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53 Cards in this Set
- Front
- Back
IMA Statement of Ethical Professional practice 4 Standards
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Competence
Confidentiality Integrity Credibility |
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Standard of Competence
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1. continually developing knowledge
2. be in accordance with laws, regulations, and technical standards. 3. Provide decision support material that are accurate, clear, concise and timely. 4. Recognize and communicate professional limitations or other constraints. |
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Standard of Confidentiality
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1.Keep information confidential except when disclosure is authorized or legally required.
2. inform all relevant parties regarding appropriate use of confidential information. Monitor subordinates' activities to ensure compliance. 3. Refrain from using confidential information for unethical or illegal advantage. |
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Standard of Integrity
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1.Mitigate and Advise Conflicts of interest.
2. Refrain from conduct that would hurt carrying out duties ethically. 3. Abstain from activity that discredits the profession. |
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Standard of Credibility
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1.Communicate information fairly and objectively .
2.Disclose all relevant influential information. 3. Disclose delays, or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. |
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What are the 3 sub-disciplines of accounting?
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Financial Accounting
Management Accounting Cost Accounting. |
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Financial Accounting
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1.Reporting to External Users.
2. Financial Statements in conformance with GAAP 3. Historical Focus |
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Management Accounting
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1. Reporting to Internal users
2. Produce reports that improve organizational decision making. 3. Future Oriented |
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Cost Accounting
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Supports both financial and management accounting.
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How Is a cost defined by Management Accounting
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A measurement in monetary terms by the amount of resources used for some purpose. The Term becomes OPERATIONAL only when modified by a term that defines the purpose, such as acquisition cost, incremental cost, or fixed cost.
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How Is a cost defined by Financial Accounting
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the sacrifice measured by the price paid or required to be paid to acquire goods or services.
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In financial accounting, when is cost referred to as an Asset?
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The term 'cost' is often used when referring to the valuation of a good or service acquired.
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In financial accounting, when is cost referred to as an Expense/loss?
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When the benefits of the acquisition (the goods or services) expire.
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Cost object
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any entity to which costs can be attached.
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Example of a cost object
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Products, processes, employees, departments, and facilities.
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cost driver
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the basis used to assign costs to a cost object.
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Example of a Cost Driver
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A measure of activity, such as direct labor, machine hours, beds occupied, computer time used, flight hours, miles driven or contracts, that is a causal factor in the incurrance of a cost to an entity.
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What is the KEY ASPECT of a Cost Driver
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The existence of a direct cause-and-effect relationship between the quantity of the driver consumed and the amount of total cost.
If beds occupied goes up and total costs goes up then beds occupied is a cost driver. |
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Manufacturing costs
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Direct Materials
Direct Labor Manufacturing Overhead. |
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Direct Materials
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1.Tangible inputs to the manufacturing process that can practicably be traced to the product.
2.Costs of bringing raw materials to the production line, (Transportation in) |
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Example of Direct material
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sheet metal welded together for a piece of heavy equipment
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Direct labor
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the cost of human labor that can be practibably be traced to the product .
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Example of Direct Labor
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Wages of the worker.
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Types of Manufacturing Overhead
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1. Indirect Materials
2. Indirect Labor 3. Factory Operating Costs |
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INdirect Materials
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Tangible inputs to the manufacturing process that cannot practicably be trace to the product.
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Example of Indirect Materials
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Welding compound that used to put together a piece of heavy equipment, or staples used in a stapling machine.
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Indirect labor
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the cost of huan labor connecte with the manufacturing process that cannot practicably be traced to the product.
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Example of Indirect labor
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wages of assembly
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Example of Factory operating costs
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Utilities, Real estate Taxes, insurance, depreciation of factory equipment.
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Manufacturing Costs are Grouped into the following classifications
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1. Prime Cost
2. Conversion Cost |
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Prime Cost
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Costs Directly Attributable to a product.
Direct Materials + Direct Labor |
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Conversion Cost
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The costs of converting raw materials to a finished product
Direct labor + Manufacturing overhead, |
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Non Manufacturing costs
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1. Selling (marketing) expenses
2. Administrative expenses |
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Selling Expenses
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incurred in getting the product from the factory to the consumer.
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Examples of selling expenses
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Sales personnel salaries, advertising and product transportation.
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Administrative Expenses
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costs incurred by a company not directly related to producing or marketing the product,
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Administrative costs.
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executive salaries and depreciation on the headquarters building.
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Product Costs
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Inventoriable costs. Capitalized as part of finished goods inventory. this eventually becomes a component of COGS.
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Period costs.
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Expended when incurred.
Not capitalized in finished goods inventory. Excluded from Cost of Goods Sold |
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The Theory behind period costs
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Period costs are casued by the passage of time and would occur even if production was zero
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What are treated as product costs for EXTERNAL FINANCIAL REPORTING?
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all manufacturing costs
(Direct Materials Direct Labor F + V Manufacturing Overhead). |
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What are treated as period costs for EXTERNAL FINANCIAL REPORTING?
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Selling and Administrative costs
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Absorption costing
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Also called full costing.
Required under GAAP Product costs: Fixed and Variable production Costs. Period costs: Fixed and Variable S + A costs |
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Variable costing
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Also called direct costing (for internal reporting only)
Product costs: Variable production costs Period Costs: Fixed and Variable S + A costs |
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Direct costs
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costs associated with a particular cost object in an economically feasible way. I.e. they can be traced to that object
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Exambples of direct cotst
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direct materials and direct labor inputs to a manufacturing process discussed in item 3.a. on the previous page.
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Indirect costs
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costs that cannot be associated with a particular cost object in an economically feasible way and thus must be allocated to that object. To simplify, indirect costs are often collected in cost pools.
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Examples of indirect costs
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indirect materials and indirect labor inputs to a manufacturing process. To simplify, indirect costs are often collected in cost pools.
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cost pool
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an account into which a variety of similar cost elements with a common cause are accumulated
it is perferable that the costs in a cost pool have the same cost driver. |
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Example of a cost pool
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Manufacturing Overhead.
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Common costs
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type of indirect cost. a cost shared by two or more users.
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The key to common costs
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They must be allocated using some systematic and rational basis as they cannot be directly traced to the the users that generate the costo
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An example of common cost
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Depreciation or rent on the headquarters. This is a direct cost when treating the building as a whole, but is a common cost of the departments ocated in the building and thus must be allocated when treating individual departments.
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