Budget variance is the difference between the budgeted or planned total amount of revenue or expense and the actual amount of revenue or expense. Budget variance helps a business owner to fix an achievable target amount in a year after evaluating last years budget difference.
The margin of safety is the safety level before a company reaches its breakeven point. Margin of safety shows a company’s sales level after which the sales value will decrease. A margin of safety is the most needed factor for an investor to analyze the company’s current situation.
Reorder point is the level where the stock needs to fill again. Usually, what happens a company always set a minimum amount level of a stock and the stock needs to record for reordering when it reaches that level.
Operating cycle can be defined as the total time starting from buying inventory and selling the inventory in order to generate cash to fulfill rest operational expenses. Defining the length of an operating cycle is very crucial for a business in order to be always ready to meet future expenses.
Income statement shows a company’s income during a particular period. It also involves profit & loss statement. Usually, Income statement used by business owners to find out how much profit they earn in a particular financial year or a period.
Joint cost is the cost incurred during a manufacturing process. When a manufacturer produces different products with same raw material inputs, then the cost consumed during this whole production process is called joint cost. For example, Dairy firms use milk as the raw material an produces curd, cream, ghee etc.
Retained earnings is the net amount retained by the entity or corporation over a period of time until the reporting time or fiscal year end. This total amount excludes any dividends that need to pay out to investors.
Appreciation is the increase in the value of assets over a period of time, unlike depreciation. Appreciation occurred due to certain factors like increase in demand, change in inflation rates etc. It’s totally opposite of depreciation. Appreciation is of two types, capital appreciation & currency appreciation.
As the name suggests it’s a tax levied on incomes or earnings by companies & individuals. The government imposes this tax to provide better infrastructure & facilities to citizens also for some Government’s own activities. Income tax needs to be filed every year by individuals & entities. The only sector exempted from income tax is agriculture.
Indirect cost as the name suggests costs those are not directly linked to any product, project, facility etc. are called indirect costs. Examples are: administration costs, operations costs, product cost etc. Indirect cost is of two types: fixed cost and variable cost.
Marginal revenue can be defined as the extra revenue earned by selling one extra unit of product. It’s beneficial for a company as the profit margin increases with same marginal cost. It would be profitable, as long as the rate of marginal revenue remains higher.
The line of credit is a kind of loan agreement between a bank or any financial institution and a customer. A customer can be an individual person, a business entity, non-financial institute, Government etc.