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Agamata Relevant Costing Chap 9 Short Term Decision PDF
Agamata Relevant Costing Chap 9 Short Term Decision PDF
Agamata Relevant Costing Chap 9 Short Term Decision PDF
Income
o Direct effect with equity
Expenses
o Indirect effect with equity
Probable
o More than 50% chance
o Versus possible- 50-50 chance
o Versus remote- very little chance of probability that there will be economic benefit for
company
Historical Cost
o Original amount of accounting item
Current Cost/ Fair Value/ Market Value
o Value of accounting item at present
o Prevailing market price
Realizable Value
o Value of accounting item after deducting the expenses used for an asset for it to be sold
or a liability to be paid
Present Value
o Amount of asset or liability in the future
2 Concepts of Capital
o Financial Capital
Capital is synonymous to the net assets of a company
No required measurement basis
o Physical Capital
Synonymous to a company’s operating capacity
Required measurement basis: Fair value
Machinery, buildings
Capital Maintenance
o Way to determine how much should be considered as profit of company
o 2 concepts:
Financial Capital Maintenance
Physical Capital Maintenance