Chapter 1 (De Jesus) Flashcards
This is a measurement in monetary terms, of the amount of resources used for the purpose of production of goods or rendering services. It is the cash or cash equivalent sacrificed for goods and services with future or current benefits.
Cost
This is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events which are, in part or at least, of financial character and interpreting the results thereof.
Accounting
This is primarily concerned with recording of a company’s transactions and preparation of financial statements.
Financial Accounting
This is concerned with providing information to managers for use in planning and controlling operations for decision making. It involves financial analysis, budgeting, forecasting, cost analysis, evaluation of business, etc.
Managerial Accounting
For which group of users is managerial accounting done?
Internal users or the management
This is a branch of accounting, which involves the process of analyzing, recording, classifying, summarizing and interpreting the details of costs of materials, labor and factory overhead necessary to produce and sell the product. It is considered a subset of management accounting and financial accounting.
Cost Accounting
For which group of users is financial accounting?
External users or the investors, stockholders, creditors and others
What is the purpose of financial accounting?
For decision making
This provides information regarding cost of products and services needed by both financial and managerial accounting.
Cost Accounting
What is the main objective of cost accounting?
The determination of the production cost.
These are used to track and allocate costs and expenditures. It provides management needed information to estimate the cost of their products.
Cost Accounting Systems
Under this system, the product costs are determined as they occur simultaneously with the manufacturing operation, but the total of product costs is only known as the operation has been completed. It collects the actual amount of product costs that is why it is also known as Actual Costing.
Historical Costing
Under this system, the product costs are determined in advance form analysis and forecasts made before the actual production begins.
Standard Costing
The difference between the actual costs and predetermined costs (standard costs) are charged to what account?
Variance account
This system is a combination of actual costing and standard costing wherein direct materials and direct labor are accumulated using actual costing and factory overhead is accumulated using standard costing.
Normal Costing
