Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Accountants prepare income statements typically in terms of historical costs, in terms of the purchase price, rather than in terms of the current price. The reasons given for this practice are:
1. Historical costs produce more accurate measurement of the income.
2. Historical costs are less debatable and more objective than the calculated present replacement value, and
3. Accountants' job is to record historical costs whether or not they may have relevance for further decision making. The accountants approach ignores certain important changes in earning and losses of the firms, (1) the value of assets presented in the books of accounts is understand in times of inflation and overstated at the time of the deflection, depreciation is understand during deflection. Historical cost recording does not reflect such changes in values of assets and profits. This problem assumes a critical importance in case of the inventories and stock. The problem is how to evaluate the inventory and the goods in the pipeline. There are three common techniques of inventory valuation: (1) first in first out (FIFO), (2) last in first out (LIFO), and (3) weighted average cost (WAC). Under FIFO method, material is taken out of the stock for further processing in the order in which they are acquired. The stocks, therefore appear in the firms balance sheet at their actual cost price. This method is suitable when price has a secular trend. However, this system exaggerates profits at the time of rising prices. The LIFO method assumes that stocks purchased most recently become the costs of the raw material in the current production. If inventory levels are stable the cost of the raw materials used at any point in the calculation of profits is always close to market or replacement value. But when inventory levels fluctuate this method loses its advantages. The WAC method takes the weighted average of the costs of materials purchased at different prices and different points of time to evaluate the inventory. All these methods have their own weaknesses and do not reflect the true profit of business. So the problem of evaluating inventories so as to yield a true profit figure remains there.
Fiscal Policy The government's use of spending and taxation to affect the stage of macroeconomic moment. In theory, weak economic activity needs simulative fiscal policy, which
in the banking systems, when clearing checks, the difference between the Federal Reserve''s credits and debits is the
Describe the characteristics of Monopolistic Competition
QUESTION (a) One of the differences between a monopolistically competitive industry and a perfectly competitive one is that in the former, there is product differentiation. (i)
How does colonial background influence the development process? Colonial experience influences: • Language for example the official language of US is English. • Legal and
i want information about the theory of supply
What are the internal constraints on government action less developed countries? Internal Constraints on Government Action LDCs: • Have restricted domestic resources to ac
What is Frugal Economy
how does occupation affect the size of labour force
QUESTION a) Differentiate between returns to factor and returns to scale. b) In the long-run the Average Cost Curve is u-shaped. Discuss c) Whenever a firm is making loss
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd