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accounting Test 2 @2
| Term | Definition |
|---|---|
| A measure of the speed at which the company pays its obligations to suppliers. | Account payable turnover |
| A measure of the speed at which the company receives cash from its customers. | Accounts receivable turnover |
| The cost incurred to detect mistakes as early in the process as possible. | Appraisal cost |
| A process for translating a company’s strategy into measurable objectives and plans organized into four perspectives. | Balanced scorecard approach |
| A control procedure performed periodically by a company to adjust the recorded cash amounts and to reflect any differences between its cash balance and the cash balance according to the bank. | Bank reconciliation |
| Reports sent by banks to the businesses and individuals who have an account at the bank showing all transactions in each cash account for the period. | Bank Statements |
| A collection of activities that takes one or more kinds of input and creates an output that has value to the customer. | Business process |
| Bank deposits that the business has recorded in its cash records and sent to the bank or put into the nightly depository, but that the bank has not received and recorded before it sent the bank statements to the business. | Deposits in transit |
| A strategy that focuses primarily on the reduction or containment of costs, improvements in productivity, and penetration of products/services in the market by having the lowest cost. | Efficiency strategy |
| A cost incurred to fix mistakes after the mistake become known by the customer. | External failure cost |
| Activities that involve obtaining the cash or other resources as means to pay for investments in long-term assets, to repay money borrowed from creditors, and to provide a return to owners (shareholders). | Financing processes/activities |
| A strategy in which a company strives to adapt to changing market conditions by developing new products/services, markets, and technologies. | Flexibility strategy |
| A ratio used to monitor the profitability of the company’s products | Gross margin ratio |
| A process designed to provide reasonable assurance that a company has achieved objectives in three categories (1) effectiveness and efficiency of operations, (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations. | Internal control |
| A cost incurred to fix mistakes before the mistakes become known to the customer. | Internal failure cost |
| A measure of the speed at which the company sells its inventory/ | Inventory turnover |
| Activities involving the purchase and sale of long-term assets and other major items to achieve the business’s strategy. | Investing processes/activities |
| The amount of time that elapses from when a customer places an order until the customer receives that order. | Lead time |
| A structure in which activities and people are arranged by functions. | Mechanistic organization structure |
| A check received and deposited by the company that has been returned for lack of funds. | Nonsufficient funds (NSF) check |
| Time spent on activities that do not add value to the company’s products/services or processes. | Nonvalue-added time |
| The profit-making activities of a business enterprise. | Operating process/activities |
| A structure in which activities and people are arranged in cross-functional teams. | Organic organizational structure |
| A company’s long-term plan for using its resources, both physical and human. | Organizational strategy |
| Checks written and mailed by the business and deducted from the business’s cash records, but that the bank has not processed yet. | Outstanding checks |
| A cost incurred to prevent mistakes from occurring. | Prevention cost |
| A measure of the company’s’ ability to meet its current obligations as they become due. | Quick ratio |
| The return generated per dollar of total investment. | Return on investment ratio |
| The return generated per dollar of owners’ equity | Return on owner’s equity ratio |
| A fee charged by the bank for services to customers. | Service charge |
| Time spent on activities that add value to the company’s products/services or processes. | Value-added time |
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