Cost Accounting and PPE Analysis

Transactions that involve the direct exchange of cash for goods or services.

Transactions where payment is made or received at a later date, often through credit cards or invoices.

The process of recording financial transactions in a systematic way, using specific rules and entries.

The branch of accounting aimed at understanding and controlling the costs associated with producing goods or services.

Expenses incurred in the production process, such as raw materials, labor, and utilities.

Costs that remain constant regardless of production levels, like rent and equipment depreciation.

The process of analyzing the costs associated with each phase of production to determine overall effectiveness.

The comparison of actual costs to planned or expected outcomes, revealing areas for improvement.

Expenditure that provides benefits for a prolonged period, generally exceeding a year. It is usually considered an investment in the business.

Expenses incurred to generate revenue within the current accounting period. These expenses do not increase the value or lifespan of assets.

Expenditure incurred to acquire or improve fixed assets that are used for the long-term benefit of a business. Examples include purchasing machinery, building extensions, or renovating a building.

Payments for things like employee salaries, rent, utilities, and office supplies. These expenses are directly related to the day-to-day operations of the business.

The process of allocating the cost of a long-term asset over its useful life. This is done to reflect the gradual decline in the asset's value.

The cost of purchasing a second-hand piece of machinery and then getting it ready for use. This cost is typically considered a capital expenditure.

Expenses incurred for maintenance and repairs that do not extend the asset's useful life or increase its value. These are classified as revenue expenditures.

Expenses that include things like advertising, travel, and entertainment. These expenses are generally considered revenue expenditures.

The total value of a company's property, plant, and equipment (PPE) as recorded in its accounting records.

The difference between the selling price of an asset and its net book value. A positive gain indicates a sale price higher than the recorded value.

The estimated amount an asset will be worth at the end of its useful life. This is subtracted from the asset's cost to determine its depreciable value.

The process of allocating the cost of a long-term asset (PPE) over its estimated useful life. This reflects the gradual decline in the asset's value over time.

The period of time over which an asset is expected to be productive and generate revenue for a company.

A set of guidelines and standards for financial reporting in India, designed to promote consistency, transparency, and comparability with global practices. Ind AS is largely aligned with IFRS, aiming to improve the quality and reliability of financial statements.

The goal of Ind AS is to ensure that financial reporting is accurate, dependable, and easily comparable across various organizations. It aims to enhance the relevance and clarity of financial statements for stakeholders.

The Institute of Chartered Accountants of India (ICAI) created Ind AS to standardize accounting practices in India and align them with international standards. It focuses on a wide range of accounting concepts, including revenue recognition, leases, and the presentation of financial instruments.

The Financial Accounting Standards Board (FASB) developed this comprehensive set of rules and regulations for financial reporting in the United States. It applies to both public and private businesses, ensuring consistency and transparency.

US GAAP provides a framework for clear and standardized financial reporting, making financial statements more reliable, comparable, and relevant. It covers a range of accounting topics, including fair value estimation, mergers and acquisitions, and revenue recognition.

A set of accounting rules created by the International Accounting Standards Board (IASB) to standardize financial reporting globally.

A collection of accounting guidelines used primarily in the United States, often by companies listed on US stock exchanges.

A set of accounting standards adopted in India, largely aligned with IFRS, catering to specific Indian needs.

Focusing on the essence of a transaction rather than specific rules, allowing for flexibility in application.

Emphasizing specific rules and regulations for each type of transaction, offering clear-cut instructions.

Promotes transparency and uniformity in financial reporting across nations, enabling easier cross-border comparisons.

US GAAP, with its emphasis on detailed rules, can be considered rule-based. IFRS, focusing on underlying principles, is considered principles-based.

Ind AS aims to harmonize with global accounting practices while addressing specific needs of the Indian market.

Revenue expenditure that provides benefits in future accounting periods. Examples include heavy advertising campaigns for new products.

The cost of acquiring fixed assets, including the purchase price and any necessary transportation costs.

The process of allocating the cost of a fixed asset over its useful life. This accounting method spreads the cost of the asset over the years it is used.

The point at which a business starts to generate a profit after covering its initial expenses.

The time it takes for a business to recover its initial investment and start generating profit.

Analysis of the financial viability of a potential project.