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3 Cost Accounting PDF
3 Cost Accounting PDF
❑Basics of Accounting
❑Financial Ratios
❑Materials Costs
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•Accounting is the art of recording business transactions
in a systematic manner.
of capital.
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•Accounts of all expenses, income, assets, liabilities, and
future evaluations.
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•Financial statements are both the basis for and the result
correctly.
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•Engineers involved in feasibility studies and detailed
allocation.
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•Balance sheets and income statements are summarizing
ledgers.
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•A journal can be a book, group of vouchers, or some
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•When recording business transactions, a debit entry
Assets= Equities
Total Credits
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Balance Sheets can be made anytime and show the current financial position of a company
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•Assets are on left side and liabilities on right hand side.
and Goodwill).
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•Stockholders’ equity and Liabilities are written on Right
hand side.
assets.
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•Liquidity Ratios [Current Ratio, Cash Ratio, Acid Test] can
be easily calculated
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Prepared on yearly/ biannually/ quarterly /monthly base
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•A balance sheet applies only at one specific time, and
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•Income-sheet accounts of all income and expense items,
ratios
depreciation
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•FATR is of less value than ATR when applied to companies that use relatively large
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•Accumulation, Inventory, and Cost-of-Sales Accounts
•Materials Costs
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1- The current-average method. The average price of all
per Pound.
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2- The first-in-first-out (or fifo) method. This method
pound for the first 5000 lb and $0.0390 for the remaining
1000 lb.
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3- The last-in first-out (or lifo) method. With this method,
the most recent prices are always used. The price for the
pound.