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What role does depreciation play in break-even analysis based on accounting flows?
based on accounting flows, depreciation is regarded as fixed cost; based on cash flows, depreciation is not included in fixed cost.
so, break-even point by accounting flows is larger than cash break-even point.
in the long term, depreciation should be counted. so, break-even by accounting flows is longer term in nature.
What else can I help you with?
What is MT and MSL in accounting depreciation method?
MT and MSL are two depreciation methods used in accounting. They are based on the linear method of depreciation.
What is the meaning of trend analysis in management accounting?
Trent analysis in management is use to predict the future outcome based upon the past result of the company.
Does cvp differs from break even analysis?
though CVP and break-even analysis are both based on the same assumptions their objectives are not the same. In a sense that, the underlying objective of breakeven analysis is determine the output level that will not result in neither profit nor loss (breakeven point), where total sales will be equal to total cost ( total sales = (total variable + total fixed cost)). On the other hand, Cvp analysis seeks to determine what will be the effect on sales, cost and profit when there is a change in activity level (output).
Differentiate the Financial Accounting from Cost Accounting and Management Accounting?
to know the financial position(i.e. profit or loss) and cost accounting to know the cost price of product of business and management accounting is to take the decision based on financial and cost accounting to prepare bugdget, analysis etc
Historical cost based depreciation tends to do what when there is inflation?
HIstorical cost based depreciation tends to increase profits when there is inflation
Which method of depreciation would you use if you were to receive a bonus which is based on net profit?
which method of depreciation to use when bonus is received that is based on net profit
Which type of depreciation is not based on passage of time?
External depreciation is not based on the passage of time. A property depreciates due to external forces that can not be controlled by the owner.
What is the difference between tax depreciation and book depreciation?
Tax depreciation is the one done based on Tax rules, for example certain asset purchased from sep 2010 to nov 2010 is eligible for 100% depreciation.] Book depreciation is the one based on corporate law . Vehicles depreciated for seven years. The net book value is the one represented in financial statements. Tax man will adjust profits based on tax depreciation rules and revise tax accordingly.
What is non recoverable depreciation?
It is the depreciation amount that is not covered by the policy. Polices that are based on ACV (Actual Value), rather than RC (Replacement Cost) do not cover value lost due to depreciation.
Differentiate between accounting and accounting convention?
Accounting means the systematic recording,reporting and analysis of financial transactions of a business.While accounting convention means legally-binding practice; rather, it is a generally-accepted convention based on customs, and is designed to help accountants overcome practical problems that arise out of the preparation of financial statements.
Why are time-based depreciation methods used more frequently than activity based methods?
Time-based depreciation methods are more frequently used than activity-based methods because they offer simplicity and consistency in accounting. These methods, such as straight-line or declining balance, allow for predictable expense recognition over an asset's useful life, making financial reporting easier for businesses. Additionally, they align well with the matching principle in accounting, ensuring that expenses are matched with revenues generated during the same period. In contrast, activity-based methods can be more complex and difficult to implement, as they require detailed tracking of usage or activity levels.
Sum of the year depreciation?
In sum of year digit depreciation method depreciation is charged based on total number of years fixed assets is usable in business instead of using any percentage or fixed amount of depreciation.
