BEC - BECKER CONVERT Flashcards
What is the purpose of the balanced scorecard?
The balance scorecard displays performance relative to critical success factors identified for multiple dimensions of a business operation
What dimensions or categories of business operation are frequently identified by the balanced scorecard?
Finance, Internal business processes, Customer satisfaction, Advancement of human resource innovation
List and define the types of responsibility segments (or strategic business units-SBUs) that are used to establish business performance measures.
Cost SBU- Managers are held responsible for controlling costs; Revenue SBU- Managers are held responsible for generating revenue, Profit SBU- Managers are held responsible for producing a target profit, Investment SBU- Managers are held responsible for return on investment
Define Strategic Positioning
During strategic positioning, a firm will determine the best manner to achieve organizational goals and assess the quality practices of the organization
What is a Balanced Scorecard?
A balanaced scorecard is a report a firm produces that highlights the multiple dimensions of performance, including finance, business operations, customer satisfaction, and human resource use.
What is the formula for the contribution approach?
Revenue Less: Variable Costs Contribution Margin Less: Fixed Costs Net Income
Contribution margin ratio formula:
Contribution margin ratio= Contribution margin/ Revenue
What is the absorption formula?
Revenue Less: COGS Gross Margin Less: Operating Expenses Net Income
Formula for breakeven point in units:
Total Fixed Costs/Contribution Margin per Unit
Formula for breakeven point in dollars:
Total Fixed Costs/Contribution Margin Ratio
What is the margin of safety formula?
Total sales (in dollars)- Break even sales (in dollars)= Margin of safety (in dollars)
Define the steps and formula for economic value added
Step 1: Calculate the required amount of return and income after taxes
Investment
xCost of capital= Required Return
Step 2: Compare income to the required return.
Income after taxes-Required return= Economic Value Added
Define: Ideal Standards
Ideal standards represent costs that result from perfect efficiency and effectiveness in job performance
What is the general definition of opportunity cost?
Opportunity cost is the potential benefit lost by selecting a particular course of action
Define opportunity costs evaluated in considering an opportunity when the firm is operating at capacity
Opportunity cost at full capacity is define as the net benefit given up from the best alternative use of the capacity
Define: Currently Attainable Standards
Currently attainable standards represent costs that result from work performed by employees with appropriate training and experience but without extraordinary effort
Define: Flexible Budget
A flexible budget is a budget that can be adjusted to any activity level; it shows how costs vary in production volume
Budgeted total costs-(Variable cost per unit * activity level) + Fixed costs
Fixed costs in total are constant over the relevant range of activity level
Identify the direct material variances (two way variance analysis)
Direct material price variance= (AP-SP) x AQ
Direct material quantity variance = (AQ-SQ) x SP
When calculating the “difference” in expense variance analysis, what is the formula?
It would be “SAD” if you forgot this formula: Standard-Actual=Difference
Identify the two direct labor variances (two-way varaince analysis)
Direct Labor Rate Variance= (SR-AR) x AH
Direct Labor Efficiency Variance=(SH-AH) x SR
Using the “PURE” mneumonic, identify the formulas for two way variance analysis
P (Price) D x A
U (Usage) D x S
R (Rate) D x A
E (Efficiency) D x S
Uses of historical data
Historical data is used to track actual performance against targets
Use of current or present data
Present data is used to determine if results indicated by the information are within the established tolerances
What characteristics define information quality?
Appropriate content (relevant) Timely presentation Current (most recent) Accuracy Accessibility
What are the challenges to information quality?
Conflicting functional needs
System constraints
Non integrated processes
Risk Appetitie
Risk appetite is the willingness of a company to assume risk.
Risk appetite is often portrayed on a risk map as the tradeoff between the likelihood of unfavorable events and the degree to which those events will impact achievement goals
List two characteristics of risk
1) Likelihood (Probablity)
2) Impact (Severity or degree to which an unfavorable event inhibits achievement of objectives)
Risk Tolerance
The degree of acceptable risk assumed by a company.
A measurement of the acceptable levels of variation to the achievement of management’s objectives.
Define two types of events within the context of Enterprise Risk Management.
Positve events (representing opportunities) Negative events (representing risks)
List two qualitative methods of evaluating risks
Nominal measurements: Groupings of events into like kinds
Ordinal measurement: Lists of events in order of importance
List two quantitative methods of evaluating risks
Interval measurement: Numerical scale measurements of events
Ratio measurement: Proportional scale measurements of events
Inherent Risk
The risk to an organization when mangement takes no action to limit the likelihood or impact of events
Residual Risk
The risk to an organization that remains after mangement has done what the can to mitigate or control risk
Strategy links mission and values with related objectives. Consistent with enterprise risk management, strategy should be constrained by what feature of managements judgement?
Risk appetite
Name the key components of business strategy
Strategic Objectives:
- Related Objectives
- Operating
- Reporting
- Compliance
Strategic Objectives
The high level goals that support the mission and vision of the organization and the manner in which shareholder value will be created are considered strategic objectives
Operations Objectives
Efficiency and effectiveness of operating is the focus of operations objectives. Objectives that call upon the organization to imporve cycle time or adopt changes in technology represent operating objectives
Reporting Objectives
Relevance, accuracy and timeliness are typically the objectives for reporting. Reporting objectives focus on both internal and external reports
Complaince Objectives
Ongoing compliance with laws, rules and regulations (e.g., taxation and other regulatory requirements regarding pricing or workplace safety) is the focus of compliance objectives
Define: Contribution by SBU
Contribution by SBU represents the difference between the contribution margin (Revenue-Variable costs) and controllable fixed costs (those costs that managers can impact in less than one year)
List the two alternate formulas of Return on Investment
ROI= Income / Investment Capital
ROI= Profit Margin (or Return on Sale) x Investment Turnover (Sales/Assets)
What is the formula for residual income?
Net book value
x Hurdle Rate
Required Return
If the amount of the income from the investment exceeds the computed required return, performance objectives have been met
Market Size Variance
(Actual market size (in units) - Expected market size (in units) x Budgeted market share x Budgeted contribution margin per unit (weighted average)
Market Share Variance
(Actual market share - Budgeted market share) x Actual industry units x Budgeted contribution margin per unit (weighted average)
Sales Volume Variance
(Actual sold units - Budgeted sales units) x Standard contribution margin per unit
Selling Price Varaince
(Actual Sales Price per unit - Budgeted Sales Price per unit) x Actual sold units
Name and briefly describe the five major components that comprise the information technology of an organization
1) Hardware- Hardware is the actual physical computer or somputer peripheral device
2) Software- Software is the systems and programs that process data and turn that data into information
3) Network- A network is made up of communication media that allows multiple computers to share data and information simultaneously
4) People- Many different people have a role in IT such as hardware technicians, network admin., software developers and end users
4) Data- Data is raw facts
Describe the normal series of evenets in an Accounting Information System (AIS)
The series of events in an AIS is as follows:
1) The transaction data from source documents is entered into the AIS by an end user
2) The original paper source documents are filed
3) The transactions are recorded in the appropriate journal
4) The transactions are posted to the general and subsidiary ledgers
5) Trial balances are prepared
6) Financial reports are generated
Name and briefly describe five different types of MIS reports
1) Periodic Schedule Reports- The traditional reports that display infomration in a predefined format and are made available on a regular basis to end users of the system
2) Exception Reports- Reports produced when a specific condition or “exception” occurs.
3) Demand Reports- Specific reports that can be printed on demand
4) Ad Hoc Reports- A report that does not currently exist but that can be created on demand without having to get a software developer involved
5) Push Reports- A report that can actually be “pushed” or sent to a computer screen or computer desktop
What are the primary roles of buisiness information systems (BIS)?
The primary roles of business information systems are to:
1) Process detailed data
2) Assist in making daily decision, and
3) Assist in developing business strategies
Describe the two types of processing used in a computerized enviornment
Bath processing- periodic processing
Online, real time (OLRT) processing (often referred to as “online processing”) - immediate processing
Identify three types of software
1) System software (programs that run the computer)
2) Programming languages (generate computer processing instructions)
3) Application software (programs used by end users)
What is a batch control total?
A batch control total (or batch total) is a munaully calculated total that is compared to a computer generated total as a means of testing the accuracy and completeness of the input and processing. Batch totals are used for numbers that are normally added, such as dollar amounts. Hash totals are used for numbers that are not normally added, such as account numbers.
Identify some difference and problems that one needs to be aware of when auditing in a computer enviornment rather than in a manual enviornment.
1) Disappearing audit trail
2) Uniform transaction processing
3) Computer initiated transactions
4) Potential for increased errors and irregularities
5) Potential for increased supervision and review
List and explain the steps in batch processing
Batch processing is accomplished in two steps:
1) Create a Transaction File- The first step is to create the transaction file by manually (usually) keying the data (data entry), editing the data for completeness and accuracy, and making any necessary corrections
2) Update the Master File- The second step is to update the master file by sorting the transaction file into the same order as the master file and then updating the relevant records in the master file from th transaction file.
What is the major distiniction between batch processing and online processing?
The major distinction between batch processing and online processing is that the transactions in a batch processing system are processed in batches and are not necessarily at the time those transactions are submitted. In online processing, transactions are processed as the transactions are entered.
What is the distinction between centralized and distributed processing?
Centralized processing maintains data and performs data processing at one or more central locations. Decentralied processing occurs when computing pwer and processing are spread out over many locations
What are the various categories of business information systems?
The categories of Business Information Systems are:
1) Transaction processing system
2) Decision support systems
3) Management Information Systems
4) Executive Information Systems
Identify functions that should be segregated in an IT department
The duties of systems analysts, computer programmers, and computer operators should be segregated (although many companies combine system analysts and computer programmers).
What are three types of programmed controls?
Programmed controls are:
1) Input controls
2) Processing controls
3) Output controls
What are the five steps of the system development life cycle?
1) Systems analysis
2) Operations and maintenance
3) Implementation and Conversion
4) Conceptual Framework
5) Physical Design
What are the three main functions of internal control objectives?
1) Preventitive
2) Detective
3) Corrective
What is the objective of the executive information systems (EIS)?
Executive information systems (executive support systems), provide senior executives with immediate and easy access to internal and external information to assist executives in monitoring business conditions. EIS assist in strategic, not daily, decision making
What is the decision support system (DSS)?
A decision support system is a computer based information system that provides interactive support for managers during the decision making process. A DSS is useful for developing information directed towards making particular decisions.
What are transaction processing systems (TPS)?
Transaction processing systems are the systems that proces and record the routine, daily transactions necessary to conduct business
What is the objective of the management information systems (MIS)?
To provide managerial and other end users with reports. These predefined management reports provide managers with the information they need to assist them in the business decision-making process
Which principles of control should be applied to systems development?
Strategic master plan
Project conrols
Data processing schedule
Steering committee
System performance measurements
Post implementation review
Why is it important to have segregation of duties between computer operators and computer programmers?
It is important that computer operators and computer programmers duties be segregated because a person performing both function would have the opportunity to make unauthorized and undetected program changes
