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CPA > BEC Custom 2 > Flashcards

BEC Custom 2 Flashcards

1
Q

Under IIA’s International Standards who is responsible for managing an organization’s internal audit activity?

A

Chief Audit Executive

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2
Q

Under the Attribute Standards related to an internal audit activity’s Quality Assurance and Improvement program must include periodic external assessments how often?

A

At least every five years

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3
Q

Four primary themes associated with the Attribute Standards (IIA)

A
  1. Purpose, authority, and responsibility
  2. Independence and objectivity
  3. Proficiency and due professional care
  4. Quality assurance and improvement program
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4
Q

What is the focus of the Attribute Standards (IIA)?

A

involve characteristics applicable to individuals and internal audit activities

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5
Q

What are the seven primary Performance Standards (IIA)?

A
  1. Managing the internal audit activity
  2. Nature of work
  3. Engagement planning
  4. Performing the engagement
  5. Communicating results
  6. Monitoring progress
  7. Communicating the acceptance of risks
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6
Q

What does Standard 2000, “Managing the Internal Audit Activity,” state?

A

The chief audit executive must effectively manage the internal audit activity to ensure it adds value to the organization

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7
Q

What types of services do the Implementation Standards (IIA) distinguish between?

A
  • assurance services (designated by “A”)

- consulting services (designated by “C”)

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8
Q

What is the “Intercept” when it comes to the slope formula?

A

the value of the dependent variable at the lowest value of the independent variable (which is often zero)

in other words, the point at which the dependent variable intersects the vertical (Y) axis, which is where the independent variable (horizontal x axis) has its lowest value

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9
Q

What is macroeconomics?

A

The study of economic activities of an entire nation or major sectors of a national economy.

Such matters as demand/supply, employment/unemployment, and inflation/deflation for an entire country

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10
Q

Economics

A

concerned with allocation of scarce resources among alternative uses

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11
Q

What is microeconomics?

A

economic activity at the level of individual-decision making unit

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12
Q

Graph

A

Diagram that shows relationship between two sets of values (or variables)

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13
Q

What does a positive slope indicate?

A

the two variables move in the same direction

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14
Q

What does a negative slope indicate?

A

the two variables move in opposite directions

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15
Q

What does a neutral slope indicate?

A

one variable doesn’t change with changes in the other variable

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16
Q

What is a time series graph?

A

Shows the change in a variable over time (the x-axis)

the horizontal axis measures time

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17
Q

In a free-market economy what should be the least significant factor in determining resource allocation and use?

A

government regulation of commerce

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18
Q

What is a Command economic system?

A

government determines the production, distribution, and consumption of goods and services

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19
Q

What is a Market economic system?

A

Individuals, businesses, and other distinct entities determine the production, distribution and consumption of goods and services

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20
Q

What is the Free Market Model?

A
  1. individuals provide economic resources to business firms (labor, capital)
  2. business firms provide money payment for resources to individuals (wages, interest)
  3. individuals provide money payment for goods/services to business firms (purchase price)
  4. business firms provide goods/services to individuals (products)
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21
Q

Why is the demand curve negatively sloped?

A
  • the quantity demanded is lower at higher prices and increases as price decreases
  • the quantity demanded varies inversely with price along a given demand curve
  • x = quantity; y = price
  • it is downward sloping
22
Q

What is a complementary commodity?

A

One which is used together with another commodity.

23
Q

Since quantity is a function price, what type of variables are they?

A
  • price is an independent variable

- quantity is a dependent variable

24
Q

What does an increase in demand cause?

A

a shift of the demand curve - up and to the right

25
Q

What two factors cause the negatively sloped demand curve?

A
  • income effect - individuals can purchase more units at a lower price
  • substitution effect - lower priced items will be purchased as substitutes for higher priced items
26
Q

What is the sum of individual demand curves?

A

the market demand curve

27
Q

What two factors of note influence changes in demand?

A
  1. change in price of substitute commodity

2. change in price of complementary commodity

28
Q

What is a change in quantity demanded?

A

movement along a given demand curve as a result of a change in price only

29
Q

What will a reduction in price of a commodity cause in regards to the demand curve?

A
  • increase the quantity demanded

- a change in price causes movement along a specific demand curve

30
Q

What will an increase in the cost of input factors to production process cause the supply curve to do?

A
  • to shift inward

- it will cause the per-unit cost to increase and the supply curve will shift upward and to the left (inward)

31
Q

What would an increase in the price of a commodity do to the supply curve?

A
  • increase the quantity supplied, a movement along a supply curve
  • would not shift the supply curve
32
Q

What relationship does a supply schedule (supply curve) show?

A
  • shows the quantity of a commodity that will be supplied (provided) at different selling prices during a period of time
33
Q

What happens if the supply curve shifts inward (to the left)

A

the same quantity will be provided after the shift as was provided before the shift, only at a higher price

34
Q

Supply

A

the quantity of a good or services that will be provided at different prices

35
Q

What kind of slope does a supply curve have?

A
  • a positive slope

- as price increases, more quantity will be supplied

36
Q

What is the sum of individual supply curves?

A

the market supply curve

37
Q

What happens if there is a change in supply?

A

a shift in the supply curve - results from factors other than price change -

  • number of providers
  • costs of inputs
  • technology
38
Q

What is a change in quantity supplied?

A

a movement along a given supply curve as a result of a change in price only

39
Q

What happens if supply decreases?

A

curve shifts left and up

40
Q

What happens if supply increases?

A

curve shifts right and down

41
Q

What happens if the price of a good is fixed by the government below market equilibrium price?

A

Excess demand - price that can be charged is limited (price ceiling), less supply will be provided, such that demand will exceed supply

42
Q

What happens as a result of a price floor?

A

A quantity surplus due to higher prices

43
Q

If demand and supply curves are traditional, what would cause a higher equilibrium price?

A

an increase in demand

44
Q

Where does market equilibrium occur?

A
  • where market demand intersects market supply

- intersection establishes equilibrium quantity and price

45
Q

What happens at market equilibrium?

A
  • market demand = market supply

- there is neither a shortage nor a surplus

46
Q

What causes a market shortage?

A

actual price charged is less than equilibrium price

*demand will exceed supply

47
Q

What causes a market surplus?

A

actual price charged is more than equilibrium price

*supply will exceed demand

48
Q

What happens to market equilibrium if demand only changes?

A

Equilibrium quantity and price will change in the same direction is demand

49
Q

What happens to market equilibrium if supply only changes?

A

Equilibrium quantity will change in the same direction as supply, but equilibrium price will change in opposite direction

50
Q

What happens to market equilibrium if both demand and supply change?

A

New equilibrium quantity and price will depend on direction and magnitude of each change

CPA (16 decks)

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