What is Cash Ratio? Since cash is the most liquid asset, a financial analyst may examine cash ratio and its equivalent to to current liabilities. Trade investment or marketable securities are equivalent of cash , therefore they may be included…
Meaning of share split: A share split is a method to increase the number of outstanding shares through a proportional reduction in the par value of the share. This affects only the par value and the number of outstanding share…
The cost incurred for maintaining a given level of inventory are called carrying costs. They includes storage ,insurance, taxes, deterioration and obsolesce. What is carrying costs? The cost incurred for maintaining a given level of inventory are called carrying cost.…
Salvage value (SV) is the most common example of terminal cash flows. Salvage value may be defined as the sale value (market price) of an investment at the time of its sale. The cash proceeds net of taxes from the…
Sunk costs are cash outlay incurred in past . They are result of past decisions and cannot be changed by future decisions. Since they do not influence future decisions, they are irrelevant costs. Further they are unavoidable and irrecoverable historical…
According to the matching concept all expenses matched with the revenue of that period should only be taken into consideration. What is Matching Concept? If the financial statements of the organization if any revenue is recognized then expenses related to…
Dual aspect concept is the core of double entry book-keeping. Every transaction or event has two aspects. i.e. Alternatively Example of dual aspect concept BALANCE SHEET Liabilities ₹ Assets ₹ Capital 2,50,000 Land 2,00,000 Bank Loan 75,000 Machinery 1,00,000 Other…
Periodicity concept is also called the concept of definite accounting period. As per going concern’ concept an indefinite life of the entity is assumed. For a business entity it causes inconvenience to measure performance achieved by the entity in the…
Realization concept closely follows the cost concept. Any change in value of an asset is to be recorded only when the business realizes it. What is realization concept ? Realization concept closely follows the cost concept. Any change in value…
According to the money measurement concept , only those transactions, which can be measured in terms of money are recorded. What is money measurement concept? Since money is the medium of exchange and the standard of economic value. And the…