Category: Accounting

Importance of Accounting Ratios & their Functional Classification

Accounting ratios are very useful tool to provide information about the underlying conditions of an organization. They act as indicator of financial soundness, strength, position and status of an organization. Importance of ratio Analysis depends on its interpretation. In the…

Difference between Financial Accounting and Management Accounting

Financial Accounting: Financial accounting deals with the business transactions and events for the enterprises as a whole and generates information to persons and authorities other than management such as government, creditors, investors etc. Management Accounting: Management accounting is a branch…

Difference between Cost Accounting and Management Accounting

Cost Accounting: It is a special branch of accounting which involves classification, accumulation, assignment and control of costs. Management Accounting: Management accounting is a branch of accounting that collects and provides accounting, cost accounting, economic and statistical information to various…

Material Losses in Cost Accounting

What are Material Losses in Cost Accounting? Losses of material during handling, storage or manufacturing are called as material losses in cost accounting. We could classified material losses into two parts i.e. normal losses and abnormal losses. Normal Losses: Losses which…

Accounting Standards –Its Meaning, Significance & Need

Introduction of Accounting Standards Preparation and presentation of corporate financial statement are governed by the companies act, 1956 and accounting standards. In India the institute of chartered accountants of India had established in 1977 an Accounting Standard Board (ASB). Meaning…

What is Cost Accounting? – Objectives & Importance of Cost Accounting

Definition of Cost accounting Cost accounting is a specialized branch of accounting which involves classification, accumulation, assignment and control of costs. It is a formal mechanism by means of which costs of products or services are ascertained and controlled. General…

Capital Expenditure & Capital expenditure planning

Definition capital expenditure A capital expenditure is an investment in a long-term asset. In accounting, “long-term asset,” “capital asset,” “fixed asset” and “tangible resource” are synonyms. Fixed assets generally provide the economic power for long-term profitability. Capital expenditure planning Capital…

Difference between an Accrual and a Deferral

Both Accruals and deferrals are used for expenses and for revenues.  Difference between an Accrual and a Deferral are as follows  An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt  Accrued Expenses are…