What is Opportunity Cost

Opportunity Cost: - The maximum benefit foregone due to choosing one alternative over another. For example consider the following investment opportunities and Return. We have BDT 1000 and we have three investment opportunities 

i) We can make a bank deposit which can earn 10% return.

ii) We can make investment in share which can gives 15% return.

iii) We can start a business which can earn 17% return.

Now if we choose to invest in share then 17% is the opportunity cost for investing in share.

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What is Variable cost

Variable cost: - Variable costs are those costs which are change with the output. Variable costs per unit is fixed but total is variable. Examples are Material Costs, Wages, Salesman Commission, e.t.c

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What is Fixed Cost

Fixed cost: - Fixed costs are those costs which are not change with the output. Fixed costs total is fixed but per unit is variable. Examples are Interest expense, Rent expense, Depreciation e.t.c

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What is Cost driver

Cost driver:- Cost driver is a factor or activity that causes a cost to be incurred.

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What is Par value

Par value:- Par value is the amount of legal capital per share – that is, the amount below at which the stockholders’ equity cannot be reduced except by losses or special legal action.

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What is Post balance sheet events

Post balance sheet events: Post balance sheet events have a significant effect on the values shown in the accounts, and occur after the balance sheet date but prior to the date on which the accounts are approved by the directors. Some of those events make more information available rather than altering the numbers as such. These are called adjusting events. An example of such an event is a sale of a fixed asset when the sale is agreed during the financial period but the final price is agreed after the end of the period. The final price will be reflected in the balance sheet and the P &L Account. If a post balance sheet event is not an adjusting event but it is material, then it should be disclosed separately in the results.

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