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Indirect Cost

Indirect cost is those costs that cannot be directly assigned to/related to/identified with a particular cost center or cost object, but they benefit multiple cost objects. It is not possible to calculate them for a single cost object. However, it…

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Direct Cost

A cost that is easily attributable to a cost center is known as Direct Cost. When all the direct costs are taken together they are known as prime costs. Example: Direct Material, Direct Labor, Direct Expenses. The cost that can…

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Budgeting

Budget is a blue print of future course of action and activities. Budget means expressing the future course of action of an organization in quantitative terms. Budgeting can be defined as the process of planning and anticipating costs and expenditure…

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Ratio Analysis

A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of…

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Cost Apportionment (Distribution)

When the cost items cannot be directly charged to or accurately traceable to a particular cost center, then such items of cost are prorated amongst various cost centers, on an equitable basis, this process is known as cost apportionment. It…

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Cost Allocation

Allocation of cost, implies the entire distribution of the overhead item to the departments on a logical basis. It represents that part of cost attribution, which charges a particular cost to a cost unit. Allocation of cost is directly assigned…

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Nature of Transactions

Capital Transactions The business transactions, which provide benefits or supply services to the business concern for more than one year or one operating cycle of the business, are known as capital transactions. The transactions which relate to capital are again…

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Inventory Records

Following are the records maintained for inventory management Purchase Requisition NoteIndentGoods Receipt NoteJob Order (In/Out)Material Issue NoteMaterial Return NoteProduction ReportDelivery NoteRejection InwardRejection Outward

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Inventory Valuation

The accounting method that a company decides to use to determine the costs of inventory can directly impact the balance sheet, income statement and statement of cash flow. There are three inventory-costing methods that are widely used by both public…

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