Every product we use is produced in some kind of manufacturing facility. There are different types of costs associated with each unit of product, e.g. Material and labor costs. These costs can be classified into two categories of Fixed and Variable costs. Different costing techniques account for these costs in different ways. Overheads in production […]
What is Absorption Costing Method? Read More »
Introduction One of the few recent International Financial Reporting Standards (IFRSs) issued by International Accounting Standards Board (IASB) that happened to supersede the old standard(s) and have caught attention of Accountants in practice and industry across the globe is the standard that discusses the matter of Revenue Recognition in detail – IFRS 15 Revenue from
Revenue Recognition, The Five Steps Approach under IFRS 15 Read More »
Introduction Every product we use or see has a price tag (cost + margin), that pricing decision can be the difference between a product being successful or flop. In traditional costing the variable costs are spread across the products line uniformly irrespective of the product consuming that cost or not. However different products require different
What is Activity Based Costing (ABC)? Read More »
Introduction The account payable of a business refers to any credit it has taken from suppliers for any goods purchased or services obtained from them. The account payable is a liability for a business that it has to pay in a future point in time. As with any other system in a business, the account
Account Payable Control System, the Ultimate Guide Read More »
Introduction Behind every successful business there are great control procedures and systems that ensure the success of the business. Among these systems, the most important system is a good inventory control system for businesses with physical stock. Inventory or stock control helps businesses ensure that stock is always available for sale and use. It ensures
Inventory Control,The Ultimate Guide Read More »
Introduction In previous articles, we have covered both perpetual inventory system and periodic inventory system. In this article we will cover the advantages and disadvantages of perpetual and periodic inventory system. Typically, in a manufacturing business or a business with a physical stock, proper inventory management is necessary. Businesses need to keep track of their
Advantages and Disadvantages of Perpetual Inventory and Periodic Inventory System Read More »
Introduction The closing inventory and cost of goods sold of a business are two important values that help a business determine their profits or losses for a period. To calculate the cost of goods sold, a business needs to know the value of its closing inventory. This can be calculated by tracking the inventories of
What is perpetual inventory system? Read More »
Businesses need to calculate the value of their inventory and cost of goods sold at the end of each period to determine their profit or loss. To calculate these, businesses need to keep track of any changes in their inventories during the year. There are two main types of inventory systems that are widely used,
What is periodic inventory system? Read More »
When a business purchases a new fixed asset, the business cannot expense out all of the cost of the asset in the year of purchase. This is due to the matching concept which states that expenses should be matched to the year in which revenues are earned from them. Fixed assets help a business generate
What is Depreciation? Read More »
In the previous articles, we have talked about inventory as well as methods in valuing inventory. In this article, we will talk about the inventory costing. So what are the costing methods of inventory? Inventory costing is very crucial; especially for merchandising company as we need to present in the financial statements both in statement
Four Methods of Inventory Costing Read More »
