Financial management- corporate finance, and business finance, is a decision-making

process concerned on how much and what types of assets to acquire.

Objectives- to optimize the financial and economic benefits of an investment.
Financial statement analysis- is the process of obtaining information from the basic
financial statements for the evaluation of the firms past, current and future performance
and condition.
Financial statements- serve as a communication link between the company and
different users.
Horizontal analysis- involves comparison of figures shown in the financial statements
of two or more consecutive periods.
Vertical analysis- or common size analysis is a tool in analyzing financial statements
in which each line item on FS is listed as a percentage of a base item within the
statement.
Ratio analysis- most widely known and most commonly used tool for financial
statement analysis.
Cash management- involves control over the receipts and payment and cash so as to
minimize.
Objective- to keep the investment in cash as low as possible while still keeping the
firm operating efficiently and effectively.
Cash budget- is the tool used to present the expected cash inflows and cash outflows.
Receivable management- consist of money owed to a firm for goods and services sold
in credit.
Objective- is to ensure that the firm investment in accounts receivable is appropriate
and contributes to shareholders wealth maximization.
Credit policy- is a set of guidelines for extending credit to customers.
Inventory management- is important as it is difficult. The necessity of forecasting
sales before establishing target inventory level makes inventory management a difficult
risk.
Objective- a responsibility of the financial officer to maintain a sufficient amount.
Inventory planning- involves the determination of what inventory quality, quantity,
timing and location should be in order to meet future business requirements.
Financial leverage- refers to the used of debt financing to increase the potential returns
on investment.
Financial risks- refers to the risks that the company may not be able to meet its
financial obligations due factors such as changes in interest rates, market conditions, or
its financial structure.
Capital budgeting- is a process that businesses use to evaluate potential major
projects or investments.
Capital budgeting decision- the firm decision to invest its funds in the long-term
assets in anticipation of an expected flow of benefits over a number of years.
Long-term financial decision-are decision that are taken for a period of more than a
year or more.
Philippine stock exchange- is the national stock exchange of the Philippines. Its main
function is to facilitate the buying and selling of stocks and other securities through its
accredited participants.
PSE Index- commonly known previously as the philsix and presently as the psei, is the
main stock market index of the pse.
Economics- study of those activities that involves production and exchange among
people.
- Study of mankind in the ordinary business of life.
- Science of choice using scarce resources.
- Is what economists do.
Adam smith- father of economics
GNP- gross national profit, total value of all final goods and services produced within
a nation.
GDP- gross domestic product, is the market value of everything produced within a
country.
Micro- “mikos” small
Macro- “makros” large
Microeconomics- seeks to explain the working of individuals firms, households,
individuals, prices, wages particular industries.
Macroeconomics-is the study of the large part of the economy. Is the study of economic
behavior of the economy as a whole and the individual economic units of the economy.
Management accounting- is the provision of financial and non-financial decision-making
information to managers.
- Is the process of identification, measurement, accumulation, analysis,
preparation, interpretation, and communication of information that assists
executives in fulfilling organizational objectives.
Objectives- is to maximize profit and minimize losses.
Conference method- estimates of cost functions are derived from analysis and opinions about
cost relationships by individuals from various departments this method can be done
quickly but may be as reliable as those that are based on other methods.
Account analysis- analyst estimate variable and fixed cost behaviors of a particular cost by
analyzing ledger accounts and designating them as containing fixed costs variable cost or mixed
cost.
Engineering approach- to cost segregation uses the analysis and direct observation of
processes to identify the physical relationship between inputs and outputs and then quantifies
and expected cost behavior the engineering approach is time and costly.
High-low method- estimate of cost functions are derived by computing for the slope for the
variable costs have fixed and variable cost components.
Scatter graph method- also known as the visual fit technique the scatter graph method is a
rough guide foe cost estimation which plots the cost against past activity events.
Line regression- represent the data as a line of conditional expected values.
Least squares method- also known as the simple regression analysis the least square method
technique is designed primarily to achieve accuracy in determining the line of regression which
is difficult to attain under the statistical.
Correlation analysis- is a method of establishing the relationship or the correlation between
two variable the dependent variable and the independent variable.
Activity based costing- is commonly used approach to improve a traditional costing
system.
- A costing methodology that identifies activities in an organization and
assigns the cost of each activity with resources to all products and services
according to actual consumption by each.
Traditional costing system- systems utilize a single, volume-based cost driver.
- Many companies use does not trace indirect costs, such as supervisor’s
salaries and utilize directly to the product
Cost- as the amount of expenditure actual or national incurred on or attributable to a
given things.
Costing- as the technique and processes of ascertaining costs.
Cost accounting- as the application of costing and cost accounting principles, methods
and techniques to the science, art and practice of cost control the ascertainment of
profitability.
Cost Centre- is a sub-unit of the organization for which costs may be collected
separately and used for cost ascertainment control.
Cost unit- as a unit of quantity of product, service or time or a combination of these in
relation t which costs may be ascertained or expressed.
Cost management- identifies, collects, measures, classifies and reports information
that useful managers for determining the cost of products, customers and suppliers and
other relevant object and for planning, controlling.
- Is a system defined as a set of cost management techniques that function together
to support the organizational goals and activities.
Budget- is a detailed plan for acquiring and using financial and other resources over a
specified time period.
Budgeting- is the act of preparing a budget.
Budgetary control- is the use of budget to control a firm’s activities.
Financial budget- is a financial plan which includes the cash receipts inflows and
payments outflows that occur over a period of time.

Theories
1.A primary purpose of using a standard cost system is
-to provide a distinct measure of cost control
2. statement is true concerning standards cost?
- if properly used, standards can help motivate employees.

3. when evaluating the operating performance management sometimes uses the

different between expected and actual performance. This refers to.
 -management by exception
4. best basis upon which cost standards should be set to measure controllable
production inefficiencies is.
- engineering standards based on attainable performance.
5. a company employing very tight (high) standards in a standard cost system should
expect that
-most variances will be unfavorable
6. the fixed overhead application rate is a function of a predetermined “normal” activity
level. If standards hours allowed for good output equal this predetermined activity
level for a given period, the volume variance will be.
-zero
7. the absolute minimum cost possible under the best conceivable operating conditions
is a description of which type of standard?
- theoretical
8. standards, which are difficult to achieve due to reasons beyond the individual
performing the task, are the result of firm using which of the following methods to
establish standards?
-ideal standards
9.standards represent level of operation that can be attained with reasonable effort are
called:
-normal standards
10. when performing input/output variance analysis in standards costing “standard
hours allowed” is a means of measuring
-actual output at standards hours
11. a company uses a two-way analysis for overhead variance: budget and volume the
volume variance is based on the
- fixed overhead application rate

12. assuming that the standard fixed overhead rate is based on full capacity the cost of
available but unused productive capacity is indicated by the
-factory overhead cost volume variance