Assumptions of Break-even analysis?

The break-even analysis is based on certain assumptions. They are:

(i) All costs can be separated into fixed and variable components,
(ii) Fixed costs will remain constant at all volumes of output,
(iii) Variable costs is in direct proportion to volume of output
(iv) Selling price will remain constant,
(v) Product-mix will remain unchanged,
(vi) The number of units of sales will coincide with the units produced so that there is no opening or closing
stock,
(vii) Productivity per worker will remain unchanged,
(viii) There will be no change in the general price level.

Variable cost vs Fixed Cost.

“Discount offered on a product” - What type of account is it?

There are 3 Types of Discount;
1. Trade discount: The amount which is deducted from the price list of the goods sold is called a trade
discount. The seller fixes up invoice price or sale price deducting trade discount from the listed price.
The trade discount is not accounted for.
2. Quantity discount: The discount allowed by the seller to the buyer on the amount crossing minimum
target sales is called quantity discount. If the sale amount crosses the minimum target sale, the seller
grants an excess discount to the buyer.This excess amount of discount is called a quantity discount.
3. Cash discount: The seller grants some amount as a discount to the debtor for the realization of the
outstanding sales within the term period of sales. This is called a cash discount.The discount is a
nominal account.

Laissez faire leadership

● ‘Let it be’ – the leadership responsibilities are shared by all
● Can be very useful in businesses where creative ideas are important
● Can be highly motivational, as people have control over their working life
● Can make coordination and decision making time-consuming and lacking in overall direction
● Relies on good team work
● Relies on good interpersonal relations
Draw the accounting cycle.

The accounting cycle is the holistic process of recording and processing all financial transactions of a
company, from when the transaction occurs, to its representation on the financial statements, to closing the
accounts.
1. Transactions: Financial transactions start the process.
2. Journal Entries: record these entries in the company’s journal in chronological order.
3. Posting to the GL: The journal entries are then posted to the general ledger where a summary of all
transactions to individual accounts can be seen.
4. Trial Balance: At the end of the accounting period a total balance is calculated for the accounts.
5. Worksheet: When the debits and credits on the trial balance don’t match, the bookkeeper must look
for errors and make corrective adjustments that are tracked on a worksheet.
6. Adjusting Entries: At the end of the company’s accounting period, adjusting entries must be posted to
accounts for accruals and deferrals.
7. Financial Statements: The balance sheet, income statement, and cash flow statement can be prepared
using the correct balances.
8. Closing: The revenue and expense accounts are closed and zeroed out for the next accounting cycle.

Depreciation and Causes of Depreciation

Depreciation can be easily defined as a reduction in the carrying amount of a fixed asset. Depreciation is
equated with a value of consumption of the asset for a specific period. Over the span of an asset, over which
it is considered usable, depreciation brings down the value of the asset to a salvage value.
Causes of Depreciation
● Wear and Tear
● Lapse of Time
● Obsolescence
● Exhaustion
● Non-Use
● Maintenance
● Market Trend
 Leader vs Manager

Functions of Management
● Henri Fayol noted that managerial activities consists of:
1. Forecasting and Planning.
➢ Forecasting, Formulation of Objectives, Policies, Programs, Schedules, Procedures & Budgets
2. Organizing
➢ Identification & grouping of activities, Delegation of responsibilities & authority, Establishment of shipping
3. Staffing
➢ Selection, Communication, participation, Appraisal, Counseling, Training, Compensation, Dismissal
4. Directing or Actuating
➢ Motivation, Communication, Leadership, Supervision
5. Controlling
➢ Standard laying, Measurement of work, Interpretation, Corrective action
6. Innovations and Representations
➢ Creativity, Coordination, Cooperation.
● Luther Gulik as “POSDCORB”, P-Planning, OOrganizing, S-Staffing, D-Directing, Co-Coordinating,
R-Reporting, B-Budgeting.