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AAT Accounting Systems & Control L4 AQ2016 > Extras > Flashcards

Flashcards in Extras Deck (19)
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1
Q

What is ABC costing?

A

This costing involves examining the costs to determine what causes them and using this information to charge to costs to the units of output.

2
Q

Why use abc costing for decision making?

A

Gives a more accurate overhead cost and therefore more accurate product costs. Decisions about selling prices and profitability of products will be based on more accurate information.

3
Q

What is standard costing?

A

This system is planned or established for each item produced. Actual costs are monitored and compared to standard to identify the variances.

4
Q

Advantages of standard costing?

A

Allows a company to analyse the cause of the variances such as material usage - production, material price - purchasing.

5
Q

Disadvantages of standard costing

A

Time consuming to set up but this may outweigh with the benefits it could bring to a company

6
Q

What does centralisation mean?

A

It refers to hierarchical level within the organisation that has authority to make decisions.

7
Q

What does decentralisation mean?

A

When decision making is delegates to senior managers or organisation levels

8
Q

What is a budget committee?

A

Someone appointed by the managing director to set, agree and take responsibility of producing the budgets . (Managers from different departments)

9
Q

What is a master budget?

A

This budget is brought together by all the subsidiary budgets in order to create a budgeted P/L, BS and CB

10
Q

Closing inventory formula - operating profit

A

Total cost of production / production units X Closing inventory of finished goods

11
Q

What does window dressing mean?

A

Misleading representation of finically statements or information such as valuing inventory incorrectly to prevent higher profits = more tax payable

12
Q

What is a type of analytical method of evaluating the worthwhile to improve internal controls?

A

Cost benefit analysis

13
Q

What is budgetary slack?

A

Deliberate over estimations of revenue or under estimations of expenses

14
Q

What is a firewall system?

A

A system that prevents eternal people accessing any part of the system.

15
Q

What is goal congruence?

A

When all parts of the organisation works towards the same goal

16
Q

What is a budget

A

A financial plan for an organisation that is prepared in advanced

17
Q

Why do organisations use budgets?

A

To motivate staff

To monitor and control costs

To communicate

To be able to plan ahead

18
Q

Abc costing

Examples of cost pools

A

Assembly
Set up costs
Customer service
Maintenance

19
Q

ABC costing

Cost drivers examples

A

No. Of set ups
No. Of units sold
No. Of customers