Navigyan Edutech

📚 Accounting Concept Series – Historical Cost Concept
Did you know? 🤔
According to the Historical Cost Concept, assets are recorded in the books at the price paid to acquire them, not at their current market value.
🔹 Bought a machine for ₹10,000? 🔹 Even if its market value becomes ₹14,000 later, 🔹 It will still be shown at ₹10,000 in the accounts (subject to depreciation).
✅ Ensures objectivity ✅ Easy to verify ✅ Maintains consistency in financial reporting
💡 Remember: "Record the cost, not the current value."
Are you preparing for CA, CMA, CS, B.Com, or learning accounting fundamentals? Follow for more easy accounting concepts explained with practical examples.
💬 Comment "NEXT" if you want the next accounting concept in this series.

Day 13: Why your factory's "speedometer" lies to you. 🏎️💨

​When a manufacturer tells you a machine can print 100 pages a minute, that’s Installed Capacity. It assumes the machine runs 24/7/365 with zero stops.

​But in the real world?

​Machines need maintenance (Practical Capacity).

​Market demand rises and falls with the seasons (Normal Capacity).

​Unexpected power cuts or sudden rush orders happen (Actual Capacity).

​If you don't know the difference, your cost per unit will always be wrong, and your profits will bleed through unabsorbed fixed overheads.

​Check out our latest breakdown to see the exact formulas and a step-by-step printing press example that makes this crystal clear. 📖

​