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emplaw

emplaw

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Glindex
A CombinedGlossary/Subiect
A
ABC. SeeActivity-based costing(ABC)Absorptioncosting.The costingmethod whereproducts "absorb"both fixed and variable manufac-turing costs,332-338Absorptioncosting ncome statement,
334,420,421.Accountnalysis.method or deter-
miningcost behavior thatis basedon a manager'sudgmentin classify-ing eachgeneraledger account as avariable,fixed,ormixed cost,
31,7-320Accounting ate of return(ARR).Ameasureofprofitabilitycomputedby dividinghe averagennualoper-ating income romanassetby theinitial nvestmentn the asset.71.476478,497Accountseceivableurnover.Measurea company'sabilityto collect cashfrom creditcustomers.o computeaccounts eceivableurnover,dividenet creditsales byaverage netaccounts eceiv ble,728Accrualaccounting,76Acid-test ratio. Ratio of the sum ofcashplusshort-term investmentsplusnet current eceivableso totalcurrent iabilities.Tellswhether heentitycanpayall ofits current iabil-ities f theycome dueimmediately.Also called hequickratio,727Activity-basedostingABC).Focuseson activitiesas the fundamentalcostobjects. hecostsofthoseactivitiesbecome hebuilding blocksor com-pilingthe indirectcostsofproducts,services,ndcustomes, 238-246assessingroductprofitabilitywith,240-246cost- enefit est,249Z50development f systemor,238-239
usingfordecisionmaking,
247-249usingorobcosting,39-240
Activity-basedmanagementABM).Usingactivity-basedostnforma-tionto make decisionshat increaseprofits while satisfyingcustomer'sneeds,47-249Activitycostallocatinrates, 37Advertising,0Allocate.To assignnndirectcost oa costobject,54Allocationbase.A commondenomi-nator hatinks ndirectcosts o costobjectssuchasobsorproductionprocesses).deallStheallocationbasestheprimarycostdriver of theindirect cost,1,22Annuities.A streamof equalinstallmentsmadeat equal timeintervals,481calculatinguture valueof,484-485calculatingresentalueof,485-488internalate of returnwith,495496netpresentaluewith,490-491'Appraisal costs.Costsncurred todetectpoor-qualitygoodsor ser-vices,259,260Assetscapital,470residual alueof,493-494returnon,731totaI,690,731Assign.To attach acost to a costobject, 4Audit committee.A subcommitteeftheboardofdirectorshats respon-sibleoroverseeingothhenternalaudit unctionandheannual inan-cialstatement uditbyCPAs.Average osts.The totalcost dividedby thenumberof units,72-73Average nit costs,183
B
BAIIPluscalculator,529-536Balanced scorecard.Measuresthatrecognizethat managementmustconsiderinancialperformance mea-sures andoperationalperformancemeasures whenjudgingtheperfor-mance of a company andits sub-units,671.-676Balance sheets,67-68. SeealsoFinancialstatementsbudgeted,554comparative,7 1.771.8,720horizontal analysis of,7 1.7-71.8verticalanalysis of,720Benchmarking.Thepracticeof com-paringa company withother com-paniesthatare leaders, 54L-542,670,72L-722againstndustry average,722againstkey competitor,721,Blame,563Board of directors.The body electedby shareholders tooversee thecompany,TBook valuepershare ofcommonstocl<.Common stockholders'equifydividedby thenumberofshares ofcommon stockoutstanding.Therecorded amountforeachshare ofcommon stock outstan ding,733-7 34Breakevenpoint. Thesalesevel atwhich operatingincome iszero:Total revenuesequaltotal expenses.affect of changesn fixed costson, 380affectof changesnsalespriceon,377affect of changesnvariablecostson, 378finding, using CVP analysis,
36s-368.382-384graphing,371.Budgeted alance heet,54Budgetedncomestatement,48Budgetedmanufacturing verheadrate. 23
G-l
 
G.2
Glindex
Budgetedtatementf cash lows,554-555,56Budgets.Quantitativeexpressionfaplanthathelpsmanagersoordi-nateandmplementheplan,3. SeealsoCapitalbudgetingbenefits1,540-542capitalexpenditures,43cash, 51-554employeecceptancef, 555-556tlnancral.J -JJ6flexible,596-602inventorSpurchases,nd costofgoodsold,546-547master,,542-545.69operating,45-548operatingxpenses,47forplanningandcontrolling,539-540rollingupunit, 557-558sales,45-546sensitivitynalysis o4556-557static,597,622usesf, 539-542using,o controloperations,558-563Budgetariances,Businessctivities,n valuechain,49-51.Businessecisions.eeDecisionsBusinessnvironment,8-25Businessunctions,34-235Businessectors, 7-49Business-to-business82B)e-commerce,21
c
Capital,ostof,688Capitalassets, 70Capitalbudgeting.Theprocessofmakingcapital investmentdeci-sions.Companiesmakecapitalinvestmentshenrheyacquireapi-talassets,ssetssed for a longperiodof time,470-473comparingmethodsof, 497-498methodsf,471process,72-473usingaccountingateof return,476-478usingdiscountedash lowmodels,488-497usingpaybackperiod,473-476
Capital expenditures budget. Acom-pany's planfor purchasesofproperryplant,equipment,and other long-term assets,543Capital rationing. Choosingamongalternativecapitalinvestmentsduetolimited funds,472,492-493Capital turnover. The amountof salesrevenue generatedor every dollarofinvestedassets;a componentof theROIcalculation computedas salesdivided by totalassets,85Cash budgets. Details howthe busi-ness expects togofromthe begin-ning cash balance to thedesiredending balance. Also calledthestatement of budgeted cash receiptsandpayments,551-554Cash collections, udgeted,551Cash flow models,discounted,488497Cash lows, 471472budgeted statement of, 554-555,556discounting,485-488net cash nflows, 471-475,477478,489,490-492Cashpayments,budgeted,552-553Centralized decision making. Refersto companies in which allmajorplanningand operating decisionsaremadeby top managemenq666Certified FinancialManager(CFM).Aprofessionalcertification issuedby theIMAto designateexpertisenthe areas of financial statementanalysis, working capitalpolicy,capital structure, business aluation,andrisk management, 11Certified Management Accountant
(cMA),11CertifiedublicaccountantsCPAs),7-8,1.9Chief executive fficer(CEO).Thepositionhiredby the boardofdirec-torsto overseehe companyon adailybasis,Chief financial officer(CFO).Thepositionresponsibleorallof thecompany'sinancialconcerns,Chiefoperatingofficer(COO).Thepositionesponsibleoroverseeingthe company's perations,Climate oraction,675-676
Committed fixedcosts. Foxedcosrsthat are ockedinbecauseofprevious-managementdecisions;managementhas littleor no controlover thesecostsnthe short run,306Common-sizestatement.A financialstatement hat reportsonlypercent-agesnodollaramounts),721,722Communication,54L, 669Companies, comparisonsbetween,
720-721,
Comparativealanceheets,717-719,720Comparativencometatements,716-717,719Competence,2Competitionglobal,20time-based, 0-23Competitiveadvantage,41.4Competitors,enchmarkingagainst,721.Compoundinterest.Interestcom-putedon theprincipaland all inter-estearnedodate, 81Confidentiality,2Constraints.A factorhat restrictsro-ductionor salef aproduct,34436Continuous mprovementhilosophy.Aphilosophyequiringemployeesocontinuallyook forways o improveperformance24-25Contributionmargin.Sales evenueminusvariableexpenses,34-335,362-363,379Contributionmarginapproach, odecisionmaking, 41.7-41,8Contribution rnarginincomestate-ments. An incomestatementhatgroupsosts ybehavior ather hanfunction;canonly be usedbyinter-nalmanagement,26-327,335,362-363,420,431Contributionmarginperunit.Theexcess f theunit salesriceover hevariablecostperunit. Alsocalledunit contributionmargin,363Contributionmarginratio.Ratioofcontribution margino sales evenue,363-365,367368,369, 383-384Controldecisions,singABC,248Controllablecosts.Costs that cdrrvbe nfluencer changedy manage-ment,68-69
 
Controller.The position responsibleforgeneralinancial accounting,managerialaccountingand taxreporting,7Controlling. One of management'sprimaryresponsibilities; valuatingthe resultsof businessperationsagainstheplanandmaking adjust-ments o keep hecompanypressingtoward tsgoal,3Conversion osts.The combinationof direct labor and manufacturingoverhead osts,58, 73Coordination, 41Corecompetencies,14Corporate candals, 8Cost allocated ystems, eedormoreaccurate,233-237Cost allocation.Assigning ndirectcosts o costobjects,11for activities, 43-245Costallocation ase, 35Cost assignment.generalerm thatreferso both tracing direct costsand allocating ndirect costs o costobjects,11Cost behaviors.Describesowcostschange svolumechanges, 02-31,4determining,1,7-326fixed costs,306-309high-lowmethod or,320-322mixedcosts,09-311regressionnalysis f, 322-325relevantangeand, 31,1,-31,3stepcosts,373-31,4variableosts, 03-306Cost-benefitnalysis.Weighingcostsagainstbenefits o helpmakedeci-sions,2415for ABC, 249-250ofquality programs,60:262Cost centers. subunitesponsibleonlyforcontrolling costs, 559,560,669performanceeports, 79Costdistortion.Overcostingomeproductswhile undercostingtherproducts,234Cost driver.Theprimaryfactor thatcauses costr122Costequations. mathematical qua-tionfora straight ine that expresseshowa costbehaves,304, 307,320-326Costing.SeelsoActivity-basedcosting;obcosting;Processcostlngabsorption, 32-338just-in-time,66:268product,4
.it
varlaDle. 55L-JJ /
Costobjects.Anythingforwhichmanagers anta separatemeasure-ment of costs,3-54Costof capital,88Cost ofgoodsmanufactured.hemanufacturingcostof thegoodsthatfinished heproductionprocessthisperiod,63-64calculationof,64-66Costofgoodsold,55,63,29-I30Cost ofqualityreports.A reporthatlists thecosts ncurredby the com-panyrelated oqualiry The costsarecategorizedaspreventioncosts,appraisedosts,nternalailurecosts,andexternalailurecosts,58Costperunit of output,682Cost-pluspricing. An approach opricingthatbeginswiththeprod-uct'sull costsandaddsadesiredprofittodeterminecost-plusrice,108-109, 25-427Costpredictionsdataconcerns ndr326usinghigh-lowmethod,325usingegressionnalysis,25Costeports,production,'1..9-196Costsaccountanalysisf, 31.7-320activity,237affectof volumeon,302-31.4allocating, 4appraisal,59,260assigning,4averag%2-73average nit,183controllable,8-69conversion,8,1.73cutting,248differential,69direct,53-54duplicationf,668externalailure,259,260in financialstatements.2-68Iixed,70-71,303,306-309,379-381,43L432flexiblebudget,598-600flow of,n costing,68-L72
Glindex
flow of, through nventoryaccounts,66-67functionalseparation f, 326-327indirect,53-54,234internalailure,259,260irrelevant, 9-70,415-41,6labor,629labor compensation, 8-59manufacturing, 6-58, 71.,1.21.-1.26,32, 611-61,2marginal, T3materials, .1.1.-1.1.4merchandising,5-56mixed, 03,309-31,37Lnoninventoriable, 34operating,4opportunity,440overhead,21-126perequivalentnits, 1,81,1,92period,4,59,62-68,332,333prevention,58-259,60prime,58product,4-58, 59,62-68,105,333relevant, 9-70, 31.1.-31.3,1. 41.6standard,09-627step, 13-314sunk,0,416total,72-7 ,72-73,180-183,192-1.93,31,1,-313totalixed,307totalmixed,309total variable,304transferred-in, 88uncontrollable,8-69unit,183,L95variable,70-7 1.,303-306, 31.2,377-379CostsofqualitS 258-262Costsystems, eedoraccurate,233J34Cost racing.Assigningirectcosts ocostobjectshat used hose osts,11Costvariancesdirect abor,61.9-622for directmaterials, 1.3-61.8useof,623-624Cost-volume-profit(CVP)analysis.Expresses herelationship amongcosts,olume,andprofitorloss.assumptions361-362for changing usiness onditions,376-384components f,361.contributionmargin ratio,363-365dataequiredfor,36leffectof salesmixon, 381-384

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