Inventory valuation : Inventory valuation : Inventories should be generally valued at the lower of cost or net realizable value. What is inventory valuation? Inventories should be generally valued at the lower of cost or net realizable value. This principal…
Inventory is also known as ‘stock’, refers to physical goods and materials that business owns with a view of future resale. And it is very important asset for any company. Further, inventory can be defined as asset held The inventories…
Element of cost means the grouping of costs according to their common characteristics. Further, cost is the amount of resource given up in exchange of some goods or services. It is defined as the amount of expenditure (actual or notional)…
Net asset value method represents the value of company’s assets minus liabilities. It measures the worth of the company. Being a straight forward method, the value of shares of target company is computed in terms of net assets acquired. This…
Net Realizable Value also called Liquidation Value or Adjusted Book Value. Net realizable value is defined as realizable value of all assets after deduction of liquidation expenses and paying off liabilities. Although in some case liquidation expenses can be ignored…
The analysis of ratios related to sales measure the profitability or the operational efficiency of the firm. This ratios reflect the final results of business operations. They are some of the most closely watched and widely quoted ratios. Management attempts…
Cost accounting is defined as ” the process of accounting for cost which begins with recording of income and expenditure or the basis on which they are calculated & ends with the preparation of periodical statements and reports of ascertaining…
Bonus issue means an issue of additional shares to existing shareholders free of cost in proportion of their existing holding. What are bonus shares? It is defined as issue of shares at no cost to current shareholders in a company…
ABC analysis in cost accounting is an accounting methodology that assigns cost to activities rather than products or services. This helps resources & overhead costs to be more accurately assigned to products & services that consume them. Meaning and definition…
Discount Rate is the rate used to calculate present value of future cash flows . It is rate which depends on the risk free rate and risk premium of an investment. Further, actually each cash flow stream coming from different…