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CPA - BEC > BEC Mnumonics > Flashcards

BEC Mnumonics Flashcards

1
Q

The 5 components COSO’s Framework

A

CRIME
C-Control Activities: policies & procedures to implement IC
R-Risk Assessment: FS misstated or fraud
I-Information and Communication: Timely & accurate
M-Monitoring: Are IC effective-report deficiencies
E-Control Environment: Tone at the tope - “PHRASED”

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2
Q

4 categories that the ERM framework defines as enterprise objectives?

A

SORC
S-Strategic: high level goals designed to achieve the mission
O-Operations: Achievement objectives through the effective and efficient use of resources (ROIC> Cost)
R-Reporting: Achievement of reliable reporting
C-Compliance: Ensuring compliance with laws and regulations.

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3
Q

Control environment component are often?

A 
PHRASE
P: Philosophy and operating style of management
H: Human resources
R: Reporting (financial) competencies
A: Authority and responsibility
S: Structure (organizational)
E: Ethical values (and entegrity)
D: Directors
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4
Q

Enterprise Risk Management (ERM) includes components that are similar to the components of the Framework but are broader in scope:

A 
IS EAR AIM
I: Internal environment (control environment)
S: Setting objectives
E: Event identificaiton
A: assessment of risk
R: Risk repsonse
A: Activities
I: Information and communication
M: Monitoring
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5
Q

The Internal Environment component of ERM?

A 
PHRASEDC
P: risk management Philosophy
H: Human resources standards
R: Risk appetite
A: Assignment of Authority and responsibility
S: organizational Structure
E: integrity and Ethical values
D: board of Directors
C: commitment of Competence
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6
Q

Critical success factors?

A

FECH

F: Financial (measuring financial results)
E: business process (measuring Efficiency and effectiveness of business process)
C: Customer (measuring the effort that adds to customer satisfaction)
H: learning and growth (leveraging Human resource capabilities)

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7
Q

Cost accounting systems are designed to meet the goal of measuring cost objects or objectives. The most frequent objectives include?

A

PIE
P - Product costing (inventory and cost of goods manufactured and sold)
I - Income determination (profitability)
E - Efficiency measurements (comparisons to standards)

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8
Q

Conforming and Non-Conforming qualities?

A

A PIE

Conforming:

A - Appraisal includes the costs incurred (e.g. statistical quality control, inspection and testing) to identify defective products or services
P - Prevention includes the costs incurred (e.g., engineering or training) to prevent the production or delivery of defective products or services.

Non-Conforming:

I - Internal failure is the cost of defective parts or lost production time (e.g., scrap and rework)
E - External failure is the cost of returns and lost customer loyalty due to defective products or services.

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9
Q

Calculating the GDP using the expenditure approach

A

GICE

G: Government purchases of goods and services
I: Gross private domestic Investment
C: Personal Consumption expenditures
E: Net Exports (exports minus imports)

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10
Q

Calculating the GDP using the income approach:

A

: I PIRATED

I: Income of proprietors
P: Profits of corportations
I: Intererst
R: Rental income
A: Adjustment for net foreign income and misc items
T: Taxes 
E: Employee compensation
D: Depreciation
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11
Q

Factors that shift the demand curves:

A

WRITEN

W: Changes in Wealth
R: Changes in the price of Related goods
I: Changes in consumer Income
T: Changes in consumer Tastes or preference
E: Changes in consumer Expectations
N: Changes in the Number of buyers served by the market

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12
Q

Factors that shift supply curves:

A

E COST

E: changes in price Expectations of the supplying firm
C: changes in production Costs
O: changes in the price or demand of Other goods
S: changes in Subsidies or taxes
T: changes in production Technologies

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13
Q

The classification of risk?

A

DUNS

D: Diversifiable Risk
U: Unsystematic Risk (non-market/firm specific)
N: Nondiversifiable Risk
S: Systematic Risk (market)

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14
Q

Responsibility segments?

A

CRPI

C - Cost SBU
R - Revenue SBU
P - Profit SBU
I - Investment - return on assets (board of directors)

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15
Q

Components of Strategy?

A

SR ORC

S - Strategic objective, high level goals that support the mission of the organization
R - Related objectives, the specific objectives that permeate the organization in support of strategic objectives.
O - Operations Objectives, efficiency and effectiveness of operations
R - Reporting objectives, relevance, accuracy and timeliness are typically the objectives for reporting.
C - Complianance objectives, ongoing compliance with laws, rules, and regulations.

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16
Q

Financial Scorecard (measures)

A

pointed ‘AT US’

AT - Accurate & Timely
U - Understandable
S - Specific accountability

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17
Q

The critical success factors, measured by Financial and non-financial features of an organization?

A

FICA

F - Financial (profit “AT US”)
I - Internal business processes, efficient production
C - Customer satisfaction, market share
A - Advancement of innovation & Human resource development (learning & growth)

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18
Q

The four domains that COBIT defines IT processes that direct the delivery of solutions and services and ensure that directions are followed:

A 
PO AIDS ME:
Direct: PO - plan and organize
Solution: AI - Acquire and Implement
Service: DS - Deliver and Support
Ensure direction followed: ME - Monitor and Evaluate
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19
Q

The seven distinct information criteria, COBIT describes as the business requirements for information that satisfy business objectives:

A

ICE RACE

I-Integrity
C-Confidentiality
E- Efficiency
R- Reliability
A- Availability
C- Compliance
E- Effectiveness
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20
Q

The steps in the systems development life cycle:

A

A DITTO

A- Analysis
D- Design
I- Implementation and conversion
T- Training
T- Testing
O- Operations and Maintenance
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21
Q

Leftward shifts in the demand curve will cause supply (national output) to fall at equilibrium. Changes in factos that cause the demand curve to shift left:

A

TWICE Govt.

Factors Change Shift Output
T - Taxes - Increase Left falls
W-wealth Decrease Left falls
I - Interest Increase Left falls
C-consumer confid Decrease Left falls
E-exchange rate Increase Left falls
Govt Spending Decrease Left falls
22
Q

Calculate real GDP with multiplier effect?

A

Multiplier = 1/(1-MPC); change in real GDP= Multiplier x change in spending;

MPC = change in consumption / change in income.

23
Q

What are the three major production concepts?

A

(1) total product TP= total amount of output (Q) produced;
(2) marginal product MP = change in total product resulting from a one-unit increase in quantity of an input employed;
(3) average product AP = total product divided by the quantity of an input

24
Q

What is the process for discounting cash flows?

A

(1) calculate after-tax cash flows;
(2) add depreciation benefit (depreciation x tax rate);
(3) multiply result by appropriate present value of annuity;
(4) subtract initial cash outflow; Result= Net present value

25
Q

How do you calculate a firm’s degree of operating leverage?

A

percentage change in EBIT (earnings before interest and taxes)/percentage change in sales

26
Q

What is financial leverage?

A

financial leverage= percentage change in EPS/percentage change in EBIT

27
Q

How do you calculate combined (Total Leverage)?

A

percentage change in EPS/percentage change in sales

28
Q

What is net working capital?

A

difference between current assets and current liabilities

29
Q

What is the cash conversion cycle formula?

A

lower the better; inventory conversion period + receivables collection period - payables deferral period

30
Q

How do you calculate inventory conversion period?

A

average inventory/average cost of sales per day (COGS /360)

31
Q

How do you calculate receivables collection period?

A

average receivables/average sales per day (sales/360)

32
Q

How do you calculate payables deferral period?

A

average payables / averages purchases per day (COGS/360)

33
Q

How do you calculate # of days of inventory in stock?

A

360/inventory turnover ratio = ending inventory/COGS x 360

34
Q

How do you calculate per share valuation?

A

Price= Dividend/required return

35
Q

How do you calculate per share valuation with assumed growth?

A

Current price=Dividend in one year/ (Required return-growth rate)

36
Q

What is sales volume variance?

A

(actual sold units minus budgeted sales units) x (sales price minus variable costs)

37
Q

How do you calculate sales mix variance?

A

(actual product sales mix ratio minus budgeted product sales mix ratio) x actual sold units x budgeted contribution margin per unit of that product

38
Q

How do you calculate sales quantity variance?

A

(actual sold units of product minus budgeted sales units of product) x budgeted product sales mix ratio x budgeted contribution margin per unit of that product

39
Q

How do you calculate market size variance?

A

(actual market size in units minus expected size in units) x budgeted market share x budgeted contribution margin per unit (weighted average)

40
Q

How do you calculate market share variance?

A

(actual market share minus budgeted market share) x actual industry units x budgeted contribution margin per unit (weighted average)

41
Q

How do you calculate selling price variance (or sales revenue flexible budget variance)?

A

(actual selling price per unit minus budgeted sales price per unit) x actual sold units

42
Q

How do you calculate contribution margin ratio?

A

ntribution margin / revenue

43
Q

Under the equation format, how do you calculate DM price variance?

A

actual quantity purchased x (actual price minus standard price)

44
Q

Under the equation format, how do you calculate DM quantity usage variance?

A

standard price x (actual quantity used minus standard quantity allowed)

45
Q

Under the equation format, how do you calculate DL rate variance?

A

actual hours worked x (actual rate minus standard rate)

46
Q

Under the equation format, how do you calculate DL efficiency variance?

A

standard rate x (actual hours worked minus standard hours allowed)

47
Q

Direct labor and direct materials variances.

A

Direct labor and direct materials variances. The mnemonics are PURE, SAD, and DADS.

P-DA
U-DS
R-DA
E-DS

P = Price variance 
U = Usage variance
R = Rate variance
E = Efficiency variance

Standard less Actual = Difference (SAD)

For the SAD mnemonic a positive difference is good and a negative difference is bad (ie standard price is greater than actual means you saved money, hence a positive number is a good variance).

DA = Difference times Actual
DS = Difference times Standard
48
Q

Margin of Safety ?

A

= Sales – Breakeven even sales

OR Breakeven% x sales

49
Q

Qick ratio (Acid test)?

A

= (cash and equivalents + marketable securities + accounts receivable) / current liabilities

50
Q

Inventory valuation under FIFO method?

A
  1. WIP BFN x % complete
    + 2. unit completed (transferred out)
    - 3. Beginning inventory
    + 4. % complete of ending

CPA - BEC (12 decks)

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