Zero Based Budgeting - ZBB
A method of budgeting in which all expenditures must be justified each new period, as opposed to only explaining the amounts requested in excess of the previous period's funding.
Supply Chain Management - SCM
The management and coordination of a product's supply chain for the purpose of increasing efficiency and profitability.
Just In Time - JIT
An inventory strategy companies employ to increase efficiency and decreasewaste by receiving goods only as they are needed in the production process,thereby reducing investory costs.
Inventory
Inventory can be either raw materials, finished items already available for sale, or goods in the process of being manufactured. Inventory is recorded asan asset on a company's balance sheet.
Balance Sheet
Activity Based Budgeting - ABB
A method of budgeting in which activities that incur costs in each functionof an organization are established and relationships are defined betweenactivities. This information is then used to decide how much resource should be allocated to each activity.
Accounting
To provide a record such asfundspaid or received for a person or business.Accountingsummarizes and submits this information in reports andstatements. The reports are intended both for the firm itself and outside parties.
Annual Report
A corporation's annual statement of financial operations. Annual reportsinclude a balance sheet, income statement, auditor's report, and a description
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of the company's operations.
Cook the Books
Cookie Jar Accounting
Anaccountingpractice where a company uses generous reserves from goodyears against losses that might be incurred in bad years.
Certified Public Accountant - CPA
A designation by the American Institute of Certified PublicAccountantsfor those who pass an exam and meet work-experience requirements.
Generally Accepted Accounting Principles - GAAP
The common set of accounting principles, standards and procedures thatcompanies use to compile their financialstatements. GAAP is a combinationof authoritative standards (set by policy boards) and simply the acceptedways of doing accounting.
Auditor's Report
Recorded in theannual report, the auditor's report tests to see that acorporation'sfinancialstatements comply with GAAP. This is sometimesreferred to as the clean opinion.
Cash Flow
The amount of cash a company generates and uses during a period,calculated by adding non-cash charges (such as depreciation) to the netincome after taxes.Cash flowcan be used as an indication of a company'sfinancialstrength.
Income Statement
Afinancialreport that - by summarizing revenues and expenses, andshowing the net profit or loss in a specified accounting period - depicts a business entity’s financial performance due to operations as well as other activities rendering gains or losses. Also known as the " profit and loss statement" or "statement of revenue and expense".
Voodoo Accounting
Any form of accounting that does not follow principles of conservatism.
While there are many methods by whichfinancialstatements can be fudged,it always comes down to inflating revenue or hiding expenses. Examples of accounting shenanigans include the big bath, cookie jar accounting andimproper recognition of revenue.
Big Bath
The strategy of manipulating a company's income statement to make poor results look even worse. The big bath is often implemented in a bad year to enhance artificially next year's earnings. The big rise in earnings mightresult in a larger bonus for executives. New CEOs sometimes use the big bath so they can blame the company's poor performance on the previousCEO and take credit for the next year's improvements.
Earnings
The net income of a company during a specific period. Generally, but notnecessarily, referring to after-tax income.
Write-Off
A reduction in the value of an asset or earnings by the amount of an expenseor loss.
Bottom Line
Slang for net income or profit.
This term comes from the structure of theincome statement : profit isrecorded on the bottom line of the sheet.
Net Income - NI
An individual's or company's totalearnings, calculated by revenues adjustedfor costs of doing business, depreciation, interest,taxesand other expenses.Often referred to as "the bottom line".
Top Line
A reference to sales or revenue.
Revenue
1.The dollar amount of sales during a specific period, includingdiscounts and returned merchandise. It is the "top line" figure fromwhich costs are subtracted to determine net income.
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