Questions and Answers
How does rationalisation impact the size of a firm?
It can increase or decrease the size of the firm
Why is rationalisation valued by corporate entities?
It helps reduce expenses and boost revenues
What is rationalisation in a business context?
A process of restructuring to improve operational effectiveness
What does a rationalisation process aim to achieve?
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What is the primary purpose of rationalisation in a corporation?
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What type of business transactions are taken into account in Financial Accounting?
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What nature of transactions are captured and recorded under the system of financial accounting?
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What type of transactions are out of the preview of financial accounting?
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Study Notes
Rationalisation in a Business Context
- Rationalisation is the process of reorganising a company's operations to increase efficiency and reduce costs.
- It aims to achieve a more streamlined and efficient business, often resulting in a reduction in the size of the firm.
- Corporate entities value rationalisation as it helps to eliminate unnecessary costs, improve productivity, and enhance competitiveness.
Financial Accounting
- Financial accounting involves the recording and reporting of business transactions that are monetary in nature.
- The system captures and records transactions that are financial, such as sales, purchases, and payments.
- Non-monetary transactions, such as executive decisions or management restructuring, are outside the scope of financial accounting.
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Description
Learn about the process of restructuring and improving operational effectiveness in a business through rationalization. Understand the strategic and structural adjustments involved in rationalization to boost sales and save costs.
