for just 20 $ - Click here to Download
Contingency Approach Definition: An approach that says that organizations are different face different situations (contingencies) and require different ways of managing.
Definition of gross profit ratio: Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales. Components: The basic components for the calculation of gross profit ratio are gross profit and net sales.Net sales means that sales minus sales returns. Gross profit would be the difference betweennet sales and cost of
Fixed Manufacturing Overhead Cost Deferred in Inventory Definition: The portion of the fixed manufacturing overhead cost of a period that goes into inventory under the absorption costing method as a result of production exceeding sales. Also see: Fixed manufacturing overhead cost released from inventory
Fixed Manufacturing Overhead Cost Released From Inventory Definition: The portion of the fixed manufacturing overhead cost of a prior period that becomes an expense of the current period under the absorption costing method as a result of sales exceeding production.
Break Even Point Definition: Break even point is defined as the level of sales at which profit is zero. The break-even point can also be defined as the point where total sales equals total expenses or as the point where total contribution margin equals
Constraint Definition: A constraint is anything that prevents an organization or individual from getting more of what it wants. Or a limitation under which a company must operate, such as limited machine time available or limited raw materials available that restricts the company’s ability
Consignment Accounting Questions and Answers: Learning Objectives: Answer the various general questions about consignment accounting. Theoretical Questions: Distinguish between a sales and consignment. Click here to see answer. What is “consignment of goods”? Is it the same as “goods on sale or return” Click
Consignment Accounting Exercises and Problems: Learning Objectives: Prepare journal entries, consignment account and consignee account in the books of consignor. Prepare journal entries and consignor account in the books of consignee. Problem 1 (Journal Entries and Ledger Accounts): Riaz Sugar Factory of Multan, consigned
Fixed Installment Method or Straight Line Method or Original Cost Method of Depreciation: Learning Objectives: Define, explain and give example of fixed installment or straight line or original cost method. What are the advantages and disadvantages of of using this method? Fixed installment method
Gross Profit Analysis (GP Analysis): After studying this chapter you should be able to: Gross profit is the difference between the cost of goods sold and sales. Since the adherence of the actual to the budgeted or standard gross profit figure is highly desirable, a careful analysis of unexpected
Break Even Point Analysis-Definition, Explanation Formula and Calculation: Learning Objectives: Define and explain break even point. How is it calculated? What are its advantages, assumptions, and limitations? Definition of Break Even Point Calculation by Equation Method Calculation by Contribution Margin Method Advantages / Benefits
Fixed Cost Definition: A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.
Liquid or Liquidity Ratio / Acid Test or Quick Ratio: Definition: Liquid ratio is also termed as “Liquidity Ratio“, “Acid Test Ratio” or “Quick Ratio“. It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm
Conceptual Skills Definition: Conceptual Skills are the skills managers must have to think and to conceptualize about abstract and complex situations. Using these skills, managers must be able to see the organization as a whole, understand the relationships among various subunits, and visualize how
Fixed Assets Turnover Ratio: Definition: Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means
Definition of net profit ratio: Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage. Components of net profit ratio: The two basic components of the net profit ratio are the net profit and sales. The net profits are obtained
Fixed Assets to Proprietor’s Fund Ratio: Definition: Fixed assets to proprietor’s fund ratio establishes the relationship between fixed assets and shareholders funds. The purpose of this ratio is to indicate the percentage of the owner’s funds invested in fixed assets. Formula: Fixed Assets to