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In addition to the absolute pass-through that uses incremental values (i.e., $2 cost shock causing $1 increase in price yields a 50% pass-through rate), some researchers use pass-through elasticity, where the ratio is calculated based on percentage change of price and cost (for example, with elasticity of 0.5, a 2% increase in cost yields a 1% increase in price).
The accounting method often gives a more intuitive account of the amortized cost of an operation than either aggregate analysis or the potential method. Note, however, that this does not guarantee such analysis will be immediately obvious; often, choosing the correct parameters for the accounting method requires as much knowledge of the problem ...
The percentage-of-completion method says that if the contract clearly specifies the price and payment options with transfer of ownership, the buyer is expected to pay the whole amount and the seller is expected to complete the project, then revenues, costs, and gross profit can be recognized each period based upon the progress of construction ...
In accounting, a basis of accounting is a method used to define, recognise, and report financial transactions. [1] The two primary bases of accounting are the cash basis of accounting, or cash accounting, method and the accrual accounting method. A third method, the modified cash basis, combines elements of both accrual and cash accounting.
Standard Costing is a technique of Cost Accounting to compare the actual costs with standard costs (that are pre-defined) with the help of Variance Analysis. It is used to understand the variations of product costs in manufacturing. [6] Standard costing allocates fixed costs incurred in an accounting period to the goods produced during that period.
An example is an office coffee fund: Expense "Coffee" (Dr) may be immediately followed by "Coffee – employee contributions" (Cr). [35] Such an account is used for clarity rather than being a necessary part of GAAP ( generally accepted accounting principles ).
The accounting equation is a statement of equality between the debits and the credits. The rules of debit and credit depend on the nature of an account. For the purpose of the accounting equation approach, all the accounts are classified into the following five types: assets, capital, liabilities, revenues/incomes, or expenses/losses.
At the beginning of the accounting period the stock is canceled using the opposite booking: expense account = inventory asset account During the accounting period any input is booked directly to the expense account. For example, if we buy materials the bookings are: material account = supplier account material expense account = material account