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A number of capital budgeting techniques that are used in practice are (Fig.24.1): 1. Pay Back Period Method: The payback period is the length of time required to recover the initial cash outlay of the project. It can be calculated as follows: ADVERTISEMENTS: Payback Period = Cash Outlay/Annual cash inflowThe method can be understood as follows:If a project involves a cash outlay of Rs. 1,50,000 and Rs. 2,00,000 in the first, second and third and fourth years respectively. It’s payback period is 4 years because the sum of cash inflows during 4 years is equal to the initial outlay. When the annual cash inflow is a constant sum, the payback period is simply the initial outlay divided by the annual cash inflows.For example, a project which has an initial cash…

Stock records are maintained in the following different forms:1. Bin card2. Stores ledger ADVERTISEMENTS: 3. Stock identification card4. Materials received note5. Materials requisition slip6. Materials returned slip ADVERTISEMENTS: 7. Materials transfer note8. Damage/shortage/excess report9. Daily receipt voucher10. Package slip. 1. Bin card: ADVERTISEMENTS: A bin card is said to be mirror of the bin which depicts the quantity materials stored therein. It tells the history of the bin. If functions as materials movement record and as a replenishment index. It is a brief version of the stock ledger pertaining to an item and serves the purpose of a ready reckoned for the item binned therein. The bin card serves the following purpose:(i) It is a check on the stock ledger recording.(ii) It helps in verifying the stock.(iii) It is a…

Purchasing procedure varies with different business forms, but all of them follow a general pattern in the purchase and receipt of materials and payment of obligations. The important steps in purchasing and receiving procedure are as follows (Fig.9.1). STEP-I: Purchase Requisition: A form known as purchase requisition is commonly used as a formal request to the purchasing department to order goods or services. The purchase requisition serves three general purposes:1. It fixes the responsibility of the department/ personnel making the purchase requisition. ADVERTISEMENTS: 2. It can be used for future reference.3. It automatically starts the purchasing process and informs the purchasing department of the need for the purchase of materials.Usually, purchase requisitions are prepared by the storekeepers for regular stores items which are below or approaching the minimum level of…