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

Course Code
COMM 112
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
Value chain: inbound logistics, outbound logistics, marketing and sales, service,
procurement, technology development, human resources management, developing
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
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
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
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

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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
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
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
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
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