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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
Production Total Cost
Production Total Cost = Total Fixed Cost (TC) + Total Variable Cost (VC) (BEC SU 2.5.5)
26
Average Total Cost (ATC)
Average Total Cost (ATC) = Total Cost (TC)/Quantity (Q) Increase Fixed Cost (FC) & Average Fixed Cost (AFC) (BEC SU 2.5.5)
27
Average Fixed Cost (AFC)
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
Average Variable Cost (AVC)
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
COSO Components of Internal Control
``` 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
The Risk Management Process
``` 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
Components of COSO ERM
``` 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
COSO Classes of Objectives
O - Operations R - Reporting C - Compliance [BEC 1.3.3.c.4)]
33
COSO ERM Classes of Objectives
``` O - Operations R - Reporting C - Compliance S - Strategies (BEC 1.4.7.b.) ```
34
Most Important Acts of Shareholders At Annual Meetings
"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
Federal Metrics
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
Net Exports (NX)
``` Net Exports (NX) = Exports (X) - Imports (M) (Results can be + / -) (BEC SU 3.1.2.e.) ```
37
Trading At A Forward Premium (Exchange Rates)
Expected to Gain Purchasing Power | BEC SU. 4.2.7.e.
38
Trading At A Forward Discount (Exchange Rates)
Expected to Lose Purchasing Power | BEC SU. 4.2.7.e.
39
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)
Loss in Net Inflows; Gain in Net Outflows | BEC SU. 4.3.1.e.
40
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)
Gain in Net Inflows; Loss in Net Outflows | BEC SU. 4.3.1.e.
41
What are the effects if supply increases and demand increases on equilibrium?
``` Equilibrium Price (Pe) is Unknown; Equilibrium Quantity (Qe) Increases (BEC SU. 2.1.3.d. - Figure 2-5) ```
42
What are the effects if supply is constant and demand increases on equilibrium?
``` Equilibrium Price (Pe) Increases; Equilibrium Quantity (Qe) Increases (BEC SU. 2.1.3.d. - Figure 2-5) ```
43
What are the effects if supply decreases and demand increases on equilibrium?
``` Equilibrium Price (Pe) Increases; Equilibrium Quantity (Qe) is Unknown (BEC SU. 2.1.3.d. - Figure 2-5) ```
44
What are the effects if supply increases and demand remains constant on equilibrium?
``` Equilibrium Price (Pe) Decreases; Equilibrium Quantity (Qe) Increases (BEC SU. 2.1.3.d. - Figure 2-5) ```
45
What are the effects if supply is constant and demand remains constant on equilibrium?
There is no effect on equilibrium | BEC SU. 2.1.3.d. - Figure 2-5
46
What are the effects if supply decreases and demand remains constant on equilibrium?
``` Equilibrium Price (Pe) Increases; Equilibrium Quantity (Qe) Decreases (BEC SU. 2.1.3.d. - Figure 2-5) ```
47
What are the effects if supply increases and demand decreases on equilibrium?
``` Equilibrium Price (Pe) Decreases; Equilibrium Quantity (Qe) is Unknown (BEC SU. 2.1.3.d. - Figure 2-5) ```
48
What are the effects if supply is constant and demand decreases on equilibrium?
``` Equilibrium Price (Pe) Decreases; Equilibrium Quantity (Qe) Decreases (BEC SU. 2.1.3.d. - Figure 2-5) ```
49
What are the effects if supply decreases and demand decreases on equilibrium?
``` Equilibrium Price (Pe) is Unknown; Equilibrium Quantity (Qe) Decreases (BEC SU. 2.1.3.d. - Figure 2-5) ```
50
Net Present Value
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
Internal Rate of Return
``` Initial investment / After-tax net cash inflows = Present value Factor (same as payback) (CPA Excel Focus Notes - Capital Budgeting) ```
52
Accounting Rate of Return
Increase in accounting income / Investment (CPA Excel Focus Notes - Capital Budgeting)
53
Payback Period
nitial investment / After-tax net cash inflows = Payback Period (CPA Excel Focus Notes - Capital Budgeting)
54
Capital Expenditures (Long)
``` 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
Capital Expenditures (Short)
Increase in accounting net income + Depreciation on investment = After-tax net cash inflows (CPA Excel Focus Notes - Capital Budgeting)

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