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A/R
Accounts receivable; promises to pay for a good or service delivered.

ABB budget
Activity-based budget; type of budget that focuses on activities instead of departments or products.

ABC
Activity-based costing; a method of assigning costs to customers, services, and products based on the activity’s consumption of resources.

ABM
Activity-based management; a discipline that focuses on the management of activities as the route to improving the value received by the customer and the profit achieved by providing this value.

Abnormal spoilage
Any unacceptable product that should not normally exist under efficient and normal operating conditions.

Abnormal variation
The variation in an element caused by some new factor making the process vary in an unexpected and unacceptable manner.

Absolute advantage
The advantage that an entity has when it can produce a unit of a good or service with less labor than another.

Absolute quality conformance
A total quality management(TQM) quality rule that sets conformance exactly at a required value.

Absorption costing
An inventory costing system that includes both variable and fixed manufacturing costs; inventory absorbs all costs of manufacturing; also known as full costing.

Accelerated depreciation
Any depreciation method that writes off a capital investment faster than straight line depreciation; more of the depreciable amount is written off in the early years of the investment than with the straight line method.

Accounting changes
Changes to correct errors and make adjustments as a usual part of business, and changes to accounting principles.

Accounting equation
An equation that represents a balance between the resources of a company on one side of the equation (assets) and all of the claims on those resources on the other side of the equation (liabilities + equity).

Accounts receivable
Promises to pay for a good or service delivered; also known as A/R.

Accrual accounting
An accounting method that recognizes revenue when it is earned rather than collected and recognizes expenses in the period in which they are incurred rather than when the expense or bill is actually paid.

Accrued expenses
The amount a firm owes but has not yet paid for wages, taxes, interest, and dividends.

ACH
Automated clearing house; the electronic exchange of payments, financial documents, and payment information in a standardized format.

Activity
Any type of action, work, or movement performed within an entity.

Activity analysis
Identifies, codifies, and analyzes the activities needed to finish a job or operation by interviewing personnel directly involved with various aspects of the operation.

Activity center
A logical grouping of activities, actions, movements, or sequences of work.

Activity cost driver
A measurement of the amount of an activity used by a cost object.

Activity level
The number of units produced or the number of units sold; also known as output level, measures of output, or output.

Activity method
A depreciation method that does not depreciate assets by the passage of time, but by units of use of the asset. Assets are depreciated either as input units such as the number of hours used, or output units, such as the number of items produced by the asset; also known as variable charge approach or units of production method.

Activity-based budget
A type of budget that focuses on activities instead of departments or products; also known as ABB budget.

Activity-based cost drivers
Any factor that has a cause-and-effect relationship on costs and focuses on a manufacturing or service activity (operations) such as machine setup, machine use, packaging, or any other activity.

Activity-based costing
A method of assigning costs to customers, services, and products based on an activity’s consumption of resources; also known as ABC.

Activity-based management
A discipline that focuses on the management of activities as the route to improving the value received by the customer and the profit achieved by providing this value; also known as ABM.

Actual cost
The historical cost paid for a good or service.

Actual costing system
A method of accounting where the actual costs incurred for all costs including direct labor, direct material, and overhead are recorded.

Actual-cost transfer pricing
Setting a transfer price that equals either the full or variable cost to the selling unit.

Additional processing costs
Any costs that can be specifically identified with a product because the cost occurs after the split-off point where the costs are assigned to the separate products; also known as separable costs.

ADR
American depository receipt; represents a proof of ownership for underlying shares of a foreign security.

AI
Artificial intelligence; any computer-based system that is intended to mimic human choices or behaviors.

All-channel network
A group in which communication flows among all members.

Allocation
A means of determining the proportional share of a total cost that belongs to a particular cost object.

Allocation base
Any factor that has a cause-and-effect relationship on costs, such as a level of activity changing the overall cost; used to allocate fixed overhead to cost pools.

Allowable cost
The difference between the target price and the target profit.

American depository receipt
A document showing proof of ownership for underlying shares of a foreign security; also known as ADR.

American option
A contract allowing the owner to exercise an option at any time prior to its maturity.

Application software packages
Preprogrammed, pretested software applications that meet business needs.

Appraisal costs
The costs of auditing processes for quality, including formal and informal measurements and evaluations of quality levels, setting quality standards, and performance requirements.

Arbitrage
The simultaneous purchase of an investment instrument in one market and the sale in another with the objective of making a profit on the price differences in the different markets.

Artificial intelligence
Any computer-based system that is intended to mimic human choices or behaviors; also known as AI.

Artistic intangibles
Intangibles such as copyrights on books, movies, plays, poems, music, photos, and audiovisual information.

Asset
Probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events.

Asset coverage
The amount by which assets cover debt.

Asset demand
Demand for money for people or businesses to hold as monetary assets, such as stocks or bonds.

Asset-based borrowing
A form of credit based on the pledging of an asset for collateral; also known as secured short-term loan.

Assurance service
An independent professional service designed to improve the quality and context of information for managers or other decision makers.

Attestation engagements
Services such as determining if a debtor has met all requirements of a loan agreement.

Attribution theory
Theory of motivation which purports that employees attribute their own and others’ behavior either to intrinsic or extrinsic rewards and may experience a decrease in motivation if an employer substitutes an extrinsic for an intrinsic reward.

Authoritative budgeting
A budgeting process in which top management creates a budget without advice or review from below; also called top-down budgeting.

Authoritative standards
Standards determined solely by management.

Autocratic leader
Leader who dominates a work group and makes decisions with little or no input from others.

Automated clearing house
The electronic exchange of payments, financial documents, and payment information in a standardized format; also known as ACH.

Availability float
The time interval between when the check is deposited and when the firm’s account is credited with the collected funds.

Available-for-sale securities
A category for all securities that do not fit in the trading and the held-to-maturity categories, such as securities that have an indeterminate use or indefinite holding time, but are also not being actively traded to take advantage of temporary differences in market prices.

Average cost method
An inventory valuation method that lumps all costs for all similar inventory items together and produces an average cost for the period.

Avoidable cost
A cost that can be eliminated in whole or in part by choosing one alternative over another in the decision-making process; also known as escapable cost.

Avoidable risk
Risk that is independent of economic, political, or other factors or general market movements; it is associated with a specific company or industry; also known as unique risk, unsystematic risk, or diversifiable risk.

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