Accounting Basics

View:  
Sorted by:  

Measuring Irrationality in Finance Is Rational Behavioral Finance

Understanding how irrational financial behavior works is only half the job. You also have to determine the value of irrationality. That is to say, you must figure out how much your own inherent irrationality [more…]

What Managerial Accountants Do

Managerial accounting plays a critical role in running a business because it provides valuable information about the business to help managers make educated decisions. The process of gathering information [more…]

How to Set Up a Master Budget

To prepare a master budget, managerial accountants collaborate with managers throughout the organization to develop a realistic plan, in numbers, for what will happen during the next period. The master [more…]

The Differences between Managerial and Financial Accounting

Managerial accounting provides internal reports tailored to the needs of managers and officers inside the company. On the other hand, financial accounting provides external financial statements for general [more…]

Classify Companies by Their Output

You can separate businesses into three basic categories: Service companies, retailers, and manufacturers. Because companies provide many different services and products to their customers, some companies [more…]

How Profits Are Measured

To earn money and succeed, a business — whether it’s a service company, a retailer, or a manufacturer — needs to create profits. To generate profits, companies must make sales to customers that exceed [more…]

How to Distinguish between Efficiency and Productivity

Efficiency measures how little waste is created when producing and selling a product. Productivity,on the other hand, considers how to maximize sales and profits while using as few assets as possible. [more…]

How Asset Turnover Is Measured

Asset turnover measures a company’s productivity. The higher the asset turnover, the more productive the company. To calculate asset turnover, divide sales revenue by average assets: [more…]

How to Distinguish Direct from Indirect Manufacturing Costs

When manufacturing a product, you can easily trace certain costs to individual products that you make. Call these expenses direct costs. On the other hand, certain costs don’t easily trace to an individual [more…]

The Difference between Product and Period Costs

Accountants split all costs into two categories — product costs and period costs — depending on whether these costs go toward making products. Product costs [more…]

Incremental Costs in Managerial Accounting

When you need to choose between two alternatives, incremental costs change depending on which alternative you choose. Managerial accountants sometimes refer to incremental costs as [more…]

Opportunity Costs in Managerial Accounting

Sometimes choosing one alternative means losing money because you turned down another alternative. These costs are called opportunity costs. For example, suppose you can either visit your mother in Peoria [more…]

How to Distinguish Among Different Users of Accounting Information

People who use accounting information fall into two broad groups: insiders and outsiders. Business managers are insiders; they have the authority and responsibility to run a business. Everyone else is [more…]

How to Make Use of Accounting in Your Personal Financial Life

A great deal of the information you use in making personal finance and investing decisions is accounting information. You need a basic understanding of accounting terminology and valuation methods in order [more…]

The Newest Career in Accounting, the Chartered Global Management Accountant (CGMA)

Recently the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) in the United Kingdom and the Republic of Ireland joined forces to sponsor and promote a new [more…]

Cost Accounting: Budgeting Basics

In cost accounting, a budget is a financial plan that includes both financial and non-financial information. Its most obvious features are a projection of revenue [more…]

Why Budgeting is Important in Cost Accounting

In cost accounting, when you put together a budget, you determine how you plan to use your resources. Assets are resources; cash is the most famous asset. Other property, like vehicles, for example, are [more…]

Center on Profit Centers in Accounting Reports

From a one-person sole proprietorship to a mammoth business organization like General Electric or IBM, one of the most important tasks of managerial accounting is to identify each source of profit within [more…]

How to Report Operating Expenses

Below the gross margin line in an internal P&L statement, reporting practices vary from company to company. There is no standard pattern. One question looms large: How should the [more…]

How to Present a Profit Analysis Template

Very little detail for sales revenue and expenses are included when presenting a profit model, in order to keep the template as brief as possible. After arguing for the separation of fixed and variable [more…]

Take a Closer Look at the Lines in the Profit Template

Profit center managers depend heavily on the information in their P&L reports. They need to thoroughly understand these profit reports. They should examine each element of the profit template. [more…]

How to Use the Profit Template for Decision-Making Analysis

The profit template is very useful for decision-making analysis. To demonstrate, suppose that you’re under intense competitive pressure to lower the sales price of one product you sell. This product is [more…]

Business Budget versus Government Budget

Business and government budgeting are more different than alike. Government budgeting is preoccupied with allocating scarce resources among many competing demands. Unlike the government, the revenue of [more…]

Liabilities: How to Judge Liquidity and Solvency of a Business

Solvency refers to the ability of a business to pay its liabilities on time. The liquidity of a business is not a well-defined term; it can take on different meanings. However, generally it refers to the [more…]

Cash and the External Balance Sheet

The external balance sheet reports just one cash account. But many businesses keep several bank checking and deposit accounts, and some keep a fair amount of currency on hand. A business may have foreign [more…]

Listings:back...201-225226-250251-275

Sign Up for RSS Feeds

Small Business & Careers
Great Gadget Giveaway -- Enter to Win!

Inside Dummies.com