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Chapter

COMM 112 Chapter Notes -Psychological Contract, Parallel Computing, Profit Center


Department
Commerce
Course Code
COMM 112
Professor
Teri Shearer

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Chapter 1
Managerial accounting: the provision of accounting information for a company’s
internal users
Planning: the detailed formulation of action to achieve a particular end
Controlling: managerial activity of monitoring a plan’s implementation and taking
corrective action as needed
Decision making: the process of choosing among competing alternatives
Financial accounting: primarily concerned with producing information for external
users
Value chain: inbound logistics, outbound logistics, marketing and sales, service,
procurement, technology development, human resources management, developing
infrastructure
Continuous improvement: the continual search for ways to increase the overall
efficiency and productivity of activities by reducing waste, increasing quality, and
managing costs
Total quality management: philosophy in which manufacturers strive to create an
environment that will enable workers to manufacture perfect products
Lean accounting: organized costs according to the value chain and collects both
financial and nonfinancial information
Line positions: positions that have direct responsibility for the basic objectives of an
organization
Staff positions: positions that are supportive in nature and have only indirect
responsibility for an organization’s basic objectives
Controller: chief accounting officer, supervises all accounting functions and reports
directly to the general manager and chief operating officer
Treasurer: is responsibility for the finance function
Sarbanes-Oxley Act (SOX): established stronger government control and regulation of
public companies in the U.S.
Publicly traded companies: issue shares traded on the U.S. stock exchange
Ethical behaviour: involves choosing actions that are right, proper, and just
Certified Management Accountants (CMA) and Certified General Accountants
(CGA): have established ethical standards for accountants
Chartered Accountant (CA): education program that focuses on external financial
reports and, in particular, auditing functions
Chapter 2
Cost: the amount of cash or cash equivalents sacrificed for goods and/or services that are
expected to bring a current or future benefit to the organization

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Expenses: expired costs
Price: revenue per unit
Accumulating cost: the way that costs are measured and recorded
Assigning cost: the way that a cost is linked to some cost object
Cost object: any item such as a product, customer, department, project, geographic
region, plant, and so on, for which costs are measured and assigned
Committed fixed costs: can be avoided
Discretionary fixed costs: can be modified
Direct costs: those costs that can be easily and accurately traced to a cost object
Indirect costs: costs that cannot be easily and accurately traced to a cost object
Allocation: an indirect cost is assigned to a cost object using a reasonable and convenient
method
Variable cost: on that increases in total as output increases and decreases in total as
output decreases
Fixed cost: a cost that does not increase in total as output increases and decrease in total
in input decrease
Opportunity cost: the benefit given up or sacrificed when on alternative is chosen over
anther
Products: goods produced by converting raw materials through the use of labour and
indirect manufacturing resources, such as manufacturing plant, land, and machinery
Services: tasks or activities performed for a customer or and activity performed by a
customer using an organization’s products of facilities
Manufacturing organizations: organizations that produce products
Service organization: organizations that provide services
Product (manufacturing) costs: those costs, both direct and indirect, of producing a
product in a manufacturing firm or of acquiring a product in a merchandising firm and
preparing it for sale
Direct costs
Direct
Tracing
cost
object
Indirect
costs
Allocation
cost
object

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o Direct materials: those materials that are part of the final product and can be
directly traced to the foods being produced
o Direct labour: the labour that can be directly traced to the foods being produced
o Manufacturing overhead: all product costs other that direct materials and direct
labour
Prime cost: the sum of direct material cost and direct labour cost
Conversion cost: the sum of direct labour cost and manufacturing overhead cost
Period costs: all costs that are not product costs
Selling costs: those costs necessary to market, distribute, and service a product of service
Administrative costs: all costs associated with research, development, and general
administration of the organization that cannot reasonably be assigned to either selling or
production
Manufacturing costs: total of:
o Direct material cost: the cost of any material that is an integral part of the
finished product
o Direct labour cost: the wages of employees who are integral to the finished
product
o Factory overhead costs: costs other than direct materials cost and direct labour
cost that are incurred in the manufacturing process
Materials inventory: consist of the costs of the direct and indirect materials that have not
entered the manufacturing process
Work in process inventory (WIP): consists of the direct materials, direct labour, and
factory overhead costs for products that have entered the manufacturing process but are
not yet completed
costs
period
capitalize
asset
depreciation
expense
period
expense
product
inventory
asset
COGS
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