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Final Exam Ch.9-13
Vocabulary From Book
95
Accounting
Undergraduate 2
12/11/2012

Additional Accounting Flashcards

 


 

Cards

Term
Budgets
Definition
Plans Dealing with the acquisition and use of resources over a specified period
Term
Planning
Definition
The cornerstone of good management; involves developing objectives and goals for the organization, as well as the actual preparation of budgets
Term
Operating
Definition
Involves day to day decision making by managers, which is often facilitated by budgeting
Term
Control (with respect to Budgets)
Definition
Involves ensuring that the objectives and goals developed by the organization are being attained; often involves a comparison of budgets with actual performance and the use of budgets for performance evaluation purposes
Term
Zero-Based budgeting
Definition
Requires managers to build budgets from the ground up each year
Term
Participatory budgeting
Definition
a budgeting process that starts with departmental managers and flows up through middle management and then to top management. Each new level of management has responsibility for reviewing and negotiating any changes in the proposed budget.
Term
Master Budget
Definition
Consists of an interrelated set of budgets prepared by a business
Term
Sales forecast
Definition
combines with the sales budget to form the starting points in the preparation of production budgets for manufacturing companies, purchases budgets for merchandising companies, and labor budgets for service companies.
Term
Sales Budget
Definition
used in planning the cash needs for manufacturing, merchandising, and service companies
Term
Operating budgets
Definition
Used to plan for the short term (typically one year or less)
Term
Production Budget
Definition
used to forecast how many units of product to produce in order to meet the sales projections
Term
Material Purchases budget
Definition
Used to project the dollar amount of raw materials purchased for production
Term
Direct Labor Budget
Definition
Used to project the dollar amount of direct labor cost needed for production
Term
Manufacturing overhead budget
Definition
used to project the dollar amount of manufacturing overhead needed for production
Term
Cash Receipts Budget
Definition
used to project the amount of cash expected to be received from sales to customers and cash collections from customers
Term
Cash Disbursements budget
Definition
used to project the amount of cash to be disbursed during the budget period
Term
Summary Cash Budget
Definition
shows cash receipts and cash disbursements, along with any required borrowing or repayments made during the month
Term
Pro Forma financial statements
Definition
budgeted financial statements that sometimes are used for internal planning purposes but more often are used by external users
Term
Static Budgets
Definition
Budgets that are set at the beginning of the period and remain constant throughout the budget period
Term
Flexible Budgets
Definition
Budgets that take differences in spending owing to differences in volume out of the analysis by budgeting for labor (and other costs) on the basis of the actual number of units produced
Term
Variance analysis
Definition
Allows managers to see whether sales, production, and manufacturing costs are higher or lower than planned and, more important, why actual sales, production, and costs differ from those budgeted.
Term
Control (with respect to Variance Analysis)
Definition
Involves the motivation and monitoring of employees and the evaluation of people and other resources used in the operations of the organization.
Term
Management by exception
Definition
the process of taking action only when actual results deviate significantly from planned results
Term
Standard cost
Definition
a budget for a single unit of service
Term
Standard quantity
Definition
the budgeted amount of materials, labor, or overhead for each product
Term
Standard Price
Definition
the budgeted price of the materials, labor, or overhead for each unit
Term
Task Analysis
Definition
a method of setting standards that examines the production process in detail to determine what it should cost to produce a product
Term
Ideal Standard
Definition
a standard that is attained only when near perfect conditions are present
Term
Practical Standard
Definition
a standard that should be attained under normal, efficient operating conditions
Term
Flexible Budget Variance
Definition
the difference between the flexible budget operating income and actual operating income
Term
Sales Price Variance
Definition
the difference between the actual sales price and the flexible budget sales price, times the actual sales volume
Term
Price Variance
Definition
the difference between the actual price and the standard price, times the actual volume purchased
Term
Usage Variance
Definition
the difference between the actual quantity and the standard quantity, times the standard price
Term
Budget Variance
Definition
the difference between the amount of fixed overhead actually incurred and the flexible budget amount; also known as the spending variance
Term
Volume Variance
Definition
the difference between the flexible budget amount and the fixe overhead applied to products
Term
Decentralized organizations
Definition
organizations in which decision-making authority is spread throughout the organization
Term
Responsibility accounting
Definition
an accounting system that assigns responsibility to a manager for only those areas which are under that manager's control
Term
Cost Center
Definition
an organizational segment, or division, in which the manager has control over costs but not over revenue or investment decisions
Term
Performance Report
Definition
Provides key financial and non-financial measures of performance for a particular segment
Term
Revenue Center
Definition
An organizational segment, or division, in which the manager has control over revenue but not costs or investment decisions
Term
Profit Center
Definition
An organizational segment, or division, in which the manager has control over both costs and revenue but not investment decisions
Term
Investment Centers
Definition
an organizational segment, or division, in which the manager has control over costs, revenue, and investment decisions
Term
Strategic Business unit (SBU)
Definition
Another term for an investment center
Term
Segmented income statements
Definition
reports that calculate income for each major segment of an organization in addition to the company as a whole
Term
segment costs
Definition
all costs attributable to a particular segment of an organization but only those costs that are actually caused by the segment
Term
common costs
Definition
indirect costs that are incurred to benefit more than one segment and that cannot be directly traced to a particular segment or allocated in a reasonable manner
Term
Segment Margin
Definition
the profit margin of a particular segment of an organization, typically the best measure of long-term profitability
Term
Return on Investment (ROI)
Definition
measures the rate of return generated by an investment center's assets
Term
Margin
Definition
for each sales dollar, the percentage that is recognized as net profit
Term
Asset Turnover
Definition
the measure of activity used in the ROI calculation; it measures the sales that are generated for a given level of assets
Term
Net Operating Income
Definition
Net income from operations before interest and taxes
Term
Operating assets
Definition
typically include cash, accounts receivable, inventory, and the property, plant and equipment needed to operate a business
Term
Residual Income
Definition
The amount of income earned in excess of a predetermined minimum rate of return on assets
Term
Balanced Scorecard
Definition
an approach to performance measurement that uses a set of financial and non-financial measures that relate to the overall strategy of the organization
Term
Productivity
Definition
a measure of the relationship between outputs and inputs
Term
manufacturing cycle time
Definition
the total time a product is in production, including process time, inspection time, wait time, and move time; cycle time includes both value-added and non value-added time
Term
throughput
Definition
the amount of product produced in a given amount of time, such as a day, week, or month
Term
manufacturing cycle efficiency (MCE)
Definition
the value-added time in the production process divided by the throughput, or cycle time
Term
Quality
Definition
usually defined as meeting or exceeding customers' expectations
Term
Kaizen
Definition
a system of improvement based on a series of gradual and often small improvements
Term
Hejunka
Definition
a system of standardizing manufacturing processes to improve efficiency
Term
Prevention costs
Definition
costs incurred to prevent product failures typically related to design and engineering
Term
appraisal (detection) costs
Definition
costs incurred to inspect finished products or products that are in the process of production
Term
Internal Failure Costs
Definition
Costs incurred once the product is produced and then determined to be defective
Term
External Failure Costs
Definition
costs incurred when a defective product is delivered to a customer
Term
Examples of Prevention costs
Definition
design and engineering costs
quality training
supervision
quality improvement projects
training and technical support provided to suppliers
Term
Examples of Appraisal (Detection) Costs
Definition
Inspecting raw materials
testing goods during the production process
final product testing and inspection
Term
Examples of Internal Failure Costs
Definition
Material, Labor, and other manufacturing costs incurred in rework
Scrap
Spoilage
Downtime
Design Changes
Re inspections
Disposal of Defective products
Term
Examples of External Failure Costs
Definition
Repairs made under warranty
Replacement of defective parts
Product recalls
Liability costs from defective products
lost sales
Term
Stock Option
Definition
the right to buy a share of stock at a set price (called the option price or strike price) at some point in the future
Term
Restricted Stock
Definition
a form of management compensation in which employees receive shares of stock with restrictions such as requirements to stay with the company for a set length of time or requirements to meet established performance measures
Term
Horizontal Analysis
Definition
an analysis of financial statements over time
Term
Trend Analysis
Definition
horizontal analysis of multiple years of data
Term
Common size financial statements
Definition
statements in which all items have been restated as a percentage of a selected item on the statements
Term
Working capital
Definition
the excess of current assets over current liabilities, which is a measure of an entity's liquidity
Term
Liquidity
Definition
a measure of the ability of a company to meet its immediate financial obligations
Term
Current Ratio
Definition
a measure of an entity's liquidity; also known as working capital ratio
Term
quick Ratio
Definition
a stricter test of a company's ability to pay its current debts with highly liquid current assets
Term
Accounts Receivable Turnover Ratio
Definition
one of the best measures of the efficiency of the collection process
Term
Inventory turnover ratio
Definition
a measure of the number of times the value of inventory is sold in one year
Term
Cash to cash operating cycle ration
Definition
a measure of the length of time between the purchase of inventory and the eventual collection of cash from sales
Term
Debt-to Equity Ratio
Definition
A solvency measure focusing on the amount of capital provided by creditors
Term
Times Interest Earned
Definition
A measure of the company's ability to meet current interest payments to creditors
Term
Debt Service Coverage Ratio
Definition
A measure of the amount of cash generated by operating activities that is available to repay principal and interest in the upcoming year
Term
Ratio of cash flow from operations to capital expenditures
Definition
a measure of a company's ability to use cash flow from operations to finance the acquisition of property, plant, and equipment
Term
Return on Assets (ROA)
Definition
a measure of return to investors on all assets invested in the company
Term
Return on Common Stockholders' equity (ROCSE)
Definition
a measure of return to common stockholders as a percentage of stockholders' equity
Term
Earnings per Share (EPS)
Definition
a key measure of performance that is often used to compare companies of different size
Term
Price-Earnings (P/E) ratio
Definition
a measure of the current price of a company's stock in comparison to its earnings. Theoretically, the P/E ratio tells us something about how investors think that a company's stock will perform in the future compared with other companies' stock
Term
Operating activities
Definition
Include acquiring and selling products in the normal course of business
Term
Financing activities
Definition
include cash flows from selling or repurchasing capital stock, long-term borrowing, and contributions from owners
Term
cash equivalent
Definition
an item that can be readily converted to a known amount of cash and that has an original maturity of three months or less to the investor
Term
Investing activities
Definition
include the purchase and sale of property, plant, and equipment; the purchases and sale of securities; and loans made as investments
Term
Direct Method
Definition
Reports cash collected from customers and cash paid for inventory, salaries, wages, and so on
Term
Indirect method
Definition
starts with net income and removes the impact of non-cash items and accruals
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