Accounting

Definition: The joint cost refers to that cost which is incurred before the split-off point on the production or manufacturing of multiple products, by consuming the same inputs or factors of production (i.e., raw material and manufacturing process). This type of cost accounting is usually common in primary industries. Split-off Point: The production stage at which all the … [Read more...] about Joint Cost

Definition: The term service costing or operating costing refers to the computation of the total operational cost incurred on each unit of the intangible product. These intangible products or services can be either in the form of internal services that are carried out by industries as supporting activities for the manufacturing of goods; or external services that are offered as … [Read more...] about Service Costing

Definition: A cost sheet is a statement which represents the various costs incurred at different stages of business operations, in a tabular format, to determine the total cost or expenditure made by the organization and the cost which is incurred on each unit of a product or service in a particular period. The cost sheet of a business organization provides an insight into … [Read more...] about Cost Sheet

Definition: A cash book is that unique book of accounts which fulfils the objective of both, a journal and a ledger. Like a journal, it is the first book which records all the cash transactions of the business; and it also acts as a subsidiary book to post all the cash transactions, similar to a cash account in the ledger. It can be broken down into two words, i.e., 'cash' … [Read more...] about Cash Book

Definition: Journal refers to a 'book' or 'diary' and entry means noting down of something. On combining these two words, we get 'journal entries' which can be explained as a book meant for the original recording of the day to day business transactions or activities in a systematic order. The formal step by step entry of these business activities in a journal is termed as … [Read more...] about Journal Entries

Definition: Kaizen costing is a technique of controlling the cost incurred over unproductive activities and resources which does not add any value to the organization. In simple words, it is a practical approach to solving cost-related problems to improve the overall efficiency of the organization. Kaizen costing is implemented in business organizations to manage different … [Read more...] about Kaizen Costing

Definition: Depreciation is the partial reduction of the value of fixed (tangible) assets used to carry out business operations, resulting out of its limited life span. It is set off against the revenue generated by such consumption each year. Every asset which is of a fixed nature tends to face obsoletion and physical deterioration due to its regular use. These assets include … [Read more...] about Depreciation Methods

Definition: Profitability ratios are the financial measures to analyze the earning capacity and determine the financial soundness of the organization by comparing the earnings with the multiple expenditures and ensure the optimum utilization of the various resources. Profit is the ultimate aim of the business and analyzing the financial position of an organization using the … [Read more...] about Profitability Ratios

Definition: Cost classification is the logical process of categorising the different costs involved in a business process according to their type, nature, frequency and other features to fulfil accounting objectives and facilitate economic analysis. Cost refers to the value sacrificed with the aim of gaining something in return. Every business process involves some cost. It is … [Read more...] about Cost Classification

Definition: Cost accounting is the accounting method for ensuring cost effectiveness by accumulating, organising, recording, calculating, analysing and assessing the overall expenses incurred on a product, process or project, etc. It is mostly used in industrial units or factories where the goods are manufactured. Unlike financial accounting, cost accounting is a broader … [Read more...] about Cost Accounting