Basic Concepts of Financial Accounting for CPA Exam - Online Syllabus Topics for Financial Accounting Course

Cost Center and Cost Unit

Difference between Cost Center and Cost Unit: Cost Center – Definition, Types and Examples: Cost center includes a production or service location, function, activity or…
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Absorption Costing

Definition of Absorption Costing (Total Costing or Total Production Cost): Absorption costing or total costing or total production cost means all costs that are involve…
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Cash Budget Format and Example

Cash Budget Format and its Explanation with Solved Example: Cash Budget For the period ending……….. Solved Example: The directors of Kingston & Co. were concerned…
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Introduction to Cash Budget

Definition and Explanation: Of all the components of the master budget, none is more important than the cash budget. Liquidity is of paramount importance to…
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Abandonment of a Product Line

Decision for Abandonment (Close) of a Product or Department – Explanation with Solved Examples: When a product line or department of business is unable to…
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Make or Buy Decision

Explanation with Solved Example: Sometimes businesses encounter a situation where they have to decide between making a particular product themselves or to buy it from…
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Profit Volume Chart

Definition and Explanation: “Profit volume chart is a straightforward relationship of profits to sales level”. Break even chart does not directly show the amount of profit….
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Margin of Safety

Definition – Margin of Safety (MOS): Margin of safety (MOS) is defined as; “it is the difference between the actual or budgeted sales as the case…
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Break Even Chart

Explanation of the Concept of Break Even Analysis with Diagram: Break even chart may be prepared in different forms and styles; but they all in…
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Target Profits

Definition, Explanation and Formula: Every business make plan to earn a specific amount of profit for a specific fiscal year, this profit is known as…
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Break Even Point

Definition: Break even point shows the output level (units produced or services rendered) at which total revenues just equals to total costs or point at…
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Break Even Analysis

Introduction to Break Even Analysis: Definition, Use and Components of Break-even Analysis: Break-even indicates a situation where; there is no profit or loss for a…
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Marginal Costing

Definition and Explanation of Marginal Costing (Direct or Variable Costing): Marginal costing is simply a technique to analyze cost information for decision making process. Different terms…
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Marginal Cost

Definition and Explanation: Marginal means Extra. Marginal cost is defined by CIMA as “the cost of one unit of a product or service which would…
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Limitations of Ratio Analysis

Financial ratio analysis faces some limitations, which are given below: (1) Ratio analysis requires a proper comparison i.e., one ratio its own is of no…
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Liquid Ratio

Liquid Ratio or Acid Test Ratio or Quick Ratio – Definition, Explanation and Use: Current ratio (which takes all current assets into account) may give…
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Current Ratio

Current Ratio or Working Capital Ratio – Definition, Explanation and Use: The current or working capital ratio is determined by dividing the total current assets…
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Liquidity Ratios

Definition, Explanation and Use: Liquidity ratios determine the ability of a business to finance, its day to day operations, or in other words, to pay…
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Non Current Asset Turnover

Definition, Explanation and Use: Non-current asset turnover ratio determines the efficiency with which a business uses its non-current assets to generate revenue for the business….
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Trade Payable Payment Period

Definition, Explanation and Use: The trade payables’ payment period ratio represents the time lag between a credit purchase and making payment to the supplier. As…
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Trade Receivable Collection Period

Definition, Explanation and Use: The trade receivables’ collection period ratio represents the time lag between a credit sale and receiving payment from the customer. As…
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Inventory Turnover Ratio

Definition, Explanation and Use: Inventory turnover ratio is often linked with the measurement of profitability. Though this ratio does not in itself measure profitability, but…
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Activity Ratios

Activity Ratios or Turnover Ratios – Definition,  Explanation and Use: The activity ratios or turnover ratios (which are sometimes referred to as efficiency ratios or…
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Return on Equity

Return on Equity (ROE) Ratio – Definition, Explanation and Use: Return on equity ratio (ROE) is one of the most widely used financial ratio. This…
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Return on Capital Employed

Definition, Explanation and Use of ROCE Ratio: Return on capital employed (ROCE) ratio is used to determine the returns that a company is generating from…
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Return on Assets

Definition, Explanation and Use of Return on Asset Ratio: The return on assets percentage determines the performance of business’ assets in terms of profitability. This…
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Operating Expenses Ratio

Definition and Explanation: Operating expenses ratio shows operating expenses as a percentage of sales. Operating expenses relate to the operations of a business entity. In other…
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Explains financial and managerial accounting. Exercises, problems, calculators and more.

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