Imprest Petty Cash With Question and Answer

Earlier article on ¬†imprest petty cash system refers. Below is a very simple worked question and answer for the reader to enhance the understanding of imprest petty cash system. Question: ABC Enterprise has the following petty cash transaction for the month of January 2012:- Jan Description $ 1 Received from cashier 450.00 2 Cleaning 60.00 … Read more

Explain what are Non-current liabilities and current liabilities

As we know liabilities are financial obligations of the business to external parties which consists of two major categories namely: Non-current liabilities and Current liabilities NON- CURRENT LIABILITIES CURRENT LIABILITIES Amounts owing by the business that are NOT REPAID WITHIN ONE YEAR.   Examples are Long term loan, Mortgage on Property and Debenture Amounts owing … Read more

What are the advantages and disadvantages of using the Periodic Review Inventory control system

Append below a table to show the advantages and disadvantages on using the Periodic Review Inventory Control system: ¬† ADVANTAGES of Periodic Review Control System: DISADVANTAGES of Periodic Review Control System: 1 All stock items are reviewed periodically so that there is likely to be less obsolete stocks 1 In general larger stocks are required, … Read more

What are the advantages and disadvantages of using the Re-order Level Inventory control system

The following tabulates the advantages and disadvantages of using the Reorder level inventory control system: ¬† ADVANTAGES of Reorder Level Inventory Control DISADVANTAGES of Reorder Level Inventory Control 1 Lower stocks on average 1 Many items may reached re-order level at the same time, thus overloading the re-ordering systems 2 Under reorder level inventory control … Read more

In Inventory control, what the assumptions underlying the Economic Order Quantity(EOQ)

Economic order quantity is defined as the ordering quantity which minimises the balance of cost between inventory holding costs and re-order costs.Underlying assumptions in an Economic Order Quantity model are: That there is a known, constant stockholding cost That there is a known, constant ordering cost, That rates of demand are known, That there is … Read more

In Inventory control, explain what are stock-out costs and give examples of stock-out costs

When dealing with inventory control, quite often we encounter terms like stock out costs and would like to give some examples of them. Tabulated below the definition of stock out costs and some examples: Stock-out costs are costs associated with running out of stock Examples of stock-out costs are: Lost contribution through the lost sale … Read more

Give a brief contrast between Budgetary Control and Standard Costing

There seems to be a big difference when we understand that standard costing system is concerned with the manufacturing of a product or providing of a service whilst budgetary control system is concerned with the overall policy of the company.But are there any similarities between these two systems.? Append below are are the similarities of … Read more

Explain what we mean by Financial Reporting and what are the limitations of financial reporting.

Below explained briefly what is financial reporting and its limitation: Interestingly, financial statements ( income statement, balance sheet, cash flow statements, notes to the financial statements) is ONLY PART of financial reporting. Financial reporting includes not only financial statements but other means of providing and communicating useful information in making business and economic decision. These … Read more

Explain why Revenue and Expense Accounts are designated as Temporary or Nominal accounts

Below explained what accounts are known as temporary or nominal account: The increase in capital resulting from revenue is TEMPORARY, since capital will be reduced by expenses in the same period. These accounts are closed out at the end of the accounting period and the net balance ( for example, the excess of revenue over … Read more