Accounting Journey
External Investors are interested in this type of Accounting.
Financial Accounting
•It represents the amount of revenue available to cover fixed costs and contribute to profit. It is calculated by subtracting total variable costs from total revenue
•Contribution Margin:
Liabilities =
Assets - Owners Equity
CVP stands for
Cost, Volume, Profit
________costs cannot be changed by any decision. They are not differential costs and should be ignored when making decisions.
Sunk
Inventory is an example of:
Assets, Liability or Owners Equity
Liability
Costs and expenses that remain unchanged despite changes in the level of the activity base are called
Fixed Cost
Break-even point in units X Selling Price per unit
•the total income a company generates from selling its products or services. It is calculated by multiplying the selling price per unit by the number of units sold
Revenue/Sales
Formula to Calculate: NET CASH FLOW
= Cash Inflow - Cash Outflow
This type of accounting is used for forecasting
Managerial
Historical and/or Future perspective is a trait of this type of Accounting
Managerial
Current Ratio
Current Assets / Current Liabilities
The Break Even Point in units sold will decrease if there is an increase in
Selling Price
•expenses that remain constant regardless of the level of production or sales. They include items such as rent, salaries, and insurance. Fixed costs do not change with changes in volume.
Fixed Cost
How much of my selling price is going into covering my variable cost
Variable Cost Ratio
Uncovering Potential Bottleneck is an Advantage or Disadvantage of Budgeting
Advantage
Margin of Safety
(Actual/Projected)- Break Even Point
Costs that are not affected by a SPECIFIC decision or action.
Irrelevant
understand the relationship between the costs, the volume of production or sales, and the resulting profit
Break Even Point
is a financial tool used to forecast and manage a company's cash inflows and outflows over a specific period.
Cash Budget
Degree of Operating Leverage
contribution Margin / Operating Income
Break-even Point (in Units):
Total Fixed Costs / Contribution Margin per Unit
What is my full name
Marcelle Kitengie