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LANGUAGE OF ACCOUNTING - Coggle Diagram
LANGUAGE OF ACCOUNTING
Accounting = Language of Business
Accounting Period
Management Accounting
a month
a quarter
a year
Financial Accounting
financial year
= Financial Reporting Period
external financial reports
Income Statement
Balance Sheet
profit = revenue - costs
Different concepts of costs
Management Accounting
provide most useful information
support decision making
cost object
object/ item
costs are measured
unit/ total costs
unit cost
cost of one unit
of products/ services
total cost
cost of a group
of products/ services
variable/ fixed costs
variable cost
total costs
vary
in proportion to outputs
unit costs
remain the same
fixed cost
total cost
remain the same
unit cost
vary
direct/ indirect costs
direct cost
can be directly traced
cost object
can be measured
cost object
indirect cost
cannot be directly traced
cost object
cannot be measured
cost object
relevant/ irrelevant costs
relevant cost
not yet been incurred
differ
between different decisions
irrelevant cost
already been incurred
stay the same
between different decisions
sunk/ incremental costs
sunk cost
already been incurred
irrelevant
incremental cost
incurred
when decisions are chosen
relevant/ irrelevant
relevant
differ
between decisions
irrelevant
stay the same
between decisions
product/ period costs
product cost
directly used to make products
direct materials
direct labour
indirect manufacturing overhead
period cost
selling
administration
External Reporting
types of reports
balance sheet
assets = liabilities + equities (owners)
liabilities
equities
income statement
income
expenses
statement of changes in equity
statement of cash flows