Fundamentals of Cost Accounting (4th Edition) Ch.1 – Flashcards
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Financial Accounting
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Field of accounting that reports financial position and income according to accounting rules
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Cost Accounting
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Field of accounting that measures, records, and reports information about costs
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Generally Accepted Accounting Principles (GAAP)
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Rules, standards, and conventions that guide the preparation of financial accounting statements for firms registered in the U.S.
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International financial reporting standards (IFRS)
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Rules, standards, and conventions that guide the preparations of the financial accounting statements in many other countries.
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Nonvalue-added activities
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Activities that do not add value to the good or service from the customer's perspective.
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Cost-benefit analysis
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Process of comparing benefits (often measured in savings or increased profits) with costs associated with a proposed change within an organization.
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Cost driver
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Factor that causes, or "drivers," costs.
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Differential costs
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Costs that change in response to a particular course of action.
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Differential revenues
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Revenues that change in response to a particular course of action.
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Responsibility center
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Specific unit of an organization assigned to a manager who is held accountable for its operations and resources.
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Budget
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Financial plan of the revenues and resources needed to carry out activities and meet financial goals.
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Activity-based costing (ABC)
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Costing method that first assigns costs to activities and then assigns them to products based on the products' consumption of activities.
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Performance measure
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Metric that indicates how well an individual, business unit, product, or firm is working.
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Benchmarking
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Continual process of measuring a company's own products, services, and activities against competitors' performance.
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Just-in-time (JIT) method
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In production of purchasing each unit is produced or purchased just in time for his use.
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Lean accounting
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A cost accounting system that provides measures at the work cell or process level and minimizes wasteful or unnecessary transaction processes.
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Customer relationship management (CRM)
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System that allows firms to target profitable customers by assessing customer revenues and costs.
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Outsourcing
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Having one or more of the firm's activities performed by another firm or individual in the supply or distribution chain.
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Total quality management (TQM)
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Management method by which the organization seeks to excel on all dimensions with the customer ultimately defining quality.
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Cost of quality (COQ)
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System that identifies the costs of producing low-quality items, including rework, returns, and lost sales.
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Enterprise resource planning (ERP)
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Information technology that links the various processes of the enterprise into a single comprehensive information system.
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