For managerial accounting accounting purpose, it is very useful to recast the normal income statement into a contribution margin format. So what is the difference between the normal gross margin format and the contribution margin format. The difference is self-explanatory -refer to the formula: Gross margin = Revenues – Cost of Sales whereas: Contribution margin [...]
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As accounting has it primary objective of providing information useful to decision makers, the understanding of the role play by Accounting Information Systems is critical to many accountants. It’s important to understand how the accounting systems work: how to collect data about an organization’s activities and transactions; how to transform that data into information that [...]
For non financial manager, it is important to know what your accounting personnel meant by an Accounting Cycle. Append below is a flowchart from my other blog for a clearer understanding of the Accounting Cycle: An Accounting Cycle: Is a series of accounting process which begins with the identification of an economic activity or transaction, [...]
For non financial managers who are pursuing MBA accounting who have just read earlier article on the fundamental accounting concepts, below is a worked out example of the dual aspect concept or what usually your accounting colleagues call the double entry system or the debit and credit system DUAL ASPECT CONCEPT This dual aspect concept [...]
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Accounting is like a language where non financial managers need to know some of their jargon particularly on understanding of the fundamental accountings concepts. Furthermore, the need to understand the reasons for reading the financial statement, the characteristics and the limitations of such financial statements. Below are some of the relevant articles:- Accounting Concepts/Convention/Principles Commonly Used Accounting [...]
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[GO TO MAIN PAGE FOR ALL TOPICS COVERED UNDER ACCOUNTING CONCEPTS] For those unfamiliar, we might be surprised that some users like the company’s suppliers too can be a user of the financial statement. Append below is a listing of the user group who will consistently use the financial statements for their own needs:
[GO TO MAIN PAGE FOR ALL TOPICS COVERED UNDER ACCOUNTING CONCEPTS] Managers who follow the figures in the financial statements very closely might need to be a bit cautious as whatever figures revealed in the financial statement might not really be gospel truth. Like all others, there indeed are some limitations of financial statement:
[GO TO MAIN PAGE FOR ALL ARTICLES ON ACCOUNTING CONCEPTS] Like the public investors, as managers who are also the users of the financial statements which are in the annual reports, we should also understand why the public or investors read the company’s financial statement?
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[GO TO MAIN PAGE FOR ALL ARTICLES ON ACCOUNTING CONCEPTS] As managers, whether with or without financial accounting knowledge, it is indeed essential to at least understand what constitute some good main qualitative characteristics of financial statements. Append below are a table of such characteristics:
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[GO TO MAIN PAGE FOR ALL TOPICS ON ACCOUNTING CONCEPT] The basic step to fortify your understand of accounting is to be familiarize with some of the commonly phrase accounting terms which are appended below ( linked to my other blog). We definitely don’t need to be an Accountant as reiterated, however the end objective [...]
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