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accounting > Accounting > Flashcards

Accounting Flashcards

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CPA flashcards
1
Q

Horizontal analysis

A

Comparing the horizontal lines with each other from different balances beets

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2
Q

Vertical analysis

A

The change is expressed in percentage

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3
Q

Fixed costs

A

Cost not effected by the sales volume

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4
Q

Direct costs

A

Directly bound with a item - tangible

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5
Q

Indirect cost

A

Intangible

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6
Q

Overhead cost

A

All expenses not connected to a profit center

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7
Q

Controllable costs

A

A manager can control and able to keep

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8
Q

Differential costs

A

Costs which are different between two cases

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9
Q

Relevant costs

A

Costs which are important to consider while making a decision

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10
Q

Sunk costs

A

Past costs related to a past decision

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11
Q

Opportunity costs

A

The costs connected to the opportunity chosen

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12
Q

Incremental costs

A

The cost of producing one more unit, including the variable costs and the variable portion of the mixed costs

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13
Q

The indifference point

A

The level of activity at which the cost is the same under either a fixed cost option or a variable cost option

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14
Q

Discretionary costs

A

Do not effect current capacity and has less impact, easy to restore

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15
Q

Step costs

A

The same on the range, but different from range to range

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16
Q

Mixed costs

A

Tmc = fixed costs +( variable costs per unit * unit sales)

17
Q

High/ low method

A

8 steps
Select two periods
Calculate the difference
Divide the two differences with each other
Multiple the result with each of the periods
Subtract the result from step above
Fixed costs per period - result from 6 * time periods = total fixed costs
Total mixed costs - total fixed costs = total variable costs

18
Q

CVP analysis

Assumptions

A

Fixed costs remains fixed
Variable costs fluctuates with revenue
Only quantitative
Revenue fluctuates with sales volume
All costs can be assigned to departments
Mixed costs can be divided into fixed and variable costs

19
Q

CM

A

V -S

20
Q

CMR W

A

TR-TV/TR

21
Q

Interest on a loan

A

Principal* rate * time

22
Q

Effective interests rate

A

Annual interest in loan/loan - compensating balance

23
Q

CCC

A

OC -PDP

24
Q

PDP

A

Average accounts payable/ daily costs of food sold

Remember the 365 because of daily

25
Q

IHP

A

Inventory holding period
Average food inventory / daily cost of food sold

Remember the 365 because of daily

26
Q

Investment considerations

A 
Risk
Return
Liquidity 
Cost
Size
Time

6

27
Q

Lockbox system

A

B = C / I * T

B = breakeven
I = daily interest
T = change in time 
C = bank charge per item
28
Q

Cash flow

A

Meet obligations
Positive future cash flow
The effect of investments
Determine the net income and from which department it is generated from

29
Q

Activity categories

A

Operating
Investing
Financing

30
Q

Cash flow operating rules

A

A decrease in current asset is added to net income
An increase to current assets is deducted from net income
A decrease in current liabilities is deducted from net income
An increase in current liabilities is added to the net income

31
Q

Base year comparison

A

Percentage - one year is base and the following is compared to it

32
Q

PV

A

Cash flow/ (1 + r ) T

33
Q

NPV

A

The outflow - the investment in -
Principal + precent value / 1 + r T
Accept if bigger than 0

34
Q

IRR

A

Principal +
end result / 1 + R

R = rate of return
The result must be greater than the discount rate from NVP

35
Q

WACC

A

E/ debt + E * CE +

Debt / debt + E * Cdebt * (1-taxe rate)

36
Q

PI

A

NPV / upfront investment

Highest number

37
Q

Financial leverage

A

To what degree a business is using borrowed money

38
Q

Operating leverage

A

To what extent the expenses are fixed or variable
High level means high variable room for big return also most risk of not being able to pay the expenses of the sales goes down

accounting (5 decks)

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