Accounting Vocabulary.docx

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Accounting Vocabulary Chapter 2 Account analysis: a method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst’s prior knowledge of how the cost of the account behaves. Activity base: A measure of whatever causes the incurrence of a variable cost. For example, the total cost of X-ray film in a hospital will increase as the number of X-rays taken increases. Therefore, the number of X-rays is the activity base that explains the total cost of X-ray film Administration costs: All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling. Committed Fixed Costs: Investments in facilities, equipment, and basic organizational structure that can’t
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