Definition: Average Fixed Cost (AFC) refers to the fixed costs of production divided by the quantity of output produced. Fixed costs are those that do not vary with the production level. These may include rent, salaries of permanent staff, and insurance. These costs remain constant whether the firm produces nothing, a little, or a lot. …
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Definition: Price discrimination is a pricing strategy in which a business charges different prices for the same product or service to other groups of customers based on their willingness to pay. This practice can help businesses maximize their profits by charging higher prices to customers willing to pay more while still making sales to less …
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Definition Opportunity cost is the potential benefit a company or investor buyer may have gotten had they chosen this opportunity over others. It means how much of a potential benefit or gain in investment is missed by a person had they not skipped that opportunity. Opportunity cost is a term that plays a major role …
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The term “overheads” refers to any expenses occurring within a business. However, it does not cover every expenditure. Instead, it only applies to expenses not related to a product or service directly. These may still be a part of the production process or relate to those items. However, companies cannot allocate them to a single …
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Cash transactions are one of the most common activities within any company. Usually, these involve paying various parties or receiving cash from them. However, most companies have transferred these transactions to their banks. This way, they have automated the system or made it smoother. However, companies still need cash at hand to handle various transactions. …
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The accounting field has progressed significantly over the past. The introduction of standardized bodies and procedures has helped this field go global. On top of that, using technology in this area has also enhanced its reach greatly. Digital technology has played a vital role in helping the field progress even further. It contributed to more …
A business entity is incurring different expenses, direct and indirect, to keep the cycle running. Some expenses are direct to the core product or service of the business. While other expenses are incurred for selling the products and are not directly part of the production process. Material and labor are included in the direct costs …
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Accounting can be a perfect career choice for many students. This field requires a vast amount of knowledge and expertise. However, it can create a successful path for future growth. Usually, the goal for most accountants is to become a CFO or even a CEO in a well-reputed company. Apart from these, accountants can also …
Accounting incorporates various tasks that companies must perform to deal with financial transactions. This process involves recording, summarizing, analyzing, and reporting financial information. However, the most relevant branch of accounting is financial accounting. Within this branch, companies seek to prepare financial statements. These statements provide details of a company’s operations and activities for a period. …
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Managerial accounting refers to a branch of accounting that covers the flow of information internally. This branch covers various tools and techniques that companies can use to enhance decision-making. While financial accounting covers reporting information externally, managerial accounting is for internal purposes. For most companies, it is more crucial than financial accounting as it has …
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