What are agency problem and agency Cost

Agency problem: - Corporate managers are hired to act for well being of the company, but sometimes they act for their own interest. This leads to a conflict between managers and shareholders. This is called agency problem.

Agency Cost: - The cost associated with minimizing agency problem is known as agency costs.

Read More

What are direct costs and indirect costs

Direct costs: - Direct costs are directly associated with manufacturing.  Direct costs are generally variable costs and direct costs can include:

• Direct materials
• Direct labor
• Direct expense

Indirect Costs: - Indirect costs are those costs that are incurred in the factory but that cannot be directly associated with manufacturing the product. Indirect Costs are classified according to the three elements of cost, materials labor and overheads.

• Indirect materials
• Indirect labor
• Indirect expenses

Read More

What are Product costs and period costs

Product costs: - Product costs are the costs of manufacturing the product.

Period costs: - Period costs are the costs other than product costs that are charged to, debited to, or written off to the income statement each period.

Read More

What is Liability

Liability:-

Liabilities are claims against assets by the bodies outside of the business. Examples of liabilities are:

• Loans from banks

• Creditors

• Bank overdrafts e.t.c

Read More

What is Asset

Asset:-
 

Assets are tangible and intangible items that have value in exchange which the business owns.

Examples of assets are:

• Cash
• Buildings
• Machinery
• Furniture
• Debtors (money owed from customers)
• Stock / Inventory e.t.c

Read More

What is Capital Expenditure

Capital Expenditure:-

Capital Expenditure is an expenditure which is capitalized as occurred. It has further utility so it is capitalized in the Balance Sheet.

For Example purchase of Fixed Assets.

Read More