Accounting 201

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maggie.mccall26
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Accounting 201
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2011-12-08 23:42:00
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Accounting 201 terms
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Accounting 201 terms for final exam
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  1. Activity–based costing (ABC)
    “A management accounting practice that identifies all of an organization’s major operating activities (both production and nonproduction), traces costs to those activities, and then assigns costs to the products or services that use the resources and services supplied by the activities.”
  2. Activity–based management (ABM)
    “An approach to managing an organization that identifies all major operating activities, determines the resources consumed by each of those activities and the cause of the resource usage, categorizes the activities as either adding value to a product or service or not adding value, and seeks to eliminate or reduce nonvalue–adding activities.”
  3. Balanced scorecard
    “A framework that links the perspectives of an organization’s stakeholder groups to the organization’s mission, objectives, resources, and performance measures.”
  4. Benchmarking
    A technique for determining a company’s competitive advantage by comparing its performance with that of its best competitors.
  5. Benchmarks
    Measures of the best practices in an industry.
  6. Business plan
    A comprehensive statement of how a company will achieve its objectives.
  7. Continuous improvement
    “The management concept that one should never be satisfied with what is, but should instead constantly seek improved efficiency and lower cost through better methods, products, services, processes, or resources.”
  8. Core competency
    The thing a company does best and that gives it an advantage over its competitors.
  9. Costs of quality
    Both the costs of achieving quality and the costs of poor quality in the manufacture of a product or the delivery of a service.
  10. Just–in–time (JIT) operating philosophy
    “A management tool aimed at improving productivity and eliminating waste by requiring that all resources–materials, personnel, and facilities–be acquired and used only as needed.”
  11. Lean production
    “A management system that reduces production time and costs, investment in materials inventory, and materials waste and results in higher–quality goods.”
  12. Management accounting
    “Management accounting is a profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in theformulation and implementation of an organization’s strategy”
  13. Mission statement
    A description of the fundamental way in which a business will achieve its goal of increasing the value of the owners’ interest in the business.
  14. Nonvalue–adding activities
    Activities that add cost to a product or service but do not increase its market value.
  15. Operating objectives
    Short–term goals that outline expectations for the performance of day–to–day operations.
  16. Outsourcing
    The engagement of other companies to perform a process or service in the value chain that is not among an organization’s core competencies.
  17. Performance measures
    Quantitative tools that gauge an organization’s performance in relation to a specific goal or expected outcome.
  18. Primary processes
    Components of the value chain that add value to a product or service.
  19. Strategic objectives
    “Broad, long–term goals that determine the fundamental nature and direction of a business and that serve as a guide for decision making.”
  20. Supply chain
    The path that leads from the suppliers of the materials from which a product is made to the final consumer. Also called the supply network.
  21. Support services
    Components of the value chain that facilitate the primary processes but do not add value to a product or service.
  22. Tactical objectives
    Interim goals that position a business to achieve its long–term strategies.
  23. Theory of constraints (TOC)
    “A management theory that contends that limiting factors, or bottlenecks, occur during the production of any product or service, but that once managers identify such a constraint, they can focus their attention and resources on it and achieve significant improvements.”
  24. Total quality management (TQM)
    A management tool that requires that all parts of a business work together to build quality into the business’s product or service.
  25. Value chain
    “A way of defining a business as a set of primary processes and support services that link together to add value to a business’s products or services, thus fulfilling the business’s mission and objectives.”
  26. Value–adding activities
    Activities that add value to a product or service as perceived by the customer.
  27. Activity–based costing (ABC)
    “A method of assigning overhead costs that categorizes all indirect costs by activity, traces the indirect costs to those activities, and assigns activity costs to products using a cost driver related to the cause of the cost.”
  28. Actual costing
    “A method of cost measurement that uses the actual costs of direct materials, direct labor, and overhead to calculate a product or service unit cost.”
  29. Conversion costs
    The costs of converting direct materials into a finished product; the sum of direct labor costs and overhead costs.
  30. Cost allocation
    The process of assigning a collection of indirect costs to a specific cost object using an allocation base known as a cost driver.
  31. Cost driver
    An activity base that causes a cost pool to increase in amount as the cost driver increases in volume.
  32. Cost object
    “The destination of an assigned, or allocated, cost.”
  33. Cost of goods manufactured
    The cost of all units completed and moved to finished goods storage during an accounting period.
  34. Cost pool
    The collection of overhead costs assigned to a cost object.
  35. Direct costs
    Costs that can be conveniently and economically traced to a cost object.
  36. Direct labor costs
    The costs of the labor needed to make a product or perform a service that can be conveniently and economically traced to specific units of the product or service.
  37. Direct materials costs
    The costs of the materials used in making a product that can be conveniently and economically traced to specific units of the product.
  38. Finished Goods Inventory account
    An inventory account that shows the costs assigned to all completed products that have not been sold.
  39. Fixed cost
    A cost that remains constant within a defined range of activity or time period.
  40. Indirect costs
    Costs that cannot be conveniently or economically traced to a cost object.
  41. Indirect labor costs
    The costs of labor for production–related activities that cannot be conveniently or economically traced to a unit of the product or service.
  42. Indirect materials costs
    The costs of materials that cannot be conveniently and economically traced to a unit of the product or service.
  43. Manufacturing cost flow
    “The flow of manufacturing costs (direct materials, direct labor, and overhead) through the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory accounts into the Cost of Goods Sold account.”
  44. Materials Inventory account
    An inventory account that shows the balance of the cost of unused materials.
  45. Nonvalue–adding cost
    The cost of an activity that adds cost to a product or service but does not increase its market value.
  46. Normal costing
    A method of cost measurement that combines the actual direct costs of materials and labor with estimated overhead costs to determine a product or service unit cost.
  47. Overapplied overhead costs
    The amount by which overhead costs applied using the predetermined overhead rate exceed the actual overhead costs for the accounting period.
  48. Overhead costs
    “Production–related costs that cannot be practically or conveniently traced to an end product or service. Also called factory overhead, factory burden, manufacturing overhead, service overhead, or indirect manufacturing costs.”
  49. Period costs
    “The costs of resources used during an accounting period that are not assigned to products or services. Also called noninventoriable costs or selling, administrative,and general expenses.”
  50. Predetermined overhead rate
    The rate calculated before an accounting period begins by dividing the cost pool of total estimated overhead costs by the total estimated cost driver for that pool.
  51. Prime costs
    The primary costs of production; the sum of direct materials costs and direct labor costs.
  52. Product costs
    “The costs assigned to inventory, which include the costs of direct materials, direct labor, and overhead. Also called inventoriable costs.”
  53. Product unit cost
    “The cost of manufacturing a single unit of a product, computed either by dividing the total cost of direct materials, direct labor, and overhead by the total number of units produced, or by determining the cost per unit for each element of the product cost and summing those per unit costs.”
  54. Standard costing
    “A method of cost measurement that uses the estimated costs of direct materials, direct labor, and overhead to calculate a product unit cost.”
  55. Statement of cost of goods manufactured
    A formal statement summarizing the flow of all manufacturing costs incurred during an accounting period.
  56. Total manufacturing costs
    “The total costs of direct materials, direct labor, and overhead incurred and transferred to Work in Process Inventory during an accounting period. Also called current manufacturing costs.”
  57. Underapplied overhead costs
    The amount by which actual overhead costs exceed the overhead costs applied using the predetermined overhead rate for the accounting period.
  58. Value–adding cost
    The cost of an activity that increases the market value of a product or service.
  59. Variable cost
    A cost that changes in direct proportion to a change in productive output (or some other measure of volume).
  60. Work in Process Inventory account
    An inventory account used to record the manufacturing costs incurred and assigned to partially completed units of product.
  61. Cost–plus contracts
    Job contracts that require the customer to pay all costs incurred in performing the job plus a predetermined amount of profit.
  62. Job order
    “A customer order for a specific number of specially designed, made–to–order products.”
  63. Job order cost card
    A document on which all costs incurred in the production of a particular job order are recorded; part of the subsidiary ledger for the Work in Process Inventory account.
  64. Job order costing system
    “A product costing system that traces the costs of direct materials, direct labor, and overhead to a specific batch of products or a specific job order; used by companies that make unique or special–order products.”
  65. Operations costing system
    A product costing system that combines parts of job order costing and process costing to create a hybrid system designed specifically for an organization’s production process.
  66. Process costing system
    “A product costing system that traces the costs of direct materials, direct labor, and overhead to processes, departments, or work cells and then assigns the costs to the products manufactured by those processes, departments, or work cells; used by companies that produce large amounts of similar products or liquid products or that have long, continuous production runs of identical products.”
  67. Product costing system´╗┐
    “A set of procedures that is used to account for an organization’s product costs and to provide timely and accurate unit cost information for pricing, cost planning andcontrol, inventory valuation, and financial statement preparation.”

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