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  1. Business ethics encompasses a form of ethics that is applied for the business environment. Business ethics are normally classified as either generic ethics to business or applied to a particular profession. For example, under the business ethics of accountants one would find ethical principals of confidentiality and integrity that an accountant is required to abide to.
  2. The income statement outlines the revenue and expenditure of an organization to portray the net income/(loss) derived during a particular period. Such statement is present in all the annual reports of companies as prescribed by corporate law.
  3. The balance is a statement that shows the balances of assets, liabilities and equity at a particular date. This is also an integral part of annual reports of companies.
  4. The just in time inventory method, is an inventory technique that targets towards zero inventory, defects and breakdowns and elimination of non-value added activities. This technique was developed by Toyota with the aim of excellence in all manufacturing phases. For this system to be effective it is imperative that suppliers provide a 100% effective delivery system.
  5. A premise that states that a particular point increase in through production is hindered by something, like for example bottlenecks.
  6. Cost accounting provides information about costs traced to a particular product in order to aid management in economic decision, like pricing setting.
  7. Process costing is a cost accumulation system that is applicable to firm that manufacturing substantial similar products during a particular time-frame. For example, a car manufacturer uses process costing.
  8. Accumulating manufacturing system is a system that builds on previous experience in order to enhance efficiency and effectiveness. For example, an examination of the labor efficiency variance would serve as an indication of the level of efficiency of workers. Such variance will be examined in order to further build up such efficiency element by removing errors and highlighting successful procedures.
  9. Factory labor is normally assigned by looking at the hours taken by the workforce for that particular product. For example, under a job costing system, a job card is prepared by the foreman, which states the number of hours workers took for that job.
  10. Since under process costing all products are homogenous in the process there will be an identical objective, identical inventory account and an identical overhead assignment method.
  11. FIFO stands for First In First Out, which means that the old stock will be the first issued whenever a sales is made. For instance, a company had 100 units opening stock at $10 per unit and bought a further 50 at $12 per unit. If the organization sells 10 units these will be valued at $10 per unit.
  12. LIFO stands for Last In First Out, which means that stock sold will be valued at most recent prices in accordance with the purchases made. For example, a firm had 100 units opening stock at $10 per unit and bought a further 50 at $12 per unit. If the organization sells 10 units these will be valued at $12 per unit.
  13. Labor cost encompasses the expenditure involved by employing human resources in the organization. There are two types of labor costs, which entail direct and indirect labor.  An example of labor cost entails the overtime premium given to workers for working additional hours.
  14. Employees under job costing work on different jobs engaged by the company, while under process costing specialization of workers is devoted to a particular product. Accumulation of costs is also different, under job costing according to the job and under process costing costs are accumulated by the process or department.
  15. Activity based costing is a technique of assigning overheads to products based on cost drivers. For example, packaging overheads are assigned in accordance with number of products packed.
  16. A manufacturing company is a business entity that is involved in the transformation of raw materials into finished products or work in progress. For example a firm engaged in car production is a manufacturing company.
  17. Batch-level activities are production of small or large batches performed by a series of operations and each operation is carried out on the whole batch before subsequent batches are produced. For example, the production of a batch of chairs for a school according to their requirements is a batch-level activity.
  18. Factory-level activities encompass the production of identical units during a particular time frame. For example, manufacture of same model computer equipment falls under factory-level activities.
  19. Under the traditional method overheads are allocated in line with one overhead rate that focuses on the utilization of a main resource of the firm, normally labor or machinery. Activity based costing allocates overheads in accordance to cost drivers.  For example, set-up overhead costs are allocated under the traditional method in accordance to machine hours or labor hours used.  Under activity based costing it is allocated under the number of set-ups made.
  20. Objectives of JIT are: eliminate non-value added activities, zero inventory, breakdowns and defects, one batch size and on-time delivery from suppliers.
  21. Variable cost is a cost that varies in direct proportion with the units produced, like direct material cost.
  22. Mixed costs are costs that incorporate both a variable and a fixed element in them. For example, maintenance cost encompasses a planned maintenance that is carried out irrespective of level of activity and a variable one that is performed in line with the level of activity.
  23. Operating leverage entails the determination of the degree to which an organization incurs a mixture of fixed and variable expenditure. For example, a company that incurs few sales and each sale holds a high gross profit margin has a high operating leverage.
  24. Decisions that involve incremental analysis are make or buy decisions, sell or process further, special orders and changes in production or technology utilized. For example, an organization deciding either to make the component or purchase it from a supplier.
  25. Opportunity cost comprises the cost of the foregone alternative. For example, if the firm decides to produce such product it will have opportunity cost of the foregone machine hours on such product, which may be used to other goods.
  26. Degree worth is the usefulness of formal training in practice. For instance, an individual graduating in accounting, what are the levels of skills he/she has attained from the degree to work as a management accounting.
  27. External sales are sales made with customers outside the organization or group. For example a subsidiary company selling to outside clients in the target market.
  28. An operating budgets are budgets that portray functions of the organization. For example, a production budget shows the planned production for the firm.
  29. An internal report comprises information that is given to persons inside the organization. It may be to higher levels like top management or to the same and subordinate levels. For example, a variance analysis report is an internal report given to higher level management.
  30. Non-controllable costs are costs that are outside the control of the organization or department due to their nature or respective time frame. For example a sudden rise in the price of raw materials due to inflation is a non-controllable cost.
  31. A direct fixed cost is a cost that is not affected by production, but ceases to exist if the activity under consideration is no longer active. For example, an advertising campaign for a particular brand is a direct fixed cost, because it that brand ceases to exist such cast will also perish.
  32. Direct labor is the employees that are directly involved in the production of goods. For example, workers in a wood manufacturer engaged in the production of the wood.
  33. Net present value method is a capital expenditure appraisal technique that abides with the time value of money premise. It computes the overall net present value after discounting future cash flows.
  34. The most significant qualitative activities are those that affect the whole organization for the long-term, like firm reputation.
  35. Short-term debt is debt that will be settled into cash in the operating cycle of the organization, like accounts payable. Long-term debts are debts that hold a maturity of a long-term nature, like bonds.
  36. Horizontal analysis encompasses examination of the movements of a variable over time to establish a trend. For example, considering the percentage changes in sales over a five year time frame.
  37. The inventory turnover ratio indicates how many times stock is turned over during a period. The higher the inventory turnover the better the stock management of the company.
  38. Profit margin is a ratio that outlines the profits generate out of every $100 of sales. The greater the profit margin the better the profitability of the firm.
  39. Solvency ratios are financial ratios that measure the stability of the company in meeting its long-term obligations. Interest cover is an example of a solvency ratio.
  40. Comprehensive income entails income that has not yet been recorded in the income statement, because it has not yet been realized. Example of such income is an unrealized holding gain available from the sale of securities.
  41. Improper recognition arises in accounting whenever the recording of a transaction infringes an accounting principle or standard. For example recognizing sales revenue before being realized.

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Drury, C., 1997. Management and Cost Accounting. Fourth Edition. New York: International Thomson Business Press.

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