Controlling The basic management function of (1) establishing benchmarks or standards, (2) comparing actual performance against them,

and (3) taking corrective action, if required. AUDIT 1. Accounting: Systematic examination and verification of a firm's books of account, transaction records, other relevant documents, and physical inspection of inventory by qualified accountants (called auditors). See also external audit and internal audit. 2. 2. Quality control: Periodic (usually every six months) onsite-verification (by a certification authority) to ascertain whether or not a documented quality system is being effectively implemented. Cost Control

Practices and policies used by businesses to determine whether actual costs are in line with budgeted costs and to correct discrepancies by limiting actual costs or adjusting budgeted costs. Cost control is necessary for a business to stay within budget, and to adapt to changing profit or cost conditions. Deviation A rate that is different from the manual rate. Rate-A value describing one quantity in terms of another quantity. A common type of rate is a quantity expressed in terms of time, such as percent change per year. Management Information System An organized approach to the study of the information needs of an organization's management at every level in making operational, tactical, and strategic decisions. Its objective is to design and implement procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner. In a management information system, modern, computerized systems continuously gather relevant data, both from inside and outside an organization. This data is then processed, integrated, and stored in a centralized database (or data warehouse) where it is constantly updated and made available to all who have the authority to access it, in a form that suits their purpose. Management by Objective A management system in which the objectives of an organization are agreed upon so that management and employees understand a common way forward. Management by objectives aims to serve as a basis for (A) greater efficiency through systematic procedures, (B) greater employee motivation and commitment through participation in the planning process, and (C) planning for results instead of planning just for work. In management

by objectives practice, specific objectives are determined jointly by managers and their subordinates, progress toward agreed-upon objectives is periodically reviewed, end results are evaluated, and rewards are allocated on the basis of the progress. The objectives must meet five criteria: they must be (1) arranged in order of their importance, (2) expressed quantitatively, wherever possible, (3) realistic, (4) consistent with the organization's policies, and (5) compatible with one another. Suggested by the management guru Peter Drucker (1909-2005) in early 1950s, management by objectives enjoyed huge popularity for some time but soon fell out of favor due to its rigidity and administrative burden. Its emphasis on setting clear goals, however, has been vindicated and remains valid.

Liability

1. Finance: A claim against the assets, or legal obligations of a person or organization, arising out of past or current transactions or actions. Liabilities require mandatory transfer of assets, or provision of services, at specified dates or in determinable future. 2. Accounting: Accounts and wages payable, accrued rent and taxes, trade debt, and short and long-term loans. Owners' equity is also termed a liability because it is an obligation of the company to its owners. Liabilities are entered on the right-hand of the page in a double-entry bookkeeping system. 3. Law: (1) Responsibility for the consequences of one's acts or omissions, enforceable by civil remedy (damages) or criminal punishment. (2) An obligation to do or refrain from doing something.
Assets

1. Something valuable that an entity owns, benefits from, or has use of, in generating income Accounting: Something that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value). An asset can be (1) something physical, such as cash, machinery, inventory, land and building, (2) an enforceable claim against others, such as accounts receivable, (3) right, such as copyright, patent, trademark, or (4) an assumption, such as goodwill. Assets shown on their owner's balance sheet are usually classified according to the ease with which they can be converted into cash. See also intangible assets and tangible assets.
Equities: Common stocks (ordinary shares) traded in a securities market. FIXED COSTS

A periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent, salaries, and wages. While in practice, all costs vary over time and no cost is a purely fixed cost, the concept of fixed costs is necessary in short term cost accounting. Organizations with high fixed costs are

significantly different from those with high variable costs. This difference affects the financial structure of the organization as well as its pricing and profits. The breakeven point in such organizations (in comparison with high variable cost organizations) is typically at a much higher level of output, and their marginal profit (rate of contribution) is also much higher Variable Cost. A periodic cost that varies in step with the output or the sales revenue of a company. Variable costs include raw material, energy usage, labor, distribution costs, etc. Companies with high variable costs are significantly different from those with high fixed costs. This difference affects the financial structure of the company as well as its pricing and profits. The breakeven point in such companies (in comparison with high fixed cost companies) is typically at a much lower level of output, but their marginal profit (rate of contribution) is also much lower.