Horngren's Cost Accounting: Chapter 1 Flashcards

Vocabulary flashcards covering key definitions and concepts from Chapter 1 of Horngren's Cost Accounting.

Management Accounting

Measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill organizational goals. It does not need to be GAAP compliant.

Financial Accounting

Focuses on reporting financial information to external parties such as investors, governmental agencies, banks, and suppliers, based on GAAP.

Cost Accounting

Measures, analyzes, and reports financial and nonfinancial information related to the costs of acquiring or using resources in an organization.

Strategy

Specifies how an organization matches its own capabilities with the opportunities in the marketplace.

Strategic Cost Management

Cost management that specifically focuses on strategic issues.

Value

The usefulness a customer gains from a company's product or service, determined by the entire customer experience.

Value Chain

The sequence of business functions by which a product is made progressively more useful to customers: Research and Development, Design of Products and Processes, Production, Marketing, Distribution, Customer Service, and Administration.

Customer Relationship Management (CRM)

A strategy that integrates people and technology in all business functions to deepen relationships with customers, partners, and distributors.

Supply Chain

The flow of goods, services, and information from initial sources of materials, services, and information to their delivery, encompassing the Production and Distribution functions of the value chain.

Five-Step Decision-Making Process

A 5-step framework consisting of: 1) Identify the problem and uncertainties, 2) Obtain information, 3) Make predictions about the future, 4) Make decisions by choosing among alternatives, and 5) Implement the decision, evaluate performance, and learn.

Planning

Selecting an organization's goals and strategies, predicting results under various alternative ways of achieving those goals, deciding how to attain the desired goals, and communicating them to the entire organization.

Control

Comprises taking actions that implement planning decisions, evaluating past performance, and providing feedback and learning to help future decision making.

Budget

The quantitative expression of a proposed plan of action by management and an aid to coordinating what needs to be done to execute that plan.

Cost-Benefit Approach

A management accounting guideline that compares the benefits of an action or purchase to its costs, requiring that benefits should generally exceed costs.

Line Management

Management directly responsible for achieving the goals of the organization.

Staff Management

Management that provides advice, support, and assistance to line management.

Sarbanes-Oxley Act (SOX)

Legislation passed in 2002 in response to corporate scandals to improve internal controls, corporate governance, monitoring of managers, and disclosure practices of public companies.

IMA Standards of Ethical Conduct

Four ethical standards for management accountants advanced by the Institute of Management Accountants: Competence, Confidentiality, Integrity, and Credibility.

Key Success Factors

Performance areas across the value chain and supply chain that customers expect companies to optimize: Cost and Efficiency, Quality, Time, Innovation, and Sustainability.

CFO Organizational Structure

The reporting structure under the Chief Financial Officer (CFO), which includes Corporate Controller, Tax, Treasury, Risk Management, Investor Relations, Strategic Planning, and Internal Audit.