Profit is not cash, only cash is cash as the saying goes. Cash is of course very important to any business. To be exact, cash flow is very important to a business. With credit sales and deferred payment transactions becoming dominant in business the cash balance of a business can be easily divorced from its …
Inflation is the general increase in price levels experienced in an economy. A little inflation is a norm but a lot of inflation has drastic economic effects. Prices rising too fast means incomes are decimated in the wake. High inflation also introduces a measurement problem, if the value of money changes quickly the values of …
Credit sales have become a major element of the business environment. The underlying agreement is simple, a buyer proposes to delay the payment for the item being sold. This can be either a single delayed payment or through instalment payments. This doesn’t always go to plan. The buyer may prove unwilling or unable to pay …
Cost accounting is central to any business operation. It provides important information for management decision making that is used in financial control and pricing amongst other important business decisions. Cost accounting is directly linked to matters of a business’s profitability. So we can understand how important cost accounting is to businesses. The advantages of cost …
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As the world progresses ever so slowly towards having uniform global accounting standards many points of view have emerged on both the virtues and limitations of accounting standards. While there are valid arguments on both sides of the debate, accounting standards will be with us and are continuing to move towards harmonisation and ultimately, global …
Management accounting is a branch of accounting that has a vast scope and objectives. As the name suggests it is a function of accounting that serves the needs of management in a business. Management accountants perform many tasks that include cost accounting, financial accounting, cost-benefit analysis and producing information for decision making. Despite its wide …
Financial statements published by companies are their way of communicating with the outside world about both the performance and position of the company. While accounting regulates that information should be truthful, reliable, a fair representation, complete and material there are very few things that do not possess room for improvement. Ratio analysis is used by …
Depreciation is a very important consideration in business accounting. Businesses with a heavy investment in non-current assets will record a large depreciation value in their accounts. Depreciation is also important because it is an allowable deduction for tax purposes and hence has a large impact on business cash flows. Depreciation is also important because it …
There is at times a confusion between cost accounting and management accounting. This is mostly because for many people their introduction to management accounting comes in the form of cost accounting. From there on the understanding that there is a difference between the two is difficult to ascertain. However, many differences can distinguish them. Among …
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The cash book is very important in the accounts of any business. Business transactions are measured in monetary terms so naturally, the accounting book that is responsible for recording the day to day movements of money in the books is very important. There are four types of cash book, the singles column, two-column cash book, …