Latest Terms

Revenue Expenditure

Revenue expenditure is expenditure which is expensed out in the period in which it is incurred. It is not recorded as an asset on balance sheet because it is expected to benefit the company only in the period in which it is incurred.

Accruals

Accruals are revenues and expenses that are recognized (usually referred to as “accrued”) prior to the due date for their receipt or payment as the case may be. This practice of accruing revenues and expenses before their due dates is based on the accrual principle of accounting.

Relevant Cost of Material

Relevant cost of raw material is the material cost that needs to be considered while taking a managerial decision. Relevant cost of material may be in the form of incremental cash flows or opportunity cost.

Accounting Errors

Accounting errors are unintentional mistakes in book-keeping of transactions. Accounting errors are different from accounting fraud because in fraud an intentional mistake is made to ...

Prepayments

Prepayments (also known as deferred expense) are assets that represents cash paid in advance for goods or services to be received later.

Joint Products

Joint products are two or more outputs having significant values that are generated from a single production process that uses common inputs.

Fixed Overhead Budget Variance

Fixed overhead budget variance (also known as FOH expenditure variance) is the difference between total fixed overhead budgeted for a given accounting period and actual fixed overheads incurred during the period.

Fixed Overhead Volume Variance

Fixed overhead volume variance is the difference between fixed overhead applied to good units produced during a given accounting period and the total fixed overheads budgeted for the period.

Barriers to Entry

In economics, the term barriers to entry refers to obstacles that make it difficult for new firms to enter into a given market or industry.

Price Ceiling

Price ceiling (also known as price cap) is an upper limit imposed by government or another statutory body on the price of a product or a service. A price ceiling legally prohibit sellers from charging a price higher than the upper limit.

Flexible Budget

Flexible budget is budget typically in the form of an income statement that is adjustable to any level of activity such as units produced or units sold. It is mostly used for performance evaualtion.

Conversion Costs

Conversion costs include all direct or indirect production costs incurred on activities that convert raw material to finished goods. There are two main components of conversion costs, direct labor cost and manufacturing overhead costs.