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82 Cards in this Set
- Front
- Back
Four perspectives of scorecard
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1. customer
2.internal processes 3.learning and growth 4. financial |
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pure competition
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large number of sellers produce and distribute virtually identical products and services
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monopolistic competition
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many companies produce similar but not identical products
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monopoly
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companies that have exclusive control over a product,service or geographic market
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oligopoly
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few firms control the types of products and services and their distribution
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price fixing
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group of companies agree to limit supply and charge identical prices for their goods and services.
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price gouging
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price of setting an excessively high price with the intent of reaping short term excessive profits
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markup
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an additional amount to the cost of their products and services.
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Cost-based pricing policy
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Selling price=cost+(cost*markup percentage)
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selling margin
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selling price-cost
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selling margin percentage
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selling margin/ selling price
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penetration pricing
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setting an initial selling price low in an attempt to gain market share
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predatory pricing
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practice of selling products below cost in an attempt to drive out the competition, control the market, and then raise the price
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dumping
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company sells it's product below cost in foreign countires
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Skimming pricing
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setting an initial selling price high in an attempt to make early profits
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life-cycle pricing
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a pricing strategy based on the estimated total cost of product over it's life
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target pricing
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a pricing strategy where the company first estimates the selling price and then subtracts the required markup to determine target cost
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Conversion process
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1. scheduling production
2. obtaining raw materials 3. using labor and other resources 4. storing finished goods |
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Reasons to maintain inventory
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1. to meet customer demand
2. to smooth production scheduling 3. to take advantage of quantity discounts 4. to hedge against price increases |
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quantity discount
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reduced purchase price due to volume
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ordering costs
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costs incurred to place one additional order for inventory; costs that vary with the number of orders placed and received
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carrying costs
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costs that vary with the number of units carried in inventory
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reorder point
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inventory level that when reached indicates the need to place an order for additional inventory
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daily demand
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amount of inventory needed each business day
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daily demand formula
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annual demand (D)/ # of business days in a year
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reorder point formula
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daily demand* lead time
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lead time
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# of days epapsing from the time an order is placed until the order is recieved
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safety stock
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small amount of inventory kept on had
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reorder point when company maintains safety stock
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(daily demand*lead time)+safety stock
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jit model
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eliminates distruptions in production
reduces or eliminates nonvalue-added activities minimizing inventory |
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bonus rate
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percentage the bonus will pay
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bonus base
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form of income the bonus rate is applied to
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bonus based on income bef income taxes
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bonus=(income bef bonus-bonus) * bonus rate
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bonus based on net income
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bonus=(income bef bonus and income taxes-bonus-income taxes)*bonus rate
income taxes=(income bef bonus and income taxes-bonus)*tax rate |
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benefits of budgeting
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planning
communication &coordination resource allocation evaluation and control |
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Costs of budgeting
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1. time and resource requirements
2. adaptability of departments and segments of business 3. motivation and behavior of individuals |
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budgetary slack
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difference b/t what a person with input into the budgeting process chooses as an estimate of revenues or expenses and what is actually a realistic estimate; deliberately induced bias
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mandated budgeting
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top-down budgeting, the budget is prepared by upper management based on predetermined standards
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participatory budgeting
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bottom-up budgeting, the budget is coordinated by upper management based on input from lower level employees
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incremental budgeting
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strategy whereby the company uses the prior periods budget as a starting point in preparing the periods budget
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zero-based budgeting
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company begins each budget period with a zero budget, requires consideration of every activity undertaken by the department or segment
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master budget
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compilation of all the budgets and shedules prepared planning for the revenue, conversion and expenditure process
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planning budget schedules
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1. sales budget
2. cash receipts schedule 3. accounts receivable schedule 4. marketing and distribution budget |
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Revenue process planning
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1. sales budget
2.cash reciepts shedule 3. accounts recievale shedule 4. marketing and distribution budget |
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Conversion process planning
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1. production budget
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Expenditure process planning
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1. direct materials purchase budget
2. direct labor and overhead budget 3. administrative budget 4.cash disbursement schedule 5.accounts payable schedule |
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Budgeted financial Statements
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1. Finished Goods schedule
2. cost of goods sold shedule 3.income statement 4.statement of cash flows 5. balance sheet |
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Measuring customer satisfaction
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1. increase the number of customers
2. increase market share-#of customers relative to competition 3. enhancing company image |
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Measuring customer loyalty
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1. increase customer retention
2. increase revenue per customer |
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sales budget
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shows the expected sales for the period in both physical quantity and financial dollar amounts for a particular product line, geographic area, or sales manager
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cash receipts schedule
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shows anticipated cash collections from customers for the period
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accounts recievalbe shedule
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indicates the changes expected in the balance of accounts receivable during the budget period
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Calculating ending balance of accounts receivable
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+Credit sales during the month
=total amount due from customers -cash reciepts from credit customers during the month -cash sale discounts taken by customers during the month =ending balance of accounts recievable |
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marketing and distribution budget
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indicates the planned expenditures for these marketing and distribution activities
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production budget
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uses information fron mt esales budget plus the company's desired ending inventory level to determine the quantity of finished goods to produce each period
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administrative budget
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reflects expected administrative costs, including administrative labor
should reflect the costs of activities not considered in the revenue or conversion process |
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direct labor and manufacturing overhead costs
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reflects the expected costs of the conversion process
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direct materials purchases budget
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reflects the expected cost of direct material purchases during the period
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cash disbursement shedule
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expected cash outflows during the period
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Estimated balance in accounts payable is determined by.........
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beginning balance of accounts payable
+purchase on account during the month =total amount owed to suppliers -cash paid to suppliers on account during the month -cash purchase discounts for the month =ending balance of accounts payable |
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accounts payable schedule
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indicates the expected changes in the balance of accounts pauable during the period
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how to determine target cost
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selling price-required markup
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daily demand formula
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annual demand/# of business days
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reorder point formula
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daily demand* lead time
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double-entry equation
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Assets=liabilities +owners equity
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Asset increase;asset decrease
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cash is used to purchase inventory
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asset increase, owners equity increases
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services are provided to a client on account
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asset decrease, liability decrease
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an obligation to a bank is paid
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asset decrease, owners equity decreases
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a bill for utility is received and paid
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liability increase, liability decrease
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a note payable is given to a supplier to pay off an account payable
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liability increase, owners equity decrease
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A bill is received but not payed
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liability decrease, owners equity increase
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an obligation to a customer is fulfilled
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owners equity increase, owners equity decrease
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common stock is issued in exchange for perfected stock
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debit
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increase an asset with a debit (left
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credit
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increase a liability or owner's equity with a credit, right
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Expanded accounting equation
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cash+ other assets= liabilities+contributed capital+ retained earnings,
revenues earned and expenses incurred are part of retained earnings |
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journalizing
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recording transactions in chronological order
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posting
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process of recording the appropriate part of journal entry into the effected acount
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normal balance
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the side on which it increases
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accounting cycle
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the time period between financial statements
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post-closing trial balance
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prepared to ensure that debits equal credits
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permanent account
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asset, liability, owners equity whose balance is carried over from year to year
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