Determination of Profit and Loss on Contract
When a certain work is done on contract then it may or may not be completed in the concerned or related financial year. If the contract is completed in the financial year, then there...
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Economic Order Quantity (EOQ)
A decision about how much to order has great significance in inventory management. The quantity to be purchased should neither be small nor big because costs of buying and carrying materials are very high....
Statement of Cost accounting
Theoretically, cost sheet and statement of cost are similar. Cost sheet is a component of the manufacturing factory, and its main objective is to present total cost or per unit cost by classifying every...
Scope of Cost Accounting
The following important tasks are included under the scope of cost accounting – 1. To keep a count of investments and to classify and analyze the investments – under cost accounting the total investment...
General Principles of Cost Accounting
The following are the main principles of Cost Accounting: 1. Cause-effect relationship- Cause-effect relationship should be established for each item of cost. Each item of cost should be related to its cause as minutely...
Objections Against Cost Accounting
A number of objections are generally raised against the introduction of costing on various grounds. The following are some of the important objections usually raised: 1. Want of necessity- It has been argued that...
Techniques of Costing
(1)Standard costing- In this technique, the vari-ous expenditures and costs of producing a commodity are estimated under general working conditions and on the basis of this various standards are fixed. In this technique the...
Some important point related to final account in financial statement
1. Divisible Profit and Dividend- Divisible profitsmeans the maximum amount of profit which are legally available for distribution as dividend to the shareholders. Divisible profit is arrived afterdeduction of depreciation and income tax. Dividend...
Special Items related to Final Accounts
1. Provisions- As per the Companies Act, 1956, the expression ‘provision’ means any amount written off or retained by providing for depreciation, renewals or diminition in value of assets, or retained by way of...
Preparation of Final Accounts of the Company
The following points should be considered while preparing final accounts of the company: 1. Proper Format- Final accounts of a company contains balance sheet at first and then the profit and loss account and...