Characteristics of an Effective Financial Reporting Framework

Any effective financial reporting system needs to be a coherent one (i.e., a framework in which all the pieces fit together according to an underlying logic). Such frameworks have several characteristics: Transparency A framework should enhance the transparency of a company’s financial statements. Transparency means that users should be able …

Read More »

What is Activity-Based Costing (ABC)?

What is Activity-Based Costing? Activity-based costing is an accounting method that assigns costs to the different activities involved in making a product in order to allocate a company’s funds in a fair way. For example, a furniture manufacturer makes two types of chairs. One chair is a straight back kitchen chair …

Read More »

Bad and doubtful debts

bad debts

When you are preparing the financial statements for a business, you will frequently find a reference to bad and doubtful debts. It is important to ensure you understand the difference between bad debts and doubtful debts. Bad debts Bad debts are incurred when it is reasonably certain that a debtor …

Read More »

Basics of Costing

What is Cost? Cost is a word used to describe the money spent on a particular thing. In our private lives, we talk about the cost of running a car or the cost of heating our home. In a business context, we can talk about the cost of labour, or …

Read More »

ERP Implementation Guidance for Management Accountants

Before an organisation is ready to implement the ERP system, its management accountants must be prepared for it. Following are some checklists to ensure if the management accountants are prepared for this change process: Have clear objectives. Be prepared to listen to others. Expect and plan for a productivity dip …

Read More »

Meaning of Ad Valorem

ad valorem

Ad valorem is derived from a ‘Latin’ word which means ‘according to value’. Ad valorem is a tax or a duty levied by the state, local or municipal government on the assessed value of the asset or property and not on the volume of the asset or property of the …

Read More »