BSNS 115
What is accounting - ✔️✔️- Language of business. Recording and evaluating business
activities
Shareholder - ✔️✔️- External user. Owns shares in a business
Stakeholder - ✔️✔️- Internal or external user. Anyone who takes an interest in the
business or lives in the same city as
Stewardship Usefulness - ✔️✔️- A traditional form of accounting. Creating reports of
transactions for a given period
Decision Usefulness - ✔️✔️- More recent form of accounting. Helping users make
informed choices about the allocation of their recourses
Internal users of accounting - ✔️✔️- Those who have access to all financial records
External users of accounting - ✔️✔️- Those outside the business. May still be affected
by the businesses actions. Info may help them choose whether to invest or not
Conceptual framework - ✔️✔️- Relevance
Reliable
Compatibility
Understandability
Financial Accounting - ✔️✔️- Reporting of financial statements. Based on historical
performance
Management accounting - ✔️✔️- Using financial info to make decisions to plan and
control for the support of the entity
, Relevant range - ✔️✔️- An estimate of activity span where a cost will fall between. `
CVP - ✔️✔️- Cost - Volume - Profit
Contribution margin = - ✔️✔️- total sales - variable cost per unit
Contribution margin ratio = - ✔️✔️- total CM / total sales or UMC/ SP
What is breakeven - ✔️✔️- Activity level required to cover all costs associated with the
business. At breakeven your FC = CM
Margin of safety - ✔️✔️- Difference between break even point and current operations
BE in units - ✔️✔️- FC/ UCM
CM ratio - ✔️✔️- CM / sales
BE in $ - ✔️✔️- ( FC / UCM ) x SP
BE + desired profit in units - ✔️✔️- FC + des. profit / UCM
BE + desired profit in $ - ✔️✔️- (FC + des. profit / UCM ) x SP
UCM - ✔️✔️- SP - VC
Weakness of BE - ✔️✔️- Assumes linearity
Stepped fixed cost
Difficult with multi product business as they share FC
Mixed Costs = - ✔️✔️- Semi variable, semi fixed
High low method - ✔️✔️- Used to find variable rate in MC
(High - low $)/ (high - low volume)
Finding FC in MC - ✔️✔️- MC - (variable rate x chosen months volume) = FC
Cost formula MC = - ✔️✔️- FC + VC rate x units
What is accounting - ✔️✔️- Language of business. Recording and evaluating business
activities
Shareholder - ✔️✔️- External user. Owns shares in a business
Stakeholder - ✔️✔️- Internal or external user. Anyone who takes an interest in the
business or lives in the same city as
Stewardship Usefulness - ✔️✔️- A traditional form of accounting. Creating reports of
transactions for a given period
Decision Usefulness - ✔️✔️- More recent form of accounting. Helping users make
informed choices about the allocation of their recourses
Internal users of accounting - ✔️✔️- Those who have access to all financial records
External users of accounting - ✔️✔️- Those outside the business. May still be affected
by the businesses actions. Info may help them choose whether to invest or not
Conceptual framework - ✔️✔️- Relevance
Reliable
Compatibility
Understandability
Financial Accounting - ✔️✔️- Reporting of financial statements. Based on historical
performance
Management accounting - ✔️✔️- Using financial info to make decisions to plan and
control for the support of the entity
, Relevant range - ✔️✔️- An estimate of activity span where a cost will fall between. `
CVP - ✔️✔️- Cost - Volume - Profit
Contribution margin = - ✔️✔️- total sales - variable cost per unit
Contribution margin ratio = - ✔️✔️- total CM / total sales or UMC/ SP
What is breakeven - ✔️✔️- Activity level required to cover all costs associated with the
business. At breakeven your FC = CM
Margin of safety - ✔️✔️- Difference between break even point and current operations
BE in units - ✔️✔️- FC/ UCM
CM ratio - ✔️✔️- CM / sales
BE in $ - ✔️✔️- ( FC / UCM ) x SP
BE + desired profit in units - ✔️✔️- FC + des. profit / UCM
BE + desired profit in $ - ✔️✔️- (FC + des. profit / UCM ) x SP
UCM - ✔️✔️- SP - VC
Weakness of BE - ✔️✔️- Assumes linearity
Stepped fixed cost
Difficult with multi product business as they share FC
Mixed Costs = - ✔️✔️- Semi variable, semi fixed
High low method - ✔️✔️- Used to find variable rate in MC
(High - low $)/ (high - low volume)
Finding FC in MC - ✔️✔️- MC - (variable rate x chosen months volume) = FC
Cost formula MC = - ✔️✔️- FC + VC rate x units
