F/Acount - Ans
2ai )
Direct materials consist of all of the materials that become an integral part of the
finished product . Direct materials should include the actual cost of the materials,
as well as freight in, import duties, purchasing costs , receiving costs , storage
costs and other directly attributable costs of acquiring the materials.
Example- Orange in fanta making
2aii)
Direct labor consists of all of the personnel costs required to manufacture the
finished product . Direct labor should include wages, payroll taxes , and benefits
associated with personnel who are integral to manufacturing the finished product .
Example- Wage of machine operator
2aiii )
Factory overhead consists of all of the other costs required to manufacture the
finished product that do not fit into the direct material or direct labor elements .
They consist mainly of indirect material, indirect labor, depreciation , utilities ,
rent, repairs and maintenance and insurance .
Example- Indirect wages.
2b)
i ) RAW MATERIALS
These are the materials or goods purchased by the manufacturer. Manufacturing
process is applied on the raw material to produce desired finished goods.
ii) WORK - IN - PROGRESS ( WIP) These are the partly processed raw materials
lying on the
production floor.
iii ) FINISHED GOODS
These are the final products after manufacturing process on raw materials. They
are sold in the market .There are two kinds of manufacturing industries .
===========================================
1 a)
i ) It can result in a business exhausting the budget , leading to spending more
than
what is coming in .
ii) Businesses may need to file for bankruptcy or shut their doors if they fail to keep
adequate records from the beginning .
iii ) It can result in problems with suppliers, payroll , utilities , and other vital
components to a running successful business .
1 b)
i ) Relevance means an account information to make a difference in decision
making
ii) Comparability means an account information can be used to compare different
entities
iii ) Consistency : information is consistently presented from year to year
iv ) Reliability means an account information is verifiable , factual, and neutral
1 c )
i ) Accounting is only one source of information and primarily provides information
based on financial terms: Although this
information is vital , decisions cannot be based solely on a
monetary basis . Various decisions depend upon a diverse range of issues being
considered .
ii) The historical perspective of financial accounting : In order to obtain a recent
estimate of an entity’s financial
performance , the corporate managers carefullyscrutinize financial accounting
information. In retrospect, this information is based on past performance .
*3A*
Where a big business with diverse trading activities is conducted under the same roof the same is usually divided into several departments and each department deals with a particular kind of goods or service. For example, a textile merchant may trade in cotton, woolen and jute fabrics. The overall performance for this type of business depends, however, on departmental efficiency.
*3B*
(i) Compare the results among the different departments together with the previous results thereof,
(ii) Formulate policy in order to extend or to develop the enterprise in the proper line; and
(3b)..
Pick just 2(two)
(A)
Departmental accounts help to understand or locate the success, failure, rates of profit, etc.
(B) It helps the management to make proper plan of action, policies in order to increase profit after analysing the results of operation of various departments.
(C) Departmental accounting helps us to understand which department should be expanded further or which one should be closed down as per the results of the operation.
(D) If also helps to encourage a healthy competitive spirit among the various departments which, ultimately, helps to increase profits of the firm as a whole.
(E) For additions or alterations of various departments, departmental accounts helps a lot as it supplies the necessary information.
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April 05, 2018, 04:39:44 pm
