Notional Costs Notional costs are also known as imputed cost. The primary objective of charging notional costs is to enable management to make clearer internal decisions by making sure that internal decision making become more realistic by assuming that the cost of all resources consumed reflects the full economic value – usually by applying market … Read more
The below questions represent some accounting questions on recording of transactions. The following multiple-choice practice questions are extracted from Certified Accounting Technician (CAT) Scheme Paper 1 [ Refer Answers at the end of the questions ] Question 1 Hywel purchases goods on credit with a list price of $100. The supplier gives Hywel a … Read more
In the earlier articles, we have discussed Changes in accounting estimates and fundamental errors. This article explained what is this Changes In accounting Policies Changes In Accounting Policies As we know Accounting policies are the specific principles, bases, methods, conventions, rule and practices that an enterprise adopts in the preparation and presentation of its financial … Read more
In a Company’s Annual Report, we see a section in the Notes to the Accounts pertaining to Segmental Reporting. This article seeks to give a basic understanding of what’s segmental reporting all about. Segmental Reporting · As we know that The Notes To The Accounts assists the investors/readers of the financial statements with both complementary … Read more
There are a few traditional methods of preparing budgets. One of it is the using of Incremental Budget. This article discusses what are an Incremental Budget and the pros and cons. Incremental budget Basics: a budget prepared using a previous period’s budget or actual performance as a basis with incremental amounts added for the new … Read more
(1) What is An Annual Report? An Annual Report : is a document produced annually by companies designed to show a true and fair view of the company’s annual performance, it comprises the audited financial statements prepared in accordance with company law and other regulatory requirements, and also containing other non-financial information. In UK and … Read more
Earlier we have discussed in details changes in accounting estimates and changes in accounting policies. In this article, we look at what are Fundamental Errors and how do we deal with them. Next we compare Fundamental errors with errors in accounting estimates. Fundamental Errors Basics: Errors are bound to arise whenever judgement has to be … Read more
This is a two- part articles which discuss what is Changes in Accounting Estimate and Changes in Accounting Policies. Change in Accounting Estimate Basics: Use of estimate is an integral process of the accounting process. Use in line with matching concept and conservatism concept Use of estimate is needed due to the inherent uncertainties in … Read more
Difference Between Principle-based Versus Rule-based Principle-based: Accounting standards may take the form of general principles, relying on interpretation and judgment by the financial statement preparers before they can be implemented. Whereas: Rule-based: Alternatively, standards may take the form of a series of rules, limiting the flexibility and use of judgment allowed in their implementation. A … Read more
Difference Between Fair Value Versus Historical Cost Fair Value: Accounting Standard defined: Fair value as the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. It is meant to represent market value given a sufficiently robust and efficient market. Where no such market exists, … Read more