Accounting & Finance Terminology

Front 1

Define "Accounting System"

Back 1

A formal mechanism for gathering, organizing, and communicating information about an organization's activities.

Front 2

Define "Activity Based Accounting"

Back 2

A system that first accumulated overhead costs for each of the activities of an organization and then assigns the costs of activities to the products, services, or other cost objects that caused that activity.

AKA Transaction Based Costing

Front 3

Define "Attention Directing"

Back 3

Reporting and interpreting of information that helps managers to focus on operating problems, imperfections, and opportunities.

Front 4

Define "Avoidable Costs"

Back 4

Coats that will not continue if an ongoing operation is changed or deleted

Front 5

Define "Break Even Analysis"

Back 5

The study of cost volume profit relationships.

Front 6

Define "Budget"

Back 6

A quantitative expression of a plan of action as an aid to coordinating and implementing the plan

Front 7

Define "Cost Center"

Back 7

A responsibility centre for which the objective is to manage (minimize) costs efficiently

Front 8

Define "Cost Pool"

Back 8

A group of individual costs that is allocated to cost objectives using a single cost driver.

Front 9

Define "Contribution Margin"

Back 9

The sales price less all the variable expenses.

Front 10

Define "Conversion Costs"

Back 10

Direct Labour Costs + Factory overhead costs

Front 11

Define "Decision Model"

Back 11

Any method for making a choice, sometimes requiring elaborate quantitative procedures

Front 12

Define "Factory Overhead"

Back 12

All costs other than direct material or direct labour that are associated with the manufacturing process.

Front 13

Define "Financial Accounting"

Back 13

The field of accounting that serves external decision makers such as shareholders, suppliers, banks, and government regulatory agencies

Front 14

Define "Line Authority"

Back 14

Authority exerted downward over subordinates

Front 15

Define "Management Accounting"

Back 15

The process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information that helps managers fulfill organizational objectives

Front 16

Define "Problem Solving"

Back 16

Aspect of accounting that quantifies the likely results of possible courses of action and often recommends the best course of action to follow.

Front 17

Define "Relevant Costs"

Back 17

The predicted future costs and revenues that will differ among alternative courses of action

Front 18

Define "Responsibility Accounting"

Back 18

Identifying what parts of the organization have primary responsibility for each objective, developing measures of achievement of the objectives, and creating reports of these measure by organization subunit or responsibility center.

Front 19

Define "Responsibility Centers"

Back 19

A set of activities assigned a manager, a group of managers, or a group of employees in order to create "ownership of management" decisions.

Front 20

Define "Scorekeeping"

Back 20

The accumulation and classification of data.

Front 21

Define "Staff Authority"

Back 21

Authority to advise but not command. It may be exerted downward, laterally, or upward.

Front 22

Define "Value Added Costs"

Back 22

The necessary cost of an activity that cannot be eliminated without affecting a product's value to the customer.