374 ACCOUNTING FOR MANAGERS
Feedforward The process of determining prospectively
whether strategies are likely to achieve the target
results that are consistent with organizational
goals.
Financial accounting The production of financial statements,
primarily for those interested parties who are
external to the business.
Financial reports or
statements
The Profit and Loss account, Balance Sheet and
Cash Flow statement of a business.Financial year The accounting period adopted by a business for
the production of its financial statements.
Finished goods Inventory that is ready for sale, either having
been purchased as such or the result of a
conversion from raw materials through a
manufacturing process.
Fixed assets Things that the business owns and are part of the
business infrastructure – fixed assets may be
tangible or intangible.
Fixed costs Costs that do not change with increases or
decreases in the volume of goods or services
produced, within the relevant range.
Flexible budget A method of budgetary control that flexes, i.e.
adjusts the original budget by applying standard
prices and costs per unit to the actual production
volume.
Forecast A revised budget estimate or update, part-way
through a budget period.
Full cost The cost of a product/service that includes an
allocation of all the (production and
non-production) costs of the business.
Gearing A measure of the extent of long-term debt in
comparison with shareholders’ funds.
Gross profit The difference between the price at which goods
or services are sold and the cost of sales.
Income The revenue generated from the sale of goods or
services.
Incremental budget A budget that takes the previous year as a base
and adds (or deducts) a percentage to arrive at
the budget for the current year.
Indirect costs Costs that are necessary to produce a
product/service but are not readily traceable to
particular products or services – see overhead.