Shared Flashcard Set

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Ch 23-25
acct
29
Accounting
Undergraduate 2
06/03/2010

Additional Accounting Flashcards

 


 

Cards

Term
Budget
Definition
Formal statement of a company's future plans. In monetary terms.
Term
Capital Expenditures Budget
Definition
lists dollar amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities
Term
Cash Budget
Definition
shows expected cash inflows and outflows during the budget period. Prepared after sales, merchandise purchases, expenses and capital expenditures budgets.
Term
Master Budget
Definition
formal, comprehensive plan for a company's future. Contains several individual budgets that are linked with eachother to form a coordinate plan.
Term
Continuous Budgeting
Definition
applied by preparing rolling budgets.
Term
Rolling Budget
Definition
Revising entire set of budgets for remaining months and quarters to replace onces that lapsed.
Term
Controllable Variance
Definition
Variable OH spending variance + Fixed OH spending variance + variable OH efficiency variance
Term
Cost Variance
Definition
(aka variance) Actual - standard costs. Can be favorable or unfavorable.
Term
Efficiency Variance
Definition
occurs when standard direct labor hours expected for actual production differ from the actual direct labor hours used.
Term
Favorable Variance
Definition
when compared to budget, the actual cost or revenue contributes to a higher income.
Term
Fixed Budget
Definition
(static budget) based on a single predicted amount of sales or other measure of activity.
Term
Flexible Budget
Definition
(variable budget) a report based on predicted amounts of revenues and expenses corresponding to the actual level of output.
Term
Management by Exception
Definition
managers focus attention on the most significant variance and give less attention to areas where performance is reasonably close to standard.
Term
Price Variance
Definition
Difference between ACTUAL PRICE per unit of input and budgeted price per unit of input.
Term
Quantity Variance
Definition
difference between actual quantity of input used and budgeted quantity of input
Term
Spending Variance
Definition
occurs when management pays an amount different than the standard price to acquire an item.
Term
Standard Costs
Definition
preset costs for delivering a product or service under normal conditions.
Term
Unfavorable Variance
Definition
when compared to budget, actual cost or revenue contributes at a lower income.
Term
Variance Analysis
Definition
explaining the difference (or variance) between actual costs and the standard costs allowed for the good output
Term
Volume Variance
Definition
occurs when a difference occurs between the actual volume of production and the standard volume of production.
Term
Accounting Rate of Return
Definition
(return on average investment) computed by dividing a project's after-tax net income by the average amount invested in it.
Term
Avoidable Expenses
Definition
(escapable expenses) amounts the company would not incur if it eliminated the segment.
Term
Capital Budgeting
Definition
process of analyzing alternative long term investments and deciding which assets to acquire or sell.
Term
Hurdle Rate
Definition
minimum acceptable rate of return and is applied as follows. Used when using IRR
Term
Incremental Costs
Definition
(differential costs) additional costs incurred if a company pursues a certain course of action.
Term
Internal Rate of Return
Definition
(IRR) which equals the rate that yields an NPV of zero for an investment.
Term
Net Present Value
Definition
(NPV) is computed by discounting the future net cash flows from the investment at hte project's required rate of return and then subtracting the initial amount invested.
Term
Payback Period
Definition
(PBP) expected time period to recover the initial investment amount
Term
Unavoidable Expenses
Definition
(inescapable expenses) are amounts that would continue even if the segment is eliminated.
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