The selection of accounting principles to use during the course of financial accounting depends on the regulatory and reporting requirements the business faces. International public companies also frequently report financial statements in accordance to International Financial Reporting Standards. The establishment of these accounting principles is to provide consistent information to investors, creditorsregulators and tax authorities. Cash Method Financial accounting may be performed using either the accrual method, cash method or a combination of the two.
Applications[ edit ] CVP simplifies the computation of breakeven in break-even analysisand more generally allows simple computation of target income sales. It simplifies analysis of short run trade-offs in operational decisions.
Limitations[ edit ] CVP is a short run, marginal analysis: For longer-term analysis that considers the entire life-cycle of a product, one therefore often prefers activity-based costing or throughput accounting.
Segregation of total costs into its fixed and variable components is always a daunting task to do. Fixed costs are unlikely to stay constant as output increases beyond a certain range of activity.
The analysis is restricted to the relevant range specified and beyond that the results can become unreliable. Aside from volume, other elements like inflation, efficiency, capacity and technology impact on costs 5.
Impractical to assume sales mix remain constant since this depends on the changing demand levels. The assumption of linear property of total cost and total revenue relies on the assumption that unit variable cost and selling price are always constant.
In real life it is valid within relevant range or period and likely to change.Inflation may be defined as ‘a sustained upward trend in the general level of prices’ and not the price of only one or two goods. G. Ackley defined inflation as ‘a persistent and appreciable rise in the general level or average of prices’.
This note examines some of the methods by which real property investments are analyzed, including those most commonly used and others that will serve for purposes of comparison or illustration. Economic value added versus profit-based measures • Profits calculated in accordance with accounting standards do not truly reflect Note: no further adjustments are made in respect of the tax on the other items adjusted for during the calculation of NOPAT.
The budget process is the way an organization goes about building its budget.
A good budgeting process engages those who are responsible for adhering to the budget and implementing the organization's objectives in creating the budget. It was called the Committee on Accounting Procedure, or CAP, and comprised 18 accountants and three accounting professors.
Shortly after CAP was formed, the first set of GAAP standards was created. Theory of Prices with its constituents of theory of inflation, deflation and reflation. Theory of economic growth. Documents Similar To Economics Notes [PDF Library] Quick Revision Notes (CPT Economics December ) Ready.
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