Managerial: Accounting

Glossary

A

Absorption costing (Focus 3) A product costing method that classifies direct materials, direct labor, variable overhead, and fixed overhead as product costs.

Accounting rate of return (Unit 9.4) The return generated by an investment based on its net operating income.

Accounts receivable turnover (Unit 12.3) A measure of the liquidity of a company's accounts receivable that shows how many times, on average, a company's receivables balance is “turned over,” or collected, during the year.

Acid-test ratio (Unit 12.3) A measure of liquidity that includes only highly liquid current assets in its measurement, also referred to as the quick ratio.

Activity (Units 2.1, 7.1) An event that consumes resources; any repetitive event that serves as a measure of output or usage, such as sales, production, phone calls made, or miles driven.

Activity-based budgeting (Unit 7.3) The practice of using activity-based costing information and knowledge about activities and resource consumption to prepare an organization's budget.

Activity-based costing (Unit 7.1) A costing technique that assigns costs to cost objects, such as products or customers, based on the activities those cost objects require.

Activity-based management (Unit 7.3) The process of using activity-based costing information to manage a business's activities.

Activity cost pool (Unit 7.2) A group of costs combined based on their activity cost drivers and the resources to be consumed.

Activity rate (Unit 7.2) Rate calculated by ...