Managerial Accounting Overview

These flashcards cover key vocabulary terms related to managerial accounting, contrasting it with financial accounting and highlighting essential concepts.

Managerial Accounting

The process of identifying, measuring, analyzing, and interpreting financial information to help managers make informed business decisions.

Financial Accounting

An accounting field that deals with the summary, analysis, and reporting of financial transactions pertaining to a business.

GAAP (Generally Accepted Accounting Principles)

A common set of accounting principles, standards, and procedures that companies use to compile their financial statements.

Direct Materials

The raw materials that are traceable to the finished product.

Direct Labor

The labor costs that can be directly attributed to the production of goods.

Overhead

Indirect costs associated with manufacturing that cannot be directly traced to specific products.

Cost of Goods Sold (COGS)

The direct costs attributable to the production of the goods sold by a company.

Inventory

Goods and materials that a business holds for the purpose of resale.

Upstream Cost

Costs associated with the research and development, and product design phase.

Midstream Cost

Costs incurred during the production phase, including direct materials, direct labor, and overhead.

Downstream Cost

Costs associated with marketing, distribution, and customer service after the product is manufactured.

Just-in-Time (JIT) Inventory

An inventory management strategy that aligns raw-material orders from suppliers directly with production schedules.

Internal Controls

Processes designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

Fraud Triangle

A model that outlines the three key elements that lead to fraudulent behavior: opportunity, incentive, and rationalization.

Sarbanes-Oxley Act (SOX)

A law enacted to enhance standards for all U.S. public company boards, management, and public accounting firms.

Selling and Administrative Expenses

All non-manufacturing costs associated with selling goods and services and managing the company.