2.0 Content
2.1 Define Three (3) Accounting Concepts
2.1.1 Define Historical Cost
Historical cost is the initial or original amount/cost charged for an asset, as recorded in an entity's financial statements. (Bragg, 2010)
2.1.2 Define Matching Concept
Matching concept is an accounting concept or accounting practices that match the amount of revenues with the amount of any related expenses incurred together during the same accounting period. (Bragg, 2017)
2.1.3 Define Prudence Concept
Prudence concept is practised by recognizing the confirmed revenue transaction of an asset and the possible expenses and liabilities incurred. (Bragg, 2013)
2.2 Explain the Three Accounting Concepts are applied in practice
2.2.1 How Historical Cost concept applied in practice? Historical cost is all of the transactions or value of the item/asset are recorded in their original cost/value incurred in the past/time and the cost/value incurred when the transaction took place. By using the historical cost accounting concept, the firm calculates a more accurate and reliable value of the particular item/asset (Accounting-Simplified.com, 2017)
Example & Explanation:
The company land and building was bought for RM 1,000 million in the year 2000 and its expected market
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(AccountingTools, 2017). Until now, Nestle Malaysia has used the straight line method to measure and record the depreciation of plants and machineries. (Appendix XX) The depreciation of plants and equipment in 2015 and 2016 are recorded and measured with the straight line method. (Appendix XX) Furthermore, the costs of all assets are recorded in historical value. All these has proven that Nestle Malaysia practices the consistency concept in their financial
In order for Jim Turin & Sons, Inc to have used this method of accounting it would have had to match the cost of the merchandise with the revenue earned from the sale. Using the matching of revenue and cost the company would have had to have kept an actual inventory and maintained records of the costs associated with said inventory. Since the costs are not immediately deducted under the accrual method they are deferred to the year when the merchandise is
Based off of the data provided in the case study it would appear that under the traditional costing. Which are the cost that were incurred to produce OS-367. It appears that those cost were being allocated to GS-157 and HS-241. The cost per unit for OS-367 was $10 under the traditional costing system and the same has become $13.75 under the ABC system.
The managerial accounting system at Bridgeton, as it is presented, seems to be lacking detail necessary for efficient analysis. The sections used are sales, direct material, direct labor and overhead by account number, each divided into individual accounts and summed to find totals. There is no separation of fixed and variable costs in any of the accounts, making it difficult to analyze exactly where operations are costing money and, therefore, how they could possibly be improved. The presentation of the information groups all sales together and the different categories of costs together and does not provide for individual product analysis. The products are analyzed (categorized into classes) based on their costs, with no consideration to revenues associated with these products, and no real understanding of the overhead applied to each product. The overhead costs are applied to accounts based on labor and materials of the company as a whole, rather than using considerations associated with the individual products.
Cost-plus pricing, it the industry pricing standard, and is a method to determine a price of the product by finding the cost per unit and then including a mark-up
History. What is history? History is not just a complete story from the perspective of a man nor women. But it is a replica that tells the story of our communities, cities, countries, and the world. History by definition is the account of change over a period of time. For centuries, people have altered the environment in order to meet their needs. The effect of these changes have brought upon both positive and negative effects on the environment, societies, and regions. Some include the development of irrigation in ancient Egypt, the construction of chinampas by the Aztecs, and the mining of coal in Great Britain. Throughout time, many of the ancient civilizations have gone through inconvenient setbacks while trying to complete their goal. Nevertheless,
Historical: Historical and cultural context surrounding the text. New Historicist: Literature and history as equals: history is a text subject to interpretation.
Sulaiman, M., Nik Ahmad, N. N. & Alwi, N. M., 2005. Is standard costing obsolete? Empirical evidence from Malaysia. Managerial Auditing Journal, 20(2), pp. 109-124.
Depending on the legal parameters, countries may be required to adhere to strict laws and regulations which can leave small room for interpretation and improvising. For tax purposes, US companies are allowed to use faster depreciation and straight line depreciation for financial statements; Starbucks chooses to use the straight line depreciation. When paying taxes, adj...
Cost Analysis is an aspect of estimation that applies both formally and informally to the aspect of costing. Cost analysis is a formal discipline used to help appraise, or assess, the case for a project or proposal, and is an informal approach to making decisions of any kind. It is ultimately an economic tool to aid in logical decision making. In the case of construction cost estimates, the next step would be the cost analysis process. The sole purpose is to determine if the completed estimates are reasonable. Usually comparisons are made with similar projects done in the past to see if the number are within the same vicinity of each other. Though the estimates may differ from case to case, if the cost estimate is significantly higher or lower than the normal ra...
Accounting policies must be applied consistently to similar transactions and events, for example, entities are allowed to carry some items of PPE at historical cost and some at fair value, but similar items should be treated consistently in the same way within any one of class PPE.
History is a record. History shows us what we have done in the past, and what could possibly lie ahead in our future. Everything has a history, and that is because history can be about anything. It can be about a person, or an entire group of people. It can be about a country or a gov...
History is a series of important past events that connect with something. History is what makes people make better decisions. There are many definitions of history and everyone has their own.
I define history as important events that have happened in the past, and the ones that are presently happening. At some time or another everything will be considered history. History tells a story, whether it’s written, painted, carved, or sung; a collection of events that someone explains to you that is usually important.
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000
It states that all expenses must be matched in the same accounting period as the revenues they helped to earn. Matching principle is a combination of accrual accounting and the revenue recognition principle.