A Balance Sheet is one of the financial Statements the reveal the financial status of the business at a given point in time. It basically lists down all Assets, Liabilities, and the overall Equity (or Capital) that has been invested into the organization. In other words, the balance sheet is a snapshot of the overall […]
Purpose of Balance Sheet – Here Are the 5 Purposes Yould Should Know Read More »
Introduction: Companies have an internal audit to evaluate their internal controls, like corporate governance and accounting processes. The main purpose of internal audit is to provide the company with independent assurance that its risk management, corporate governance, and internal control processes are operating effectively. The internal audit ensures that rules, regulations, and laws are being
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Definition: Fixed costs are the indirect production costs that fixed in total although the volume of products is increased or decreased. However, fixed costs change in units when the productions are increased or decreased. These costs including rental expenses, insurance expenses, depreciation expenses and are not change even though the company increases or decreases its
What are Fixed Costs? Definition, Example, and How is it from Variable Cost? Read More »
Introduction: The cost of goods sold also referred to as the cost of sales is the cost you incur to make your products or services. Generally, this cost includes direct material, direct labor, and production overheads. In a service business, this cost will include the pay of labor, taxes paid, and any benefit given to
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Introduction Prime costs and conversion costs are used in the analytics of the manufacturing sector as a key metric to determine the efficiency in the production of the specific product. Prime costs are expenses directly related to creating finished goods while conversion costs are used in the conversion of raw materials into finished goods i.e.
Prime Costs Vs. Conversion Costs – What are the Key Difference? Read More »
Introduction The identification and allocation of costs determine the profitability of the product or the organization. The costs are classified into direct and indirect costs based on the cost’s traceability to the product. It is called direct cost when the expenditure can be identified and feasibly allocated to a particular product. Contrary to this, those
Direct cost Vs. Indirect Cost – What are the Key Difference? Read More »
Definition: Conversion costs are the costs that are incurred by manufacturing companies when converting raw materials into finished goods. It is the direct labor plus any manufacturing overheads needed to convert raw materials into a finished product. In other words, conversion costs are associated with converting direct materials into an actual product ready to be
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Definition: A prime cost refers to an entity’s expense directly related to the materials and labor used in production. Prime costs are those costs that are directly incurred to create a product or a service and are particularly useful in determining the contribution margin of a product or a service and calculating the minimum price
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Net purchases, in accounting, mean the total amount of purchases made less any discounts received, goods returned, allowances, and tax. This is the formula: Net Purchases= Gross Purchases – Purchased Returns – Allowances – Discounts. In the above equation, the components of the equation have the following meanings: Gross Purchases: Gross purchase is the total
Net Purchases in Accounting: Example, Formula, and Journal Entries Read More »
Return on capital: Return on capital or return on equity invested or capital employed is the percentage return on investment. The return is generated from the profit the business makes from its activities. This is the formula for calculation of return on capital employed: Return on Capital Employed is calculated by Earning Before Interest and
How to Improve Return on Capital Employed? 4 Points You Should Know Read More »
