Inventory control, Managerial Accounting

INVENTORY CONTROL

The activities of a business during a financial year combine investment projects in progress with new projects commencing and others terminate within the year. It would appear reasonable to presume, therefore, that business financial reports are presented in the cash-flow mode used to appraise investments, to facilitate comparison of actual with planned cash flows.

Some businesses do make such comparisons as part of their retrospective monitoring of investment decisions, but there is no obligation to do so. Cash-flow accounting, as it is called, has its supporters, but its introduction is frustrated by statutory and non-statutory regulations.

The Companies Act requires limited companies to produce profit and loss accounts and balance sheets in prescribed form. The Inland Revenue assumes that taxable profit has been computed by applying recognized accounting principles. The Accounting Standards Committee recommends the application of standard practices in the measurement of profit and portrayal of a company's financial position in its balance sheet. More compellingly, profit and loss reporting is compatible with the investors' objectives of stable and growing earnings.

Profit is measured conventionally by setting against the sales revenue for a period the costs expired in earning that revenue. That is, sales are matched against their relevant costs. Profit is therefore more evenly reported than it would be if all cash receipts and payments, capital and revenue, were fully reflected in the accounts of the period in which they are received and paid.

The management accountant also adopts the matching principle when preparing control information in both actual and budgeted form, and also ascertains full product cost as a starting point for setting selling prices.

This outlines the systems and methods used to control the flow of resources through production and service cost centers, for their eventual inclusion in product and period costs.

Posted Date: 12/5/2012 7:51:54 AM | Location : United States







Related Discussions:- Inventory control, Assignment Help, Ask Question on Inventory control, Get Answer, Expert's Help, Inventory control Discussions

Write discussion on Inventory control
Your posts are moderated
Related Questions
State (or select) the dependent variable (Y) Will the CER be employed to estimate price, labor hours, cost, material cost, or some other measure of cost? Will the CER be employ

Steps involved in ratio analysis The following are the four steps involved in the ratio analysis: 1) selection of relevant data from the financial statement depending upon t

PERMANENT ABANDONMENT OF PREMISES A company may find it more profitable to concentrate its output in some factories by closing down others.  The decision, in this instance, is

areas where zero based budgeting can be effectively used?

Inventory planning & control under uncertainty The basic EOQ model assumes that all the parameters (elements) in the model are certain (i.e. can be predicted precisely in advan

Explain what is meant by traditional costing system. Support with example.

Difference between Direct labour and Indirect labour Direct labour:- Labour which plays an active and direct part in the production of a particular commodity is called di

Financial Accounting Which is concerned with the provision of information to external parties outside the organization? It is the procedure of measuring, classifying, summariz

In this method, approximation of various assets here excluding cash and including liabilities are made getting into consideration the transactions in the ensuring period. Afterward

The management of Popular Stores Sdn. Bhd. are in the process of exploring the company’s investment opportunities.