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accounting Hilton Ch 1, 2 and 7 vocab

Terms in this set (63)

control
ensuring that the org operates in the intended manner and achieve its goals
directing operational activities
running the org on a day to day basis
major objectives of managerial accounting activity
1. providing info for decision making and planning
2. assisting managers in directing and controlling operational activities
3. motivating managers and other employees toward the organization's goals
4. measuring the performance of activities, sub units, managers and other employees within the org
5. assessing the org's competitive position and working with other managers to ensure the organization's long run competitiveness in its industry
attention directing function
managerial accounting report designed to help management focus on tasks that add value to the company
balanced score card
model of business performance evaluation that includes several type of financial and non financial performance measures
financial accounting
use of accounting info for reporting to parties outside the organization
accounting system
the system of procedures, personnel, and computers used to accumulate and store financial data in the org
one part of the org's management info system
accumulates data for use in both financial and managerial accounting
cost accounting system
accumulate data about the costs of producing goods and services; one part of the organizations overall accounting system
managerial accounting
(users of info, regulation, source of data, nature of reports and procedures)
managers within the org, unregulated, org's core accounting system and other various sources are sources of data; reports often focus on subunits within the org
financial accounting
(users of info, regulation, source of data, nature of reports and procedures)
interested parties outside the org; regulated by GAAP, IASB, FASB and SEC; almost all data is exclusively draw from the org's core accounting system; reports focus on the enterprise
line positions
directly involved in the provision of goods or services
staff positions
supervise activities that support company's overall mission but they are only indirectly involved in operational activities
CFO
in charge of all accounting and finance functions
CFO synonyms
controller in smaller companies
comptroller in non profit or gov't orgs
treasurer
typically is responsible for raising capital and safeguarding the org's assets
internal auditor
who in larger orgs is the director of an internal audit department is responsible for reviewing the accounting procedures, records, and reports in both the managerial and financial accounting areas of responsibility
value chain
the set of linked, value-creating activities, ranging from securing basic raw materials and energy to the ultimate delivery of products and services
for a company to have a sustainable competitive advantage
1. perform one or more activities in the value chain at the same quality level as its competitors but at a lower cost
2. perform its value chain activities in the value chain is a crucial step in the development of a fir'm's strategy
cost drivers
cost causing factors
strategic cost management
the overall recognition of the importance of cost relationships among the activities in the value chain and the process of managing those cost relationships to the firm's advantage
capacity
the upper limit on the amount of goods and service that an org can produce in a specified amount of time
cost management system
a management planning and control system with the objectives of
1. measure the cost of the resources consumed in performing the org's significant activities and measure the unused capacity of those resources
2. identify and eliminate non value added costs
3. determine the efficiency and effectiveness of all major activities performed in the enterprise
4. identify and evaluate new activities that can improve the future performance of the org
non value added costs
costs of activities that can be eliminated with no deterioration of product quality, performance or perceived value
activity accounting
crucial to the goal of producing quality goods and services at the lowest possible cost
activity based costing (ABC)
-managerial accountants have developed a system for determining the cost of producing goods and services
- costs of the org's significant activities are accumulated and then assigns to goods and services in accordance with how the activities are used in the production of those g&S
activity based management (ABM)
using an activity-based costing system to improve the operation of an org
American institute of CPAs
many managerial accountants and members of corporate finance and accounting team are CPAs and members of
institute of management accountants IMA
largest accounting org
2 journals
cost
the sacrifice made, usually measured by the resources given up to achieve a particular purpose
Product cost
cost assigned to goods that were either purchased or manufactured for resale
also known as inventoriable cost
cost of goods sold
the products costs are recognized as
period costs
costs that are not product costs
i.e. R&D, selling and admin costs
operating expenses
the costs of producing services
treated as period costs
raw material
inventory including all materials before they are placed into production
work in progress
inventory referring to manufactured products that are only partially completed at date when the balance sheet is prepared
finished goods
inventory referring to manufactured goods that are complete and ready for sale
manufacturing costs are split into what 3 categories
direct material, direct labor, and manufacturing overhead
direct material
raw material that is consumed in the manufacturing process , is physically incorporated into the finished product and can be traced to products relatively easily
direct labor
cost of salaries, wages and fringe benefits for personnel who work directly on the manufactured products
manufacturing overhead
all other costs of manufacturing
3 types of costs: indirect material, indirect labor, other manufacturing costs
indirect material
cost of materials that are required for the production process but don't become an integral part of the finished product
i.e. chair glue
indirect labor
costs of personnel who don't work direcly on the product but whose services are necessary for the manufacturing process
i.e. janitors
other manufacturing costs
costs include depreciation of p&E, property taxes etc.
service departments or support departments
those that don't work directly on manufacturing products but are necessary for the manufacturing process to occur
overtime premium
the extra compensation paid to an employee who works beyond the time normally scheduled
idle time
time that isn't spent productively by an employee due to events such as equipment breakdowns or new setups of production runs
conversion costs
direct labor and overhead
prime costs
direct material and direct labor
costs of goods manufactured
total cost of direct material, direct labor and manufacturing overhead transferred from work in progress inventory to finished goods inventory
schedule of cost of goods manufactured/ COGS
to summarize the flow of manufacturing costs during an accounting period
activity
a measure of an org's output of products or services
cost driver
a characteristic of an activity or event that causes costs to be incurred by that activity or event
cost object
an entity to which a cost is assigned
direct cost
cost that can be traced to a particular costs object
indirect cost
a cost that isn't directly traceable to a particular cost object
controllable cost
a manager can control or heavily influence the level of a cost
opportunity cost
the benefit that is sacrificed when the choice of one action precludes taking an alternative course of action
out of pocket costs
those that require the payment of cash or other assets as a result of their incurrence
sunk costs
costs that have been incurred in the past
i.e. survey
differential costs
the amount by which the cost differs under 2 alternative actions
incremental costs
the increase in cost from one alternative to another
marginal costs
the extra cost incurred when one additional unit is produced
average cost per unit
total cost/ number of units manufactured
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