What is Cost Tracing

cost tracing

Cost tracing refers to the assignment of accumulated costs that have a direct relationship to a particular cost object. It is worth noting that cost assignment is a general term for assigning costs, whether direct or indirect, to a cost object.  On the other hand, cost tracing is a specific …

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Coverage Ratios – Meaning and Formulas

The coverage ratio measures the firm’s ability to service (repay) the fixed liabilities. These ratios establish the relationship between fixed claims and what is normally available out of which these claims are to be paid. These fixed claims may consist of interest on loans, dividend on preference shares, amortisation of …

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What is Money Measurement Concept

money measurement concept

Money Measurement Concept The money measurement concept states that a corporation should only report those accounting transactions that can be represented in terms of money. It means that the centre of accounting transactions is on quantitative data, preferably than on qualitative information. Thus, a high number of items are nevermore …

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Factors determining the credit policy

credit policy image

The credit policy is one of the essential factors determining both the quantity and quality of accounts receivables. Various factors determine the size of the investment a company makes in accounts receivables. They are, for instance: i. The effect of credit on the volume of sales; ii. Credit terms; iii. …

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Difference between imputed costs and capitalised costs

Imputed Costs: Imputed costs are those costs which do not involve any cash outlay. For example: interest on capital, it not an expense actually paid in monetary term. It is just a book entry. Capitalised Costs: These costs are initially recorded as assets but subsequently treated as expenses. Main examples …

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