Articles

Internal (secondary) costs

Internal (secondary) costs arise from inside of the entity and they may consist of a number of previously incurred external costs and intercompany turnover.   TOTAL COSTS ARE THUS USUALLY NOT THE SUM OF EXTERNAL AND INTERNAL COSTS (external costs would then be included multiple times and inte

Management (managerial) accounting

Management accounting provides information for decision-making and as such it looks mainly into the future and is prepared for internal use, mainly for managers of the entity.  Management accounting uses data from financial accounting, but also from other internal and external sources. There is

Investment appraisals

The series describes the decision-making process during selecting investment projects for implementation, with an emphasis on methods for evaluating investments. The mentioned methods comprise mainly of payback period, ROI, methods based on discounting cash flows such as Net present value, Internal

Basics of financial analysis

This series includes an introduction to financial analysis. It describes who usually performs the analysis, its objectives, source data, drawbacks and limits or useful benchmarks. Furthermore, it states what the basic methods are and classifies the indicators into groups. The group of indicators ar

All about cost of capital

This series contains articles relating to a way of determining the cost of capital, usually WACC, and its basic components (costs of debt and cost of equity or risk-free rate and surcharges for risk). It contains description of basic methods for determining WACC (CAPM and Gordon Growth Model), desc

Financial analysis indicators - market value and capital market

This series follows the series about Group of financial analysis indicators and describes in detail the indicators of market value and capital market.    

Organisation of financial and management accounting

Almost any company is required to maintain financial accounting records for the purpose of financial reporting. Management accounting is voluntary and depends on whether management requires it. If the entity maintains management accounts as well, the accounting system can be organized as: One led

Direct expenses

Direct expenses are costs that form part direct (prime) costs but are covered neither in direct material costs or direct labor costs. As being part of direct costs, they are directly and clearly identifiable with cost object (usually product or service). That means they are the costs DIRECTLY associ

Accounting and its types

This short series tries to show that the concept of accounting is much broader than most people think. It briefly describes the basic branches of accounting, especially financial and managerial accounting. This series is freely followed by series Cost accounting.

Forecasting and budgeting

The series aims to describe the fundamental aspects of forecasting and budgeting - planning process, the difference between forecast and budget and description of the basic types of budgets (fixed vs. flexible, static vs. continuous, incremental vs. zero-based budget and top-down or bottom-up budget

All about variance analysis

This series describes in detail variance analyses - what it is about, when is the varince significant and how to breakdown and analyse the variances on various types of costs. 

Financial analysis indicators - activity

This series follows the series about Group of financial analysis indicators and describes in detail the indicators of activity.    

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