Store RoutingThe process set by a manufacturing company to control materials is called store routing. Store routing consists of all the process involved in proper purchasing, storing, and issuing of materials to the concerned departments. The store routing can be summarized as follows.1. Purchasing and receiving of materials* Request for purchase of materials* Inquiry and tender quotation forms issued to potential suppliers* Selecting suitable supplier* Placing order2. Storing of materials* Classification and codification of materials* Keeping...
Thursday, 29 April 2010
Essentials Of Materials Control
Posted on 18:43 by Unknown
The main essentials of materials control are as follows.* There should be a proper co-operation and co-ordination among the departments dealing with material purchasing, receiving, testing, storing, production planning and accounting.* There should be a centralized purchasing department.* There should be a proper perpetual inventory system, which reflects physical movement of stocks and their current balance.* There should be a good method of classification and codification of materials.* There should be a standard forms for requisitions, order,...
Saturday, 24 April 2010
Objectives Of Materials Control
Posted on 18:54 by Unknown
Material controls basically aims at efficient purchase, storage and consumption of materials. The following are the major objectives of materials control.1. To ensure better quality of materials at right quantity at right time for efficient and uninterrupted production of output.2. To maintain the cost of materials at the minimum level.3. To purchase materials at a reasonable price.4. To minimize the handling cost and time in storing and using the materials.5. To provide information to the management about raw materials, their costs and availability.6....
Needs And Importance Of Materials Control
Posted on 18:32 by Unknown
Materials control is necessary for making efficient purchase, storing and consumption of materials. Every manufacturing company requires to maintain a materials control system that facilitates efficient purchase, storage and use of the materials. The needs for materials control system in the company arise due to the following reasons.1. Economical PurchaseEvery manufacturing company should purchase high quality materials at the most economical price. An efficient materials control system ensures how better quality materials can be bought at the...
Concept And Meaning Of Materials control
Posted on 18:23 by Unknown
Material ControlMaterials control can be defined as a systematic control over purchasing, storing and consumption of materials. Materials control helps to maintain a regular and timely supply of materials by avoiding over and under-stocking. Materials control ensures that the right quality and quantity of materials is available to the company at the right time. Materials control helps to reduce the losses and wastage of materials by maintaining their efficient purchase, storage and use or consumption in the factory. The importance of materials...
Types Of Materials
Posted on 18:14 by Unknown
Manufacturing a product needs input of raw materials. Raw materials are main component of the product. There are two types of materials.1. Direct MaterialsThe materials required for producing a product are called direct materials. Direct materials are also known as raw materials or input materials. Direct raw materials constitute the main component or part of a finished product. It is identified in terms of cost per unit of output. Wood for furniture industry, sugarcane for sugar mills. textile for garment industry are some of the examples of direct...
Concept And Meaning Of Material
Posted on 18:02 by Unknown
A manufacturing company incurs different types of costs to produce a unit of output.Such costs includes material costs, labor costs and other costs.Among them, material costs are important because in many manufacturing companies such costs are greater than all other costs combined.Material is one of the most important elements of production. The term 'Material' refers to raw material used for production, sub-assemblies and fabricated parts. Materials include components, consumable stores, maintenance, spare parts and tools. They are used in manufacturing...
Thursday, 22 April 2010
Concept Of Cash Flow From Financing Activities And Its Determination
Posted on 00:48 by Unknown
Financing activities are concerned with cash collection by issuing shares and debentures, raising long-term loan and so on. It also involves cash outflows in terms of redemption of debentures and preference shares, repurchase of shares, repayment of long-term loan and payment of cash dividend.The specimen showing the determination of cash flow from financing activities are as follows.Particulars.........................................................AmountIssue of equity shares............................................................xxxIncrease...
Cash Flow From Investing Activities
Posted on 00:35 by Unknown
Investing activities refer to those activities which are concern with acquisition or sales of long-term assets or investment.Cash inflows from investing activities include the cash received from sales of fixed assets as well as investment and cash outflows include cash paid for the purchase of fixed assets and investment made.The specimen showing the determination of cash flow from investing activities are as follows.Particulars...............................................................AmountPurchase of plant and equipment..............................................(xxx)Sale...
Friday, 16 April 2010
Concept Of Cash Flow From Operaring Activities And Its Determination And Specimen
Posted on 19:38 by Unknown
Operating activities refer to day to day revenue generating activities of a firm. These activities are considered to be the major sources of internally generated cash. Cash inflows from operating activities include the cash from sale and collection from debtors. Cash outflows for operating activities include cash purchase, payment to suppliers, payment for other operating expenses, payment for interest and taxes. Cash flow from operating activities could be determined by using two methods.1. Cash flow from operating activities under direct methodUnder...
Preparation Of Cash Flow Statement
Posted on 19:29 by Unknown
The cash flow statement is prepared by showing inflows and outflows of cash from a major activities of a firm. The activities that result in cash inflows are referred to as sources of cash and the activities that result into cash outflows are referred to as uses of cash. For the purpose of preparing cash flow statement,the firms activities are classified into three categories that result into inflows and outflows of cash.1. Cash Flow From Operating Activities* Direct Method* Indirect Method2. Cash Flow From Investing Activities3. Cash Flows From...
Wednesday, 14 April 2010
Differences Between Cash Flow Statement And Funds Flow Statement
Posted on 18:40 by Unknown
Followings are the main differences between cash flow statement and funds flow statement.1. ConceptCash flow statement is based on narrow concept of funds, which considers changes in cash. Funds flow statement is based on the changes in working capital which considers both the changes in cash as well as other components of current assets and current liabilities.2. Basis Of PreparationCash flow statement is prepared on cash basis. Funds flow statement is prepared on accrual basis.3. Working capitalCash flow statement does not require use of changes...
Importance Of Cash Flow Statement
Posted on 18:24 by Unknown
The cash flow statement provides information regarding inflows and outflows of cash of a firm for a period of one year. Therefore cash flow statement is important on the following grounds.1.Cash flow statement helps to identify the sources from where cash inflows have arisen within a particular period and also shows the various activities where in the cash was utilized.2. Cash flow statement is significant to management for proper cash planning and maintaining a proper matching between cash inflows and outflows.3. Cash flow statement shows efficiency...
Monday, 12 April 2010
Concept Of Cash Flow Statement And Its Objectives
Posted on 22:06 by Unknown
Concept Of Cash Flow StatementEvery big and small firms performs cash transactions. Cash transaction refers to cash inflows and outflows.Cash inflows and outflows help to review success, failure of a firm and its ability to meet maturing debts. Such review and evaluation are possible if the statement of cash flow is prepared.Accounting standard Board(ASB) at international level in 1996 suggested every firm to publish the statement of cash flow along with the final accounts. Since then the statement of cash flow is getting more recognition than...
Sunday, 11 April 2010
Difference Between Net Profit And Funds From Operation
Posted on 23:14 by Unknown
Following are the differences between net profit and funds from operation:1. MeaningNet Profit: Net profit is the difference of total revenues and total expenses and losses which include both operating and non-operating items.Funds From Operation: Funds from operation excludes both non-operating incomes and non-operating losses/expenses.2. ObjectiveNet Profit: Net profit represents the operating result of a business.Funds From Operation: Funds from operation represents the flow of working capital from the operating activities. 3. DeterminationNet...
Difference between Income Statement And Funds Flow Statement
Posted on 23:04 by Unknown
Income statement and funds flow statement can be distinguished as below:1. MeaningIncome Statement: Income statement is a summary of total income and total expenses and losses of a particular period.Funds Flow Statement: Funds flow statement is the statement of changes in financial position.2. ObjectiveIncome Statement: Income statement is prepared to ascertain the profit earn or loss suffered by a firm.Funds Flow Statement: Funds Flow Statement is prepared to identify how the profit has been utilized.3. PreparationIncome Statement: Income statement...
Difference Between Balance Sheet And Funds Flow Statement
Posted on 22:51 by Unknown
The main differences between balance sheet and fund flow statement are as below:1. MeaningBalance Sheet: Balance sheet is a statement of assets, liabilities and capital.Funds Flow Statement: Funds flow statement is a statement if changes in assets, liabilities and capital accounts.2. ObjectiveBalance Sheet: Balance sheet is prepared to ascertain the financial position of a firm.Funds Flow Statement: It is prepared to ascertain the sources and application of funds.3. PreparationBalance Sheet: It is prepared with the help of trial balance.Funds Flow...
Funds Flow Statement
Posted on 20:10 by Unknown
After ascertaining the increase or decrease in net working capital and funds or loss from operation, the next step is to prepare the funds flow statement. The purpose of preparing the funds flow statement is to know about the funds obtained and used by the firms. The funds flow statement has two sides. On the left hand side, the sources of funds are shown and on the right hand side, the uses or applications of funds are shown.Sources..................................... Amt...........Applications...................................AmtFunds...
Concept Of Statement Of Funds From Operations And Its Preparation
Posted on 19:20 by Unknown
After preparing the schedule of changes in net working capital, the second step is to determine the amount of funds(loss) from business operations. It refers to the funds or loss, which is generated or suffered in the business as a result of its regular operations during the period. The funds fro operation is an important source of fund, while loss from operation is one of the important applications of funds. The funds or loss from operation is determined by adjusting the firm's net income in a statement called the statement of funds from operations....
Wednesday, 7 April 2010
Preparation Of Statement Or Schedule Of Changes In Net Working Capital
Posted on 18:51 by Unknown
In the preparation of funds flow statement, the first step is to find out the net amount of increase or decrease of working capital, as increase in net working capital is a use of funds and decrease in net working capital is a source. Since net working capital is excess of current assets over current liabilities, the increase or decrease in the net working capital can be found out by comparing the current assets and current liabilities contained in the balance sheets of two following dates.For this purpose, a statement is prepared which is called...
Tuesday, 6 April 2010
Preparation Of Funds Flow Statement
Posted on 18:50 by Unknown
Funds flow statement is prepared mainly with the help of balance sheets of any two successive dates. Funds flow statement is prepared by comparing the balance sheets of the two dates and using the income statement of the year for which the funds flow statement is being prepared.The following steps are taken for the preparation of the funds flow statement.Step -1: Preparation of statement or schedule of changes in Net Working Capital.*Using only one current account*Using both current and non-current accountsStep -2Statement of funds from operation*...
Saturday, 3 April 2010
Concept of "Statement" In Funds Flow Statement
Posted on 18:56 by Unknown
A statement is a written record which presents some kind of information and facts about some events in a systematic manner.The funds flow statement is,therefore, a written record of the source of funds in terms of net working capital and its application on different heads during a particular period of time. It is also called statement of sources and application of funds or how funds come and where funds gone statement.The funds flow statement is prepared by using one of the following forms.1. Horizontal FormThe funds flow statement can be prepared...
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