Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Tracy BEC Flashcards > BEC CPA > Flashcards

BEC CPA Flashcards

1
Q

What is the IRR definition?

A

Concerned w/ Profitability using the Time Value of Money.

Internal Rate of Return is the % of return that makes the Net Present Value (NPV) = 0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

For Absorption Costing:

-Identify Period Costs

A

Variable Selling, General & Admin

Fixed Selling, General & Admin

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is Risk Appetite for Enterprise Risk Management?

A

How much risk a corporation is willing to accept?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Penalty for certifying a statement filed with the SEC “Knowing it does not comply”

A

Fined $1 or less

Prison 10 years max

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Net Domestic Product Formula

A

Gross Domestic Product

- Depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Order of Budgeting for Production

A
  1. Sales
  2. Production
  3. Direct Materials to be purchased
  4. Cash Disbursements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Variable Overhead (VOH) spending rate variance

A

Actual Hrs (Actual VOH $ - Budget VOH $)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Formula for Effective Interest Rates

A

Principal x Stated Interest Rate/# of payments per period
DIVIDED BY
Net Proceeds of loan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

ERM - 5 principals of Governance & Culture

DOVES

A 
D - Desired Culture
O - Board Oversight
V - Values
E - Employee attracts, develops and retain
S - Structure Operating (day to day)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Diversiture - Cash Exchange

  • Outright sale of a sub
  • Parent gives up control
  • Hopes to lead to increase in stock
A

Sell-Off

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Unemployment Rate Formula

A

of unemployed/Total Labor Force x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Operating Margin

A

Operating Income/Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Risk Seeking behavior

A

Higher the Risk
Lower the Return

Investors certainty is greater than the expected value of the investment (will settle for lower returns)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Budgeting Production Units

A
  1. Sales Budgeting
  2. Production Units

Sales in units (Step #1)
+ Ending Desired Finish Goods
- Beginning Finish Goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Unemployment Type where skills don’t match the job

A

Structural Unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is Factoring?

A

Turning over AR collections to a 3rd party factor in exchange for a short term loan.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Market Capitalization

A

The Market Value of Outstanding Shares

Market $
x # Shares Outstanding

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Real Interest Rate Formula

A

Nominal Interest Rate

- Inflation Rate or

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the prison penalty for securities fraud?

A

Prison less than 25 Years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Personal Income Formula when given National Income

A

National Income

+ Transfer of Payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Nominal GDP vs Real GDP

A

Nominal is the normal (current) GDP rate,

Real is Nominal plus Inflation or minus deflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Steps involved with ABC (Activity Based Costing)

A
  1. Identify the Activity Centers (utilities, handling fees)
  2. Identify the Cost Drivers (labor hrs, machine hrs, lbs)
  3. Accumulate the costs (how much in each activity)
  4. Determine the activity levels
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What happens when you have A/R (Exports) with

  1. Foreign Currency risk?
  2. Derivative Options?
A
  1. Foreign Currency Risk - that prices will decrease

2. Sell Put Options, Forward or Futures contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Bond Yield Risk Premium Formula

A

Pre-Tax Cost of LT Debt
+ (Market Risk - Risk Free Risk)

or

Interest/Proceeds
+ (Market Risk - Risk Free Risk)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Cross Elasticity Formula of Demand

A

% Change in Units Demanded/
% Change in $$

New Demand-Old Demand/Old Demand DIVIDED BY
New $ - Old $/Old $

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Regression Analysis

A

Estimates the Dependent cost variable

“Goodness to fit”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Who will likely gain when inflation gets higher?

A

Those with Fixed Debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What are the External Factors of Quality Control?

Is it conformity or non-conformity?

A

External Factors

  • Customer returns
  • Liability Claims
  • Warranties

Non-Conformity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Which costing (Traditional or ABC) generates greater unit costs for low-volume products?

A

Activity Based Costing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Direct Labor Efficiency Variance

A

Budget DL $ (Actual DL Hrs - Budget DL Hrs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Criteria for Capital Lease is?

A

O - Ownership transfers after lease term
W - Written option to buy
N - Ninety five % of lease FV less than/greater than PV payments
S - Seventy five % of assets economic life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is Redundant Data Check?

A

Checks storage or transmission media for distortion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Financial Risk:

An industry/firm risk where equity securities are chosen due to their negative correlations to current holdings.

A

Diversifiable Risk (Non-Market Risk)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Cost accumulation system that best describes: allocating production costs to products and services by averaging costs over total units. Costs by department rather than by job.

A

Process Costing

  • Gas and Oil
  • Steel
  • Lumber
  • Food processing
  • Meat packaging
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Type of cost that make a difference between two or more alternative courses of action. The best cost for decision making.

A

Relevant Costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Example of an Agent

A

Employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Disaster Plan should include what 5 items?

A
  1. Alternate Processing Site
  2. Back-up and offsite storage
  3. Identifying of critical applications
  4. Test of plan
  5. Vendor contract for alternate processing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

After Tax Cost of Debt Formula

A

Pretax Cost of Bonds 6.86%

x (1 - tax rate%) x(1-tax%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Controls particular to a specific process or subsystem, rather than related to the timing of it’s occurence

A

Application Controls

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

How do management decisions affect the development of value?

CPER

A

C - Create Value (Profitable, benefit > Cost)
P - Preserve Value (ongoing, sustainable)
E - Erode Value (Value decreases, do not want)
R - Realize Value (Monetary or Non-Monetary)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Direct Material Price Variance

A

Actual DM Qty (Actual DM $ - Budget DM $)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

For Absorption Costing:

- Identify Product Costs

A

Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

When U.S. Commercial banks increase net deposits, what also increases?

A

U.S. Money Supply

-As US Banks take in more money and hold it, the more they can lend out. As deposits increase, loans increase.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Example of Fiduciary

A

Board of Directors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What is Operating Leverage?

A

How much Fixed operating costs are used rather than variable.

Fixed/Variable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Flexible-Budget Revenue Variance is also known as

A

Sales price $ variance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Working Capital turnover

A

Sales/Avg Working Capital –> C Assets - C Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Profitability Index Method

A

PV of Future Net After Tax Cash Inflows/
DIVIDED BY
Initial Cash Outflows for investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What are the 5 activities in the Business Process Management?

A
  1. Design a Process
  2. Model a Process
  3. Execute the Process
  4. Monitor the Process
  5. Start all over at 1
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Internal and External Theory of Constraints

A

Internal - Market Demand Greater than Production

External - Market Demand Less than Production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

What is Check Digit?

A

Error detection on identification numbers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

NPV - Net Present Value Equation

A

A way to look at the value of INCOMING cash flows & cost of OUTGOING cash flows.

Subtract the Net Investment (Outflow) from:
+ Depreciation ( x tax %)
+ After tax savings in cash inflows (1 - tax%)
+ PV Salvage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

What is a junk bond? When is it used?

A

Noninvestment grade bond
High risk - High return
Very low investment grade

Used to raise capital for acquisitions and leverage buyouts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

What are the SOX laws for Audit Committee requirements?

A
  • Must be a member of the Board of Directors
  • At least one member of the Audit Committee must be a financial expert
  • Moderate disputes between management and auditors
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

COSO - 4 principals related to Risk Assessment

SAFR

A

S - Specify Objectives (Identify risks)
A - Assess Changes (economy, industry)
F - Fraud Potential (pressure, opportunity)
R - Risk Analysis and Identify (manage risks)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

What is a Long-Term Forward Contract

A

Private, over the counter customized or swap

It’s usually large

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

What is Target Residual Risk?

A

The desired optimal level of risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

Other names for Non-Market risks

A

Diversified
Unsystematic
Firm-Specific

Mixing investments to offset risks in portfolio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

What is Economic Order Quantity (EOQ)?

A

The formula anticipates where carrying costs are near restocking fees.

Square Root of:
2SO/C

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Sales Volume for Target Profit - How many units to reach a certain sales target?

A

Fixed Costs + PreTax Profit/

Conribution Margin–> (Revenue - Var cost)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

How to calculate 2/10 net 30

A

1.) 360/(30-10) 18
x (times)
2.) 2%/(100%-2%) 2.04

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

Contribution Margin

A

Selling $ - Variable Costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

COSO - 5 Components

A 
C - Corporate Governance
R - Risk Assessment
I - Internal/External Communication
M - Monitoring
E - Evaluating ongoing control activities
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

During a recession, what would the Federal Reserve most likely do?

A

Lowers the discount rate it charges to banks to borrow more money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

Dupont Analysis Formula

Components of Return on Equity

A

Net Income/Sales –> Net Profit Margin

X Sales/Assets –> Asset Turnover

X Assets/Equity –> Financial Leverage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

Concurrent means

A

Happening at the same time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

Types of Quality Control - Internal Factors

Conformity or non-conformity

A

Rework on items
Scrap
Tooling changes

Non-conformance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

Cost accumulatoin system that best describes: allocating production costs to products and services that are identifiable as separate units.

A

Job Order Costing

  • CPA Firm
  • Airplane Assembly
  • Repair Shops
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

Direct Material Usage Variance

A

Budget DM $ (Actual DM Qty - Budget DM Qty)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q 
For Variable (Direct) Costing:
- Identify Period Costs
A

Fixed Overhead Costs
Variable Selling, General % Admin
Fixed Selling, General & Admin

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

4 Major factors that Impact Global Competitive Advantage

A
  1. Factors of production
  2. Domestic Demand
  3. Related & Supporting industries
  4. Firm Strategy, Structure and Rivalry
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

What is used to issue keys and digital certificates?

A

PKI - Public Key Infrastructure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

COSO - Name 2 principles related to Monitoring

SOD

A

SO - Separate and Ongoing Evaluations

D - Deficiency Communications

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

If an employer increases wages, what happens to employment?

A

Increased wages means lower employment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

What happens when you have A/P (Imports) with

  1. Foreign Currency risk?
  2. Derivative Options?
A
  1. Foreign Currency risk - that price will increase

2. Buy Call Options, Futures or Forward Contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

DCF - Discounted Cash Flow Formula

A

Dividend/Price of Stock + Growth Rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

Describe each classification for Equity

  1. Flexibility
  2. Tax Deductible
  3. EPS Dilution
  4. Financial Risk
  5. Issuance Costs
  6. Investor Return
A
  1. Flexibility - YES at BOD Discretion
  2. Tax Deductible - NO
  3. EPS Dilution - YES
  4. Financial Risk - NO
  5. Issuance Costs - HIGH
  6. Investor Return - VARIABLE
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

What is the payback period formula?

A

Outflow of Initial Investment/
Annual Net After Tax Cash Inflows

After Tax Cash Inflows include Depreciation x tax% and Annual Cash Inflows x (1 - tax%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

GDP - Income Approach Measurement

I-PIRATED

A 
I - Income of Proprietors
P - Profits of Corporations
I - Interest Income (net)
R - Rental Income
A - Adjustments (Net Foreign Income)
T - Taxes
E - Employee Wages - Household Income
D - Depreciation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

What is a Hurdle Rate?

A

Weighted Average Cost of Capital
Cost of Debt %/Total Debt %
x
Cost of Equity %/Total Equity %

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

SCOR Model developed by Supply Chain Council

A
  1. Plan - demand requirements, assess suppliers
  2. Source - Vendor payments, pay for goods
  3. Make - Turn raw materials into Finished goods
  4. Deliver - shipping, hand delivery, etc.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
82
Q

ERM - Enterprise Risk Management Components

A 
G - Governance & Culture
O - Objective Setting & Strategic Planning
P - Performance
R - Review and Revise Risk
O - Ongoing Communications
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
83
Q

What 2 controls are typically included in an organization disaster recovery plan?

A
  1. Downtime Controls

2. Backup Controls

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
84
Q

What are relevant costs? Give some examples.

A

Relevant costs are costs where change occured.

Examples include:
Direct Costs, Prime Costs
Discretionary Costs, Incremental Costs
Opportunity Costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
85
Q

ERM - The 4 principals of Objective Setting and Strategic Planning

SOARS

A

S - Stategic Evaluations (Vision)
O - Objectives of the business (Mission)
A - Analyze Business Context (Geo Area, Competition)
R - Risk Appetite (Aggressive, Conservative)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
86
Q

How to calculate flexible budget at actual?

A

Actual Units Produced
X Budgeted Cost $ per unit

  • Flexible Budget Variance = Contribution Margin
  • Fixed Budget (Stays the same) =

Operating Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
87
Q

High-Low Method of Budgeting Formula

A
  1. Take Change in Total Cost $ (High $ - Low $)/

Change in Total Volume (High Qty - Low Q)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
88
Q

Net Profit Margin (broken out 3 times)

A

Net Income/Pre Tax Income –> Tax Burden

X Pre Tax Income/EBIT –> Interest Burden

X EBIT/Sales –> EBIT Margin

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
89
Q

What is the value of a Bond?

A

The present value of its future cash flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
90
Q

Diversiture - CASH EXCHANGE
Sub is made public through public offerings, creating a new company

Parent remains in control

A

EQUITY CARVE OUT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
91
Q

Fixed Overhead (FOH) Budget Spending Variance

A

Actual Fixed Overhead - Budgeted Fixed Overhead

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
92
Q

Direct Labor Rate Variance

A

Actual DL Hrs (Actual DL $ - Budget DL $)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
93
Q

ROI - Return on Investment formula

A

Net Income/Investment Capital –> (Debt + Equity)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
94
Q

Globalization is measure by

A

World Trade Growth as a % of GDP

95
Q

What is ERM (Enterprise Risk Management)

A

Framework to assist organizations in developing a comprehensive response to risk management

96
Q

ERM - Performance Principle (VAPIR)

R - Risk Responses - what are they?

A

Avoid Risk
Reduce Risk
Transfer/Share Risk
Self-insure (Accept)

97
Q

Types of Quality Control - Appraisal

Conformity or non-conformity

A

Inspections - post production
Lab maintenance
Product testing

Conformity

98
Q

What the advantages and disadvantages of Equity Financing?

A

Advantages - Debt ratios are lower, credit risk decreases

Disadvantages - as Equity increases ROE decreases

99
Q

Classify risk into 2 broad categories

DUNS

A

Diversified
Un-systematic (Ex: Strikes, Lawsuits, Death) or
Non-Diversified
Systematic (Ex: War, Inflation, Political Events)

100
Q

Times Interest Earned Ration

A

EBIT/Interest Expense

101
Q

What is a Put Option

A

Derivative Hedge used when you Export Goods, A/R risk that the financial currency may decrease

102
Q

Inflation Rate using CPI

A

Current CPI - Prior CPI/Prior CPI X 100

103
Q

Different Business Units w/ relatively remote connections come together under a single management.

A

Circular Combination

Example: Pharmaceutical and Lester Realtor

104
Q

Weighted Average Cost of Capital

Hurdle Rate

A

Cost of Equity + Cost of Debt (**don’t forget (1-tax%)

x % Equity x % Debt

105
Q

Which component of COSO includes:

  • financial reporting objectives
  • risks
  • fraud risk
A

Risk Assessment

106
Q

Economic Value Added Formula

A

NOPAT (Net Operating Profit After Taxes)

- (Investment x WACC) –> Required Return

107
Q

Quality Program used to determine zero defects and goal post conformance measurement.

A

Control Chart (Dot Chart)

108
Q

Economies of scale

A

Proportionate savings due to an increase in production

109
Q

GDP - Expenditure Approach Measurement

G-ICE

A

G - Government Spending
I - Investments Businesses
C - Consumption Expense (Personal)
E - Exports (Exports - Imports)

110
Q 
For Variable (Direct) Costing:
- Identify Product Costs
A

Direct Materials
Direct Labor
Variable Overhead

111
Q

Financial Leverage

A

Firm chooses Debt over Equity to finance a project

Debt/Equity

112
Q

5 Steps for Process Costing

A
  1. Production Report (costs and # units produced)
  2. Find Equivalent Units
  3. Accumulate all Costs
  4. Calculate Average unit costs
    A. FIFO
    B. Weighted Average
  5. Apply Average Costs to the units completed and left in WIP
113
Q

Variable Efficiency Variance

A

Budget VOH $ (Actual VOH Hrs - Budget VOH Hrs)

114
Q

What is the prison penalty for failure to retain workpapers?

A

Prison less than 10 Years

115
Q

Steps to compile and document internal control assessment

COPS

A

C - Component Evaluations
O - Overall Assessment
P - Principal Evaluation
S - Summary of Internal Control Deficiencies

116
Q

When a firm finances each asset of the same approximate maturity as the life of the asset

A

Working Capital Management or Hedging Approach

Finance length of time = Maturity of Asset
Liability = Asset

117
Q

Example of Representative

A

Corporate Attorneys

118
Q

Production Volume Variance

A

Applied Production Overhead

119
Q

Unemployment resulting from declines in Real GDP during periods of contraction or recession.

A

Cyclinder Unemployment

120
Q

When you import foreign goods, which hedges are best?

A 
Importing = A/P
so you will
Buy a call
Buy a forward
Buy a future
121
Q

Does Long Term financing + Increase or - Decrease Interest Risk?

A

LT - Decreases interest risk because you are borrowing less frequently and less of a credit risk

122
Q

Return on Investment Formula

A

Operating Income/Avg Invested Capital

123
Q

What change to interest rates will halt or slow down inflation?

A

Raising (Increase) Interest Rates

Consumers will save more and borrow less

124
Q

Factors that shift Demand Curves

WRITEN

A

W - Wealth
R - Related Goods (Substitutes/Compliments)
I - Income for Consumer
T - Tastes of Consumer (Preferences)
E - Expectations change $ (Black Friday sales)
N - Number of Buyers Served in market

125
Q

Advantages and Disadvantages of Absorption Costing?

A

Advantages = GAAP Used and IRS Used

Disadvantages = Inventory affects net income
Net Income is less reliable

126
Q

Single bank is designated as a central bank as a means of controlling receipts.

A

Concentration Banking

127
Q

Types of Quality Control - Prevention

Conformity or non- conformity

A

Employee Training
Inspection - Preproduction
Re-Design - Process
Re-Design - Product

Conformity

128
Q

When you Buy a Call Option, you want interest rates to ….

A

Go up because you purchased a call to help fill the gap when prices increase.

129
Q

Profitability measurement that can be used to evaluate the efficiency of asset usage and management, and the effectiveness of business strategies to create profits.

A

Return on Assets

Formula: Net Income/Average Assets

130
Q

Reorder Point Formula

A

Safety Stock
+ (Leadtime x Sales during leadtime)

Key words: Avg Daily Demand

131
Q

What is inflation?

A

Inflation is when the cost of money increases

Prices increase for products and the purchasing power of money decreases

132
Q

Difference in a Forward or Future contract

A

Forward - Larger and Long term

Future - Smaller and short term

133
Q

Factors that shift supply curve

E-COST

A 
E - Expectations of \$\$
C - Cost or Productions
O - Other Goods Demanded 
S - Subsidies or Taxes
T - Technology Production
134
Q

What happens to operating leverage if Fixed Costs decreases?

A

Operating Leverage decreases

135
Q

A Financial Contract that gets its value from the performance of another, such as interest rates, stocks, assets.

A

A Derivative

136
Q

What are the 4 common risks identified using COSO Framework?

A
  1. Management Override
  2. Fraud
  3. Material Omission
  4. Illegal Acts
137
Q 
Diversiture - NO CASH
Separates a sub from a parent
Distribution of stock dividend to create a new entity
Sub is undervalued and less profitable
Parent gives up control
A

SPIN OFF

138
Q

How do you figure out growth if it’s not given for the Discounted Cash Flows formula?

A

Dividends/Required Return -OR-

Net Income/Equity x (1 - payout rate)

139
Q

Inventory Valuation - how is inventory accounted for?

A 
LIFO - Valued @
Lower of Cost or Market Value (Median of:
     Replacement Cost
     Market Ceiling
     Market Floor)

FIFO - Valued @
Lower of Cost or Net Realizable Value
NRV = Selling $ - Cost to Sell

140
Q

Theory of Derived Demand

A

An increase in demand of a product also increases demand of the resources

141
Q

When you Sell a Put Option, you want interest rates to …..

A

Decrease, because you sold the Put in hopes that the price will decrease helping you recoup some money

142
Q

When you export foreign goods, which hedges are best?

A 
Export = A/R
so you will 
Sell a put option
Sell a future
sell a forward
143
Q

The link between 2 businesses in a conglomerate diversification is typically for what reason?

A

Financial - usually cash rich companies with no room for expansion in the current market.

144
Q

Example of an Executive

A

Officers (CEO, CFO, COO)

145
Q

Example of the Learning Curve Formula

Using 5 Hours and 65% Learning Curve

A

5 Hours = 1 Unit
5 hrs x 65% (or 3.25 hrs)= 2 Units
3.25 hrs x 65% (or 2.11 hrs) = 4 Units
2.11 hrs x 65% (or 1.37 hrs) = 8 Units and so on

146
Q

5 Techniques in Business Process Managment Improvements

A
  1. Baseline - define baseline for process
  2. Measure (time reduction, etc)
  3. Analyze
  4. Improve
  5. Control - monitor in real time

Start again

147
Q

Unemployment Type that is not consistent with full employment; a slow-down in economic activity

A

Cyclinder Unemployment

148
Q

What are the 3 methods for solving cost of retained earnings?

A
  1. CAPM Formula
  2. Discounted Cash Flow Formula
  3. Bond Yield Risk Premium Formula
149
Q

ERM - 3 Principals related to Ongoing Information Communication and Reporting

TIP

A

T - Technology
I - Internal/External Communication
P - Procedures and Policies

150
Q

Marginal Propensity to Save Formula

A

% Change in savings/% Change in income

151
Q

Accounting Rate of Return Formula

A

Projects Annual Net Income per year/
Average Investment Cost

Take Cash In - Depreciation/Avg (Total Investment, Carrying Value after Depreciation)

152
Q

What is the prison penalty for altering, destroying or falsifying documents?

A

Prison less than 20 Years

153
Q

Difference between industry best practices and current company practices?

A

Gap Analysis

154
Q

Net Profit Margin

A

Net (Operating) Income/Sales

155
Q

CAPM Formula

A

Risk Free Rate

+ Beta (Market Rate - Risk Free Rate)

156
Q

Does Short Term financing + Increase or - Decrease Interest RisK?

A

ST - Increases interest risk because interest rates fluctuate more dramatically

157
Q

Describe each classification for DEBT

  1. Flexibility
  2. Tax Deductible
  3. EPS Dilution
  4. Financial Risk
  5. Issuance Costs
  6. Investor Return
A
  1. Flexibility - NONE
  2. Tax Deductible - YES
  3. EPS Dilution - NO
  4. Financial Risk - YES
  5. Issuance Costs - LOW
  6. Investor Return - FIXED
158
Q

COSO - 3 principals related to Information and Communication

OIE

A

O - Ongoing evaluations
I - Internal communications
E - External communications

159
Q

What is a Hash Total?

A

Numeric total that is only a means to control - Ex: sum of all numbers

160
Q

What are economic indicators?

A
  1. Leading indicators - Avg new employment claims, buliding permits for residents.
  2. Lagging indicators - Bank prime rates, duration of unemployment
  3. Coincident Indicators - Industrial GDP, Industrial Production
161
Q

Weighted Average Cost of Capital Formula

A

% Common Stock x % CS Cost
+ % Preferred Stock x % PS Cost
+ % Debt (Bonds) x % Bonds Cost (After Tax)

162
Q

Residual Income Formula

A

Net (Operating) Income

- (Operating Assets x Cost of Capital)

163
Q

Real GDP Formula

A

Nominal GDP/GDP Deflator x 100

To find changes year to year:
Current Real GDP - Prior Real GDP/Prior GDP

(if + then GDP Grew, if - then GDP Deflated)

164
Q

What are these characteristics of:

  • Lot size = 1
  • Insignificant set-up times and cost
  • Balanced and Level workloads
  • Flow of goods controlled by a “pull” approach
A

Just in Time Production

165
Q

Fixed Overhead Volume Variance

A

Budget Fixed Overhead

166
Q

Net Working Capital

A

Current Assets

- Current Liabilities

167
Q

Accounting Rate of Return

A

Average Inflow per year –> Cash In + Deprec per Year
DIVIDED BY
Initial Outflow (Cost)

168
Q

What are the 3 categories of System Design?

A
  1. Data
  2. Process
  3. User Interface
169
Q

The unemployment which exists in any economy due to people being in the process of moving from one job to another.

A

Frictional Unemployment

170
Q

The CEO and CFO of an organization must certify, on a quarterly or annual basis, that material information is made known to officers of the entity, and the effectiveness of internal controls has been evaluated within ___ days prior to the report

A

90 days

171
Q

How do short-term interest rates compare to long-term interest rates

A

Generally, Short Term Rates are LOWER

172
Q

What is the Turnaround Strategy? Give an example.

A

Turnaround Strategy

  1. Contraction (Cuts in size and cost)
  2. Consolidation (implementing new policy)

Example: Dell stopped selling to individuals and decided to retail through Best Buy and other retailers.

173
Q

What is a primary benefit of the Just-in-Time inventory system for raw materials?

A

Eliminates Non-Value-Added operations

174
Q

What best describes a business cycle?

A

Activity that alternates periods of growth and decline in an economy’s GDP.

175
Q

Sales Volume Variance

A

Budget Contribution Margin Per Unit
X
(Actual Sold Qty - Budget Sold Qty)

176
Q

Financial Ratio Times Interest Earned falls into what category?

A

Long-Term Solvency

177
Q

Days in Accounts Receivable falls into what category?

A

Asset Utilization

178
Q

Equity Multiplier falls into what category?

A

Long-Term Solvency

179
Q

Return on Equity falls into what category?

A

Profitability

180
Q

Quick Ratio falls into what category?

A

Liquidity

181
Q

Price Earnings Ratio falls into what category?

A

Market Value

182
Q

When a company sharply raises interest rates, what effect does that have on the currency of that country?

A

It increases the currency, that currency will be in more demand now.

183
Q

Does short term or long term interest rates fluctuate the most?

A

Short term fluctuates more than long-term.

184
Q

What is artificial intelligence?

A

Not Siri, and Alexa

AI is language interpretation, speech recognition and visual perception.

185
Q

What is a natural monopoly?

A

When economic or technological conditions permit only one efficient supplier.

Example: Uber and Lyft

186
Q

The SEC assigns responsibility for the evaluation of the effectiveness of internal controls over financial reporting to?

A

Management

187
Q

Implementing controls that protect the completeness accuracy and security.

A

Data integrity

188
Q

What is the librarian’s control of programs?

A

Software control

189
Q

What is a standard cost system and which type of costing may use this type of system?

A

Standard cost system one where costs are charged to work in progress on predetermined standard rates.
Job order costing or processing costing may use it.

190
Q

What is the 3 layer architect of client/server applications?

A

Desktop client
Application
Database

191
Q

Which branch sells US Bonds

A

US Treasury

192
Q

Which branch controls discount rates it charges to banks?

A

Federal Reserve

193
Q

What are the 4 types of information on the Balanced Scorecard?

A
  1. Financial
  2. Innovation
  3. Strategic
  4. Customer
194
Q

What is a VAN (Value Added Network)?

A

Route data transactions between trading partners

195
Q

To find the book value of Common Stock?

A

Retained Earnings
+ CS Market Value
+ APIC Market Value

Then Divide total by # CS Shares
**If dividends in arrears then subtract from RE first

196
Q

What is value added activity?

A

Value that a customer is willing to pay extra for? Example: Operating equipment to produce a product
Not: Rework or Material Movement

197
Q

Variable Costs are constant during Direct Variable Costing or Absorption Costing?

A

Direct Variable Costing - Variable Costs are constant

198
Q

Sales Volume = Production Volume during Direct Variable Costing or Absorption Costing?

A

Absorption Costing absorbs all fixed costs to Sales Volume = Production Volume
Variable Cost per unit are the same

199
Q

When is most profit earned by a monopoly or any company in a market? Optimal Production is when

A

When marginal costs = marginal revenue

200
Q

Marginal Propensity to Consume formula

A

% change in Consumption (Spending)
DIVIDED BY
% change in Income

201
Q

Price Elasticity of Demand formula

A

% Change in Qty Demand
DIVIDED BY
% change in price

202
Q

Income Elasticity of Demand formula

A

% change in Qty Demand
DIVIDED BY
% change in income

203
Q

what is Equilibrium Price

A

Quantity Supplied = Quantity Demanded

204
Q

What is disposable income?

A

Personal Income - Personal Taxes

205
Q

Return to Scale formula

A

% increase output/% increase input

if RS > 1 - increase your return to scale
if RS < 1 - decrease your return to scale

206
Q

What are economic costs?

A

Explicit (cost during production; wages, materials, utilities) and Implicit costs (opportunity costs, hard to measure, cost of giving up something)

207
Q

Inventory conversion formula

A

Avg Inventory/
DIVIDED BY
COGS/365

208
Q

AR Collection Period

A

Avg Receivables/
DIVIDED BY
Credit Sales/365

209
Q

AP Deferral Period

A

Avg Payables/
DIVIDED BY
COGS/365

210
Q

Current Yield Bond formula

A

Interest payment/
DIVIDED BY
Bond Price

211
Q

CAPM - Capital Asset Pricing Model

A

Risk Free Rate

- Beta (Market Rate - Risk Free Rate)

212
Q

Cost of Debt Formula

A 
Interest Expense (effective rate) - Tax Benefit/
DIVIDED BY
Carrying Value (CV) of Debt
213
Q

Financial Leverage formula

A

EBIT (Earnings Before Interest & Taxes)/
DIVIDED BY
EBT (which is EBIT - Interest)

214
Q

Contribution Margin Ratio

A

Rev - Var/
DIVIDED BY
Sales

215
Q

Common Stock payout

A

Take Earnings Net of Tax
- Preferred Stock Dividends

Remaining is CS Payout

216
Q

Residual Income Formula

A

Net Income
- Required rate of return
WHERE
Required Rate of return = NBV Equity x Hurdle Rate

217
Q

Book value of Common Stock

A

CS Value
+ APIC value
+Retained Earnings - dividends in arrears

Equals total book value of CS

218
Q

Total Labor Variance

A

Budget DL Hrs Actual DL Hrs
- Budget DL $ - Actual DL $
BUDGET DIFF - ACTUAL DIFF

219
Q

Internal Rate of Return Formula

A

+ Cash Inflow
X IRR% (Plug numbers)
Where NPV = 0

220
Q

Break even Formula for units with profit expectations

A

Total Fixed + Profit Expected/
DIVIDED BY
Rev - Var or Contribution Margin

221
Q

Break even Formula in Dollars

A

Total Fixed + Profit Expected/
DIVIDED BY
CM per unit

MULTIPLY BY x Selling $

222
Q

Operating Profit Margin

A

EBIT/Sales

223
Q

Which group is best suited to oversee the change control process

A

Audit committee - b/c they can hold management accountable

224
Q

What is the most likely information one would look for when prioritizing risks?

A

The expected value

225
Q

Inherent Risk

A

a risk that an activity would impose if no controls or factors are in place.

226
Q

Residual Risk

A

Risk that remains after management takes controls into account, the risks still remaining.

227
Q

Data Base Management System (DBMS)

A
  • Designs database
  • Maintains database
  • Includes data definitions and language
228
Q

Multiple Regression Formula

A

Uses several independent variables to predict one dependent.

229
Q

Single regression formula

A

Uses one independent variable to predict one dependent variable.

230
Q

What is throughput?

A

the amount of materials passing through a system

231
Q

Difference between Primary Capital Market and Secondary Capital Market?

A

Primary - Investment bankers buy NEW debt and equity

Secondary - exchanges of existing debt and equity

232
Q

How do you calculate per-capita output when given GDP

A

Per Capita Output = GDP/Population

233
Q

What is it called when additional deliverables are added to a project after commencement/

A

Scope Creep

Tracy BEC Flashcards (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions