Cima

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OFFICIAL TERMINOLOGY OF THE CIMA:

MANAGEMENT ACCOUNTING

ACCOUNTING

Accounting: 1. The classification and recording of actual transactions in monetary terms,

the presentation and interpretation of the results of those transactions in order to assessperformance over a period, and the financial position at a given date, and the projection in monetaryterms of future activities arising from alternative planned courses of action.

Cost Accounting: The establishment of budgets, standard costs and actual costs of operations, processes activities or products and the analysis of variances, profitability or thesocial use of funds. The use of the term costing is not recommended except with a qualifyingadjective e.g., standard costing.

Responsibility Accounting: A system of accounting that segregates revenues and costsinto areas of personal responsibility in order to assess the performance attained by personsto whom authority has been assigned.

Unifo! Accounting: A system, using common concepts, principles and standardaccounting practice, adopted by dif ferent entities in the same industry to facilitate interfirm

comparison.

ORGANIATION

"u#get Cente: A section of an entity for which control may be exercised and budgetsprepared.

Contibution Cente: A profit centre whose expenditure is reported on a marginal or directcost basis.

Cost Cente: A production or service location, function activity or item of equipment whosecost may be attributed to cost units.

In$est!ent Cente: A profit centre whose performance is measured by its return on capital

employed.

%o#uction Cost Cente: A cost in which production is carried on: this may embrace onespecific operation, e.g., machine, or a continuous process, e.g., distillation.

%ofit Cente: A part of a business accountable for costs and revenues. !t may be called abusiness centre, business unit, or strategic business unit.

Responsibility Cente: A unit or function of an organisation headed by a manager havingdirect responsibility for its performance.Re$enue Cente: A centre devoted to raising revenue with no responsibility for production,e.g., a sales centre, often used in a notforprofit organisation.

&e$ice Cost Cente: A cost centre providing services to other cost centres. "hen the

output of an organisation is a service, rather than goods, an alternative term is normallyused, e.g., support cost centre or utility cost centre.

'( O%ERATING TERM&

"e)*ing+#o,n Ti!e: The time required to return a wor# station to a standard conditionafter completion of an operation.

"y+po#uct: A product which is recovered incidentally from the material used in themanufacture of recognised main products, such a byproduct having either a net realisablevalue or a usable value which is relatively low in comparison with the saleable value of the

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main products. $yproducts may be further processed to increase their realisable value.

C-)ngeo$e Ti!e: The time required to change a wor# station from a state of readiness forone operation to a state of readiness for another.

.iect -ous: The hours of employees applied directly to a product or service.

.o,n ti!e: The period of time for which a wor# station is not available for production due toa functional failure.

Econo!ic O#e /u)ntity: A quantity of materials to be ordered which ta#es into accountthe optimum combination of %i& bul# discounts f rom high volume purchases, %ii& usage rate,%iii& stoc# holding costs, %iv& storage capacity, %v& order delivery time, and %vi& cost of processing the order.

I#le Ti!e: The period of time for which a wor# station is available for production but is notutilised due to shortage of tooling material, operations, etc.

0oint %o#ucts: Two or more products separated in the course of processing, each having asufficiently high saleable value to merit recognition as a main product.

Ope)tion Ti!e: The period of time required to carry out an operation on a complete batch

exclusive of setup and brea#ingdown times.

%epetu)l In$entoy : The recording as they occur of receipts, issues, and the resultingbalances of individual items of stoc# in either quality or quantity and value.

%-ysic)l In$entoy: An inventory determined by actual count, weight or measurement.

%ocess Ti!e: The period of time which elapses between the start and finish of oneprocess or stage of a process.R), M)tei)ls: 'nprocessed stoc# awaiting conversion.

Re1ects: 'nits of output which fail to reach the required standard of quantity or specificationbefore despatch to customers or subsequent users. (uch faulty units may be capable of rectification, and may be so corrected if the cost of doing so is less than the loss in value

f rom allowing the fault to remain uncorrected. "hen it is uneconomic to rectify a fault, thearticle may be sold as substandard if it is still functionally sound) otherwise, it may bedisposed of as crap.

&c)p: *iscarded material which has some recovery value and which is usually eitherdisposed of without further treatment %other than reclamation and handling&, or reintroducedinto the production process in place of raw material.

&et+up Ti!e: The time required to prepare a wor# station from a standard condition toreadiness to commence a specified operation.

&toc*: Any current asset held for conversion into cash in the normal course of trading, e.g.,raw materials, wor#in progress, finished goods and goods in transit, or on consignment, oron sale or return.

2)iting Ti!e: The period of time for which an operator is available for production but isprevented f rom wor#ing by storage of material or tooling, machine brea#down.

2)ste: *iscarded substances having no value %as distinct from scrap&

2o* in pogess: Any material, component, product or contract at an intermediate stage of completion.

3( CO&T CONCE%T&4 METHO.& AN. TECHNI/UE&

Absobe# O$e-e)#: +verheads which, by means of absorption rates, in included in costs

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of specific products or saleable services, in a given period of time.

Acti$ity+b)se# Costing 5A"C6: ost attribution to cost units on the basis of benef it receivedf rom indirect activities, e.g., ordering, settingup, assuring quality.Un#e+o+o$e+)bsobe# o$e-e)#: The difference between overhead cost incurred andoverhead cost absorbed) it may be split into its tow constitute parts for control purposes.

Absoption Cost: The procedure which charges fixed as will as variable overhead at apredetermined level of activity.

Absoption R)te: A rate charged to a cost unit intended to account for the overhead at apredetermined level of activity.

")ses of Appotion!ent: -ormulae varying according to the nature of costs for the purposeof apportioning those costs among cost centres or products.

")sic Costing Met-o#: A method of costing which is devised to suit the methods by whichgoods are manufactured or services are provided.

")tc- Cost: Aggregated costs relative to a cost unit which consists of a group of similararticles which maintains its identity throughout one or more stages of production

")tc- Costing: That form of specific order costing whch applies where similar articles aremanufactured in batches, either for sale or for use within the underta#ing. !n most cases thecosting is similar to job costing.

Co!!on Costs: (hared costs of more than one product or service, where the sharedproportions are determined by management decision.

&un* Cost: (hared costs of more than one product or service, where the shared proportionsare determined by management decisions.

Continuous Ope)tion7%ocess Costing: The basic costing method applicable where goodsor services result from a sequence of continuous or repetitive operations or processes towhich costs are charged before being averaged over the units produced during the period.

Cont)ct Cost: Aggregated costs relative to a single contract designated as cost unit. Thisusually applied to major long term contracts as distinct f rom short term job costs.

Cont)ct Costing: That form of specific order costing which applies where wor# isunderta#en to customers special requirements and each order is of long duration %comparedwith those to which job costing applies& The wor# is usually constructional and in general themethod is similar to job costing.

Contibution: (ales value less variable cost of sales. !t may be expressed as totalcontribution, contribution per unit or as a percentage of sales.

Contoll)ble o M)n)ge# Cost: A cost, chargeable to a budget or costcentre, which can beinfluenced by the actions of the person in whom control of the centre is vested.!t is not always possible to predetermine responsibility, because the reason for deviation

f rom expected performance may only become evident later. -or example, excessive scrapmay arise from inadequate supervision or from latent defect in purchased material.

Con$esion Cost: osts of converting material input into semifinished or finished products,i.e. additional direct materials, direct wages, direct expenses and absorbed productionoverhead.

Cost %as a noun& : The amount of expenditure %actual or notional& incurred on, orattributable to, a specified thing or activity.%as a verb& : to ascertain the cost of a specified thing or activity.The wor# ost can rarely stand alone and should be qualified as to its nature and limitations.

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Cost Alloc)tion: That part of cost attribution which charges specific cost to a cost centre orcost unit.

Cost Appotion!ent: That part of cost attribution which shares costs among two or morecost centres or cost units in proportion to the estimated benefit received using a proxy, e.g.square metres.

Cost Ascet)in!ent: The collection of costs attributable to cost centres and cost units usingthe costing methods, principles and techniques prescribed for a particular business entity.

Cost Attibution: The process of relating cost to cost centres or cost units using costallocation or cost apportionment.

Cost Unit: A unit of product or service in relation to which costs are ascertained.

Cost Unit R)te: A rate calculated by dividing the budget or estimated overhead costattributable to a cost centre by the amount of direct labour cost expected to be incurred %orwhich would relate to wor#ing at normal capacity& and expressing the result as a percentage.

.iect L)bou Cost %ecent)ge R)te: A rate calculated by dividing the budgeted orestimated overhead cost attributable to a cost centre by the appropriate number of direct

labour hours./ours may be either the number of hours expected to be wor#ed, or the number of hourswhich would relate to wor#ing at normal capacity.

Ele!ent of Cost: The constituent parts of costs according the factors upon whichexpenditure is incurred vi0. aterials, labour and expenses.

E8ui$)lent Units: A notional quantity of completed units substituted for an actual quantity of incomplete physical untis in progress, when the aggregate wor# content of the incompleteunits is deemed to be equivalent to that of the substituted quantity of completed units, e.g.,123 units 23 percent complete 4 52 equivalent units.The principle applies when operation costs are being apportioned between wor# in progressand complete output.

Fist in4 Fist out %ice 5FIFO6: A method of pricing material issues using the oldestpurchase price first.

Ince!ent)l Costing : A technique used in the preparation of ad hoc information whereconsideration is given to a range of graduated or stepped changes in the level or nature of activity, and the additional costs and revenues li#ely to result from each degree of changeare presented.

Ince!ent)l Yiel# : A measure used in capital investment appraisal where a choice liesbetween two or more projects.The cash flows of project A are deducted from those of project $ and the rate of return iscalculated on the incremental cash flow.

Ince!ent)l R)te of Retun 5IRR6: A percentage discount rate used in capital investmentappraisal which brings the cost of a project and its future cash inflows into equality.

0ob Cost: Aggregated costs relative to a cost unit which consists of a single specificcustomer order or specific tas#.

0ob Costing: That form of specific order costing which applies where wor# is underta#en tocustomers special requirements and each order is of comparatively short duration%compared with those to which contract costing applies&.The wor# is usually carried out within a factory or wor#shop and moves through processesand operations as a continuously identifiable unit. The term may also be applied to wor# suchas properly repairs and the method my be used in the costing of internal capital expenditurejobs.

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0oint Cost: The costs of providing two or more products or services whose production couldnot, for physical reasons, be segregated.6xample, the cost of sheep rearing to produce both mutton and wool.

L)st in4 Fist out %ice 5LIFO6: A method of pricing material issues using the last purchaseprice first.

Life cycle costing: The practice of obtaining, over their lifetimes, the best use of physicalassets at the lowest total cost to the entity %terotechnology&.This is achieved through a combination of management, financial, engineering and otherdisciples.

M)c-ine Hou R)te : A rate calculated by dividing the budget or estimated overhead orlabour and overhead cost attributable to a machine group of similar machines by theappropriate number of machine hours.The hours may be the number of hours for which the machine or group is expected to beoperated, the number of hours which would relate to normal wor#ing for the factory, or fullcapacity.

M)gin: (ales less the cost of sales expressed either as a value or a percentage. (ince themargin may be calculated at different stages, the terms gross and net margin, also #nown as

gross profit and et profit, are used to differentiate between the levels.

M)gin)l Cost: The cost of one unit of product or service which would be avoided if that unitwere not produced or provided.

Note: !n this context, a unit is usually either a single article or a standard measure such asthe litre or #ilogram, but may in certain circumstances be an operation, process or part of anorganisation.

M)gin)l Costing: The accounting system in which variable cost are charged to cost unitsand fixed costs of the period are written off in full against the aggregate contribution.

Non+contoll)ble Cost 5in#iectly contolle# cost6 : A cost chargeable to a budget or costcentre which can only be influenced indirectly by the actions of the person in whom control of

the centre is vested.Typically, these costs will be mainly an apportionment of overhead costs of the entity.

Notion)l Cost: The value of a benefit where no actual cost is incurred.

Oppotunity Cost: The value of a benefit sacrificed in favour of an alternative course of action.

O$e-e)# Absoption Met-o#s: The charging of overhead to cost units by means of ratesseparately calculated for each cost centre. !n most cases the rates are predetermined.

%olicy Cost: osts incurred as a result of ta#ing a particular policy decision. -or example,ownership of assets will create a charge for depreciation. *epreciation is, therefore, a policycost.

%o#uct Cost : The cost of a finished product built up from its cost elements.An example of a product cost which provides for a f irst estimate, a subsequent standard costand for stoc# valuations at various wor# in progress stage.

Rele$)nt Costs: Costs appropriate to aiding the ma#ing of specific management decisions.

Repl)ce!ent %ice: The price at which material identical to that which is to be replacedcould be purchased at the date of valuation %as distinct from actual cost price at actual dateof purchase&.

&e!i+9)i)ble Cost7&e!i+Fie# Cost: A cost containing both fixed and variable elements,

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and which is thus partly affected by fluctuation in the level of activity.

&e$ice7Function Costing: ost accounting for services or functions, e.g., canteens,maintenance, personnel. These may be referred to as service centres, departments orfunctions.

&pecific O#e Costing: The basic cost accounting method applicable where the wor#

consists of separate contracts, jobs or batches.

Unifo! Costing: The use by several underta#ings of the same costing systems, i.e., thesame basic costing methods, principles and techniques.

9)lue An)lysis: A systematic interdisciplinary examination of factors affecting the cost of aproduct or service, in order to devise means of achieving the specified purpose mosteconomically at the required standard of quality and reliability.

9)i)ble Cost: ost which tends to vary with the level of activity.

9)i)ble O$e-e)# Cost: +verhead cost which tends to vary with changes in the level of activity.

2eig-te# A$e)ge %ice: A method of pricing material issues using a price which is

calculated by dividing the total cost of material in stoc# by the total quantity in stoc#.

;( %LANNING CONCE%T& AN. TERM&

Fin)nci)l %l)nning: 7lanning in monetary terms of the acquisition and financing of resources and of their utilisation.

Foec)sting: The prediction of relevant future factors affecting an entity and its environmentas a basis for formulation or reassessment of objectives and strategies and as a means tofacilitate the preparation of planning decisions.

Li!iting F)cto o <ey F)cto: A factor which at any time or over a period may limit theactivity of an entity, often one where there is shortage or difficulty of supply.

Long+te! &t)tegic %l)nning : The formulation, evaluation and selection of strategiesinvolving a review of the objectives of an organisation, the environment in which it is tooperate, and an assessment of its strengths, wea#nesses, opportunities and threats for thepurpose of preparing a long term strategic plan of action which will attain the objective set.

%ERT 5%o1ect E$)lu)tion )n# Re$ie, Tec-nology6 : A specification of all activities eventsand constraints relating to a project, from which a networ# is drawn which provides a modelof the way the project should proceed.

%l)nning: The establishment of objectives, and the formulation, evaluation and selection of the policies, strategies, tactics and action required to achieve these objectives.7lanning comprises long term8strategic planning and short term operational planning. Thelatter usually refers to a period of one year.

%l)nning Hoi=on: The furthest time ahead for which plans can be usually quantified with no

more than a minimum acceptable degree of error.!t need not necessarily be the planning period.

%l)nning peio#: The appropriate period of time which meets planning requirements andenables the decision ma#ing and8or control processes to be most ef fectively exercised.-or example, forestry may require a period of many years whereas fashion garments mayrequire only a few months.

%o#uct Life Cycle: The pattern of demand for a product or service over time.

>( CONTROL &Y&TEM& AN. "U.GETING

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"e)*+e$en C-)t: A chart which indicates approximate profit or loss at different levels of sales volume within a limited range.

"e)*+e$en %oint : The level of activity at which there is neither prof it or loss. !t can beascertained by using a brea#even chart or by calculation.

"u#get : A plan expressed in money. !t is prepared and approved prior to be budget periodand may show income, expenditure and the capital to be employed.

"u#get Cost Allo,)nce: The cost which a budget centre is expected to incur in a controlperiod.At its simplest this usually comprises variable costs in direct proportion to the volume of production or service achieved, and fixed costs as a proportion of the annual budget.

"u#get %eio#: The period for which a budget is prepared and used, which may then by subdividedinto control periods.

"u#get)y Contol: The establishment of budgets relating to responsibilities of executivesto the requirements of a policy, and the continuous comparison of actual with budgetedresults, either to secure by individual action the objective of that policy or to provide a basisfor this revision.

C)pit)l Epen#itue "u#get: A plan for capital expenditure in monetary terms.

C)s- Flo, "u#get: A detailed budget of income and cash expenditure incorporating bothrevenue and capital items.The cash flow budget should be prepared in the same format in which the actual position isto be presented. The years budget is usually phased into shorter periods for control, e.g.monthly or quarterly.

.ep)t!ent)l7Function)l "u#get : A budget of income and8or expenditure applicable to aparticular function.A function may refer to a department or a process.

Eceptions Repoting: A system of reporting based on the exception principle which

focuses attention on those items where performance differs significantly from standard orbudget.

Fie# "u#get: A budget which is designed to remain unchanged irrespective of the volumeof output or turnover attained.

Fleible "u#get: A budget which, by recognising dif ferent cost behaviour patterns, isdesigned to change as volume of output changes.

Long Te! "u#get: A long term plan usually prepared in monetary terms.

M)n)ge!ent Au#it: An objective and independent appraisal of the effectiveness of managers and the effectiveness of the corporate structure in the achievement of companyobjectives and policies.

!ts aim is to identify existing and potential management wea#nesses within an organisationand to recommend ways to rectify these wea#nesses.

M)gin of &)fety: The excess of normal or actual sales over sales at brea#even point

M)ste "u#get: A budget which is prepared from, and summarises, the functional budgets.The term summary budget is synonymous.

%inciple "u#get F)cto: A factor which, at a particular time or over a period, will limit theactivities of an underta#ing and which is, therefore, ta#en into account in preparing budgets.

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Rolling "u#get: The continuous updating of a short term budget by adding, say, a furthermonth or quarter and deducting the earliest month or quarter so that the budget can reflectcurrent conditions.(uch procedures are beneficial where future costs and8or activities cannot be forecast withany degree of accuracy.

&-ot te! "u#get: A budget established for use over a short period of time %usally one

year but sometimes less&and which the person responsible is expected to achieve and usefor control purposes.&toc* Contol: The systematic regulation of stoc# levels with respect to quantity, cost andlead time.The alternative term inventory control is common in the '.(.A.

&toc* Reco#e Le$el: A quantity of materials fixed in advance at which level stoc#s shouldbe reordered.

&toc*t)*ing: A process whereby stoc#s %which may comprise direct and indirect materials,wor# in progress and finished goods& are physically counted and are then valued item byitem.This may be at a point in time %periodic& or by counting and valuing a number of items atdifferent times %continuous&

?eo ")se "u#geting: A method of budgeting whereby all activities are reevaluated eachtime a budget is set. *iscrete levels of each activity are valued and a combination chosen tomatch funds available.6ach functional budget starts with the assumption that the function does not exist and is at0ero costs. !ncrements of cost are compared with increments of benefit, culminating in theplanned maximum benefit for a given budget cost.

Att)in)ble &t)n#)# : A standard which can be attained if a standard unit of wor# is carriedout efficiently, a machine properly operated or a materiel properly used. Allowances aremade for normal losses, waste and machine downtime.The standard represents future performance and objectives which are reasonably attainable.$esides having a desirable motivational impact on employees, attainable standards serveother purposes, e.g., cash budgeting, inventory valuation and budgeting departmental

performance.

")sic &t)n#)#: A standard established for use over a long period from which a currentstandard can be developed.

Cuent &t)n#)# : A standard established for use over a long period from which a currentstandard can be developed.

I#e)l &t)n#)#: A standard which can be attained under the most favourable conditions withno allowance for normal losses, waste and machine downtime. Also #nown as potentialstandard.

&t)n#)#: A 7redetermined measurable quantity set in defined conditions against whichactual performance can be compared, usually for an element of wor#, operation or activity."hile standards may be based on unquestioned and immutable natural law or facts, they are

f inally set by human judgement and consequently are subject to the same fallibility whichattends all human activity. Thus a standard for 133 percent machine output can be f ixed byits geared input8output speeds, but the effective realisable output standard is one of judgement.

&t)n#)# Cost: A standard expressed in money. !t is built up from an assessment of thevalue of cost elements. !ts main uses are providing bases for performance measurement,control by exception reporting, valuing stoc# and establishing selling prices.

&t)n#)# %ice: A predetermined price fixed on the basis of a specif ication of a product orservice and of all factors affecting that price.

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&t)n#)# %o#uction Cost@Tot)l: The predetermined cost of producing or providingspecified quantities of products or service at standard performance over a specified period.

&t)n#)# %o#uction Cost@Unit: The predetermined cost of producing or providing aspecified quantity of a product or service at standard performance.

&t)n#)# %ofit@Tot)l: The predetermined profit arising from the sale of actual quantities of products or services at standard selling prices, over a specified period.(tandard profit may be at the level of net profit, gross prof it, or contribution. 7rof it whichrelates only to trading activities is often referred to as operating prof it.

&t)n#)# &elling %ice@Unit: A predetermined price for a specified unit to be sold.A unit may consist of a single item or a batch of processed output.

&t)n#)# Unit of 2o*: A unit of wor# consisting of basic time plus relaxation allowance andcontingency allowance where applicable.The unit of wor# may be for labour output only, a combination of machine and labour output,or for a machine only.

&t)n#)# Ti!e: The total time %hours and minutes& in which a tas# should be completed atstandard performance, i.e. basic time plus contingency allowance where applicable.

9)i)nce: The dif ference between planned, budgeted, or standard cost and actual costs %andsimilarly in respect of revenues&Note: This is not to be confused with the statistical variance which measures the dispersionof a statistical population.

9)i)nce An)lysis: The analysis of variance arising in a standard costing system into theirconstituent parts.!t is the analysis and comparison of the factors which have caused the difference betweenpredetermined standards and actual results, with a view to eliminating inefficiencies.( INCOME AN. EB%EN.ITURE

A#!inist)tion Cost: ost of management, and of secretarial, accounting andadministrative services, which cannot be directly related to the production, mar#eting,

research or development functions of the enterprise.

C)pit)l Epen#itue: 6xpenditure on fixed assets or additions thereto intended to benefitfuture accounting periods %in contrast to revenue expenditure which benefits a currentperiod& or expenditure which increases the capacity, efficiency, life span or economy of operation of an existing fixed asset.

Cost of &)les: The sum of direct cost of sales plus factory overhead attributable to theturnover.!n management accounts this may be referred to as production cost of sales, or cost of goods sold.

.epeci)tion: The measure of the wearing out, consumption or other loss of value of a fixedasset whether arising from use, eff luxion of time or obsolescence through technology andmar#et changes %((A7 19&.

.e$elop!ent Cost: The cost of using scientific or technical #nowledge in order to producenew or substantially improved materials, devices, products, processes, systems or servicesprior to the commencement of commercial production %((A7 1&

.iect Cost of &)les: The sum of direct materials consumed, direct wages, direct expensesand variable production overhead.

!n management accounting this may be referred to as direct production cost of sales..iect Epenses: osts other than materials or labour, which can be identified in a specif iedproduct or saleable service.

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.iect L)bou Cost: The cost of remuneration for employees efforts and s#ills applieddirectly to a product or saleable service and which can be identified separately in productcosts.

.iect M)tei)ls Cost: The cost of materials entering into and becoming constituentelements of a product or saleable service and which can be identified separately in product costs.

.istibution Cost: ost incurred in warehousing saleable products and in deliveringproducts to customers.

E!ploy!ent Cost: A generic term given to costs attributable to an employee, in addition togross wages8salaries.They usually include employers national health insurance and state pensions contributions,employers pension premiums, holidays with pay, employers contributions to sic#nessbenef it schemes and other benefits, e.g. protective clothing and canteen subsidies.

Fie# O$e-e)# Cost: The cost which accrues in relation to the passage of time and which,within certain output and turnover limits, tends to be unaf fected by fluctuations in the levlesof activity %output or turnover&.6xamples are rent, rates, insurance and executive salaries. +ther terms used includedperiod cost and policy cost.

In#iect Epenses: 6xpenses which are not charged directly to a product, e.g., buildings,insurance, water rates.

In#iect L)bou Cost: ;abour osts which are not charged directly to a product, e.g.,supervision.

In#iect M)tei)ls Cost: aterials costs which are not charged directly to a product, e.g.coolant, cleaning materials.

M)*eting Cost: The cost incurred in researching the potential mar#ets and promotingproducts in suitably attractive forms and at acceptable prices.O$e-e)# Cost: The total cost of indirect materials, indirect labour and indirect expenses.%i!e Cost: The total cost of direct materials, direct labour and direct expenses.

The term prime cost is commonly restricted to direct production costs only and so does notcustomarily include direct production costs only and so does not customarily include directcosts of mar#eting or research and development.

%o#uction Cost: 7rime cost plus absorbed production overhead.

%ublicity Cost: %a& ost incurred in advertising and promotion as aids to the eventual salesof goods or services.%b& ost incurred in advertising and promotion of an entity as distinct from its products orservices %public relations&

Rese)c- Cost 5Applie#6: The cost of original investigation underta#en in order to gain newscientif ic or technical #nowledge and directed towards a specific practical aim or objective

%((A7 1&

&elling Cost: ost incurred in securing orders, usually including salesmens salaries,commissions and travelling expenses.

Tuno$e: Amounts derived from the provision of goods and services falling within thecompanys ordinary activities, after deduction of trade discounts, value added tax, and anyother taxes based on the amounts so derived %ompanies Act&This would normally be invoiced sales less returns and allowances.

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