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Banking & Finance Articles
Page 17 of 102
What is contract costing?
Contract costing is one of the methods of job costing and it is also called terminal costing. In this, each contract is given a number and the records are maintained separately. This method is generally used by builders, construction firms, contractors etc. The main objective of this method is to identify cost and profit of each unit separately.Chartered institute of management accountants (CIMA) defines contract costing as “That form of specific order costing, which applies where the work is undertaken as per the special requirements of customers and each order is of long term duration”.Chartered institute of management accountants (CIMA) ...
Read MoreWhat is the job costing procedure?
The job costing procedure consists of the following aspects −Direct materials cost is calculated with the help of requisition form.Employee wages are also calculated by the payroll department with the help of tickets issued.Overhead charges are also considered.Manufacturing overheads are as follows −Direct expensesDirect labourMaterial expensesManufacturing overheads of each department.Job costing accounting procedures includes the following −InquiryOrder placing (customer studies the rates, material, quality, time to complete the order etc.)EstimationAccountants do the cost of a job by keeping in view customer requirements and choices.Order receivingCustomer places the order, if the customer is satisfied with job costs.Production orderIt is an official ...
Read MoreWhat is acquisition accounting?
In merger and acquisition, to acquire the records of the events under acquisition method consists of the following steps −Measure of tangible assets and liabilitiesAcquirer measures tangible assets and liabilities at market fair value on acquisition date (date at which he gains control). Some assets like lease, insurance contracts etc. are measured on inception date. Third party firms will do the valuation or fair market analysis.Measure of intangible assets and liabilitiesIt is a more difficult task than measuring tangible assets and liabilities because acquirers don’t have any record of most of the items in the balance sheet. If they were ...
Read MoreWhat is the differences between corporation and company?
A company is a business organization which is associated with persons and set up with an aim of undertaking a business. It is governed by Companies Act 2103. Whereas a corporation is a corporate body registered outside or within a nation.In simple words a company is suitable for small entities or businesses whereas a corporate is suitable for bigger entities or businesses.CorporationA corporation is a body which is incorporated inside or outside the country but excludes corporation sole or any corporation which is formed by official gazette notification by the central government.Corporation is defined in Indian companies Act 2013, section ...
Read MoreWhat is the differences between businessman and entrepreneur?
We can say a businessman walks in a defined path and an entrepreneur makes his own path and a businessman can follow the path defined by an entrepreneur. In general many people think that both businessman and entrepreneur have similar or same meaning but they differ in their own way.BusinessmanA businessman is a person who carries out the activities related to industrial and commercial purposes. He runs the existing business and can set up new entrants for existing business in the market. Generally businessmen go for ideas which generally make profit and huge demand in the market.Businessmen face tough competition ...
Read MoreWhat is the difference between reorganization and restructuring?
In simple words, the word restructuring means any changes in a company. Generally the word restructuring in the corporate world is used in economic downturns. One should have a good understanding about the restructuring process before going for it.ReorganizationIt is a clause in company charter which provides guides to merger and acquisition, change in ownership at corporate level, change in assets. Generally, reorganization includes mergers, amalgamations, divestitures, corporate buyouts etc.Usually, the companies go for reorganization to improve their efficiency, to increase their profits, reduce or eliminate financial troubles. Reorganization includes debt payments, restructuring company’s capital structure etc.Some of the reasons ...
Read MoreWhat is equity restructuring in financial restructuring?
Financial restructuring is a process of reorganizing companies’ financial structure. Companies’ financial structure consists of both debt and equity capitals. Reorganizing financial structure can be from the asset side or liability side of the balance sheet.Equity restructuringIn this restructuring, equity capital is reorganized by reshuffling shareholders’ capitals and reserves in the balance sheet. It is a complex process, as it involves law.MethodsSome of the methods of equity restructuring are as follows −Repurchasing shares from shareholders to reduce liability to shareholders and reduction in capital.Waiving off dues of shareholders.Share capital consolidation.Writing down share capital in appropriate accounting entries.ReasonsThe reasons of equity ...
Read MoreWhat is debt restructuring in financial restructuring?
Financial restructuring is a process of reorganizing companies’ financial structure. Companies’ financial structure consists of both debt and equity capitals. Reorganizing financial structure can be from the asset side or liability side of the balance sheet.Debt restructuringIn this process, the debt capital of the company is reorganized by reorganising the items in the balance sheet. It is used as a company financial tool rather than equity restructuring because, financial manager looks to minimize the cost of capital by improving efficiency.Ways of debt restructuring are as follows −Change in debt part by using the market opportunities by low cost borrowings.Increase in ...
Read MoreWhat is acquisition financing?
To fund a merger and acquisition, the source of capital is required. To attain those funds is a complex thing because; it requires a lot of variations and combinations. Proper planning is required to get the capital for merger and acquisition. With various alternatives available, a proper mix is selected to get the low cost of capital.TypesThe types of acquisition financing are as follows −Stock swap − Acquirer exchange stock with the targeted company.Equity − Acquiring companies targets the companies which operate in an unstable industry with uneven cash flows.Cash − Takes place if an acquired company has smaller/low cash reserves.Debt − Banks ...
Read MoreWhat are the differences between liquidation and bankruptcy?
Let us learn the concepts of liquidation and bankruptcy before understanding their differences.LiquidationLiquidation is the process of winding up a company by selling their assets and distributing them based on solvent or insolvent business. Liquidation occurs when a company decides or reaches a point when it decides not to continue their business for various reasons.The main reason to liquidate the asset is due to insolvency, where business reaches a point that it can’t pay the due payments. The person who manages the liquidation process is called a liquidator.TypesVoluntary liquidation (members) −Business able make payments but owner makes a choice to ...
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