Accounting 2020 Final Exam

Front 1

Predetermined Overhead Rate

Back 1

Estimated Annual Overhead Costs / Expected Annual Activity

Front 2

Under applied

Back 2

Manufacturing overhead with a debit balance

Front 3

Over applied

Back 3

Manufacturing overhead with a credit balance

Front 4

Internal Rate of Return Factor

Back 4

Capital investment / Net annual cash flow

Front 5

Cash Payback Period

Back 5

Capital Investment / Net annual cash flow

Front 6

Profitability Index

Back 6

PV of Net Cash Flows / Initial investment. Takes into account the size of the initial investment as well as discounted cash flows. Used to compare investments of differing initial investments

Front 7

Overhead controllable variance

Back 7

Difference between actual overhead and budgeted overhead

Front 8

Discounted Cash Flow Techniques

Back 8

Capital budgeting techniques that take into account both the time value of money and the estimated net cash flow from an investment

Front 9

Net Present Value Method

Back 9

Involves discounting net cash flows to their present value and then comparing that present value with the capital outlay required by the investment.

Front 10

Discount Rate

Back 10

Determined by management to discount investments. Also known as required rate of return.

Front 11

Cost of Capital

Back 11

Rate at which a company must pay to obtain funds from creditors and stockholders

Front 12

Post Audit

Back 12

Thorough evaluation of how well a project's actual performance matches the original projections.

Front 13

Internal Rate of Return Method

Back 13

Finds the interest yield of the potential investment. Accept the project when the factor is higher than the required rate of return

Front 14

Internal Rate of Return Factor

Back 14

Capital Investment / Net Annual Cash Flows

Front 15

Annual Rate of Return Method

Back 15

Based directly on accrual accounting data rather than cash flows

Front 16

Annual Rate of Return

Back 16

Expected Annual Net Income / Average Investment

Front 17

Average Investment

Back 17

Original Investment + Salvage Value / 2

Front 18

Standard Costs

Back 18

Predetermined unit costs which companies use as measures of performance. Unit amount.

Front 19

Variances

Back 19

Differences between total actual costs and total standard costs

Front 20

Responsibility Accounting

Back 20

Accumulating and reporting costs on the basis of the manager who has the authority to make the day to day decisions about the items

Front 21

Management by Exception

Back 21

Top management's review of a budget report is focused either entirely or primarily on differences between actual results and planned objectives

Front 22

Direct Fixed Costs

Back 22

Fixed costs that pertain to one department only. Are considered a controllable cost

Front 23

Contribution Margin

Back 23

Sales less variable costs

Front 24

Return on Investment (ROI)

Back 24

Controllable Margine / Average Operating Assets

Front 25

Controllable Margin

Back 25

Sales less VC less Controllable FC

Front 26

Residual Income

Back 26

Controllable margin – (Minimum rate of return x Average operating assets)

Front 27

Operating Budgets

Back 27

Individual budgets that result in the preparation of budgeted income statement

Front 28

Financial Budgets

Back 28

Focus primarily on the cash resources needed to fund expected operations and planned capital expenditures

Front 29

Required Production Units

Back 29

Budgeted Sales Units + Desired EI - BI

Front 30

Required Merchandise Purchases

Back 30

Budgeted cost of goods sold + desired ending merchandise inventory - beginning merchandise inventory