When sanctions imposed is over ________, a mandatory bounty can be applied.
1M
What’s the range of mandatory awards?
Btw 10% and 30% of sanctions imposed.
External assessment for internal audit must be conducted _______
Once every 5 yrs
According to COSO principles, risk assessment primarily related to _______?
Organizational objectives, risk assessment, fraud, and change management.
According to the COSO principles, the control environment includes ________?
Establishing integrity and ethical value in the organizational culture.
According to COSO principles, control activities primarily relate to ________?
Risk reduction, technology controls, and policies
According to COSO principles, monitoring primarily relate to ________?
Establishing ongoing and periodic evaluations, and addressing control deficiencies.
What is “debenture”
A “debenture” is an unsecured bond.
What is “indenture”?
“Indenture” is a term given to a bond contract.
Formula of cash cycle:
Inventory conversion cycle + accounts receivable conversion cycle - accounts payable conversion cycle
Def: Infrastructure as a service (laaS)
Access to virtual hardware
Def: Platform as a service (PaaS)
Access operating system and related services
eg. use of the cloud to create (not access) software.
Def: Software as a service (SaaS)
Access software. (Eg. Google doc)
eg. use of the cloud to use (not create) software
A transaction processing system is also called
Operational system
Organizations that adopt activity-based costing tends to have more:
- Precise measures of cost
- Cost pools
- Allocation bases (e.g., multiple causes for costs to occur)
under direct (variable) costing, which of the following is treated as product costs?
Variable manufacturing cost
Fix manufacturing cost
Variable selling and admin cost
Fix selling and admin cost
Only variable manufacturing cost is product cost, the rest of are period cost
Level 2 inputs in the U.S. GAAP hierarchy of inputs for fair value determination include quoted prices in ?
Active markets for similar (but not identical) assets or liabs
AND
Both identical and similar assets and liabs in inactive markets.
Eg. Corp bonds(high yield), mortgage-back securities, bank loans, municipal bonds, certain OTC derivatives
Level 1 inputs:
Observable, quoted prices for identical assets or liabs active markets.
Eg. US government and agency securities, foreign gov debt, listed equites and money market securities.
Level 3 inputs:
Unobservable inputs for assets or liabs
Eg. Distressed debt, private equity, exotic or non-standard derivatives.
Which one of the following is not a limitation of black-scholes option pricing model?
A. It fails to consider the probability that the option will be exercised.
B. It assumes the stock does not pay dividends.
C. It assumes the risk-free rate of return used for discounting remains constant during the option period.
D. It assumes the option can be exercised only at the expiration date.
A
The demand curve reflects the impact that price has on the amount of a _________.
Product purchased.
Dif. Btw call option and a put option?
Call option:
buying a specific security at fixed conditions of price and time.
Put option:
Sell a specific security at fixed conditions of price and time.
Return on investment:
Profit margin percentage:
Capital turnover:
Return on investment:
income/investment
Profit margin percentage:
Income/sales
Capital turnover:
Sales/investment
Operating cycle:
Account receivable conversion cycle+inventory conversion cycle
Risk assessment is,
“…the process of identifying, analyzing, and managing the risks involved in achieving the organization’s objectives.
Control activities are,
“…the policies and procedures that ensure that actions are taken to address the risks related to the achievement of management’s objectives.”
What are “porter’s 5 forces”?
- Competition in the industry
- Potential of new entrants into industry
- Power of suppliers
- Power of customers
- Threat of substitute products
Accounting rate of return approach formula:
ARR=average annual incremental revenue - average annual incremental expenses/initial (or average) investment
Present value is determined using:
NPV=
Present value is determined using: discount rate, also called “hurdle rate”, based on cost of capital to firm. (E.g. WACC)
NPV=Difference btw present value of cash inflows and outflows (initial cash investment)
Profitability Index approach:
PI=NPV of project inflows/PV of project cost
__________ is the cost assigned to goods that either purchased or manufactured for resale.
Product cost.
It also is often referred to as “inventoriable cost”
In a macroeconomic free-market flow model, LEAKAGES result when income is used for the purposes other than __________. E.g. ________ & __________
Domestic production, Savings & taxes
What quality definition can be described as “meeting or exceeding the needs and wants of customers?
Quality of design
Conforming to the design specifications is
Quality of conformance
_________ is a qualitative forecasting method that involves development of a consensus by a group of experts using a multi-stage process to converge on a forecast, which is particularly useful approach for long-term forecasting.
The Delphi method
__________ use past values or patterns to predict a future value or values, but the longer the forecasting period, the less likely will the past values or patterns be relevant to those future values.
Time series models
Over the past 50 years, how has the share of total U.S. purchases and output represented by imports and exports, respectively, changed?
Answers are :
Imports as Share of Purchases
Exports as Share of Output
Increase, Increase
IT facility controls are__________. That is, they are controls over the IT department as a whole.
General Control
Most, but not all, IT facility controls are _________. For example, backup procedures are an important ________ control.
Preventive, corrective
The ___________ method of evaluating capital projects uses a _______(also called hurdle rate or cost of capital rate) to _______ future cash flows (or savings) to their present value. Thus, the discount rate or hurdle rate must be established in advance of using the method.
Net present value, discount rate, discount
Describe the Theory of Constraints (TOC).
TOC identifies strategies to maximize income when the organization is faced with bottleneck operations. A bottleneck operation occurs when the work to be performed exceeds the capacity of the production facilities.
Define “Six Sigma.”
Six Sigma is a quality improvement approach that is designed to systematically reduce defects. Six Sigma is also a fact-based method to achieve cost reduction.
______ is the risk to the organization if management does nothing to alter its likelihood or impact. ______is the risk of the event after considering management’s response.
Inherent risk, Residual risk
Define “project risks”.
Project risks are related to adequately defining the project, properly organizing resources, and organizing and committing team members.
_______ is the process of adding resources (such as overtime labor or adding additional materials or equipment) to shorten selected activity times on the critical path. _______ is the shortest possible time to complete an activity after accelerating resources.
Crashing, Crash time
How is the projected completion time determined using Program Evaluation and Review Technique (PERT)?
Expected time of completion is determined by assigning a weighting of one for each of the optimistic and pessimistic estimates, a weighting of four for the most probable estimate, adding the assigned values together, and then dividing that sum by six.
Activity ______ is the maximum amount of time that an activity can be delayed without delaying the entire project.
Example:
slack
component of COSO’s enterprise risk management framework
The components include (1) internal environment, (2) objective setting, (3) event identification, (4) risk assessment, (5) risk response, (6) control activities, (7) information and communication, and (8) monitoring.
The Dodd-Frank Act of 2010 established a requirement that all members of the ________ of public companies must be independent.
compensation committee
The Wall Street Reform and Consumer Protection (Dodd-Frank) Act of 2010 requires public corporations to disclose _______________.
why or why not the chairman of the board is also the chief executive officer
Response to a risk as identified by COSO’s Enterprise Risk Management Framework (RISK RESPONSE)
a. Avoidance. This response involves exiting the activity that gives rise to the risk.
b. Reduction.
c. Sharing.
d. Acceptance.
Enterprise risk management is
Enterprise risk management is a process, effected by an entity’s board of directors, management and other personnel, applied in a strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.
A financial expert is one that possesses all of the following attributes:
1] An understanding of generally accepted accounting principles and financial statements
2] Experience in preparing, auditing, analyzing, or evaluating financial statements of the breadth and complexity expected to be encountered with the company
3] An understanding of internal controls and procedures for financial reporting
4] An understanding of audit committee functions
The nominating/corporate governance committee def.
(1) oversees board organization, including committee assignments, (2) determines director qualifications and training, (3) develops corporate governance principles, and (4) oversees CEO succession.
The compensation committee def.
(1) reviews and approves CEO compensation based on meeting performance goals, (2) makes recommendations to the board with respect to incentive and equity-based compensation plans, and (3) attempts to align incentives with shareholder objectives and risk appetite.
Measures of ____________ success are related to the quality and efficiency of production, and include such things as scrap and rework percentages, warranty costs, workplace safety record, and downtime.
internal business process
Measures of ___________ are related to the quality, vitality, and productivity of the workforce and include such things as employee turnover, new product development, product improvements, employee satisfaction levels, and personnel training and education.
learning and growth
According to the Institute of Internal Auditors’ Standards, the internal audit function should have all of the following competencies except:
Knowledge of key information technology risks.
Knowledge to evaluate fraud risk.
Knowledge of information technology audit techniques.
Knowledge of financial reporting.
Knowledge of financial reporting.
According to the IIA International Standards for the Professional Practice of Internal Auditing, the internal audit charter should set forth the _______, ________, and _________ of the internal audit activity.
purpose, authority, responsibility
*The scope of the activity should not be included in the charter.
With ____________ the shareholder gets one vote for each director for each share of stock owned.
cumulative voting rights
With _____________, a shareholder gets one vote for each share owned.
statutory voting rights
Specific NYSE and NASDAQ rules that make a director not independent include:
(a) A director is not independent if s/he has been an employee of the corporation or an affiliate in the last 5 years (3 years for NASDAQ).
(b) A director is not independent if a family member has been an officer of the corporation or affiliate in the last 5 years (3 years for NASDAQ).
(c) A director is not independent if s/he was a former partner or employee of the corporation’s external auditor in the last 5 years (3 years for NASDAQ).
(d) A director is not independent if s/he or a family member in the last 3 years received more than $120,000 (for a twelve-month period) in payments from the corporation other than for director compensation.
(e) A director is not independent if s/he is an executive of another entity that receives significant amounts of revenue from the corporation.
“The chairman of the board of directors cannot also serve as the chief executive officer” - is an requirement of ______, but not New York Stock Exchange (NYSE).
Dodd-Frank
The eight components of COSO’s enterprise risk management framework
ERM consists of eight interrelated components, including (1) internal environment, (2) *objective setting, (3) *event identification, (4) risk assessment, (5) *risk response, (6) control activities, (7) information and communication, and (8) monitoring.
*additional from 5 components of COSO
The five components of COSO’s internal Control - integrated framework
(1) Control Environment, (2) Risk Assessment, (3) Control Activities, (4) Information and communication, and (5) monitoring
A key objective in setting executive compensation is to __________.
align management’s decisions and actions with the long-term interests of shareholders (e.g., long-term stock price).
The two principles related to the monitoring component include:
a. The organization selects, develops, and performs ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning.
b. The organization evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate.
According to COSO, the position or internal entity that is best suited, as part of the enterprise risk management process, to devise and execute risk procedures for a particular department is
A manager within the department
The principles related to risk assessment include:
a. The organization specifies objectives with sufficient clarity to enable the identification and assessment of risks relating to objectives.
b. The organization identifies risks to the achievement of its objectives across the entity and analyzes risks as a basis for determining how the risks should be managed.
c. The organization considers the potential for fraud in assessing risks to the achievement of objectives.
d. The organization identifies and assesses changes that could significantly impact the system of internal control.
- Control baseline
- Change identification
- Change management
- Control revalidation/update
- Control baseline—establishing a starting point that includes a supported understanding of the existing internal control system.
2. Change identification—identifying through monitoring changes in internal control that are either necessary because of changes in the operating environment or have already taken place.
3. Change management—evaluating the design and implementation of the changes, and establishing a new baseline.
4. Control revalidation/update—periodically revalidating control operation when no known changes have occurred.
If the real rates of interest are the same, the country with the ________ nominal interest rate is expected to experience a higher rate of inflation.
higher
The movement along the demand curve from one price-quantity combination to another is called a(n)
increase or decrease in the quantity demanded.
________ markets are characterized by few large competitors. Therefore, the actions of one affect others in the market.
Oligopolistic
_______is the rate of increase in the price level of goods and services, usually measured on an annual basis. ________is a very high, unusually increasing level of inflation.
Inflation, Hyperinflation
If the Federal Reserve purchases government securities, they are able to ______ the monetary supply and, therefore, _____________ on interest rates. When a central bank is purchasing government securities and expanding the money supply, it is called an ____________.
increase, put downward pressure, expansionary open-market operation
An oligopoly is an industry that is dominated by a small number of sellers. It is best described by ________ which models conflict and cooperation among decision makers.
game theory
________ unemployment is due to imperfections in the labor market and relates to workers searching for jobs or waiting to take jobs in the near future.
Frictional
The rate of unemployment caused by changes in the composition of employment opportunities over time is referred to as the
Structural unemployment rate
eg. 網上購物上升，商店Sales Person失業。 Structural unemployment is a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap).
________ unemployment is caused by the recession phase of the business cycle, that is, by a deficiency of aggregate spending.
Cyclical
_________ is the cost assigned to goods that were either purchased or manufactured for resale. ________ also is often referred to as “inventoriable cost.”
Product cost, Product cost
The _______ of a business cycle is generally characterized by unused productive capacity and an unwillingness to risk new investments.
trough
Total units of product Average fixed cost Average variable cost Average total cost 6 $15.00 $25.00 $40.00 7 12.86 24.00 36.86 8 11.25 23.50 34.75 9 10.00 23.75 33.75
The marginal cost of producing the ninth unit is
The amount may be obtained by subtracting the total cost of 9 units from the total cost of 8 units. $25.75 = ($33.75 × 9) – ($34.75 × 8).
______ policy influences taxes, subsidies, and government spending.
Fiscal
An oligopoly is formed by the combination of firms in the same line of business, as in a ________merger.
horizontal
The capital structure of a firm includes bonds with a coupon rate of 12% and an effective interest rate is 14%. The corporate tax rate is 30%. What is the firm’s net cost of debt?
the cost of debt is equal to the effective rate less the tax advantage, or 9.8% [14% × (1–.3)].
A call feature
The bonds may have a call provision allowing the firm to force the bondholders to redeem the bonds before maturity. Call provisions typically call for payment of a 5 to 10% premium over par value to redeem the bonds. Investors generally do NOT like call features because they may be used to force them to liquidate their investment.
Sinking fund provisions—
The firm makes payments into a sinking fund which is used to retire bonds by purchase.
The economic order quantity formula is
EOQ=根号2aD/k
In the above equation, a = cost of placing one order, D = annual demand in units, and k = annual cost of carrying one unit in inventory for 1 year (i.e., inventory carrying cost).
The average accounts receivable balance is calculated as:
Credit sales per day x Average collection period = (10,000 units × $66 unit price) / 365 × 25 days = $45,205.48.
_______ is the risk of loss from a particular event.
Event risk
Which of the following is the least effective device for monitoring management behavior?
The audit committee of the board of directors.
The external auditor.
The internal auditor.
Security analysts.
Security analysts
*Security analysts have little access to, or control over, top management.
In the COSO framework, Individuals that monitor controls are referred to as _______.
evaluators
The degree of operating leverage (DOL):
Percent change in operating income/Percentage change in sales volume
The degree of financial leverage (DFL)
Percent change in EPS/Percent change in EBIT
________ mature on varying dates allowing an investor to choose a maturity date.
Serial bonds
The arbitrage pricing model includes a series of ___________ factors to estimate systematic risk. Capital Asset Price Model (CAPM) only includes one.
systematic risk
Object program—
The converted source program that was changed using a compiler to create a set of machine readable instructions that the CPU understands.
The current version of the framework (COBIT 5) is business-oriented in that it provides a systematic way of integrating IT with business strategy and governance. COBIT 5 takes a stakeholder approach to addressing information needs and incorporates the following 5 principles:
a. Meeting stakeholder needs.
b. Covering the enterprise end-to-end.
c. Applying a single integrated framework.
d. Enabling a holistic approach.
e. Separating governance from management.
A _________ is an approach to online analytical processing that combines data into a subject-oriented, integrated collection of data used to support management decision-making processes.
data warehouse
Securing client/server systems is a complex task because of all of the following factors except:
a. The use of relational databases. b. The number of access points. c. Concurrent operation of multiple user sessions. d. Widespread data access and update capabilities.
a.The use of relational databases.
In _______ computing the user is responsible for the development and execution of the computer application that generates the information used by that same user.
end-user
Good internal control in a computer system requires that ________, _________, and _________ be segregated.
operators, programmers and the library function
Developing long-range plans and directing application development and computer operations
information systems manager
Designing systems, preparing specifications for programmers, and serving as intermediary between users and programmers.
systems analyst
Maintaining control over the completeness, accuracy, and distribution of input and output.
control group
Selecting, implementing, and maintaining system software, including operating systems, network software, and the database management system.
systems programmer
The practice of authorizing changes, approving tests results, and copying developmental programs to a production library is ___________.
program change control
_________ evaluate the sophistication of IT processes rated from a maturity level of nonexistent (0) to optimized (5).
Maturity models
An _______edits source language statements for syntax errors and translates them into executable code, but it interprets source statements one statement at a time, not as a group as a ________does.
interpreter, compiler
The ability to add or update documentation items in data dictionaries should be restricted to
Database administrators
The kind of connection often used to connect dissimilar networks is a
Gateway
__________—Used to define a database, including creating, altering, and deleting tables and establishing various constraints.
Data definition language (DDL)
__________—Commands used to maintain and query a database, including updating, inserting in, modifying, and querying (asking for data)
Data manipulation language (DML)
__________—Commands used to control a database, including controlling which users have various privileges (e.g., who is able to read from and write to various portions of the database).
Data control language (DCL)
definition of a strategic objective
A statement of what the strategy must achieve and what is critical to its success
definition of a strategic initiative.
Key action programs required to achieve strategic objectives.
Return on assets is equal to net income divided by ________
average total assets
The production volume variance is due to
Difference from the planned level of the base used for overhead allocation and the actual level achieved.
An unfavorable material usage variance may be caused by defective materials, which also may cause an ___________.
unfavorable labor efficiency variance
The _______ budget cannot be prepared until all other budgets are completed.
cash
_______ are designed to provide reasonable assurance that data received for processing by computer have been properly authorized, converted into machine sensible form and identified, and have not been lost, suppressed, added, duplicated, or otherwise improperly changed.
input controls
ascertaining that computer processing has been performed as intended for a particular application is a __________
processing control
Increasing money supply is ________ policy, not _______ policy.
monetary, fiscal
________, often implemented via software, translates between two or more different protocol families and makes connections between dissimilar networks possible.
A gateway
Issuing the maximum amount of _______ generally maximizes earnings per share.
debt
A ______ budget forecasts future purchases and disposals of plant and equipment.
capital
If only one____________ exists, the analysis is known as simple regression. Multiple regression consists of a functional relationship with _____________.
independent variable, multiple independent variables
_____________—This technique is similar to moving average but the more recent sales data are weighted more heavily than older data in computing the forecast. Underlying the technique is the belief that more recent data are more relevant to predictions of future sales.
Exponential smoothing
This technique is used to evaluate the use of resources when resources are constrained.
Linear programming.
The difference between standard hours at standard wage rates and actual hours at standard wage rates is referred to as which of the following types of variances?
labor usage variance.
Nonrevenue generating departments (purchasing and billing, for example) are usually organized as __________.
cost centers.
Under responsibility accounting, costs, revenues, and investments are only allocated to those responsibility centers which have control over them. The manager of a _________ would have control over both costs and revenues, while the manager of an __________ would have control over costs, revenues, and investments.
profit center, investment center
___________ of goods is not a feature of JIT. Instead, vendors inspect their own goods and guarantee that they are free of defects, thus eliminating the need for _________ by the purchaser.
Incoming inspection, incoming inspection
Which of the following configurations of elements represents the most complete disaster recovery plan?
a. Vendor contract for alternate processing site, backup procedures, names of persons on the disaster recovery team.
b. Alternate processing site, backup and off-site storage procedures, identification of critical applications, test of the plan.
c. Off-site storage procedures, identification of critical applications, test of the plan.
d. Vendor contract for alternate processing site, names of persons on the disaster recovery team, off-site storage procedures.
b
________ represents the procedure managers use to identify whether the company has information that unauthorized individuals want, how these individuals could obtain the information, the value of the information, and the probability of unauthorized access occurring.
Risk Assessment
Purchase of treasury stock decreases the firm’s ________ and _______. Therefore it increases the firm’s financial leverage.
assets and stockholders’ equity
The ability to add or update documentation items in data dictionaries should be restricted to
Database administrators.
A manufacturing company properly classifies and accounts for one product as a by-product rather than as a main product because it
Has low sales value when compared to the main products.
This answer is correct because normal spoilage is the cost of spoiled units that occur under efficient operating conditions. It is, therefore, a necessary cost of the production process and is treated as a ________ cost. Abnormal spoilage is the cost of spoiled units that were spoiled through some unnecessary act, event, or condition. Since it is not a necessary cost of the production process, it should be treated as a _______ cost.
product (inventoriable), period
By definition prime costs are equal to ___________
direct materials + direct manufacturing labor
Typical product-costing systems synchronize the recording of accounting-system entries with the physical sequence of purchases and production. The alternative (which is normally used in high-speed automated environments) of delaying journal entries until after the physical sequences have occurred is referred to as
Backflush costing
_________ is a technique that is designed to solve waiting line problems.
Queuing theory
________ is a technique used for scheduling problems
Program Evaluation and Review Technique (PERT)
When the company produces products that _________ consume resources, an activity-based costing system improves costing.
heterogeneously
The_________ or __________ method recognizes reciprocity among service departments by explicitly including the mutual services rendered among support departments.
linear algebra, reciprocal allocation
The ___________ method allocates service department costs to other service departments and production departments usually starting with the service department that provides the most service to other service departments.
step-down allocation
The ___________ method allocates the cost of service departments ________ to the production departments without any intermediate allocations to other service departments.
direct allocation, directly
Operating leverage is _______________.
the degree to which fixed costs are used in proportion to variable costs in achieving income as reflected on the income statement.
In an interest rate swap the first company agrees to
exchange with the second company the difference between the interest charges on its own borrowings and the interest charges on the borrowings of the second company.
The variance of portfolio returns depends on three factors
(1) The percentage of the portfolio invested in each asset (the weight)
(2) The variance of the returns of each individual asset
(3) The covariance among the returns of assets in the portfolio.
The ___________ method is used to determine the fair value of interest rate swaps. The ___________ method is a present value model in which the net settlements from the swap are estimated and discounted back to their current value.
zero-coupon, zero-coupon
Beta is the covariance of the asset’s returns with the returns of the overall portfolio. Therefore, it measures _____________.
the systematic risk of the investment
______ is the possibility of loss from ineffective hedging activities.
Basis risk
_________ is the possibility of loss as a result of the counterparty to the agreement failing to meet its obligation.
Credit risk
________ is the possibility of loss from legal or regulatory action.
Legal risk
A _______ is a financial instrument or contract whose value is derived from some other financial measure (_________, such as commodity prices, stock prices, interest rates, etc.) and includes payment provisions.
derivative, underlyings
__________ is a computerized system that plans manufacturing based on demand estimates.
materials requirements planning
The Capital Asset Pricing Model (CAPM) is calculated as ks (CAPM) =
kRF + (kM – kRF)bi, which is the risk-free interest rate + (the market rate – risk-free interest rate) × beta.
eg. This is equal to 9.20% [(5% + (12% – 5%) × .60].
spending variance is equal to ?
the difference between the actual overhead rate and the standard overhead rate multiplied by the actual hours.
___________ is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
Internal rate of return
The ________ the IRR the more valuable the project is.
higher
An __________ is a series of equal payments the first of which is due at the inception of the agreement.
annuity due
An __________ would mean payments are due at the end of each period.
ordinary annuity
Potential GDP is the maximum amount of various goods and services an economy can produce at a given time with available technology and full utilization of economic resources. The point at which the aggregate demand and aggregate supply curves intersect is equilibrium–the real output (and price level) for an economy. The real output may be______________potential GDP (output).
at, above, or below
breakeven sales =
Fixed cost/contribution margin percentage
Both a country’s ________and ________ enter into the determination of that country’s gross domestic product. Specifically, it is __________ that enter into the determination of gross domestic product.
imports and exports, net exports (exports minus imports)
Under U.S. GAAP, valuation should be based on an ____ price and not on an _____price. An _____ price is the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants as of the measurement date.
exit, entry, exit
The original _________ idea was to provide customers with the ability to interact with a common corporate database for a comprehensive range of applications.
SAP (Systems Applications and Products)
Whereas the SOX retaliation cause of action relates to whistleblowing about federal securities law violations only, the SOX provision that makes it a crime to retaliate against a whistleblower relates to whistleblowing regarding commission of ________.
any federal offense
Control Objectives in the COSO “cube” model.
- Effectiveness and efficiency of Operations.
- Reliability of financial Reporting.
- Compliance with applicable laws and regulations.
When production exceeds sales absorption net income exceeds variable cost net income. Under _______ costing fixed costs are carried over to the next period in inventory.
absorption
_________ costing is for systems that are part job and part process. ________ costing is for systems that is full job. ________ costing is for systems that is full processing.
Operations, Job order, process
A computer input control is designed to ensure that
Data received for processing are properly authorized and converted to machine-readable form.
the __________ assures the recipient that the message came from a certain individual and it was not modified.
digital signature
the translation of a symbolic-language program (readable by humans) results in an _______ which is machine-readable.
object program
________ evaluate the sophistication of IT processes
Maturity models
Activity-based costing allocates costs based on activities using ______. Activities that do not add value are _________or _________.
cost drivers, eliminated or minimized
What would be the primary reason for a company to agree to a debt covenant limiting the percentage of its long-term debt?
To reduce the interest rate on the bonds being sold.
*because such a covenant would reduce the interest rate on the debt being issued.
Acquiring _____________ is not considered investment, but saving.
shares of common stock
Mobile computing _________, not ________, usability issues since systems must be redesigned for display and data entry on small screens.
increases, decreases
___________ includes all long-term debt and all owners’ equity. It does not include short-term debt.
Capital structure
The ____________ reduces the risk of bad data entering an accounting system. Hence, this control would be effective in reducing the risk of incorrect processing that would result from bad data entering a system. Stated more succinctly, __________reduces the risk of GIGO (garbage in, garbage out).
independent verification of transactions, independently verifying transactions
A balance of trade crisis would not be an issue addressed by the International Monetary Fund (IMF). The IMF maintains order in the international monetary system by providing funds to countries in financial crisis, including ________, _________, or_________.
currency crisis, banking crisis, or debt crisis
_________ is personal income less personal taxes. It is the portion of income that can be _________of as desired by the consumer.
Disposable income, disposed
As firms grow they often experience ___________ that increase their returns.
economies of scale
An individual exhibiting the following savings and consumption pattern has a marginal propensity to consume of
Year Income level Savings Consumption
1 $10,000 $2,000 $8,000
2 $15,000 $5,000 $10,000
Change in consumption/Change in income = $2000/$5000=0.4
______ risk is risk of default by the other party to a contract.
Principal
The ___________ for a period is the difference between the total goods exported and the total goods imported.
balance of trade
The _______________ is the difference between the total value of goods and services exported and the total value of goods and services imported.
balance on goods and services
___________ shows the flow of goods and services and government grants for a period of time.
Current account
“___________” refers to the transactions related to the international movement of financial capital.
Capital account
The major components of real GDP are ________ and ________.
total worker hours, labor productivity
_________ competition is characterized by many firms selling a differentiated product or service. The differentiation may be real or only created by advertising. This type of market is prevalent in retailing, including the markets for groceries, detergents, and breakfast cereals. The strategies of firms in these markets tend to focus on product or service innovation.
Monopolistic
________involves determining changes in the firm’s strategy that are necessary.
Assessing
________involves a study of environmental changes identified by scanning to spot trends.
Monitoring
_______ involves a scan of all segments of the general environment.
Scanning
________is a general decline in prices of goods and services.
Deflation
________is a contraction in the economy.
Recession
The consumer price index measures the price change of a bundle of consumer goods = ______________.
Rate of inflation
An ______in governmental spending causes an increase in domestic interest rates and international capital inflows. These capital inflows cause the domestic currency to ________, which has a _______effect on net exports.
increase, appreciate, negative
_______ policy influences taxes, subsidies, and government spending.
Fiscal
payback period include Salvage value, or not?
no
The ___________determines the difference between the nominal rate and the stated rate.
risk of the borrower
The ___________ explains the difference between the stated rate and the effective rate.
frequency of compounding
The __________ method is based upon an important assumption when comparing investments of different lives and different cash flow patterns. The method implicitly assumes that the cash inflows from an investment can be reinvested at the same internal rate of return.
internal rate of return
_________ explores the importance of variables by manipulating variables one at a time to determine their importance to the forecast.
Sensitivity analysis
__________explores the effect of simultaneous changes in a group of variables.
Scenario analysis
___________recognizes the multiple decisions that are involved in implementing a project.
Decision trees
_________views an investment as purchasing an option.
Real options technique
In using the ______ method, costs are initially allocated to both production and service departments.
step
________is based upon two principles. First, activities consume resources. Second, these resources are consumed by products, services, or other cost objectives (output). _______ allocates overhead costs to products on the basis of the resources consumed by each activity involved in the ________, ________, and ___________.
activity-based costing (ABC), activity-based costing (ABC), design, production, distribution of a particular good
Times interest earned equals ________________.
earnings before interest and taxes divided by interest expense
The balanced scorecard, a _____________ system that includes financial and nonfinancial performance measures.
performance measurement
The _________ model is calculated using the risk free interest rate, the stock’s beta coefficient, and the estimated return on the market to calculate the cost of equity.
capital asset pricing
kS (CAPM) = kRF + (kM − kRF)bi
Eurobonds are subject to ______stringent registration requirements making them ________costly to issue.
less, less
Cost of capital is used to evaluate sources of _______ funds, not______ funds.
new, old
At the ________ stage, if a company is reasonably profitable it will experience financing needs in excess of funds available either internally or from trade credit or bank credit. Additional debt financing would often result in an unreasonable amount of financial leverage at this stage of development and public equity financing is not yet available to the company. This is the stage at which the company is most likely to seek and obtain venture capital financing.
rapid growth
A bond with a ________will generally hold a steady market value because its value will not change due to changes in prevailing interest rates.
floating rate
The approximated cost of not taking the discount is calculated with the following formula:
Discount percent/(100% − discount %) × 365 days/(total pay period − discount period)
A _____________ is used to identify the potential causes of defects.
cause-and-effect diagram
A __________ ranks the causes of process variations by the degree of impact on quality.
Pareto chart
A __________ is used to identify the potential causes of defects.
cause-and-effect diagram
A _______ diagram is an alternate name for cause-and-effect diagrams.
fishbone
Four Perspectives of the Balanced Scorecard:
- Financial perspective
- Customer perspective
- Internal business processes perspective
- Learning and growth perspective
When computing equivalent units of production under the __________ method, the work done last period on beginning work in process (BWIP) is considered
weighted-average
In the computation of manufacturing cost per equivalent unit, the _________ method of process costing considers current costs only.
FIFO
A static budget includes _______ costs for _______ output.
budgeted，budgeted
＿＿＿＿＿ arise from a company’s basic commitment to open its doors and engage in business (depreciation, property taxes, management salaries).
Committed costs
The __________ measures the percentage of variation in the independent variables．
coefficient of determination
Measure of the proximity of actual data points to the estimated data points is the definition of ________.
residuals
Coefficient of the independent variable divided by the standard error of regression coefficient is the definition of ________.
t-statistic
________ (_______) budgeting is driven by involving lower-level management and employees.
Participative, (bottom-up)
______ is measured as the price that urban consumers paid for a fixed basket of goods and services in relation to the price of the same goods and services purchased in some base period.
consumer price index (CPI)
________ is the measure used by companies.
The producer price index (PPI)
________ are diagrams of the cause-and-effect relationships between strategic objectives.
Strategy maps
The _______ is the sequence of business processes in which usefulness is added to the products or services.
value chain
A derivative is ________________.
a financial contract that derives its value from the performance of an underlying, such as an asset, index, or interest rate.
An ________ is a series of equal payments the first of which is due at the inception of the agreement.
annuity due
An ________ would mean payments are due at the end of each period.
ordinary annuity
