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Showing posts from February, 2022


  INTRODUCTION The basic object of accounting is to provide information to the interested parties. Accounting information is required by the persons inside the organisation and also by the outsiders, such as government, creditors, bankers, customers etc. On the basis of information based on accounting, important decisions are taken. The decisions of economic resource allocation is primarily based on the accounting information. The financial accounting system provides the basic information useful to the businessman. Accounting may be classified as follows:      1.    Financial Accounting 2.   Cost Accounting 3.     Management Accounting Financial accounting provides information about the income, expenditure, profits, losses and the financial position of the Organisation. This information is helpful to the management to control the major function of the business i.e. finance, production distribution etc. However, financial statements are historical because they belong to past

Capital Budgeting

The term Capital Budgeting  refers to the long-term planning for proposed capital outlays or expenditure for the purpose of maximizing return on investments. The capital expenditure may be: 1.      Cost of mechanization, automation and replacement. 2.      Cost of acquisition of fixed assets, e.g., land, building and machinery etc. 3.    Investment on research and development. 4.     Cost of development and expansion of existing and new projects. DEFINITION OF CAPITAL BUDGETING Capital Budget is also known as “Investment Decision Making or Capital Expenditure Decisions” or “Planning Capital Expenditure” etc. Normally such decisions where investment of money and expected benefits arising therefrom are spread over more than one year, it includes both raising of long-term funds as well as their utilization. Charles T.Horngnen has defined capital budgeting as “Capital Budgeting is long-term planning for making and financing proposed capital outlays.” In other words, capital bud