Capital Receipts Revenue Receipts (a) Receipts derived from activities which are not part of the normal trading activities of the business (a) Receipts related to NORMAL ACTIVITIES of the business (b) Appears as capital or liabilities in the Balance Sheet (b) Credited as revenue to Trading and Profit & Loss Account © Examples: receipts of … Read more
Accounting For Losses In process costing, we can often found the output from a process is less than the input. Where the output from a process is less than the input, there is therefore a loss. Basically there are two types of losses in Process Costing: Normal loss Abnormal Loss Normal Loss · Normal … Read more
Earlier article(Part2) deal with a simple process costing without any work-in-progress In this article, we shall deal with process costing with work-in-progress. Process Costing With Work-In-Progress Work-in-progress is really uncompleted units hence this should not receive the full costs of the material, labor and overhead to complete it. Therefore it’s misleading if for the purpose … Read more
Append below a illustration of a simple set of process costing where there are merely two processes, without any work-in-process and finished stock account. Illustration Of a Simple Process Costing Process 1 Process 2 Material 15,000 – Labor 20,000 $25,000 Manufacturing expenses 5,000 $5,000 40,000 $30,000 Production for the period is 1,000 unit. Show the … Read more
Process Costing CIMA’s definition: The costing method applicable where goods or services result from a sequence of continuous or repetitive operations or processes. Costs are average over the units produced during the period, being initially charged to the operation or process.Hence, process costing: Determines the cost per unit of product in an environment where IDENTICAL … Read more
Marginal Costing Versus Absorption Costing The MAIN DIFFERENCE is the treatment of FIXED COSTS. This treatment can produce different profit figures.The two methods of costing produce different profit levels dependent upon the net change in the level of stock during the period.This is due to the VALUATION of the net change in stock during the … Read more
In earlier articles, we discussed about absorption costing, its advantages and disadvantages and its various methodologies. This article discuss about the over or under absorption of overheads:- Over or Under Absorbed in Absorption Costing Note that as long as planned level of activity and the actual level of activity is not the same there is … Read more
Answer to Accounting Test Question No 3: Company A Bank Reconciliation as at 31 st July 2006 $ Balance as per bank statement at 31 st July 2006 55,262 Add: Deposits in transit / Uncredited deposits 1,300 56,562 Deduct: Unpresented cheques Check No 6661 dated July 20th $380 6662 dated July 27th 1,050 Adjusted Bank … Read more
Accounting Test Question No 3: In early August 06, Company A received a bank statement which showed a balance of $55,262 as at 31 th July’06. However, its own record showed a balance of $55,597 on the same date. The following differences are identified: (i) Deposits amounted to $1,300 was not in the bank statement; … Read more
Accounting Test Question No.2 On Bank Reconciliation The following are the transactions from James’s Cash Book for January 2007:- Cash Book $ $ Opening b/f 1,478 Payments 16,891 Receipts 16,071 Balance c/d 658 17,549 17,549 You found the following: (a) bank charges $45 shown on the … Read more