Submitted by: Submitted by slepinzdragon1
Views: 468
Words: 475
Pages: 2
Category: Business and Industry
Date Submitted: 05/05/2010 01:12 AM
Fundamental accounting concepts:
Going concern: the business is going to continue in the future
Consistency
Prudence
Accrual: Matching: Match cost with relative revenue
Objectives/ characteristics of financial accounting regulation:
Relevance: to the decision being made
Reliability: the information should be properly prepared and free from error or bias
Understandability: information in the financial statement should be capable of being understood
Comparability: the information should be prepared on the same basis where more than one period are concerned.
ROI (ROCE) = Profit before interest and tax / Total Net Assets
Liquidity Management
Current ratio (working capital ratio)
Quick ratio (acid test ratio)
Stock turnover ratio
Debtor payment period
Creditor payment period
Profitability management
ROI (ROCE)
Gross profit ratio (or trading margin)
Net profit ratio (or net margin)
Asset turnover ratio (or utilization ratio)
ROE
MANAGEMENT ACCOUNTING
Cost accounting (Direct/Indirect) a, Fixed costs
b, Semi-fixed costs
c, Variable costs
d, Semi-variable costs
Prime cost – Production related overheads – Budget (over/under absorption)
Treatment of Labour Cost – Treatment of Direct Materials
In a manufacturing environment there are three basic components of cost:
Materials cost
Labour cost
Production overheads
Direct costs:
Direct materials + Direct labour (Wages) + Direct Expense = PRIME COST
Indirect cost: These are not charged directly to a product but need to be accumulated and then apportioned out.
TREATMENT OF MATERIALS COSTS:
FIFO (First in, First out)
LIFO (Last in, First out)
Average Price (Weighted average cost)
Standard Price (from handouts)
TREATMENT OF LABOUR COSTS:...