Accounting Ch 5-8

Front 1

Four perspectives of scorecard

Back 1

1. customer
2.internal processes
3.learning and growth
4. financial

Front 2

pure competition

Back 2

large number of sellers produce and distribute virtually identical products and services

Front 3

monopolistic competition

Back 3

many companies produce similar but not identical products

Front 4

monopoly

Back 4

companies that have exclusive control over a product,service or geographic market

Front 5

oligopoly

Back 5

few firms control the types of products and services and their distribution

Front 6

price fixing

Back 6

group of companies agree to limit supply and charge identical prices for their goods and services.

Front 7

price gouging

Back 7

price of setting an excessively high price with the intent of reaping short term excessive profits

Front 8

markup

Back 8

an additional amount to the cost of their products and services.

Front 9

Cost-based pricing policy

Back 9

Selling price=cost+(cost*markup percentage)

Front 10

selling margin

Back 10

selling price-cost

Front 11

selling margin percentage

Back 11

selling margin/ selling price

Front 12

penetration pricing

Back 12

setting an initial selling price low in an attempt to gain market share

Front 13

predatory pricing

Back 13

practice of selling products below cost in an attempt to drive out the competition, control the market, and then raise the price

Front 14

dumping

Back 14

company sells it's product below cost in foreign countires

Front 15

Skimming pricing

Back 15

setting an initial selling price high in an attempt to make early profits

Front 16

life-cycle pricing

Back 16

a pricing strategy based on the estimated total cost of product over it's life

Front 17

target pricing

Back 17

a pricing strategy where the company first estimates the selling price and then subtracts the required markup to determine target cost

Front 18

Conversion process

Back 18

1. scheduling production
2. obtaining raw materials
3. using labor and other resources
4. storing finished goods

Front 19

Reasons to maintain inventory

Back 19

1. to meet customer demand
2. to smooth production scheduling
3. to take advantage of quantity discounts
4. to hedge against price increases

Front 20

quantity discount

Back 20

reduced purchase price due to volume

Front 21

ordering costs

Back 21

costs incurred to place one additional order for inventory; costs that vary with the number of orders placed and received

Front 22

carrying costs

Back 22

costs that vary with the number of units carried in inventory

Front 23

reorder point

Back 23

inventory level that when reached indicates the need to place an order for additional inventory

Front 24

daily demand

Back 24

amount of inventory needed each business day

Front 25

daily demand formula

Back 25

annual demand (D)/ # of business days in a year

Front 26

reorder point formula

Back 26

daily demand* lead time

Front 27

lead time

Back 27

# of days epapsing from the time an order is placed until the order is recieved

Front 28

safety stock

Back 28

small amount of inventory kept on had

Front 29

reorder point when company maintains safety stock

Back 29

(daily demand*lead time)+safety stock

Front 30

jit model

Back 30

eliminates distruptions in production
reduces or eliminates nonvalue-added activities
minimizing inventory

Front 31

bonus rate

Back 31

percentage the bonus will pay

Front 32

bonus base

Back 32

form of income the bonus rate is applied to

Front 33

bonus based on income bef income taxes

Back 33

bonus=(income bef bonus-bonus) * bonus rate

Front 34

bonus based on net income

Back 34

bonus=(income bef bonus and income taxes-bonus-income taxes)*bonus rate

income taxes=(income bef bonus and income taxes-bonus)*tax rate

Front 35

benefits of budgeting

Back 35

planning
communication &coordination
resource allocation
evaluation and control

Front 36

Costs of budgeting

Back 36

1. time and resource requirements
2. adaptability of departments and segments of business
3. motivation and behavior of individuals

Front 37

budgetary slack

Back 37

difference b/t what a person with input into the budgeting process chooses as an estimate of revenues or expenses and what is actually a realistic estimate; deliberately induced bias

Front 38

mandated budgeting

Back 38

top-down budgeting, the budget is prepared by upper management based on predetermined standards

Front 39

participatory budgeting

Back 39

bottom-up budgeting, the budget is coordinated by upper management based on input from lower level employees

Front 40

incremental budgeting

Back 40

strategy whereby the company uses the prior periods budget as a starting point in preparing the periods budget

Front 41

zero-based budgeting

Back 41

company begins each budget period with a zero budget, requires consideration of every activity undertaken by the department or segment

Front 42

master budget

Back 42

compilation of all the budgets and shedules prepared planning for the revenue, conversion and expenditure process

Front 43

planning budget schedules

Back 43

1. sales budget
2. cash receipts schedule
3. accounts receivable schedule
4. marketing and distribution budget

Front 44

Revenue process planning

Back 44

1. sales budget
2.cash reciepts shedule
3. accounts recievale shedule
4. marketing and distribution budget

Front 45

Conversion process planning

Back 45

1. production budget

Front 46

Expenditure process planning

Back 46

1. direct materials purchase budget
2. direct labor and overhead budget
3. administrative budget
4.cash disbursement schedule
5.accounts payable schedule

Front 47

Budgeted financial Statements

Back 47

1. Finished Goods schedule
2. cost of goods sold shedule
3.income statement
4.statement of cash flows
5. balance sheet

Front 48

Measuring customer satisfaction

Back 48

1. increase the number of customers
2. increase market share-#of customers relative to competition
3. enhancing company image

Front 49

Measuring customer loyalty

Back 49

1. increase customer retention
2. increase revenue per customer

Front 50

sales budget

Back 50

shows the expected sales for the period in both physical quantity and financial dollar amounts for a particular product line, geographic area, or sales manager

Front 51

cash receipts schedule

Back 51

shows anticipated cash collections from customers for the period

Front 52

accounts recievalbe shedule

Back 52

indicates the changes expected in the balance of accounts receivable during the budget period

Front 53

Calculating ending balance of accounts receivable

Back 53

+Credit sales during the month
=total amount due from customers
-cash reciepts from credit customers during the month
-cash sale discounts taken by customers during the month
=ending balance of accounts recievable

Front 54

marketing and distribution budget

Back 54

indicates the planned expenditures for these marketing and distribution activities

Front 55

production budget

Back 55

uses information fron mt esales budget plus the company's desired ending inventory level to determine the quantity of finished goods to produce each period

Front 56

administrative budget

Back 56

reflects expected administrative costs, including administrative labor
should reflect the costs of activities not considered in the revenue or conversion process

Front 57

direct labor and manufacturing overhead costs

Back 57

reflects the expected costs of the conversion process

Front 58

direct materials purchases budget

Back 58

reflects the expected cost of direct material purchases during the period

Front 59

cash disbursement shedule

Back 59

expected cash outflows during the period

Front 60

Estimated balance in accounts payable is determined by.........

Back 60

beginning balance of accounts payable
+purchase on account during the month
=total amount owed to suppliers
-cash paid to suppliers on account during the month
-cash purchase discounts for the month
=ending balance of accounts payable

Front 61

accounts payable schedule

Back 61

indicates the expected changes in the balance of accounts pauable during the period

Front 62

how to determine target cost

Back 62

selling price-required markup

Front 63

daily demand formula

Back 63

annual demand/# of business days

Front 64

reorder point formula

Back 64

daily demand* lead time

Front 65

double-entry equation

Back 65

Assets=liabilities +owners equity

Front 66

Asset increase;asset decrease

Back 66

cash is used to purchase inventory

Front 67

asset increase, owners equity increases

Back 67

services are provided to a client on account

Front 68

asset decrease, liability decrease

Back 68

an obligation to a bank is paid

Front 69

asset decrease, owners equity decreases

Back 69

a bill for utility is received and paid

Front 70

liability increase, liability decrease

Back 70

a note payable is given to a supplier to pay off an account payable

Front 71

liability increase, owners equity decrease

Back 71

A bill is received but not payed

Front 72

liability decrease, owners equity increase

Back 72

an obligation to a customer is fulfilled

Front 73

owners equity increase, owners equity decrease

Back 73

common stock is issued in exchange for perfected stock

Front 74

debit

Back 74

increase an asset with a debit (left

Front 75

credit

Back 75

increase a liability or owner's equity with a credit, right

Front 76

Expanded accounting equation

Back 76

cash+ other assets= liabilities+contributed capital+ retained earnings,

revenues earned and expenses incurred are part of retained earnings

Front 77

journalizing

Back 77

recording transactions in chronological order

Front 78

posting

Back 78

process of recording the appropriate part of journal entry into the effected acount

Front 79

normal balance

Back 79

the side on which it increases

Front 80

accounting cycle

Back 80

the time period between financial statements

Front 81

post-closing trial balance

Back 81

prepared to ensure that debits equal credits

Front 82

permanent account

Back 82

asset, liability, owners equity whose balance is carried over from year to year