Chapter 2 - Cost Concepts & Terms Flashcards Preview

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Flashcards in Chapter 2 - Cost Concepts & Terms Deck (12)
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1
Q

Cost

A

A resource sacrificed or forgone to achieve a specific object; not always an expense - may be capitalized and recorded as an asset.

2
Q

Cost Object

A

Anything for which a measurement of cost is needed.

3
Q

Direct Costs

A

Costs that are specifically incurred for a particular cost object and can be traced to a particular cost object in an economically feasible way.

4
Q

Indirect Costs

A

Costs that are incurred to support a cost object but cannot be traced to a particular cost object in an economically feasible way - they must be allocated.

5
Q

Variable Cost

A

A cost that changes in total in proportion to the activity or volume; cost per unit remains constant.

6
Q

Fixed Cost

A

A cost that doesn’t change in total as the activity or volume changes.

7
Q

Relevant Range

A

The range over which cost relationships remain constant; volume or activity can be sustained without increasing capacity.

8
Q

Inventoriable Costs

A

All costs of a product that are regarded as assets when they are incurred; expensed (become COGS) when the product is sold.

9
Q

Period Costs

A

Costs that are expensed in the period in which they are incurred; costs that are expected to benefit revenues in the current period and are not expected to generate revenues in future periods.

10
Q

Manufacturing Firm

A

Produce and sell products; maintain three inventory accounts - materials, work in process, finished goods.

11
Q

Merchandising Firm

A

Sell products that have been produced by another company; maintain an inventory of products for resale.

12
Q

Service Firm

A

Sell service to public (accounting firms, law firms, physicians) and do not maintain an inventory.