Benefits-Drawbacks

What Is Debt Financing ? Debt financing is just opposite of equity financing.(in which capital is raised by selling equity instruments to the investors). It is a process of raising fund by selling debt instruments such as bond, credit cards, debentures etc. It is a borrowing of money and should be paid back with ...

What Is Equity Financing ? Equity financing (also called equity funding) is a process of raising capital by selling equity instruments like ordinary shares, preference shares etc. Companies issue share to investors to raise money for business. It is effective tool that helps to meet short-term or long-term obligation...

What Is Cost Audit ?Cost audit is conducted to ensure the correctness of the cost records maintained by the firm. It is a critical examination of costing system which helps to verify the arithmetical accuracy of cost accounts.  It provides correct cost data which helps the management to detect errors and loopholes...

What Is Hire Purchase System ?It is a method of acquiring expensive assets under which buyer get the right to use products without making the whole payment. He/she obtains the asset by making the partial payment and the remaining amount is paid periodically in installments (interest is added in installment amount)....

What Is Partial Audit ? Partial audit refers to the examination of certain suspicious parts of accounting. It does not check the entire books of accounts. It is conducted to clear the doubt of the owner or management. Generally, auditor conducts this audit to ensure the accuracy of cash record, stock level, debtors...

What Is ABC Analysis Method Of Inventory ? ABC analysis of a technique of categorizing the inventory or materials according to their value and importance. Highly valued items are categorized in  class 'A' , least valued materials in class 'C' and less profitable items than 'A' and more profitable than 'C' fall...

Benefits Or Advantages Of LeasingThe main advantages of leasing can be described as follows:1. It Promotes Entrepreneurship While commencing a business it requires huge capital to purchase fixed assets such as land, building, machinery, plant etc. Leasing resolves this requirement by providing the right to use asset...

Merits Or Advantages Of Test Check The main advantages of test check can be highlighted as follows: 1. Reduce Work Load It is a checking of partial records from books of accounts. It examines only certain financial transactions because it is difficult to check all financial transactions included in the books of accounts....

Benefits Or Advantages Of Routine Checking The main advantages of routing checking can be described as follows: 1. Detection Of Errors Routine checking involves the examination of debit and credit totals, ledger postings and account balances. Books of accounts are carefully checked so that errors and frauds can be easily...

The main drawbacks or limitations of accounting can be highlighted as follows: 1. Ignores Non-monetary Items Accounting records only monetary items (that can be measured in terms of money) and ignores non-monetary items (cannot be measured in terms of money) such as employee morale, loyalty, management efficiency etc....

Benefits / Merits Or Advantages Of Variable CostingThe main advantages of variable costing can be highlighted as follows: 1. Simplicity Variable costing system is simple and easy method of cost accumulation than absorption costing approach. 2. Assists CPV Analysis It provides essential data and information for...

The major limitations or disadvantages of cash flow statement can be described as follows: 1. Limited Scope Cash flow statement has limited scope because it cannot reveal net income from operation.  2. No Complete Information Cash flow statement cannot show the complete and up-to-date financial position...

The main benefits or advantages of cash flow statement can be studied as follows: 1. Cash Inflow And Outflow Cash flow statement reports about cash inflow and cash outflow and discloses the change in cash balances between two balance sheets. 2. Cash Forecast Cash flow statement helps to identify future cash need...