Constraints accounting


Constraints accounting

Constraints accounting (CA) is an accounting reporting technique, consistent with a process of ongoing improvement (POOGI). It is an implementation of the Theory of Constraints. It is a development of throughput accounting.

CA includes:

  1. explicit consideration of the role of constraints,
  2. specification of throughput contribution effects, and decoupling of throughput (T) from operating expense (OE).

Constraints represent part of the third level of the financial reporting conceptual framework developed by the Financial Accounting Standards Board (FASB). In providing information with the qualitative characteristics that make it useful, companies must consider two overriding factors that limit, or constrain, financial reporting. The two dominant constraints are the cost-benefit relationship and materiality. The cost-benefit relationship constraint is pervasive throughout the framework, and materiality is a threshold for recognition in financial reporting.

References

John A. Caspari, Pamela Caspari. Management Dynamics: Merging Constraints Accounting to Drive Improvement. ISBN 0-471-67231-9

Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. Intermediate Accounting. Twelfth Edition. ISBN 0-471-74955-9



Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Throughput Accounting — (TA) is an alternative to cost accounting proposed by Eliyahu M. Goldratt [Eliyahu M. Goldratt and Jeff Cox The Goal ISBN 0 620 33597 1.] . Throughput accounting [Thomas Corbett Throughput Accounting ISBN 0 88427 158 7.] is not cost accounting or …   Wikipedia

  • List of Theory of Constraints topics — This is a list of topics related to the Theory of Constraints.ABBottleneck (Bn) This is a resource that has just enough capacity or less capacity than is needed to satisfy the demand placed upon it. Bottlenecks may need to be taken into account… …   Wikipedia

  • Theory of constraints — Part of a series of articles on Industry Manufacturing methods Batch production • Job production Continuous production Improvement method …   Wikipedia

  • Theory of Constraints — (TOC) is an overall management philosophy. Dr. Eliyahu M. Goldratt introduced the Theory of constraints in his 1984 book titled The Goal . It is based on the application of scientific principles and logic reasoning to guide human based… …   Wikipedia

  • Generally Accepted Accounting Principles (United States) — In the U.S., generally accepted accounting principles, commonly abbreviated as US GAAP or simply GAAP, are accounting rules used to prepare, present, and report financial statements for a wide variety of entities, including publicly traded and… …   Wikipedia

  • Cost accounting — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts  …   Wikipedia

  • Theory of Constraints — Trichtermodell zur Illustration des Hauptsatzes der Theory of Constraints: In jeder Wertschöpfungskette gibt es genau ein System das die Leistungsfähigkeit des Ganzen bestimmt ein eindeutiger Engpass. Die Theory of Constraints (TOC, deutsch:… …   Deutsch Wikipedia

  • Behavioral Accounting — An accounting method which takes into account key decision makers as part of the value of a company. Behavioral accounting was developed to make the behavioral effects transparent to potential and current stakeholders. This is done to better… …   Investment dictionary

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

  • Inventory — means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. This remains the prime meaning in British English.[1] In the USA and Canada the term has developed from a… …   Wikipedia