Managerial Accounting Terms

Cost (aka Managerial) Accounting Correct Answer-use of financial and non-financial information to make economic decisions Fundamental Assumption of Cost Accounting Correct Answer-costs are linear over the relevant range Why is this assumption important? - Allows costs to be projected How big or small is the relevant range? - the relevant range is the range of activity that allows the relevant costs to be approximately linear Check and balance Correct Answer-organizing the work so people naturally check on each other 6 Principles of Internal Control Correct Answer-• Assignment of responsibility • Segregation of duties • Documentation • Physical controls • Independent verification • Selection of people Freight In versus Freight Out Correct Answer-• Normal assumption: buyer pays freight FOB Correct Answer-Free on Board" point at which title transfers usually point from which freight costs are measured