Test 1 Flashcards
Managerial Accounting
the provision of accounting information for a company’s internal users
Planning
the detailed formulation of action to achieve a particular end; it requires setting objectives and identifying methods to achieve them
Controlling
the managerial activity of monitoring a plan’s implementation and taking corrective action as needed; it is usually achieved by comparing actual performance with expected performance
Decision Making
the process of choosing amongst competing alternatives
Financial Accounting
a type of accounting focused primarily on the creation of financial information for external users
Value Chain
set of activities required to design, develop, produce, market, and deliver products and services to customers
Continuous Improvement
the continual search for ways to increase the overall efficiency and productivity of activities by reducing waste, increasing quality, and managing cost
Total Quality Management
a management philosophy in which manufacturers strive to create an environment that will enable workers to manufacture perfect (zero-defect) products
Lean Accounting
an accounting practice that organizes costs according to the value chain to help managers eliminate waste and, ultimately, reduce costs and improve financial performance
Line Positions
positions that have direct responsibility for the basic objectives of an organization
Staff Positions
positions that are supportive in nature and have only indirect responsibility for an organization’s basic objectives
Controller
the chief accounting officer in an organization
Treasurer
the individual responsible for the finance function; raises capital and manages cash and investments
Ethical Behavior
choosing actions that are right, proper, and just
Sarbanes-Oxley Act (SOX)
an attempt to limit securities frauds and accounting misconduct scandals
Certified Management Accounting (CMA)
has passed a rigorous qualifying examination, met an experience requirement, and participates in continuing education
Certified Public Accountant (CPA)
has passed a national examination and must be licensed by the state in which he or she wishes to practice accounting (e.g., in audit, tax, etc.)
Certified Internal Auditor (CIA)
has passed a comprehensive examination designed to ensure technological competence and has 2 years of experience
Accumulating Costs
the way that costs are measured and recorded
Administrative Costs
all costs associated with research, development, and general administration of the organization that cannot reasonably be assigned to either selling or production
Allocation
when an indirect cost is assigned to a cost object using a reasonable and convenient method
Assigning Costs
the way that a cost is linked to some cost object
Conversion Cost
the sum of direct labor cost and overhead cost
Cost
the amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization
Cost Object
any item such as products, customers, departments, projects, and so on, for which costs are measured and assigned
Cost of Goods Manufactured
the total product cost of goods completed during the current period
Cost of Goods Sold
the total product cost of goods sold during the period
Direct Costs
a cost that goes into the product (ex: steel in a safety pin)
costs that can be easily and accurately traced to a cost object
Direct Labor
the labor that can be directly traced to the goods or services being produced
Direct Materials
materials that are a part of the final product and can be directly traced to the goods or services being produced
Expenses
costs that are used up (expired) in the production of revenue
Fixed Cost
cost that remains the same (ex: rent on a building) it does not vary with relationship
costs that, in total, are constant within the relevant range as the level of output increases or decreases
Gross Margin
the difference between sales revenue and cost of goods sold
sales revenue - COGS
Indirect Costs
occurring cost that does not go into product (ex: a factory’s rent or insurance)
costs that cannot be easily and accurately traced to a cost object
Manufacturing Organizations
an organization that produces tangible products
Manufacturing Overhead
all product costs other than direct materials and direct labor
Opportunity Cost
lost revenue
the benefit given up or sacrificed when one alternative is chosen over another
Period Costs
cost related to time (ex: paying insurance in advance)
Price
the revenue per unit
Prime Cost
a form of product cost; the sum of direct materials cost and direct labor cost
Product (Manufacturing) Costs
cost of product; including direct and indirect
material used (given) + labor used (calculate) + overhead used (given)
costs of producing a product in a manufacturing firm or of acquiring a product in a merchandising firm and preparing it for sale. Product costs include direct materials, direct labor, and manufacturing overhead
Products
goods produced by converting raw materials through the use of labor and indirect manufacturing resources, such as the manufacturing plant, land, and machinery
Selling Costs
those costs necessary to market, distribute, and service a product or service
Service Organizations
an organization that produces intangible products
Services
tasks or activities performed for a customer or an activity performed by a customer using an organization’s products or facilities
Variable Cost
costs that, in total, vary in direct proportion to changes in output within the relevant range; it has a direct relationship with activity; the more products produced, the more income
Work in Process (WIP)
DEBIT BALANCE the cost of the partially completed goods that are still being worked on at the end of a time period
