The Glossary contains more than 1,100 English accounting terms, including definitions written by the IMA and HOCK. Translated terms are provided by HOCK students, who can update the translations online. Access to the full glossary is included with the CMA Study Materials.
This sample of the full Glossary shows only the terms starting with the letter A.
English | Definition |
| Abnormal Spoilage | Unacceptable units that are not expected to occur under an efficient production process. (IMA) |
| Absorbed Overhead | That portion of factory indirect cost that has been allocated to a specific product, or saleable service. (Also called Applied Overhead.) (IMA) |
| Absorption Costing | A costing system that assigns to inventory all types of manufacturing costs, including direct, indirect, fixed and variable. (Also called Full Absorption Costing.) (IMA) |
| Accelerated Depreciation | A pattern of depreciation in which the amount of depreciation computed in the early years is greater than the amounts computed in the later years. (IMA) |
| Accounting | The process of identifying, classifying, measuring, recording and communicating in monetary terms transactions and events of an economic entity that are of a financial character. (IMA) |
| Accounting Controls | Controls that are concerned with the integrity and accuracy of the accounting system and the financial reports being generated. (HOCK) |
| Accounting Profit | Revenue less all expenses included in the entity's income statement. (IMA) |
| Accounting Rate Of Return | A method of evaluating capital projects, it is a ratio of the amount of the increase in the accounting income to the required investment. (HOCK) |
| Accounting Standards | Principles and procedures to be followed by accountants as formulated by an authoritative body. (Also called Accounting Principles.) (IMA) |
| Accounting System | Methods, procedures, and standards followed in accumulating, classifying, recording and reporting business events and transactions. (IMA) |
| Accounts Payable | Monies that are due to a vendor (supplier) for merchandise or services rendered. (IMA) |
| Accounts Payable Turnover | A financial ratio used to measure the rate at which an entity pays off its suppliers. (IMA) |
| Accounts Receivable | Monies due to an entity from customers who have bought merchandise or received services on account. (IMA) |
| Accounts Receivable Turnover | A financial ratio used to measure asset utilization and a company's ability to collect cash from credit sales to its customers. (IMA) |
| Accrual Accounting | The method of recognizing and recording (a) revenues when earned, and (b) expenses when incurred, both irrespective of the time when cash is received or paid. (IMA) |
| Accrued | The accumulation of income that is due but has not been received or a cost that is incurred but has not been paid by an entity during the accounting period. (IMA) |
| Accumulated Depreciation | The amount of depreciation expense related to a fixed asset that has been recognized as an expense from the date of acquisition of that asset. (IMA) |
| Acid-Test Ratio | A ratio that measures an entity's ability to pay off short-term obligations using the most liquid current assets (excluding inventory). (Also called Quick Ratio.) (IMA) |
| Acquisition Cost | The value of cash or other resources given up in exchange for goods or services. It includes all costs necessary to get the asset ready for its intended use. (Also called Historical Cost or Original Cost.) (IMA) |
| Activity | Any event, task or unit of work with a specified purpose. Examples of activities are designing products, setting up machines, operating machines, making orders or distributing products. (HOCK) |
| Activity Analysis | Involves identifying and evaluating all the input factors and activities that are required to complete a job, a project or an operation efficiently. If it is properly executed, it is the most accurate way of determining standard costs. (HOCK) |
| Activity Driver (Cost Driver) | A factor used to assign cost from an activity to a cost object. A measure of the frequency and intensity of use of an activity by a cost object. (IMA) |
| Activity-Based Budgeting | An approach to budgeting that involves quantifying activities and processes and forecasting their costs in order to achieve strategic goals and improve performance. (IMA) |
| Activity-Based Costing (ABC) | A costing system that (a) identifies the relationship between the incurrence of cost and activities, (b) determines the underlying "driver" of the activities, (c) establishes cost pools related to individual "drivers," (d) develops costing rates, and (e) applies cost to product on the basis of resources consumed (drivers). (IMA) |
| Activity-Based Management | Management and decision making method using activity based costing information in an effort to improve customer satisfaction and profits by enhancing activities that add value and reducing activities that do not add value to the customer. (IMA) |
| Actual Cost | Acquisition cost, historical cost, or original cost. (IMA) |
| Actual Costing System | A costing system in which the actual direct labor and materials costs are charged to the units, and the actual manufacturing overhead costs are allocated to the units. (HOCK) |
| Additional Paid-in Capital | The amount received by a company from its shareholders for purchase of shares of stock above the par or stated value of the stock. (IMA) |
| Administrative Controls | Controls that are focused on management's operating objectives. (HOCK) |
| Administrative Expense | Costs incurred for the general operation of an enterprise as a whole, as contrasted with costs related to a more specific function such as manufacturing or selling. (Also called General and Administrative Expense.) (IMA) |
| Allocate | Identification of costs with cost objectives; apportioning or distributing costs to products, processes, jobs, or departments. (IMA) |
| Allocation Base | The basis used to assign indirect costs to cost objects, such as labor or machine hours. (IMA) |
| Allowance for Uncollectible Accounts | A contra account to Accounts Receivable established to record the estimated percentage of Accounts Receivable that will not be collected. (IMA) |
| American Depository Receipts | ADRs are the method by which a foreign company can, in a sense, sell shares in the U.S. without having to go through the formal SEC share registration process. (HOCK) |
| American Option | An option in which the owner has the right to buy or sell the covered asset at a fixed price at any time before or on the expiration date. (HOCK) |
| Amortization | The accounting process of allocating costs to the time periods during which such costs are consumed. (IMA) |
| Annual Report | A report prepared by entities after the close of each reporting year that includes financial statements and disclosure, an audit report, information from management, and other pertinent information concerning the entity's financial condition and operating performance. (IMA) |
| Annuity | A series of payments of an equal amount at fixed intervals for a specified number of periods. (IMA) |
| Antivirus Software | Software that recognizes and incapacitates viruses before they can do damage. (HOCK) |
| Application Controls | Controls, such as input controls, adopted to safeguard specific data processing activity, such as payroll. Their purpose is to provide reasonable assurance that data is properly processed, recorded, and reported. (IMA) |
| Application System Controls | Controls that are specific to individual applications. They are designed to prevent, detect, and correct errors in transactions as they flow through the input, processing, and output stages of work. (HOCK) |
| Appraisal Costs | Costs incurred to determine whether products and services are conforming to customer and/or manufacturing requirements. Examples include inspection and testing costs. (IMA) |
| Appreciation | The situation where there is an increase in economic worth caused by rising market prices. (IMA) |
| Arbitrage Pricing Theory (APT) | A framework for analyzing the relationship between risks and rates of return on securities, especially common stocks. It asserts that the risk elements that influence returns on securities include (1) inflation, (2) industrial production, (3) risk premiums, and (4) the slope of the term structure of interest rates. (IMA) |
| Asset | 1. Probable future economic benefits obtained by an entity as a result of past transactions. 2. Any owned physical object or right having economic value to its owners, expressed for accounting purposes in terms of its cost or other value (such as current replacement cost). (IMA) |
| Asset Coverage | A measure of the extent to which a company is able to cover its debt obligations after all liabilities have been satisfied. (IMA) |
| Asset Turnover | A financial ratio that assesses how efficiently an entity is utilizing its assets; it relates sales to assets. (Also called Total Asset Turnover.) (IMA) |
| Assurance Services | Engagements that perform an objective examination of evidence for the purpose of providing an independent assessment on governance, risk management, and control processes for the organization. (HOCK) |
| Audit | The systematic examination by analyses, confirmation, and tests of accounting records to confirm with reasonable assurance that the records adequately reflect economic status and operations. (IMA) |
| Audit Committee | Members of the board of directors (in the case of corporations), trustees, legislative bodies, or similar governance boards, with responsibilities for oversight and direction of the internal auditing function. (IMA) |
| Audit Evidence | Information that is collected to support the assertions in an audit engagement. (HOCK) |
| Audit Report | A written document that presents the scope and results of the audit. (IMA) |
| Authoritative (top-down) Budgeting | A budgeting process where all budgets for the organization are prepared by top management, including budgets for lower-level operations. (IMA) |
| Authoritative Standard Setting | A standard setting process in which management sets the standards and they are handed down to those charged with their execution. (HOCK) |
| Authority | The formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes. (IMA) |
| Authorizing | One of the four duties that needs to be segregated, this is the authorization of a transaction or event. (HOCK) |
| Available-for-Sale Securities | Securities not classified as either trading or held-to-maturity. |
| Average Collection Period | A measure of the average number of days it takes to collect receivables (credit sales). (Also called Days Sales Outstanding and Days Sales in Receivables.) (IMA) |
| Average Fixed Cost | Total fixed costs divided by the number of units produced. (Fixed cost per unit) |
| Average Total Cost | Total manufacturing costs divided by the number of units produced. Sometimes called per unit cost. (IMA) |
| Average Variable Cost | Total variable cost divided by the number of units produced. (IMA) |
| Avoidable Costs | A cost that can be avoided if a particular option is selected. Avoidable costs are relevant costs to the decision-making process because they will continue if one course of action is taken but they will not continue if another course of action is taken. (HOCK) |
| Avoiding The Risk | One of the four responses to risk, avoiding the risk involves the company eliminating the risky event or item. This might be done by selling (or otherwise disposing of) the business unit or product line. (HOCK) |
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