What is Idle time and its accounting treatment?
Idle time is the simply the time for which labour has been paid for but no work has been done. Whereas inefficiency arises when labour is actually engaged on production but output is not as expected or simply not 100%. Idle time may arise out of normal or abnormal situations and it is the situation […]
What is a non-cash expense?
Non-cash expenses are such expenses that do not involve real cash outlay or against which no real cash outflow has taken place at least in the period in which such expense has been reported. And as they are recognized as an expense they will cause entity’s retained earnings to decrease but such expenses will not […]
Top 10 Excel keyboard shortcuts for Accountants
Excel and accountants are two interconnected entities. Around the world excel is the most active computer application in the hands of accountants. Even if accountants have some other accounting software at their disposal they always like to involve excel. Most common example is that data entry work is carried out in specialized accounting software but […]
What is Cost classification and in how many ways can we classify cost?
Cost classification is a simple process in which we group or categorize costs on the basis of common characteristics. Grouping costs on the basis of their nature, form, source or any other attribution makes it really easy to understand their effects and ultimately to take decisions about costs and beyond any shadow of doubt classifying […]
What is meant by ‘net of’ in accounting or tax and other business related subjects?
The expression ‘net of’ represents the exclusion of something from a particular sum. For example net of tax means the resultant amount which is exclusive of tax or in other words the amount we get after deducting tax is net of tax amount. We can see its uses in wide variety of ways in accounting […]
What is NIFO inventory valuation method?
NIFO - Next in, First out is an inventory valuation technique in which issues to the production hall are valued at the current market price i.e. current cost or replacement cost instead of the cost at which material was bought i.e. historical cost. This valuation method attempts to keep the production cost accurate according to […]
What are different inventory valuation methods?
There are numerous valuation techniques to value the inventory or stock. However, here is the short list of those which are known. To learn more about each method, click the name! Specific identification method FIFO - First in, First out method LIFO - Last in, First out method HIFO - Highest in, First out NIFO […]
Is depreciation expense a fixed cost or a variable cost?
Let’s revisit the terms Fixed cost and Variable cost and then we will discuss where depreciation cost/expense really fits. Fixed costs are such costs that do not change with the change in activity level (e.g. units produced) with in the relevant range. Where relevant range can be defined in terms of time or activity level. […]
Is ‘Cost of goods sold’ a Product cost or a Period cost?
Before we discuss under what heading should we classify cost of goods sold, let’s first of all clear out our minds for the terms inventoriable costs and period costs with a quick review. You can the answer on difference between period costs and product costs in good detail here. Inventoriable costs (Product cost) or Product […]
What is the difference between Product cost and Period cost?
Product costs or Inventoriable costs are all such costs that form part of the inventory.These are basically such costs that relates directly to the products and are incurred to produce such products and also include the costs that are incurred to bring these products into saleable condition (or simply present location and condition). Examples are […]
