Accounting Final Flashcards
1
Q
What is decentralization?
A
decentralization is when the power within a company is spread out (not solely at the top)
2
Q
What is the Static budget also referred to as?
A
- the master budget
- Prepared at the beginning of an accounting period
- Based solely on planned volume activity
3
Q
What is the flexible budget and how is it determined?
A
- Shows expected revenues and cost in a variety of volume levels
- Standard Price X Actual Quantity
4
Q
The differences between standard (planned, expected, or estimated) amounts are known as what?
A
- Variance
5
Q
How is variance calculated?
A
- The difference between what is budgeted vs the actual numbers
6
Q
How do you know when variance is favorable or unfavorable?
A
-When actual sales revenue is greater than planned revenue
7
Q
How to calculate Price Variance
A
- Price Variance = Actual Price - Standard Price X Actual quantity
8
Q
What is Cost of goods sold and how is it calculated?
A
- The direct cost of producing the goods sold by the company
- Subtracting from the company’s revenue to determine gross profit
- COGS = Begg. Inv. + P - Ending Inv.
P= Purchases during the period
9
Q
Product Cost
A
- Are all the costs related to obtaining or manufacturing a product ( can be assets or expenses)
10
Q
Period Cost
A
- All cost not included in product cost
- Overhead, SG&A,
11
Q
Activity Based Costing (ABC)
A
- Two-stage allocation process
- Cost associated with business activity
- allocated to cost pools
12
Q
Activity Center
A
- a place to maintain all types of records
13
Q
Break Even Point
A
- Contribution margin to be = to fixed cost
14
Q
Margin of Safety
A
- Budgeted units - break even units
15
Q
What are the 3 levels of planning for a business?
A
- Strategic: long term
- Capital: intermediate (2-5 yrs)
- Operations: short term (< a yr)
- Perpetual: Monthly basis
