Reasons for Difference in Profit
The profit depicted by financial accounts and cost accounts different on account of the following reasons.
I] Items of Financial Nature not recorded in Cost Accounts:
The following items are not kept in cost accounts because they are of purely financial nature and subsequently the profits differ because these items are recorded in the financial accounts.
Ø Interest received on bank deposits.
Ø Interest, Dividend, received on investments.
Ø Rent received
Ø Losses on sale of assets
Ø Bad debts written off, recovered
Ø Transfer fees received
Ø Interest on proprietor's capital
Ø Fines and penalties payable
Ø Compensation payable.
II] Items Charged to Profit and Loss Account but not Recorded in Cost Accounts:
The subsequent items are found in the cost accounts but not kept in the financial accounts.
Ø Corporate taxes
Ø Appropriations out of profits, like transfer of profits to reserves
Ø Certain payments like dividend
Ø Additional provisions of depreciation
Ø Specific amounts written off like goodwill, patents, preliminary expenses, underwriting commission etc.
III] Items Peculiar in Cost Accounts:
The items explained below are peculiar in cost accounts when their treatment in financial accounts is dissimilar. Therefore there is a variation among the profits shown through both the systems
Ø Overheads:
In cost accounts, overheads are at last absorbed in the products through calculating the predetermined rate of absorption. In such types of cases, there might be under/over absorption of overheads. The meaning of this is that the overheads actually acquired will not tally with the overheads charged to the product. In financial accounts overheads are all the time taken at actual basis irrespective of under/over absorption of the same. In such types of cases the profits depicted through both the systems will different. Though, if the under/over absorbed overheads are charged to the costing profit and loss account, the profits depicted through financial accounts and cost accounts will not different.
Ø Valuation of Closing Stock and Work-in-Progress:
The standard of valuation of closing stock within financial statements is cost price or market price that is less. Though, in cost accounts, valuation of closing stock might be prepared on the basis of marginal costing in which only the variable costs are taken into concern when valuing the closing stock. So the closing stock valuation might different. Work-in-Progress in cost accounts is frequently valued on the basis of prime cost and occasionally variable manufacturing overheads are added in the same. Alternatively, in financial accounting, work-in-progress might be valued after taking into concern administrative expenses also. Because of this variation in valuation, profits depicted through cost accounts and financial accounts different.
Ø Abnormal Losses and Gains:
In cost accounts, abnormal losses and gains are calculated and transferred to the Costing Profit and Loss A/c. No such type of computation is made in the financial accounts. This results in variation among the profits depicted by cost accounts and financial accounts.
Latest technology based Cost Accounting Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Reasons for Difference in Profit homework help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Reasons for Difference in Profit, project ideas and tutorials. We provide email based Reasons for Difference in Profit homework help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Reasons for Difference in Profit. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Cost Accounting homework help and assignment help services. They use their experience, as they have solved thousands of the cost accounting assignments, which may help you to solve your complex issues of Reasons for Difference in Profit. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
www.tutorsglobe.com offers analysis of molecular formulas homework help, assignment help, online tutoring assistance, organic chemistry solutions by online qualified tutor's help.
Theory and lecture notes of Cournot Duopoly all along with the key concepts of cournot duopoly, cournot duopoly Assumptions, Cournot-Nash Equilibrium, Generalization to Oligopoly. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Cournot Duopoly.
heat change tutorial all along with the key concepts of heat change under constant volume, enthalpy and enthalpy changes, relation between cp and cv of an ideal gas
comparision of the camera tubes, characterstics, image orthicon, vidicon, plumbicon
dissimilar models of machines different only in the positioning of these parts. there is a particular function assigned to each part.
tutorsglobe.com properties of potassium dichromate assignment help-homework help by online potassium dichromate tutors
thermochemistry tutorial all along with the key concepts of concept of thermochemistry, energy, conservation of energy, heats of reactions, standard enthalpy of reaction, hess's law, measurements of energy changes
tutorsglobe.com edaphic factors assignment help-homework help by online environmental factors tutors
www.tutorsglobe.com offers organometallic reagents homework help, organometallic reagents assignment help, online tutoring assistance, organic chemistry solutions by online qualified tutor's help.
www.tutorsglobe.com offers Priestman Production Bonus Plan homework help, assignment help, case study, writing homework help, online tutoring assistance by accounting tutors.
Theory and lecture notes of Message recovery all along with the key concepts of message recovery, data communication, recoverable queue. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Message recovery.
tutorsglobe.com photoperiodism assignment help-homework help by online plant physiology tutors
to learn the two inputs of the arithmetic circuits of half adder, full adder and flip flops using ics.
tutorsglobe.com elementary and reticulate body difference assignment help-homework help by online chlamydia tutors
tutorsglobe.com capital budgeting and its importance assignment help-homework help by online capital budgeting and project planning tutors
1953899
Questions Asked
3689
Tutors
1472209
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!