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Gleim Auditing > 2014-2015 BEC > Flashcards

2014-2015 BEC Flashcards

1
Q

Productivity

A

=Real output/Hours Worked BEC SU 2.10.C

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2
Q

Net Domestic Product (NDP)

A

National Income
+ Indirect Business Taxes
+ Net Foreign Factor Income
=NDP
Also, NDP=GDP-Capital Consumption Allowance (Depreciation)
I Bought Two Nets For Fishing Income (IBTNFFI)
BEC. SU 3.2.1.a.3)

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3
Q

National Income (NI)

A

“Not Net Income” SuperfastCPA

Salaries & Wages
\+Rents
\+Interest
\+Proprietor & Partnership Incomes
\+Corporate Profits
=National Income (NI)

Stalin’s Red Influence Promoted Communism (SRIPC) BEC 3.2.1.a.2)

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4
Q

Real GDP

A

Real GDP = Nominal GDP/Price Index (In 100th’s)

Nominal GDP = Total Market Value of All Goods & Services In Current Dollars BEC SU. 3.2.5.

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5
Q 
GDP (Income Approach)
Personal Income (PI)
Disposable Income (DI)
A

GDP=NI+NDP+/-CCA (Capital Consumer Allowance/Depreciation)
PI=All Income Received by Individuals
DI=PI-Taxes (Personal)
BEC SU. 3.2.2. & 3.2.1.a.4)

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6
Q

GDP (Expenditures Approach)

A 
GDP=C+I+G+NX
Consumer Spending (C)
Investment Spending (I)
Government Spending (G)
Net eXports (NX)
Creativity Increases Germany's Net eXports (CIGNX) BEC SU.3.1.2.e.
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7
Q

Money Multiplier

A

Amount of money banks potentially can create

Money Multiplier=1/Required Reserve Ratio

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8
Q

Multiplier

A

Multiplier=1/(1-MPC)
MPC= Marginal Propensity to Consume
BEC 3.7.2.a.3)b)

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9
Q

Unemployment Rate

A

Unemployment Rate=(Number of Unemployed/Size of Labor Force)*100
BEC SU.3.6.1.a.

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10
Q

Consumer Price Index (CPI)

A

CPI=(Cost of Market Basket In Current Year/Cost of Market Basket In Base Year)*100
BEC.SU.3.5.1.b.2)

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11
Q

Inflation

A

Rate of Inflation=(Current-Year Price Index - Prior-Year Price Index)/(Prior-Year Price Index)
BEC.SU.3.5.1.b.1)a)

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12
Q

Demand Elasticity Coefficient: 0

A

=0 Perfectly Inelastic (I) Demand
(BEC SU.2.2.1.c.3)
%Change Q = % Change

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13
Q

Demand Elasticity Coefficient: % Change Q>%Change in Price

A

% Change Q>%Change in Price (Greater Than 1), Demand Is Relatively Elastic Range)
(BEC SU.2.2.1.c.3)

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14
Q

Demand Elasticity Coefficient: 1

A

% Change Q=%Change in Price (Equal to 1), Demand Has Unitary Elasticity (Usually Very Limited Range)
(BEC SU.2.2.1.c.3)

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15
Q

Demand Elasticity Coefficient: % Change Q

A

% Change Q

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16
Q

Demand Elasticity Coefficient: Infinite

A

Demand is perfectly elastic (BEC SU.2.2.1.c.3)

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17
Q

Effects on Total Revenue: Price Increase

A

Price Increase: Elastic Range (Decrease), Unitary Elasticity (No Change), Inelastic Range (Increase)
(BEC SU.2.2.1.b.5)

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18
Q

Effects on Total Revenue: Price Decrease

A

Price Decrease: Elastic Range (Increase), Unitary Elasticity (No Change), Inelastic Range (Decrease)
(BEC SU.2.2.1.b.5)

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19
Q

Elasticity of Demand (Ed) Midpoint Method

A

Ed=[(Q1-Q2)/(Q1+Q2)]/[(P1-P2)/(P1+P2)]

BEC SU.2.2.1.b.2

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20
Q

Elasticity of Demand (Ed)

A

Ed=[%Change Quantity Demanded/%Change Price]

BEC SU.2.2.1.a.

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21
Q

%Change Price (Point Method)

A

%Change Price=(Price After Change-Price Before Change)/Price Before Change
Point Method
(BEC SU.2.2.1.b.1)

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22
Q

%Change In Quantity (Point Method)

A

%Change Quantity=(Quantity After Change-Quantity Before Change)/Quantity Before Change
Point Method
(BEC SU.2.2.1.b.1)

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23
Q

To loosen the Money Supply

Federal

A

1 Fed sees recession looming
2 Fed buys government securities on open market
3 Fed credits cash to reserve accounts of banks selling securities
a) Increase supply; create supply of excess reserves; banks now willing to lend
b) Greater availability of cash for overnight loans causes decline in Federal funds rate
4 Fall in interest rates stimulates investment spending by businesses
5 Rise in investment spending increases aggregate demand, which increases real GDP and reduces unemployment
(BEC SU 3.9.1.b.3)

24
Q

To tighten the Money Supply

Federal

A

1 Fed fears inflation heating up
2 Fed sells government securities on open market
3 Fed decreases cash in reserve accounts of banks buying securities
a) Decrease in supply of cash reduces excess reserves; banks unable to lend
b) Lower availability of cash for overnight loans causes decline in Federal funds rate
4 Rise in interest rates stimulates investment spending by businesses
5 Fall in investment spending reduces aggregate demand, which decreases price level and reduces inflation
(BEC SU 3.9.1.b.3)

25
Q

Production Total Cost

A

Production Total Cost = Total Fixed Cost (TC) + Total Variable Cost (VC)
(BEC SU 2.5.5)

26
Q

Average Total Cost (ATC)

A

Average Total Cost (ATC) = Total Cost (TC)/Quantity (Q)
Increase Fixed Cost (FC) & Average Fixed Cost (AFC)
(BEC SU 2.5.5)

27
Q

Average Fixed Cost (AFC)

A

Average Fixed Cost (AFC) = Fixed Cost (FC)/Quantity (Q)
Increase Fixed Cost (FC); Increase Total Cost (TC) & Average Fixed Cost (AFC)
(BEC SU 2.5.5)

28
Q

Average Variable Cost (AVC)

A

Average Variable Cost (AVC) = Variable Cost (VC) / Quantity (Q)
Increase Fixed Cost (FC); 0 No Change in Variable Cost (VC) or Average Variable Cost (AVC)
(BEC SU 2.5.5)

29
Q

COSO Components of Internal Control

A 
Controls Stop CRIME
C - Control Activities
R - Risk Assessment
I - Information And Communication
M - Monitoring
E - Control Environment
(BEC SU 1.3.5)
BEC Intro (p.11)
30
Q

The Risk Management Process

A 
Step 1 Identify Risks
Step 2 Assess Risks
Step 3 Prioritize Risks
Step 4 Formulate Risk Responses
Step 5 Monitor Risk Responses
I Ate Pie For Money (IAPFM)
BEC SU 1.4.12
31
Q

Components of COSO ERM

A 
C - Control Activities
R - Risk Assessment
I - Information And Communication
M - Monitoring
E - Event Identification

R - Risk Responses
O - Objective Setting
I - Internal Environment
(BEC SU 1.4.8.b.)

32
Q

COSO Classes of Objectives

A

O - Operations
R - Reporting
C - Compliance
[BEC 1.3.3.c.4)]

33
Q

COSO ERM Classes of Objectives

A 
O - Operations
R - Reporting
C - Compliance
S - Strategies
(BEC 1.4.7.b.)
34
Q

Most Important Acts of Shareholders At Annual Meetings

A

“Avenue”
A - Amending The Articles of Incorporation
V - Voting on any matters requiring a general vote
E - Electing or removing directors
(BEC SU.1.1.3.b.)

35
Q

Federal Metrics

A

www.federalreserve.gov/releases/h6/current/h6.htm
M1 (Most Liquid Forms of Money)
M2 (M1+Less Liquid Forms of Money)
(BEC SU.3.8.3)

36
Q

Net Exports (NX)

A 
Net Exports (NX) = Exports (X) - Imports (M) (Results can be + / -)
(BEC SU 3.1.2.e.)
37
Q

Trading At A Forward Premium (Exchange Rates)

A

Expected to Gain Purchasing Power

BEC SU. 4.2.7.e.

38
Q

Trading At A Forward Discount (Exchange Rates)

A

Expected to Lose Purchasing Power

BEC SU. 4.2.7.e.

39
Q

If the Domestic Currency Has Appreciated & The Foreign Currency Depreciated As of the Settlement Date, A Domestic Firm with Foreign Currency Will Experience A Gain or Loss?
(Exchange Rate Fluctuations)

A

Loss in Net Inflows; Gain in Net Outflows

BEC SU. 4.3.1.e.

40
Q

If the Domestic Currency Has Depreciated & The Foreign Currency Appreciated As of the Settlement Date, A Domestic Firm with Foreign Currency Will Experience A Gain or Loss?
(Exchange Rate Fluctuations)

A

Gain in Net Inflows; Loss in Net Outflows

BEC SU. 4.3.1.e.

41
Q

What are the effects if supply increases and demand increases on equilibrium?

A 
Equilibrium Price (Pe) is Unknown; Equilibrium Quantity (Qe) Increases
(BEC SU. 2.1.3.d. - Figure 2-5)
42
Q

What are the effects if supply is constant and demand increases on equilibrium?

A 
Equilibrium Price (Pe) Increases; Equilibrium Quantity (Qe) Increases
(BEC SU. 2.1.3.d. - Figure 2-5)
43
Q

What are the effects if supply decreases and demand increases on equilibrium?

A 
Equilibrium Price (Pe) Increases; Equilibrium Quantity (Qe) is Unknown
(BEC SU. 2.1.3.d. - Figure 2-5)
44
Q

What are the effects if supply increases and demand remains constant on equilibrium?

A 
Equilibrium Price (Pe) Decreases; Equilibrium Quantity (Qe) Increases
(BEC SU. 2.1.3.d. - Figure 2-5)
45
Q

What are the effects if supply is constant and demand remains constant on equilibrium?

A

There is no effect on equilibrium

BEC SU. 2.1.3.d. - Figure 2-5

46
Q

What are the effects if supply decreases and demand remains constant on equilibrium?

A 
Equilibrium Price (Pe) Increases; Equilibrium Quantity (Qe) Decreases
(BEC SU. 2.1.3.d. - Figure 2-5)
47
Q

What are the effects if supply increases and demand decreases on equilibrium?

A 
Equilibrium Price (Pe) Decreases; Equilibrium Quantity (Qe) is Unknown
(BEC SU. 2.1.3.d. - Figure 2-5)
48
Q

What are the effects if supply is constant and demand decreases on equilibrium?

A 
Equilibrium Price (Pe) Decreases; Equilibrium Quantity (Qe) Decreases
(BEC SU. 2.1.3.d. - Figure 2-5)
49
Q

What are the effects if supply decreases and demand decreases on equilibrium?

A 
Equilibrium Price (Pe) is Unknown; Equilibrium Quantity (Qe) Decreases
(BEC SU. 2.1.3.d. - Figure 2-5)
50
Q

Net Present Value

A

After-tax net cash inflows
* Present value factor for annuity at target rate
= Present value of investment
- Initial investment
= Net Present Value
(CPA Excel Focus Notes - Capital Budgeting)

51
Q

Internal Rate of Return

A 
Initial investment
/ After-tax net cash inflows
= Present value Factor
(same as payback)
(CPA Excel Focus Notes - Capital Budgeting)
52
Q

Accounting Rate of Return

A

Increase in accounting income
/ Investment
(CPA Excel Focus Notes - Capital Budgeting)

53
Q

Payback Period

A

nitial investment
/ After-tax net cash inflows
= Payback Period
(CPA Excel Focus Notes - Capital Budgeting)

54
Q

Capital Expenditures (Long)

A 
Cash inflows before tax
- Depreciation on Investment
= Increase in taxable income
- Tax
= Increase in accounting net income
Cash inflows before tax
- tax
= After-tax net cash inflows
(CPA Excel Focus Notes - Capital Budgeting)
55
Q

Capital Expenditures (Short)

A

Increase in accounting net income
+ Depreciation on investment
= After-tax net cash inflows
(CPA Excel Focus Notes - Capital Budgeting)

Gleim Auditing (8 decks)

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