List the elements of costs as they appear in a Cost Sheet and represent the same using a block diagram.

Ans: We initially categorize costs by the three cost components: Costs for Products and Periods: We categorize costs as either The Classification of Product Costs: Direct costs: Also known as variable costs, direct costs are often thought of as being directly related to manufacturing. In turn, the direct expenses might comprise: We can see that … Read more

Briefly state the objectives of financial analysis from a company’s point of view.

Ans: Objectives of Financial Analysis 1) Pricing Decision: Fixing selling prices is one of the most critical functions of management. Although processes are generally determined by market conditions and other economic factors yet marginal costing technique assists the control in the fixation of selling prices under various circumstances as: 2) Profit Planning and Maintaining the … Read more

Define Budget and Budgetary Control.

Budget and Budgetary Control: Meaning of a Budget A budget is the financial or/and quantitative expression of the business strategies and policies that will be implemented over the coming years. The term budgeting is used for preparing budgets and other procedures for planning, coordination and control of the business enterprise. Budgetary Control Budgetary control is … Read more

Define Net Working Capital.

Net Working Capital: Net working capital represents the excess of Current Assets over current liabilities. When the total value of current assets exceeds the total value of current liabilities, the result represents positive working capital. On the other hand, if current liabilities exceed current assets, the result represents negative working capital. Current liability includes those … Read more

Define Gross Working Capital.

Gross Working Capital: Gross Working Capital represents – Sum total of current assets invested in the business. Current assets represent those assets that can be converted into cash within a very short period, generally within one year. The components of Working Capital are as follows:

Define Working Capital Management.

Concept of Working Capital: Capital required for a business enterprise can be classified under two main categories i.e. a) Fixed Capital and b) Working Capital Every business enterprises require long-term funds to create productions facilities through the purchase of Fixed Assets i.e.., Land, Buildings, Machinery, Furniture, etc. Investment in these assets indicates the Fixed Capital, … Read more

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