general Flashcards
The accounting cycle
collecting, analyzing, and summarizing
Business documents
sales invoices, purchase orders, check stubs, cancelled checks, electronic payments
Revenues ______ Owners’ Equity
increase
Expenses ______ Owners’ Equity
decrease
operating activities
activities that are part of the day-to-day business of a company
Financing activities
activities whereby cash is obtained from or repaid to owner’s and creditors
inflows
selling goods or services
outflows
payments to purchase inventory, pay wages, taxes, interest, utilities, rent, etc…
Investing activities
activities associated with buying and selling long-term assets
period costs
non-manufacting costs
-selling and administrative costs
-general costs
-office and corporate expenses
Product Costs
manufacturing costs
-direct materials
-direct labor
-manufacturing overhead
unfavorable cost variance
a difference between the actual cost and the budgeted cost where the actual cost is more than the budgeted amount
favorable cost variance
a difference between the actual cost and the budgeted cost where the actual cost is less than the budgeted amount
articulation
the interrelationships among the financial statements
-The income statement explains the change in the retained earnings balance in the balance sheet
-The statement of cash flows explains the change in the cash balance in the balance sheet
statement of cash flows
a report of a company’s cash inflows and outflows categorized into operating, investing, and financing activities
cost pool
the total overhead cost identified as being generated by a specific overhead cost activity
cost driver
a numerical measure used to reflect the amount of a specific overhead cost that is associated with an overhead cost activity.
Cost of goods manufactured statement
a schedule supporting the income statement that summarizes th etotal cost of goods manufactured and transferred out of the work-in-process inventory account during a period. Costs include: Direct materials, direct labor, and applied manufacturing overhead
actual manufacturing overhead
manufacturing costs other than direct labor and direct materials
applied manufacturing overhead
the amount of manufacturing overhead that is assigned to the goods products
book value
the value of a company measured by the amount of owner’s equity in the company
market value
the value of a company as measured by the number of shares of stock outstanding multiplied by the current market price of the stock; the current value of business
all budgets start with a _____ or a ______
sales budget; sales forecast
master budget process
1) Sales budget/sales forecast
2) the production budget
3) selling and administrative expense budgets
4) cash inflows and outflows can be formed into pro forma financial statements
management accounting
-Unique competitive tool
-Both financial and nonfinancial data
-Usually kept secret from competitors
-Used for internal planning, control, and evaluation
financial accounting
-Uniform across companies (GAAP)
-Restricted to financial data
-Data often made public
-Used primarily by investors and creditors in deciding whether to provide capital to the company
Sequence of the flow of costs
1) purchase raw materials
2) transfer raw materials to production
3) add direct labor and manufacturing overhead costs
4) Transfer the cost of completed goods to finished inventory
5) Sell goods and transfer cost to cost of goods sold
