Chapter 18: Managerial Accounting Concepts and Principles – Flashcards
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Financial accounting
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The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records
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Managerial accounting
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The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies
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Organization chart
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Where the operating structure of a company can be shown
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Line department
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A unit that is directly involved in the basic objectives of an organization
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Staff department
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A unit that provides services, assistance, and advice to the departments with line or other staff responsibilities
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Controller
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The chief management accountant of a division or other segment of a business
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Management process
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The five basic management functions of planning, directing, controlling, improving, and decision making
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Cost
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A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues
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Cost object
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The object or segment of operations to which costs are related for management's use, such as a product or department
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Direct costs
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Costs that can be traced directly to a cost object
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Indirect costs
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Costs that cannot be traced directly to a cost object
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Direct materials cost
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The cost of materials that are an integral part of the finished product
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Direct labor cost
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The wages of factory workers who are directly involved in converting materials into a finished product
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Factory overhead cost
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All of the costs of producing a product except for direct materials and direct labor
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Manufacturing overhead (factory burden)
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Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process
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Prime costs
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The combination of direct materials and direct labor costs
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Conversion costs
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The combination of direct labor and factory overhead costs
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Product costs
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The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs
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Period costs
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Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses
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Materials inventory
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The cost of materials that have not yet entered into the manufacturing process
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Work in process inventory
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The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished
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Finished goods inventory
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The direct materials costs, direct labor costs, and factory overhead costs of finished products that have not been sold
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Merchandise available for sale
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The cost of merchandise available for sale to customers calculated by adding the beginning merchandise inventory to net purchases
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Cost of merchandise sold
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The cost that is reported as an expense when merchandise is sold
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Cost of goods manufactured
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The total cost of making and finishing a product
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Cost of finished goods available
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The beginning finished goods inventory added to the cost of goods manufactured during the period
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Cost of goods sold
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The cost of finished goods available for sale minus the ending finished goods inventory
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Statement of cost of goods manufactured
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The income statement of manufacturing companies
