Glossary of Financial and Management Terms for Business Students, Quizzes of Management Accounting

Download Glossary of Financial and Management Terms for Business Students and more Quizzes Management Accounting in PDF only on Docsity! TERM 1 Balanced Scorecard DEFINITION 1 A performance evaluation system that integrates financial and operational performance measures along four perspectives; financial, customer, internal business, and learning and growth. TERM 2 Capital Turnover DEFINITION 2 Sales revenue divided by total assets. The capital turnover shows how much sales revenue is generated with every $1.00 of assets. TERM 3 Common Fixed Expenses DEFINITION 3 Fixed expenses that cannot be traced to the segment. TERM 4 Cost Center DEFINITION 4 A responsibility center in which managers are responsible for controlling costs. TERM 5 Decentralize DEFINITION 5 A process where companies split their operations into different operating segments. TERM 6 Direct Fixed Expenses DEFINITION 6 Fixed expenses that can be traced to the segment. TERM 7 Favorable Variance DEFINITION 7 A variance that causes operating income to be higher than budgeted. TERM 8 Flexible Budget DEFINITION 8 A summarized budget prepared for different levels of volume. TERM 9 Flexible Budget Variance DEFINITION 9 The difference between the flexible budget and actual results. The flexible budget variances are due to something other than volume. TERM 10 Goal Congruence DEFINITION 10 When the goals of the segment managers align with the goals of top management. TERM 21 Profit Center DEFINITION 21 A responsibility center in which managers are responsible for both revenues and costs, and therefor profits. TERM 22 Residual Income DEFINITION 22 Operating Income minus the minimum acceptable operating income given the size of the division's assets. TERM 23 Responsibility Accounting DEFINITION 23 A part of an organization whose manager is accountable for planning and controlling certain activities. TERM 24 Responsibility Center DEFINITION 24 A part of an organization whose manager is accountable for planning and controlling certain activities. TERM 25 Return on Investment (ROI) DEFINITION 25 Operating Income divided by total assets. The ROI measures the profitability of a division relative to the size of its assets. TERM 26 Revenue Center DEFINITION 26 A responsibility center in which managers are responsible for generating revenue. TERM 27 Sales Margin DEFINITION 27 Operating Income divided by sales revenue. The sales margin shows how much income is generated for every $1.00 of sales. TERM 28 Segment Margin DEFINITION 28 The operating income generated by a profit or investment center before subtracting the common fixed costs that have been allocated to the center. TERM 29 Transfer Price DEFINITION 29 The price charged for the internal sale of product between two different divisions of the same company. TERM 30 Unfavorable Variance DEFINITION 30 A variance that causes operating income to be lower than budgeted. TERM 31 Variance DEFINITION 31 The difference between an actual amount and the budget. TERM 32 Vertical Integration DEFINITION 32 The acquisition of companies within one's supply chain. TERM 33 Volume Variance DEFINITION 33 The difference between the master budget and the flexible budget. The volume variance arises only because the actual sales volume differs from the volume originally anticipated in the master budget.