Definition: A Promissory Note, as the name itself gives a brief description, is a legal financial instrument issued by one party, promising to pay the debt owed to another party. It is a written negotiable instrument duly signed by the maker that contains an unconditional promise to pay the stated sum of money to a particular person or to any other person, on the order of … [Read more...] about Promissory Note
Cost Accounting
Definition: Cost Accounting implies a branch of accounting which deals with recording, classifying, accumulation, allocation and control of the cost of production. It captures the incomes and expenditures and prepares statements and reports for the respective period, so as to determine and control costs. It aims at keeping a record of the cost of production, by ascertaining … [Read more...] about Cost Accounting
Financial Management
Definition: As the name itself gives a brief description, financial management is the management of firm's financial resources, in relation to its acquisition and application. It is that branch of management, which deals with the procuring, financing and managing business assets, to achieve the objectives of the concern. Aspects of Financial Management The two aspects that … [Read more...] about Financial Management
Standard Costing
Definition: Standard Costing is a costing method, that is used to compare the standard costs and revenues with the actual results, in order to arrive at the variances along with its causes, to inform the management about the deviations and take corrective measures, for its improvement. The term 'standard cost' can be defined as the expected cost per unit of the products … [Read more...] about Standard Costing
Process Costing
Definition: Process Costing is defined as a branch of operation costing, that determines the cost of a product at each stage, i.e. process of production. It is an accounting method which is adopted by the factories or industries where the standardized identical product is produced, as well as it passes through multiple processes for being transformed into the final … [Read more...] about Process Costing
Budget
Definition: In the general sense, the budget is described as a precise statement, representing a financial estimate of income and expenditure of the government for a certain period. In cost accounting, budget means a quantitative statement, prepared before a particular period to serve as an estimate of future receipts and disbursements. The integrated process of preparing, … [Read more...] about Budget
Departmentalization
Definition: Departmentalization or Departmentation is a process wherein jobs/teams are combined together into functional units called as departments on the basis of their area of specialization, to achieve the goals of the organisation. So, in this way, the entire organization is divided into parts, i.e. departments which comprise of a group of employees, who carry out … [Read more...] about Departmentalization
Amalgamation
Definition: Amalgamation, as the name itself suggest, is a form of external reconstruction, in which there is a combination of two or more than two companies, either by merger or by takeover. It indicates two activities: Two or more entities fuse to form a new company, wherein the individual identity of the two entities vanishes and the company so formed comes into being. … [Read more...] about Amalgamation
Bill of Exchange
Definition: Bill of Exchange, can be understood as a written negotiable instrument, that carries an unconditional order to pay a specified sum of money to a designated person or the holder of the instrument, as directed in the instrument by the maker. The bill of exchange is either payable on demand, or after a specified term. In a business transaction, when the goods are … [Read more...] about Bill of Exchange
Golden Rules of Accounting
Definition: In Double entry system, due to its dual aspect, every transaction affects two accounts, one of which is debited and other is credited. To record the transactions in the journal, in a sequential way, certain rules are required, and these rules are called as Golden Rules of Accounting. Types of Account To understand the golden rules of accounting, one should know … [Read more...] about Golden Rules of Accounting