Absorption of Overheads in Cost Accounting: Definition, Types, And Example

 There are different categories that companies can use to classify their costs. One such categorization is direct and indirect costs. Direct costs refer to all the costs that a company incurs related to producing a product, whether a good or service. These costs mostly include material and labour costs such as raw materials, salaries and […]

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Accounting for Dividend: How to Record in Financial Statements

The main source of finance for companies, especially small-size companies and startups, is equity finance. Equity finance consists of finance that companies raise through their shareholders. In exchange for the finance they provide, shareholders receive the shares of the company. The shares of a company give its shareholders the ownership of the company for the

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Short-Term Financing Options for Small Businesses

Small and medium-sized businesses often struggle to cope with lower liquidity. Cash crunch proves a tangling problem than profitability. Delayed accounts receivables and uncertain economic conditions affect the cash flows for small businesses in particular. Small businesses funded with a limited contributed capital cannot raise financing from capital markets such as stock or bond markets.

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How to Calculate Margin of Safety?

The margin of safety calculation takes the break-even analysis one step further in the cost volume profit analysis. It is the difference between the actual activity level and the break-even activity level. We can calculate the margin of safety for sales, revenue, or in profit terms. It can be expressed in units, dollars, or in

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Depletion Method of Depreciation

The Depletion method of depreciation is a cost allocation method that works for depleting natural resources. The accounting working for depletion works similarly as in depreciation of tangible assets or amortization with intangible assets. As the natural resources or assets “deplete” with extraction over time, the term is used as a depletion method of depreciation.

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