Acc 241 Exam Questions With 100%
Correct Answers
Budget Committee - answerA group of upper managers who are responsible for overall
policy matters relating to the budget program and for coordinating the preparation of the budget
and its final review and approval.
Cost Center - answerA cost cen...
Acc 241 Exam Questions With 100% Correct Answers Budget Committee - answer✔✔A group of upper managers who are responsible for overall policy matters relating to the budget program and for coordinating the preparation of the budget and its final review and approval. Cost Center - answer✔✔A cost center is a business unit that is only responsible for the costs that it incurs. The manager of a cost center is not responsible for revenue generati on or asset usage. The performance of a cost center is usually evaluated through the comparison of budgeted to actual costs. Cost of Goods Sold, Inventory and Purchases Budget - answer✔✔A merchandiser's budget that computes the Cost of Goods Sold, the amou nt of desired ending inventory, and amount of merchandise to be purchased. Financial Budgets - answer✔✔The budgets that project the collection and payment of cash, as well as forecast the company's budgeted balance sheet. Investment Center - answer✔✔A busi ness unit within an entity that has responsibility for its own revenue, expenses, and assets. Management evaluates the investment center based on its return on those assets invested specifically in the investment center. Line of Credit - answer✔✔A commitme nt from a lender to pay a company whenever it needs cash, up to a pre -set maximum level. It is generally secured by company assets, and for that reason bears an interest rate not far above the prime rate. Management by Exception - answer✔✔The practice of e xamining the financial and operational results of a business, and only bringing issues to the attention of management if results represent substantial differences from the budgeted or expected amount. Master Budget - answer✔✔The comprehensive planning docu ment for the entire organization. The master budget includes the operating budgets and the financial budgets. Operating Budgets - answer✔✔The budgets needed to run the daily operations of the company. The operation budgets culminate in a budgeted income st atement. Participative Budget - answer✔✔A budgeting process under which those people impacted by a budget are involved in the budget creation process. This bottom -up approach to budgeting tends to create budgets that are more achievable than are top -down b udgets that are imposed on a company by senior management Profit Center - answer✔✔A business segment whose manager has responsibility for both cost and revenue. Like a cost center, a profit center does not have responsibility for the assets it uses. Segmented income statements Responsibility Accounting - answer✔✔system of evaluating the performance of each responsibility center and its manager. Responsibility Center - answer✔✔Any part of an organization whose manager has control over cost, revenue, or investment funds. Revenue Center - answer✔✔Unit within an organ ization for which the manager is only responsible for generating revenues. Rolling Budget - answer✔✔A budget that is continuously updated so that the next 12 months of operations are always budgeted; also known as a continuous budget. Safety Stock - answer✔✔An additional quantity of items held in inventory in order to minimize the chance of an item being out of stock. Sensitivity Analysis - answer✔✔A "What -if" technique that asks what results will be if actual prices or costs change or if an underlying ass umption changes. Slack - answer✔✔The intentional overstatement of budgeted expenses and / or understatement of budgeted revenues in order to cope with uncertainty, make performance appear better, or make room for potential budget cuts. Strategic Planning - answer✔✔An organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. The planning time frame typically extends 5 - 10 years into the future. Variance - answer✔✔The difference b etween actual and budgeted amounts for revenues and expenses. Zero -based Budgeting - answer✔✔A system of budgeting where each department or division of a company must justify all expenditures and allocations rather than simply increases over the previous f iscal year. Balanced Scorecard - answer✔✔A strategic management system based upon measuring key performance indicators across all aspects and areas of an enterprise: financial; customer; internal process; and learning and growth. Benchmarking - answer✔✔Com paring actual performance to similar companies in the same industry, to other divisions, or to world -class standards. Capital Turnover - answer✔✔The amount of sales revenue generated for every dollar of invested assets; a component of the ROI calculation c omputed as sales divided by total assets. Centralized - answer✔✔Refers to an organizational structure where all major planning decisions are made by top management. Cost Center - answer✔✔A cost center is a business unit that is only responsible for the cos ts that it incurs. The manager of a cost center is not responsible for revenue generation or asset usage. The performance of a cost center is usually evaluated through the comparison of budgeted to actual costs. Decentralized - answer✔✔A type of organizati onal structure in which daily operations and decision -making responsibilities are delegated by top management to middle and lower -level mangers within the organization, allowing top management to focus more on major decisions. Economic Value Added (EVA) - answer✔✔A residual income measure calculating the amount of income generated by the company or its divisions in excess of stockholders' and long -term creditors' expectations. Flexible Budget - answer✔✔A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to compare to actual costs incurred. Flexible Budget Variance - answer✔✔The difference arising because the company actually earned more or less revenue or incurred more or less c ost than expected for the actual level of output. Goal Congruence - answer✔✔Aligning the goals of subunit managers with the goals of top management. Investment Center - answer✔✔A business unit within an entity that has responsibility for its own revenue, e xpenses, and assets. Management evaluates the investment center based on its return on those assets invested specifically in the investment center. Key Performance Indicator(KPI) - answer✔✔Also known as KPI or Key Success Indicators (KSI), help an organiza tion define and measure progress toward organizational goals. Lag Indicators - answer✔✔Performance measures that indicate past performance. Lead Indicators - answer✔✔Performance measures that forecast future performance. Management by Exception - answer✔✔The practice of examining the financial and operational results of a business, and only bringing issues to the attention of management if results represent substantial differences from the budgeted or expected amount. Product Life Cycle - answer✔✔The period of time over which an item is developed, brought to market and eventually removed from the market.
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