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Accounting Chapter 3
| Term | Definition |
|---|---|
| Bases that reflects the consumption or provision of resources. | Activity drivers |
| A shipping agreement between the business and the common carrier. | Bill of lading |
| A series of interrelated activities designed to produce the goods a company sells. | Conversion process |
| How a cost reacts to change the level of operating activity. | Cost behavior |
| A variable that depends on another variable. | Dependent variable |
| A series of interrelated activities designed to enable the company to generate revenue. | Expenditure process |
| A cost that does not change in total as the amount of activity driver changes throughout the relevant range. | Fixed cost |
| A revenue that does not change in total as the amount of activity driver changes throughout the relevant range. | Fixed revenue |
| A situation where the legal title of goods passes to the customer when the goods are received. | Free on board (FOB) destination |
| A situation where the legal title to goods passes to the customer when the goods are picked up by the common carrier. | Free on board (FOB) shipping point |
| A variable that does not depend on another value. | Independent variable |
| The cost of all manufacturing resources used to make products that are not directly associated with production. | Manufacturing overhead |
| A cost that varies, but not proportionately, to a change in the activity throughout the relevant range. | Mixed cost |
| A revenue that varies, but not proportionately, to a change in activity throughout the relevant range. | Mixed revenue |
| Discounts given to unhappy customers (buyer’s perspective). | Purchase allowances |
| Discounts offered to induce customers to pay their bills early (buyer’s perspective). | Purchase discounts |
| A document sent from a buy to a vendor to request items for purchase. | Purchase order |
| A document used by an internal party to communicate their needs to the purchasing manager. | Purchase requisition |
| Goods returned to the seller by the buyer (buyer’s perspective). | Purchase returns |
| The span of operating activity that is considered normal for the company. | Relevant range |
| How a revenue reacts to change in the level of operating activity. | Revenue behavior |
| A series of interrelated activities designed to generate revenue. | Revenue process |
| Discounts given to unhappy customers (seller’s perspective). | Sales allowance |
| Discounts offered to induce customers to pay their bills early (seller’s perspective). | Sales discounts |
| A document sent from a seller to a customer as a bill. | Sales invoice |
| Goods returned to the seller by the buyer (seller’s perspective). | Sales returns |
| A cost that changes in direct proportion to the change in the amount of activity. | Variable cost |
| A revenue that changes in direct proportion to the change in the amount of activity driver throughout the relevant range. | Variable revenue |
| See independent variable. | X variable |
| See dependent variable. | Y variable |
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