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CPA - Final Review > BEC - Revised > Flashcards

BEC - Revised Flashcards

1
Q

How is the effective rate of interest calculated?

How can you arrive at the stated rate by being given the effective rate of interest?

A
  1. Add 1 to effective interest rate
  2. Take the square root
  3. Subtract 1
  4. Multiply by the number of compounding periods
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2
Q

What is a key difference between futures and forward contracts?

A

Futures

Used for specific transaction

Forward

Used for larger group of transactions

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3
Q

How is the P/E ratio calculated?

A
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4
Q

What are unexpired costs?

A

Prepaid costs or assets like inventory.

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5
Q

How is the direct materials price variance calculated?

A
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6
Q

How is the direct materials quantity usage variance calculated?

A
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7
Q

How is the direct labor price variance calculated?

A
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8
Q

How is the direct labor efficiency variance calculated?

A
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9
Q

How is the fixed overhead volume variance calculated?

A
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10
Q

What causes shortages or surpluses as an effect of government intervention?

A

Max price set below equilibrium (price ceiling) creates shortages.

Minimum price set above equilibrium (price floor) creates surpluses.

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11
Q

How is the cost of retained earnings calculated using the CAPM method?

A
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12
Q

What is the difference between financial and operating leverage?

A

Operating leverage

Degree of fixed costs to variable cost in operating structure

Financial leverage

Degree of debt to equity in capital structure

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13
Q

What is the economic order quantity (EOQ)?

How is it calculated?

A

Order size that minimizes order and carrying costs.

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14
Q

How is the cost of retained earnings calculated using the DCF method?

A
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15
Q

How is the cost of retained earnings calculated using the BYRP method?

A
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16
Q

How is the present value of an ordinary annuity calculated?

A
17
Q

How is the present value of a perpetuity calculated?

A
18
Q

How can you determine the current value of a stock using the Dividend Growth Model (DGM)?

A
19
Q

How is the PEG ratio calculated?

A
20
Q

How can you determine the current value of a stock using the PEG ratio?

A
21
Q

What is internal rate of return (IRR)?

A

The discount rate where NPV is equal to 0.

Present value of after-tax cash flows = Initial net investment

22
Q

How is cash conversion cycle calculated?

A
23
Q

What is residual income?

A

Net income in excess of the required rate of return.

CPA - Final Review (4 decks)

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