Revision Sheet - Accounting terms and concept

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Revision Sheet - Accounting terms and concept

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Cost accounting, management control, financial accounting, internal audit, cost classification, direct costs, indirect costs, fixed costs, variable costs, cash flow, financial statements, profit and loss, cash flow statement, absorption costing, operating activities, investing activities, financing activities, cost of goods sold, operating expenses, net income, contribution margin, diagnostic controls, interactive controls, input controls, risk management, governance, internal controls, financial reporting, decision making, strategic planning, performance monitoring, cash inflows, cash outflows, revenue recognition, cost behavior, cost prediction, financial management, accounting processes, audit, operational efficiency, process improvement, financial position, current assets, non-current assets, inventory, property and equipment, research, manufacturing costs, product costing, service costing, cash equivalents, financial year, resource consumption, cost objects, cost tracing, strategic goals, behavioral guidance, performance indicators, uncertainty management, transaction

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Abstract

This document is a revision sheet covering key accounting and management control terms and concepts. It is designed to help to prepare for a multiple-choice exam.

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[...] Flexible in scope and timing. Narrower in scope, typically focusing on financial statements. Part 2 Revenue and Cash Inflow Revenue is an accumulation of value created from selling goods or services for a specified duration, like a financial year. It is reflected in the profit and loss account as a measure of value-added and is the bottom line of the economic activity of the company. On the contrary, inflow of cash refers to the receipt of liquid funds (cash or cash equivalents) in a particular period. [...]

[...] Forward Controls: Observe current activities (e.g., evaluating or managing through goals) to confirm expected results. Output Controls: Assess results against KPIs, budgets, and feedback loops. Roles of Management Accountants (Lambert & Sponem, 2009) Partner Watchdog Bureaucratic Co-Pilot Works closely with managers, providing both counsel and control. Emphasis on control that budgets and operations are aligned with goals. Focus on processes and controls but lack of agility. Empowerment against strategic thinking: guiding managers toward informed decisions. Desired Future Roles Consultant Navigator Innovator Business Partner Providing expert advice to management. Guiding organizations towards sustainable growth. [...]

[...] Investing activities relate to cash expended for investments or received from divestitures, and financing activities take into account cash flows from debt or equity and cash out-flows for repayments or dividends. Taken together, these statements present a full picture of a company's financial health and decision-making abilities. Absorption Costing vs. Variable Costing Absorption costing assigns all manufacturing costs how to the goods to sold, including fixed overheads. Adopting this approach is consistent with financial reporting requirements and eliminates the phantom losses that would occur if production is greater than sales. [...]

[...] Driving change and fostering adaptability Collaborating actively with other departments. Ethical Standards in Auditing The Institute of Internal Auditors (IIA) outlines principles for ethical conduct: 1. Integrity: Be honest, responsible, and have integrity. 2. Objectivity: Remove the conflicts of interest and bias from assessments. 3. Confidentiality: Protect sensitive information. 4. Competency: Perform audits with the necessary expertise and continuously improve skills. Internal vs. External Audit Internal Audit External Audit Focuses on operational efficiency, risk management, and process improvement. Ensures compliance with accounting standards. [...]

[...] Fixed costs are period costs, so we do not allocate them to inventory. This method eliminates the effects of changing inventory levels, providing a clearer picture of profitability. Internal decision-making, especially at the contribution margin level (the revenue available to cover fixed costs and generate profit) is particularly well served. Absorption costing may be useful for external reporting while variable costing is better suited for internal decision-making. Absorption costing is the method used for external financial reporting; in contrast, variable costing is preferred for management decision-making and control. [...]

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