What is Indifference Curve and Indifference Map

An indifference curve represents the different combinations of two items that will provide the customer with an equal degree of satisfaction. As a result, an indifference curve may be described as a locus of all the points expressing different. Combinations…

What is Law of Diminishing Marginal Utility?

So far we have covered two important topics of Cardinal Utility Approach and Total and Marginal Utility. Now, it is time to expand our discussion further. So, we will discuss the law of diminishing marginal utility. According to the law,…

Gross Margin Method

Under this method, we estimate the ending figure of the closing inventory based on the gross profit percentage. In this approach, we assume that the gross profit % remains constant during the reporting period. This method is also known as…

Bank Reconciliation Statement

The balance as per bank statement and the bank balance in the ledger accounts differ in most cases. That is why; there is a need to reconcile the difference between two sets of balances. There are plenty of reasons for…

Time Wage System

This is the system of wage payment under which the worker is paid according to the hours worked. This may be then projected over the daily, weekly and monthly basis.  Formula Rate per hour x total hours worked Example Mr…

Held to Maturity Investment

Held to Maturity Investment is debt securities which is kept under control till the time of its maturity date. Please keep in mind that equity securities have no maturity date, so they may not be treated as Held to Maturity Investment.…

Earning Per Share EPS

Earning Per Share is a market value measure and is considered one of the important financial ratio. It is denoted by the symbol EPS. It is calculated by dividing the net profit after tax which is available to the ordinary…

Standard Price Method

Under this method, we calculate a pre-determined price, and this price is kept constant for a definite time period. In this method of inventory valuation, we post all receipts into the stock ledger account and sales/ issues are valued at…

Cash Flow Hedge

There may be changes in the cash flows associated with liability, asset and probable forcast transaction. In order to mitigate the risk of such type of changes, we use the term Cash Flow Hedge. In other words, we can say that it is…