FUNCTIONAL-BASED ACCOUNTING Definition

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FUNCTIONAL-BASED ACCOUNTING focuses on organizational units such as departments and plants, uses financial outcome measures and static standards and benchmarks to evaluate performance, and emphasizes status quo and organizational stability. On the other hand, activity-based accounting focuses on processes, uses both operational and financial measures and dynamic standards, and emphasizes and supports continuous improvement. Activity-based accounting adds a process perspective.

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DEDUCTION is the act of deducting; subtraction. It is an amount that is or may be deducted, e.g. tax deductions.

CAPITAL EMPLOYED is the value of the assets that contribute to a companys ability to generate revenue, i.e., fixed assets plus current assets minus current liabilities.

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