Tuesday, April 19, 2011
Saturday, April 16, 2011
Notional Interest
What's Notional Interest?
It's an imputed cost charged for the use of internally generated fund.
Why?
Enable management to make clearer internal decisions by making sure that internal decision making become more realistic by assuming that the cost of all resources consumed reflects the full economic value - usually by applying market prices
It's an imputed cost charged for the use of internally generated fund.
Why?
Enable management to make clearer internal decisions by making sure that internal decision making become more realistic by assuming that the cost of all resources consumed reflects the full economic value - usually by applying market prices
Notional Rent
What's Notional Rent?
It's a sum put into accounts as rent where the company owns the building it is occupying and so does not pay an actual figure.
Why?
Helps to focus management attention on making best use of space so that surplus space across the whole organisation might then be sold or rented to another user.
Intra division charges to enable management to see the true performance of certain departments.
Since it's not an actual monetary transaction no record appeared in the finance accounts.
It's a sum put into accounts as rent where the company owns the building it is occupying and so does not pay an actual figure.
Why?
Helps to focus management attention on making best use of space so that surplus space across the whole organisation might then be sold or rented to another user.
Intra division charges to enable management to see the true performance of certain departments.
Since it's not an actual monetary transaction no record appeared in the finance accounts.
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