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Everything Cards Flashcards

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1
Q

The management account provides information for managers to assist in:
1. Costing
2. Decision making
3. Planning
4. ______
5. ______ _______

A
  1. Control
  2. Performance evaluation
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2
Q

Management accounts are prepared for _____ stakeholders.

Financial accounts are prepared for ______ stakeholders

A

Internal

External

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3
Q

Financial accounts should be true and fair

And hat should management accounts be?

A

As accurate as possible

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4
Q

How often are management accounts prepared?

A

On demand

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5
Q

______ accounting: recording and reporting historical data

_____ accounting: deciding where the company wants to go and ensuring it gets there

A

Financial

Management

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6
Q

Define cost object

A

Anything for which costs can be measured

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7
Q

Define composite cost units

A

They are cost units made up of two elements and are used where a single measure would be inappropriate for control purposes

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8
Q

Cost classification can be done by function (admin etc.) or by _____ (materials, ages etc.)

A

Nature

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9
Q

Prime cost = total _____ costs

A

Direct

(Costs that can be traced in full to the product)

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10
Q

What is a cost card?

A

A breakdown of all costs involved for a product

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11
Q

Define the relevant range

A

The relevant range is the range of activity levels within which assumed cost behaviour patterns occur

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12
Q

Define responsibility accounting

A

The system of accounting that segregates revenue and costs into areas of personal responsibility in order to monitor and assess the performance of each part of an organisation

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13
Q

Define responsibility centre

A

The department or function whose performance is the direct responsibility of a specific manager

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14
Q

Define absorption costing

A

The method by which a share of total production overheads is added to the prime cost, in order to calculate the full production cost of a product/service per unit

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15
Q

What is the OAR? (Overhead absorption rate)

A

Production overhead / activity level

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16
Q

Predetermined OAR = ?

A

Budgeted overhead / budgeted activity level

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17
Q

Steps of activity based costing (ABC):

  1. Group overheads into cost pools
  2. Identify cost drivers for each activity
  3. Calculate a cost per unit of cost driver
  4. ?
A

Absorb activity costs into production based on usage of cost drivers

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18
Q

Where is Job costing appropriate?

A

Where each separately identifiable cost unit or job is of relatively short duration

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19
Q

Where is contract costing appropriate?

A

Where each separately identifiable cost unit is of relatively long duration

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20
Q

Process (continuing operation) costing:

The cost per unit of output from each process is determined by dividing the _____ ______ cost by the number of _____ produced in each period

A

Total process

Units

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21
Q

Define the Just in Time (JIT) approach

A

The approach to operations planning and control based on the idea that goods and services should be produced only when they are needed

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22
Q

A push JIT System goes from _____ to production to customer

A

Supplier

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23
Q

Reasons for preparing a budget can be memorised using PRIME. What does this stand for?

A

Planning
Responsibility
Integration and coordination
Motivation
Evaluation and control

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24
Q

True or false: the following are all functions of the budget committee

Timetabling
Communication of final budget to managers
Monitoring of actual and budgeted results to assess the effectiveness of the budgeting process

A

True

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25
Define the budget manual
A collection of instructions governing the responsibilities of persons and the procedures, forms and records relating to the preparation and use of budgetary data
26
What is the principal budget factor?
The factor which limits an organisation’s activities
27
What three things does a master budget normally comprise of?
Budgeted income statement Budgeted balance sheet Cash budget
28
What is the high low method?
A technique for analysing the fixed and variable cost elements of a semi-variable cost and thus predicting the cost to be incurred at any activity level within the relevant range
29
What are the three steps to the high low method?
1. Difference between the period with the highest volume of activity and the period with the lowest volume of activity 2. Calculate variable cost per unit 3. Calculate fixed cost 4. Find cost for the given activity level
30
Define linear regression analysis
The statistical technique for establishing a straight line equation to represent a set of data
31
Why is linear regression analysis superior to the high low method?
Because it takes account of all sets of recorded data
32
Coefficient of correlation, r: If 0 If 1 If -1
Variables are not correlated Perfect positive correlation Perfect negative correlation
33
Seasonal variations: Additive model? Multiplicative model? (TS= actual time series, T= trend, SV= seasonal variation)
TS = T + SV TS = T * SV
34
The following assumptions are part of what? 1. What happens in the past will continue to happen in the future 2. A linear trend relation 3. Seasonal variations are constant or proportional to the trend line
Time series analysis
35
Big data concerns high volume, high velocity and high ______ information
Variety
36
Define data mining
The process of sorting through data to identify patterns and relationships between different items
37
Define cognitive bias
Bias arising from human perception, including bias depending on how data is presented
38
Define incremental budgeting Define zero based budgeting
Basing the forthcoming year’s budget on the current year’s results modified for changes in activity levels and prices Each budget is prepared from the beginning or zero
39
Define working capital
The value of current assets less the value of current liabilities
40
What are the two main objectives of working capital management?
Increase profits of a business Provide sufficient liquidity
41
Inventory turnover = 365 * ? Receivables collection period = 365 * ? Payables payment period = 365 * ?
Inventory / CoS (Converse for inventory turnover ratio) Receivables / revenue Payables / purchases
42
Current ratio = ? Quick ratio = ?
Current assets / current liabilities Current assets excluding inv / current liabilities
43
Is a higher or lower current ratio preferable?
Higher
44
Rate of inventory should be as _____ as possible
High
45
Define the cash operating cycle
The period of time between outflow of cash to pay for raw materials and the inflow of cash from customers
46
Calculating the cash operating cycle: + Raw materials holding period + Average production period + average inventory holding period + average receivables collection period - average payables payment period Give each formula which is * 365
Average inv of raw mat / annual usage Average inv of WIP / annual CoS Average inv of finished goods / annual CoS Average receivables / annual revenue Average payables / annual purchases
47
What is the reorder level system?
Fixed quantity is ordered whenever inventory calls to a predetermined level
48
What is the periodic review system?
Inventory levels are reviewed at fixed time intervals to fit in with production schedules
49
ABC system: the aim here is to reduce the work involved in inventory control in a business which may have what?
Several thousand types of inventory items
50
Give the economic order quantity model
EOQ = (2CoD/Ch)^1/2 D = annual demand in units Co = cost of placing an order Ch = annual cost of holding one unit in inventory
51
What does the economic order quantity model give?
The ideal order quantity to minimise total inventory cost
52
Define cash budget
A statement in which estimated future cash receipts and payments are tabulated in such a way as to show the forecast cash balance of a business at defined intervals
53
Define divisionalisation
The division of a business into more or less autonomous regional or product-centres business, each with its own revenues, expenditures and investments
54
What is responsibility accounting?
The decentralisation of authority, with the performance of the decentralised units or responsibility centres measured in terms of accounting results
55
What is the aim of a shared service centre?
To achieve significant cost reductions while improving service levels through the use of standardised technology and processes and service level agreements
56
Define return on investment (ROI) Give the equation
How much profit has been earned in relation to the amount of capital invested in the centre Controllable divisional profit / divisional capital employed * 100%
57
A project should be accepted if it _____ current ROI
Increases
58
Define residual income (RI)
A measure of the centre’s profits after deducing a notional or imputed interest cost of the capital invested in the centre
59
The balanced scorecard focuses on four different perspectives; what are they? Damn girl, that’s FIIC
Financial Customer Internal business Innovation
60
Define a flexible budget
A flexible budget recognises different cost behaviour patterns and is designed to change as the volume of activity changes
61
Define standard costing
A control technique that reports variances by comparing actual costs to preset standards so facilitating action through management by exception
62
Define breakeven analysis
The study of interrelationships between costs, volume and profit at various levels of activity
63
Define the break even point (BEP) Give its formula
The number of units sold in order for the business to break even Total fixed costs / contribution per unit
64
Define the contribution ratio Give its formula
A measure of how much contribution is earned from each £1 of sales revenue Contribution per unit / sales price per unit * 100%
65
Give the breakeven revenue formula
Fixed costs / contribution ratio
66
Define the margin of safety Give its formula
The amount by which sales can fall below budgeted sales without a loss being incurred (Budgeted sales - breakeven sales) / budgeted sales * 100%
67
Sales volume to achieve target profit formula?
(Fixed costs + required profit) / contribution per unit
68
Define payback period
The time required for the cash inflows from a capital investment project to equal the initial cash outflow
69
Define the accounting rate of return Give its formula
The amount of profit, or return, that a business can expect to make based on an investment made Average annual accounting profit / average investment or initial investment * 100%
70
Average investment formula?
1/2 * (initial investment + final or scrap value)
71
Define net present value (NPV)
The present value of cash inflows less present value of cash outflows
72
Define annuity
A series of identical cash flows for a number of years
73
Define a perpetuity
A series of identical annual cash flows that continue forever
74
Define net terminal value (NTV)
The cash surplus remaining at the end of a project after taking account of interest and cash repayments
75
Define the discounted payback period (DPP)
The time it will take before a projects cumulative NPV turns from being negative to positive
76
Define the internal rate of return (IRR)
The discount rate at which the NPV is zero, or the annual return (in present value terms) that a project is expected to achieve
77
What are hopwoods three distinct ways of using budgetary information to evaluate managerial performance?
Budget constrained Profit conscious Non-accounting
78
Overtime premium payments are always classed as what?
Factory overheads
79
The following describes what: Functions or locations for which costs are ascertained and related to cost units for control purposes
Cost centre
80
Overhead absorption rates are calculated to attribute overhead costs to cost _____
Units
81
What is known as spreading common costs over cost centres on the basis of benefit received?
Overhead apportionment
82
True or false There is no need for a single product company to allocate and apportion overheads in order to determine overhead cost per unit
True
83
Overhead absorption rates are based on actual or budgeted information?
Budgeted
84
True or false A predetermined absorption rate does not avoid fluctuations in unit costs caused by abnormally high or low overhead expenditure or activity levels
False
85
Budgeted capacity = budgeted overheads / ?
Absorption rate
86
Overheads are under absorbed when actual overhead expenditure _______ the amount absorbed
Exceeds
87
True or false Fixed production overheads are included in a marginal costing system inventory valuation
False
88
Why are inventory valuations always higher with absorption costing than marginal costing?
As fixed overheads are included
89
Which of the following is not an objective of budgeting Authorisation Expansion Performance evaluation Resource allocation
Expansion
90
Budgets are prepared for _____ use and are not usually communicated to ______
Internal Shareholders
91
What task should first be carried out when preparing the master budget?
Identify the principal budget factor
92
Is the cash budget a functional budget?
No
93
True or false A master budget will include a cash budget
True
94
_____ ______ can be used to obtain more accurate forecasts
Machine learning
95
Closing inventory value under marginal costing excludes what?
Fixed overhead per unit

Management Information (1 decks)

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