Prelim Flashcards
set of aclivities that convert raw materials/resources into goods and services purchased and consumed by the end-users.
Value Chain
set of firms and individuals that sell goods and services to the firm.
Supply Chain
set of firms and individuals that buy and distribute goods and services from the firm.
Distribution Chain
creates the value for which the customer is willing to pay.
Value chain
designed to provide users with the information for decision-making.
Accounting systems
focuses on reporting financial information to external parties such as investors, government agencies, banks, and suppliers based on Generally Accepted Accounting Principles (GAAP).
Financial Accounting
process of measuring, analyzing, and reporting financial and non-financial information that helps managers make decisions to fulfill the goals of an organization.
Management Accounting
process of measuring, analyzing, and reporting financial and non-financial information related to the costs of acquiring or using resources in an organization.
Cost accounting
This involves production, marketing, and distribution management, which is directly responsible for achieving the organization’s goals.
Line Management
This involves management accountants, information technology, and human-resources management, providing advice, support, and assistance to line management.
Staff management
These activities do not add value to the goods or services from the customers* perspective.
Non- Value -Added Activities
This is the concept of considering both the costs and benefits of a proposal.
Cost - Benefit Analysis
specific unit of an organization assigned to a manager who is held accountable for its operations and resources.
Responsibility center
Manages entire finance and accounting function
Chief Financial Officer (CFO)
Manages liquid assets
Conducts business with banks and other financial institutions
•Oversees public issues of stock and debt
Treasurer
Plan and designs information and incentive systems
Controller
Ensures compliance with laws, regulations and company policies and procedures
Provides consulting and auditing services within the firm
Internal Auditor
Records, measures, estimates, and analyzes costs
• Works with financial and operational managers to provide relevant information for decisions
Cost Accountant
reveals the economic measure of resources used to accomplish an objective like manufacturing a product.
Cost
a set of recognized methods developed for planning and controling an organization’s cost-generating activities relative to its strategy, goals, and objectives.
Cost management system
Any item for which costs are being separately measured. It is a key concept used in managing the costs of a business. Production operations and product lines are common cost objects.
Cost Object
Costs related to product-making. These costs associated with any cost object are classified according to their relationship with the cost object.
Product Costs
Costs directly identified with finished goods or those that are conveniently and economically traceable to the cost object.
Direct cost
Costs indirectly associated with finished goods or those that cannot be economically traced. These costs are allocated instead to the cost object.
Indirect costs
refers to a limited span of volume or activity.
Relevant Range
vary in total in direct proportion to changes in production volume. This cost is constant on a per unit basis as activity changes within a relevant range.
Variable costs
are constant in total within the relevant range of activity but variable on a per-unit basis.
Fixed costs
has both a variable and a fixed component.
Mixed cost
are related to making or acquiring the products that directly generate the revenues of an entity.
Product costs
operating expenses related to business functions other than production, such as selling and administration. These costs are non-manufacturing costs. These costs are more closely associated with a particular period than making or acquiring a product.
Period costs
Any material that can be easily and economically traced to a product being produced.
Direct Material
This refers to the time spent by individuals who work specifically on manufacturing a product.
Direct Labor
Any production cost that is indirect to the product. It includes factory supervisors’ salaries and depreciation, insurance, and utility costs on production machinery, equipment, and facilities
Overhead
Sum of direct labor and overhead
Conversion cost
Sum of direct materials and direct labor
Prime cost
refers to assigning an indirect cost to one or more cost objects using some reasonable allocation base or driver.
Cost Allocation