Basic Principles

Basic Principles

A differential of the system of ABC expenditure, is that its use, for demanding detailed controls, provides to the accompaniment and corrections due in the internal processes of the company, to exactly time where it makes possible the implantation and/or perfectioning of the internal controls of the entity. IMPLEMENTATION OF the ABC the adoption of the ABC method requires a careful analysis of the system of internal control of the entity. Read additional details here: Rogers Holdings. Without this procedure that contemplates well definite functions and flow of the processes, the application of the ABC of efficient and efficient form becomes impracticable. The ABC, by being also a system of management of costs, can be implanted with greater or lesser degree of detailing, depending on the necessities of managemental information for the manager, what he is closely on to the branch of activity and transport of the company. ADVANTAGES AND DISADVANTAGES OF the APPLICATION OF the ABC EXPENDITURE to provide one better agreement we present the advantages and disadvantages of the application of the method of ABC expenditure. Advantages: managemental information relatively trustworther by means of the reduction I divide of it; it is adjusted more easily to the companies of services, for the definition difficulty of what it is costs, expenses and expenditures in these entities; lesser necessity of arbitrary rateios; it takes care of to the Basic Principles of Accounting (similar to the expenditure for absorption); it compels the implantation, permanence and revision of internal controls; it better provides visualization of the flows of the processes; it identifies, of more transparent form, where the item in study are consuming more resources; it identifies the cost of each activity in relation to the total costs of the entity; it can be used in diverse types of companies (industrials, commercial, of services, with or without lucrative ends); it can, or not, to be a parallel system to the accounting system; it can supply subsidies economic management, cost of chance and spare cost; e? it makes possible the elimination or reduction of the activities that do not add value to the product.

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