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The direct labor price variance sometimes referred to as the direct labour rate variance, is one of the main variances used in standard costing and represents the difference between the standard labor rate and the actual labor rate, multiplied by the number of units of labor used.
Accounts receivable are amounts which are owed to a business by its customers, they are sometimes referred to as trade debtors. Accounts receivable are recorded in the balance sheet of the business under the heading current assets, that means they are convertible into cash within a year.
This tutorial deals with standard costing and variance analysis which is used by management to the monitor business performance against predetermined standard costs using variance reports. Standard costing is also a useful tool for valuing inventory and providing estimated selling prices to customers.
This tutorial deals with consignment accounting and accounting for consignment sales. A consignment is a term used to refer to an arrangement whereby goods are sent by their owner (consignor) to an agent (consignee) who holds and sells the goods on behalf of the owner for a commission. It is important to understand that the agent never owns the goods.
This tutorial deals with the joint venture accounting when no legal entity is formed and each business only maintains bookkeeping records for its own transactions. This type of joint venture accounting treatment, where there is no legal entity, is referred to as a joint operation or jointly controlled operation.
Break even analysis can be used by a business to calculate the revenue or number of unit sales needed in order to produce a net income of zero. At this point, the gross margin (sometimes referred to as contribution margin) is equal to the operating expenses of the business.
A variation of break even analysis can be used to work out the revenue or sales units needed to reach a target profit level.
A nonprofit organization (NPO) is an organization that has no owners and which uses its net income to help it achieve the aims for which it was established. All surplus net income has to be kept within the organization, and not paid out as dividends or distributions.
There are three main not for profit financial statements, the statement of financial position, the statement of activities, and the statement of cash flows.
Depreciation is calculated based on the chosen method of depreciation, and on estimates of an assets useful life and salvage value.
When there is an indication that a change in depreciation method, salvage value, or estimated useful life is necessary, then the business should revise its depreciation estimates accordingly.