Definition, Significance, and Applications of Standard Costing

Definition of Standard Costing Standard costing is an accounting methodology used to estimate the expenses associated with a production process, as manufacturers cannot predict actual costs in advance. This approach enables manufacturers to plan for future expenditures related to direct materials, direct labor, and overhead, facilitating effective cost management. The Chartered Institute of Management Accountants…

Role of Cash and Marketable Securities in Working Capital Management

The primary objective of working capital management is to ensure the efficient management of current assets, including cash, raw materials, work-in-process, finished goods, and receivables. Achieving this involves determining the optimal investment level in each component to support smooth business operations and financial health. The Role of Cash in Working Capital Management Cash is the…

Understanding Classification of Ratios

Ratios are essential tools for evaluating a business organization’s earning capacity, financial health, and operational efficiency. They express the relationship between two related financial items. When calculated using accounting information, they are referred to as Accounting Ratios. Ratios can be classified in two ways: A) Traditional ClassificationB) Functional Classification A) Traditional Classification This classification is…