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R
raw materials
Goods purchased for incorporation into products for sale.
realisation concept
The principle that increases in value should only be recognised
on realisation of assets by arms-length sale to an independent
purchaser.
receiver
A person appointed by secured creditors or by the court
to take control of company property, usually following the
failure of the company to pay principal sums or interest
due to debenture holders whose debt is secured by fixed
or floating charges over the assets of the company. The
receiver takes control of the charged assets and may operate
the company's business with a view to selling it as a going
concern. In practice receivership is closely followed by
liquidation.
Registrar of Companies
Government official agency that is responsible for initial
registration of new companies and for collecting and arranging
public access to the annual reports of all limited companies.
relevancy concept
Management accounting must ensure that flexibility is maintained
in assembling and interpreting information. This facilitates
the exploration and presentation, in a clear, understandable
and timely manner, of as many alternatives as are necessary
for impartial and confident decisions to be taken. This
process is essentially forward-looking and dynamic. Therefore,
the information must satisfy the criteria of being applicable
and appropriate.
relevant cost
Cost appropriate to a specific management decision.
reliability concept
Management accounting information must be of such quality
that confidence can be placed in it. Its reliability to
the user is dependent on its source, integrity and comprehensiveness.
repayable on demand
This refers to the definition of cash where there is a loss
of interest if cash is withdrawn within 24 hours.
reporting entity
A public or private limited company required to file its
annual report and accounts with the Registrar of Companies.
reserves
Retained profits or surpluses. In a not-for-profit entity
these are described as accumulated funds. Reserves may be
distributable or non-distributable.
residual income (RI)
Profit before tax less an imputed interest charge for invested
capital, which may be used to assess the performance of
a division or a branch of a business.
responsibility accounting
A system in which a budget holder is given responsibility
for all revenues and costs that can be traced to clearly
defined areas of their responsibility.
responsibility centre
A department or organisational function whose performance
is the direct responsibility of a specific manager.
retained profits
Profits that have not been paid out as dividends to shareholders,
but retained for future investment by the company.
return on capital employed (ROCE)
ROCE, or return on investment (ROI), is the profit before
interest and tax divided by average capital employed. It
indicates the profit-generating capacity of capital employed.
return on investment (ROI)
See return on capital employed (ROCE).
revenue centre
A centre devoted to raising revenue with no responsibility
for costs, for example, a sales centre - the manager is
responsible for revenues only (revenue centres are often
used in not-for-profit organisations).
reverse engineering
The decomposition and analysis of competitors' products
in order to determine how they are made, their costs of
production and the way in which future development may proceed.
rights issue
The raising of new capital by giving existing shareholders
the right to subscribe to new shares or debentures in proportion
to their current holdings. These shares are usually issued
at a discount to the market price. A shareholder not wishing
to take up a rights issue may sell the rights.
risk analysis
The evaluation and quantification of all currently known
uncertainty, in order to predict likely outcomes and identify
strategies for reducing risk to an acceptable level and
controlling residual risk.
risk
A condition in which there exists a quantifiable dispersion
in the possible outcomes from any activity. For example:
credit risk - the risk that a borrower may default on his
obligations; currency risk - the possibility of loss or
gain due to future changes in exchange rates.
risk management
The process of understanding and managing the risks that
the organisation is inevitably subject to in attempting
to achieve its corporate objectives. For management purposes,
risks are usually divided into categories such as operational;
financial; legal compliance; information; personnel.
Romalpa clause
A contractual clause, named after a case in which its effect
was litigated in 1976, by which the ownership of goods is
to remain with the seller until they have been paid for.
This can provide a useful protection for the seller in the
event of the buyer's insolvency. Its value may be questionable
if the goods are mixed with other goods in a manufacturing
process or if they are resold to a third party.
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