Ch.14 Key Terms

Front 1

accounting audits

Back 1

Procedures used to
verify accounting reports and statements.

Front 2

activity-based costing (ABC)

Back 2

A method of cost accounting designed to identify
streams of activity and then to allocate costs
across particular business processes according
to the amount of time employees devote to
particular activities.

Front 3

assets

Back 3

The values of the various items the
corporation owns.

Front 4

balanced scorecard

Back 4

Control system
combining four sets of performance measures:
financial, customer, business process, and
learning and growth

Front 5

balance sheet

Back 5

A report that shows
the financial picture of a company at a given
time and itemizes assets, liabilities, and
stockholders’ equity.

Front 6

budgeting

Back 6

The process of investigating
what is being done and comparing the results
with the corresponding budget data to verify
accomplishments or remedy differences; also
called budgetary controlling.

Front 7

bureaucratic control

Back 7

The use of rules,
regulations, and authority to guide performance.

Front 8

clan control

Back 8

Control based on the norms,
values, shared goals, and trust among group
members.

Front 9

concurrent control

Back 9

The control process
used while plans are being carried out, including
directing, monitoring, and fine-tuning activities
as they are performed.

Front 10

control

Back 10

Any process that directs the
activities of individuals toward the achievement
of organizational goals.

Front 11

current ratio

Back 11

A liquidity ratio that indicates
the extent to which short-term assets can
decline and still be adequate to pay short-term
liabilities.

Front 12

debt–equity ratio

Back 12

A leverage ratio that
indicates the company’s ability to meet its
long-term financial obligations.

Front 13

external audit

Back 13

An evaluation conducted
by one organization, such as a CPA firm, on
another.

Front 14

feedback control

Back 14

Control that focuses
on the use of information about previous results
to correct deviations from the acceptable
standard.

Front 15

feedforward control

Back 15

The control
process used before operations begin, including
policies, procedures, and rules designed to
ensure that planned activities are carried out
properly.

Front 16

internal audit

Back 16

A periodic assessment of a
company’s own planning, organizing, leading,
and controlling processes.

Front 17

liabilities

Back 17

The amounts a corporation owes
to various creditors.

Front 18

management audit

Back 18

An evaluation of the
effectiveness and efficiency of various systems
within an organization.

Front 19

management myopia

Back 19

Focusing on
short-term earnings and profits at the expense
of longer-term strategic obligations.

Front 20

market control

Back 20

Control based on the
use of pricing mechanisms and economic
information to regulate activities within
organizations.

Front 21

principle of exception

Back 21

A managerial
principle stating that control is enhanced by
concentrating on the exceptions to or significant
deviations from the expected result or standard

Front 22

profit and loss statement

Back 22

An
itemized financial statement of the income and
expenses of a company’s operations.

Front 23

return on investment (ROI)

Back 23

A ratio
of profit to capital used, or a rate of return from
capital.

Front 24

standard

Back 24

Expected performance for a
given goal: a target that establishes a desired
performance level, motivates performance, and
serves as a benchmark against which actual
performance is assessed

Front 25

stockholders’ equity

Back 25

The amount
accruing to the corporation’s owners.

Front 26

transfer price

Back 26

Price charged by one unit
for a good or service provided to another