Under the costing method of absorption, not only the cost of the variable, but also the cost determined by the product, is absorbed. Most accounting principles require absorption for the purpose of external reporting.
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Exploitation costs are used to calculate profit and share valuation in the financial statement. As stock cannot be valued in this method, inland revenue requires this cost. Estimated costs have been taken into account that they should be recovered. The terms ‘total absorption cost’ and ‘absolute cost’ also denote the cost of absorption.
¤ In the marginal cost, the contribution is calculated, whereas it is not done under absorption costing.
¤ When valuing shares under marginal costing, only variable cost is considered, while under absorption costing the stock is also evaluated in costs incurred for the production function
¤ In general, the price of goods is higher than the marginal cost of absorption.
¤ The contribution should be calculated under the marginal cost system, while the gross profit will be calculated under the absorption costing method.
The Difference Between Accountability and Responsibility
Accountability and accountability are two terms that are often confused due to the similarity between their meanings. Strictly speaking, these two words should be understood separately. The term ‘accountability’ is commonly used in the sense of ‘accountability’. On the other hand, the term ‘responsibility’ is used to mean ‘obligation’ or ‘trustworthiness’. This is the basic difference between two words.
He should shoulder accountability to an employee for the important work given to him to complete the work. He becomes responsible for delivering the goods. He will be called and questioned. Every employee of an organization carries responsibility with it. On the other hand, each and every employee has a responsibility or liability to contribute to the development of the company or organization.
Similarly, it is the responsibility of every citizen to contribute to the development of the country in one way or another. It is the responsibility of the son to take care of his aged parents. Employers should be responsible for providing facilities to employees.
Accountability leads to responsibility A teacher is held responsible for the poor performance of students in school. They have to answer why their students scored low marks? This type of accountability brings responsibility to the teacher’s mind. He considers himself responsible for questioning by the management of the school, if he does not show responsibility.
Lack of responsibility leads to wrongdoing and defeat. If a cricketer plays an irresponsible shot and is out, he becomes accountable for the team’s defeat at the hands of the opposition. These are important differences between the two words, namely, accountability and responsibility.
Cost Accounting Cost Accounting, Objectives & Elements Study (Part-1) For MPPSC, UPSC, UPPSC, Vyapam
Auditing and accounting are both closely related concepts that are linked to the same subject background of financial reporting, where a function cannot perform effectively without space It is necessary to understand the difference between the two because the combination of these functions is only financial Not only for the preparation of statements, but also to ensure the accuracy of the information in such statements. In the following article the two will differ in terms of what it means for an organization, helping the reader clearly understand the difference between the two concepts.
Accounting
Accounting is the business function of recording daily business transactions in the firm’s books to prepare financial statements at the end of the accounting period. The purpose of accounting is to provide the organization and users with comprehensive and accurate information of accounting information, including the operations carried out by the business.
Contains information about various economic activities, trade transactions and monetary exchanges. The accounting function is performed throughout the year and according to the accounting standards specified by the full-time employees of the organization.
Auditing is the process of evaluating accounting information presented in an organization’s financial statements. Auditing involves ensuring that the financial report is accurate, properly presented, ethically prepared, and whether the reports conform to accepted accounting principles and standards.
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The auditing function is outsourced by organizations to the specific entity in this evaluation, so that the firm can get an unbiased view of its financial statements. The auditing firm usually performs the audit before the financial statements are presented to the general public and ensures that the data provides an accurate and appropriate representation of the firm’s financial position.