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Difference between imputed and implicit cost?

According to the "Bible" for accounting terminology, Barron's Dictionary of Accounting Terms, 5th Edition, they are the same. In fact, when you look up implicit cost, it refers you to imputed cost. This is the definition of imputed cost: "A cost that is implied but not reflected in the financial reports of the firm: also called implicit cost. Imputed costs consist of opportunity costs of time and capital that the manage has invested in producing the given quantity of production and the opportunity costs of making a particular choice among the alternatives being considered."


Is Direct Material a variable cost?

Yes. Direct materials is a true or proportionately variable cost because the amount used during a period will vary in direct proportion to the level of production activity. Moreover, any amounts purchased but not used can be stored and carried forward to the next period as inventory. Source: Introduction to Managerial Accounting, Brewer/Garrison/Noreen, 5th edition


What are the tools and techniques used in management accounting?

1st Tool : Analysis of Financial StatementsAnalysis of financial statements is the main tool of management accounting. In this tool, we collect four financial statement, one is profit and loss account, second is balance sheet, third is cash flow statement and fourth and last is fund flow statement. After this, we calculate more than 30 ratios and also analyze the financial statement by financial analysis, fund flow analysis and cash flow analysis. Main aims of analysis of financial statements are following :1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time.4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.2nd Tool : Budgetary ControlThis is that tool of management accounting in which we make budgets for planning and control of fund. All budgets are made with past historical accounting data and future expectations. After this budgeted data is compared with actual recorded accounting data and performance is calculated on the basis of deviation between actual and expected performance.3rd Tool : Decision AccountingThere are lots of decision which businessman has to take on the basis of tools of management accounting. One of management accounting tool is decision accounting. It is helpful to take main decision which we can explain following ways :a) To buy or to construct any fixed assetb) Do's or Don'ts to do any business activityc) To choose best alternatived) Calculation the price of product4th Tool : Throughput accountingThroughput Accounting (TA) is a dynamic, integrated, principle-based, and comprehensive management accounting's tool that provides managers with decision support information for enterprise optimization. Actually this is the extension of decision accounting. Throughput accounting is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behavior in key areas towards reaching organizational goals.5th Tool : MISWe MIS tool, management accountant provides information needed to manage organizations effectively. If we have to understand MIS, we need to understand ERP, SCM, CRM, DSS and other computer techniques for providing information with effective ways.6th Tool : Financial PolicyFinancial policy is that tool of management accounting which is needed to make good structure of capital mix We decide the proportion of share capital and loans in capital structure. Financial and operating leverages are also its sub-tools.7th Tool : Working Capital ManagementWith this tool of management accounting, we manage short term assets and short term liabilities. All cash management, debtor management and inventory management will include in working capital management. We make also working capital cycle for knowing the firm's ability to convert its resources into cash. If there is low time for conversion of raw material into sales and then cash from debtor, it is good indication.


Tools and techniques of management accounting?

1st Tool : Analysis of Financial StatementsAnalysis of financial statements is the main tool of management accounting. In this tool, we collect four financial statement, one is profit and loss account, second is balance sheet, third is cash flow statement and fourth and last is fund flow statement. After this, we calculate more than 30 ratios and also analyze the financial statement by financial analysis, fund flow analysis and cash flow analysis. Main aims of analysis of financial statements are following :1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time.4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.2nd Tool : Budgetary ControlThis is that tool of management accounting in which we make budgets for planning and control of fund. All budgets are made with past historical accounting data and future expectations. After this budgeted data is compared with actual recorded accounting data and performance is calculated on the basis of deviation between actual and expected performance.3rd Tool : Decision AccountingThere are lots of decision which businessman has to take on the basis of tools of management accounting. One of management accounting tool is decision accounting. It is helpful to take main decision which we can explain following ways :a) To buy or to construct any fixed assetb) Do's or Don'ts to do any business activityc) To choose best alternatived) Calculation the price of product4th Tool : Throughput accountingThroughput Accounting (TA) is a dynamic, integrated, principle-based, and comprehensive management accounting's tool that provides managers with decision support information for enterprise optimization. Actually this is the extension of decision accounting. Throughput accounting is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behavior in key areas towards reaching organizational goals.5th Tool : MISWe MIS tool, management accountant provides information needed to manage organizations effectively. If we have to understand MIS, we need to understand ERP, SCM, CRM, DSS and other computer techniques for providing information with effective ways.6th Tool : Financial PolicyFinancial policy is that tool of management accounting which is needed to make good structure of capital mix We decide the proportion of share capital and loans in capital structure. Financial and operating leverages are also its sub-tools.7th Tool : Working Capital ManagementWith this tool of management accounting, we manage short term assets and short term liabilities. All cash management, debtor management and inventory management will include in working capital management. We make also working capital cycle for knowing the firm's ability to convert its resources into cash. If there is low time for conversion of raw material into sales and then cash from debtor, it is good indication.


What is 5th prox 4th payment terms?

Payment due on the 5th day of the 4th month after the Invoice Date.

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