Finance real money , owe million and have 100 then you have 100

Accounting Virtual , owe a million dollars +100 therefore -1 million +100

Major diff btw cash & income statement tax is not represented on income
statement because it isnt income, where as it is represented on cash flow because
there is cash moving out

Value of land is recorded at cost price/stock

Because its easy to find you can go and find out the price
Ad because this info is reliable
And if you ask to value the building at present diff people will give diff value,
Stock varies
You can appraise by appraiser then that value can be used

Because you will show much loss in sept and loss in dec which is not the real
scenario

Process produce the same things widgets

Or bills like 10k per month
Same time after time
Units produced x direct cost = payment
Time or thing produced.

Avg standard cost pizza industry

companies which produces different products diff costs

Or consultant who goes for diff companies diff pays
Or customized things made for u -

Making in small batches

Apply the only actual direct cost used in making the product
Pizza only to make the pizza CAN BE CALLED VARIABLE COST ingredients cost
Theres someone who is making it this is not the direct

Absorption- some or all of the costs can be absorbed and applied to the pizza cost
like wages to pizza
Full if every direct and overhead all electricity,rent of the building etc into the
pizza then full costing

How many pizzas in a month to neither make or loose money

To launch a produt,
Open a new outlet
If 25k pizzas a month to break even then not a good idea to open

Gas cost is variable depending on the pizzas you bake but difficult so fixed cost
,total cost easier way to categorise

To cover the fixed costs

Costing to strategise pricing

In times of no business everyone bad business we will quote just above the direct
costs so that we get some money to pay rent /survive.

Suppose we have to work overtime then more price so in good times we can quote
more
Use full costing and add into the price price is more more profit

Ratios to compare two different types of companies

Should use several ratios one cannot be believed
So that you get a correct ratio/idea

Because inventory cannot be converted quickly to cash

Average used because daily sales can fluctuate

How much income generated by putting in shareholders equity

Other assets which are not employed at present,building,warehouse

Debt is easy than equity i.e its easier to take loan than to have someone to invest in
your business
You may be paying too much for equity

To help us in knowing which is best going to creditors or investors

Best leverage is 2 to 1 - 2 million debt 1 mil equity
Best double the debt than the equity experts

If you know that the business will do well , you will want to pay more which is the
market value
How Market Is confidant in the projected earnings of the company in future

Market capitalization /market cap

Quickest & easiest

Something is worth what people are willing to pay

Ignoring, following the trend determines the orice of the stock,

Warren buffet sells when everyone buys and viceversa
Markets just follow common leaders, opinion /trend

Use other technique to find the value and you can use to check if the stock is over
or under valued using market cap method / by market

EBITDA after depreciation,amortization

Gives a range of what the value of company is or what companies are doing

Debt you ought to pay at certain fixed periods of time, whereas equity you only pay
if you make profits

NPV money now is more than money later

IRR > discount rate good investment

Else bad

Only NPV to value money because it gives the monetary value whereas IRR gives
only percentage