Category Archives: Financial Accounting

Meaning of standard costing

Standard costing It is a predetermined cost, as it is determined in advance what should be the cost of production. When standard cost is used for the purpose of cost control it is known as standard costing. Now the question … Continue reading

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Difference between differential costing and marginal costing

meaning of Differential costing It is the change in cost, due to change in the output or change in sale. It may be increase or decrease in cost. For example present cost is 300000 if work is done by labour … Continue reading

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Applications of marginal costing

The following are the 4 applications of marginal costing: 1. Cost control: in marginal costing there is fixed cost as well as variable cost . fixed cost is controlled by top management and variable cost is controlled by lower management. … Continue reading

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4 Concepts of profit volume ratio

In the last article, we have done the objectives of profit volume ratio, today we will discuss the concepts of the same. There are four concepts in profit volume or p/v ratio:  1)      Contribution: contribution is the difference between sale … Continue reading

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Profit volume ratio or cost volume profit analysis ratio or break even ratio

Profit volume ratio (also commonly known as P/v ratio) is the extension of the marginal costing. It is a very important tool in the hands of policy maker to maximize their profit. It checks the relationship of cost and profit … Continue reading

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Features, advantages and disadvantages of marginal cost

Meaning of Marginal cost Chartered Institute of Management Accounting (CIMA) defines the term marginal cost that it excludes fixed overhead cost entirely from cost of production but charged against ‘fund’ which arises out of excess of selling price over total … Continue reading

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Meaning of subsidiary company

Subsidiary company Last time we have discussed the meaning and types of holding company. Today we will discuss another type pf company that is subsidiary company. The company whose shares have been acquired is subsidiary company. A company can be … Continue reading

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Types of holding companies

Holding company A company which acquires more than 50% equity shares of any other company in order to control the composition of its board of directors, it is called holding company. Holding company’s main aim is to eliminate the competition, … Continue reading

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4 Methods of purchase consideration

Purchase consideration: As per section 14 it is the price paid by Transferee Company to the transferor company for the purchase of its business. Methods of purchase consideration:  There are different methods of purchase consideration depending upon the terms and … Continue reading

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3 Methods of valuation of shares

Valuation of shares Generally shares of the company are valued at the following cases: 1)      At the time of the assessment by income tax authority. 2)      At the time of the raising loans. 3)      At the time of the paying … Continue reading

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