Class Notes for JSS1 to SSS3 with Assessments | Past Questions of JSCE, WAEC, NECO & JAMB › Forums › JSS1 › The importance of proper cost management in business?
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James Franko.
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September 11, 2025 at 9:28 am #386986
William Doo
ParticipantWithout expenses, it is impossible to operate, because money is needed to organize work and achieve set goals: for employee salaries, to maintain an office or production site, to communicate, etc.
In business planning, expenses are all the costs that must be taken into account in order to calculate the income and profit of an organization. In corporate vocabulary, the definition of “costs” from the English “cost” has taken root – expenses, costs.
There can be a lot of expense items. They are grouped into main categories.
Expenses for materials and equipment, components, goods for sale. This is the cost of raw materials, energy resources, packaging materials and other necessary components.
Costs for repair, maintenance of production and office equipment.
Personnel expenses – payroll, including bonuses, compensation, financial assistance, personnel training costs.
Rent of premises, utility bills.
Taxes and fees, including VAT, property tax, income tax and other mandatory payments.
Marketing and advertising costs.
Transportation costs. Mobile and landline communications, Internet.
Other business and entertainment expenses.
Unforeseen (extraordinary) — related to natural disasters, fires, floods, man-made accidents and other emergency situations.
The organization’s expenses need to be planned and managed correctly in order to reduce costs, increase business profitability and have funds for enterprise development.At first glance, these concepts are identical. But when keeping records and analyzing the economic activity of a company, it is important to distinguish between them.
Costs are any funds that an enterprise spends. But in the cost structure, expenses make up the part that is withdrawn from circulation and does not affect the formation of profit. In other words, expenses do not lead to the emergence of a new asset. For example, if you paid for office cleaning, these are expenses, and if you spent money on buying a new machine for production, from the point of view of resource management, these are expenses.
It is also important to correctly determine the expenses that can be taken into account to reduce the taxable base. This is especially relevant for enterprises on a simplified taxation system, operating under the “income minus expenses” system. Tax legislation regulates which expenses can be taken into account when calculating taxes.
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September 11, 2025 at 10:15 am #386988
James Franko
ParticipantI completely agree with you. Managing expenses in procurement significantly reduces expenses, allows you to make the financial part of the company transparent for the owner, and also helps to get more favorable prices for procurement. Consider precoro as the most effective modern software solution and you will get a lot of advantages for saving expenses in procurement and proper budget distribution, as well as protecting the budget from unplanned expenses.
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