Abc Categorisation Definition

The term “ABC categorisation” is used in business and accounting to refer to the process of grouping together items or activities according to their value. For example, a company might group its products into three categories: A items are those that generate the most revenue, B items are those that generate medium amounts of revenue, and C items are those that generate the least revenue.

This approach can also be applied to expenses, with A items being those that cost the most, B items being those that cost medium amounts, and C items being those that cost the least. The ABC approach can help businesses to focus their resources on the areas that will have the biggest impact on their bottom line.