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

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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

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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

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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.

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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

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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

Explain whether it is true by giving an example that the Trial Balance provides “arithmetic proof of the accuracy of the records, it does not provide “theoretical proof”

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It is true that Trial balance provides arithmetic proof of the accuracy of the records when the total of debits and credits agree and the trial balance is in balance merely indicating the equality of the debits and credits for the hundreds or thousands of transactions entered in the ledger. However, it does not provide … Read more

Explain what is a compound journal entry ?

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Compound journal entry is an entry having more than one debit or more than one credit   Example of compound journal entry: Factory land was bought (debit) for $500,000, with a downpayment of cash (credit) of $100,000 and a mortgage(credit) of $400,000    

Briefly explain the different types of Dividend-payout policies

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The different type of Dividend Pay-out policies can be roughly categorized as follows: The “bird-in-the-hand view, whereby the shareholders  or owners prefer to be paid high dividend. Here, the shareholders only think of getting immediate dividends over less certain and more distant capital gain. Pay a low payout ratio as shareholders prefer capital gains over … Read more

Content Page on Accounting Case Study and Interesting Articles

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This Content Page helps you to navigate to all articles relating to Accounting Case Study and articles. From each topic, you can return to this Content Page. Click to the respective topic: Content Page ACCOUNTING CASES STUDY & ARTICLES 1.0 Case Study No.1: STARTING YOUR OWN BUSINESS  2.0 Case Study No.2: CONTROL OR MANAGE YOUR … Read more