Study Set Content:
SQRT
is square root
is annual demand in units
D
is procurement cost per order
S
is the carrying cost interest rate
I
is the acquisition cost per unit
C
Reorder point Formula
ROP = LD X DD
reorder point
ROP
lead days
LD
demands in units per day or daily
demand
DD
They are needed to support the operation of
the business over a long period of time.
Non-current Assets, Plant Assets, or Fixed
Assets
Assets are classified as plant assets if they
meet this set of requirements:
❖ more or less permanent in nature
❖ not for sale
❖ intended for use in the business
❖ have, physical existence
This is real estate owned and used by the
business.
Land
This is any structure constructed or
acquired for use in the business as office,
store, or warehouse.
building
This involves equipment used in offices
such as filing cabinets, computers, cash
registers, biorefs, etc. Account titles like
Equipment, Store Equipment, and Delivery
Equipment are used.
Equipment
include tables, chairs, desks,
counters, showcases, cabinets, and
anything placed on the floor. Fixtures refer
to those that are off the wall or hung on the
ceiling.
Furniture and Fixtures
This is a self-propelled vehicle that does not
operate on rails and is used to transport
people or goods.
Motor or vehicle
is a system of
allocating costs of a particular asset over its
useful life. The deterioration of an asset
causes a decrease in its value and purpose.
The amount of depreciation of plant asset is
based on the account’s estimate and should
generally conform to current trade practices.
Depreciation
All assets classified as Plant Assets/Fixed
Assets except land are subject to
depreciation. Depreciation is a system of
allocating costs of a particular asset over its
useful life. The deterioration of an asset
causes a decrease in its value and purpose.
The amount of depreciation of plant asset is
based on the account’s estimate and should
generally conform to current trade practices.
Allowance for Depreciation
These are non-monetary and immaterial
assets that are held for the production of
goods, rental, or administration to others.
Intangible Assets
Kinds of Intangible assets
○ Patent
○ Copyright
○ Goodwill
○ Franchise
○ Trademark
○ License
