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CPA Exam > BEC Superfast FCs > Flashcards

BEC Superfast FCs Flashcards

1
Q

BEC

how often does an internal audit activity need to be assessed externally?

A

every five years.

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2
Q

BEC

what are the primary themes associated with internal audit attribute standards

A

(1) Purpose, Authority, and Responsibility; (2) Independence and Objectivity; (3) Proficiency and Due Professional Care; and (4) Quality Assurance and Improvement Program.

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3
Q

BEC

the 7 primary themes of the performance standards:

A

(1) Managing the Internal Audit Activity; (2) Nature of Work; (3) Engagement Planning; (4) Performing the Engagement; (5) Communicating Results; (6) Monitoring Progress; and (7) Resolution of Senior Management’s Acceptance of Risks.

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4
Q

BEC

in a conventional graph, the ‘intercept’ is the point at which:

A

the dependent variable intersects the Y axis, and where the independent variable has the lowest value, usually zero

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5
Q

BEC

elasticity of supply?

A

%change in quantity supplied/%change in price

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6
Q

BEC

what is elasticity of demand?

A

the % change in quantity is greater than the % change in price

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7
Q

BEC

how do you prevent deflation?

A

you increase the money supply by lowering the reserve requirement, or lowering interest rates which stimulates demand and increases the general price level

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8
Q

BEC

what does an import quota do?

A

it restricts the quantity of a commodity that can be brought into the country from foreign providers. The biggest beneficiary is the domestic suppliers of the commodity.

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9
Q

BEC

3 generic strategies by Michael Porter?

A

cost leadership, differentiation, and focus

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10
Q

BEC

which framework is for gauging the attractiveness of the competitive environment of an industry?

A

five forces

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11
Q

BEC

what analysis method is for evaluating a macro-environment?

A

PEST analysis: political, economic, social, and technological characteristics

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12
Q

BEC

what are the five forces?

A

1-threat of new competition entering the market2-threat of substitute goods or services3-bargaining power of buyers of the industry good or service4-bargaining power of suppliers of the inputs used in the industry5-intensity of rivalry

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13
Q

BEC

what does SWOT stand for?

A

strengths and weaknesses of the entity, and the opportunities and threats faced by the entity

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14
Q

BEC

how is weighted avg cost of capital calculated?

A

the required rate of return on each source of capital weighted by the proportion of total capital provided by each source and then those amounts are summed.debt:30%x(10% 1-30% tax rate)=2.1%CS: 60%x12%= 7.2%PS: 10%x10%= 1%WACC= 10.3%

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15
Q

BEC

what is a compensating balance and how is the effective interest rate calculated?

A

an amount the borrower has to maintain in an account with a lender.the effective int rate is the cost of borrowing divided by the funds available for use.If the interest each year is 40,000 and the only amount you can actually use is 400,000, then the effective rate is 10%.

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16
Q

BEC

how is the required rate of return calculated?

A

risk free rate + Beta(expected rate - risk free rate)

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17
Q

BEC

basic approach to capitalize earnings to determine value of business?

A

annual earnings / required rate of return.

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18
Q

BEC

what is a time series model?

A

models based on extrapolation of past data to predict a future value

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19
Q

BEC

delphi method?

A

form of qualitative forecasting that involves consensus of a group of experts using a multi-stage process to converge on a forecast.

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20
Q

BEC

diff in quantitative & qualitative forecasting?

A

quantitative is objective and rely on math and calculations. qualitative are subjective and rely on judgement and opinion

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21
Q

BEC

what is the profitability index approach?

A

the relative economic ranking of projects by taking into account the cost & net present value of projects

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22
Q

BEC

average accounting rate of return?

A

avg annual after tax net income / avg cost of investment.the avg cost of investment is the beg book value + ending bv then divided by 2.

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23
Q

BEC

formula for calculating the profitability index of a project?

A

present value of annual after tax cash flows / original cash invested in the project

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24
Q

BEC

NASDAQ requires all companies have audit committees composed entirely of:

A

Independent directors who are also financially literate

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25
Q

BEC

can board of directors change the articles of incorporation?

A

no, only stockholders can do that

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26
Q

BEC

the purchase and sale of commodities for current delivery is what:

A

the spot market. the futures market is for delivery in the future

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27
Q

BEC

what is a specialist on the NYSE?

A

a NYSE member acting as a dealer in a small number of securities

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28
Q

BEC

what is a call option?

A

the right to purchase a security at a specified price for a defined period of time.

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29
Q

BEC

what factors make up the nominal risk free rate?

A

the real rate of interest and an inflation premium

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30
Q

BEC

if the Fed reserve purchases a large number of US gov securities, what is the effect?

A

it increases the monetary supply and puts downward pressure on interest rates

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31
Q

BEC

what is a put option?

A

it lets you sell a stock at a certain price for a period of time.

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32
Q

BEC

what is transfer pricing?

A

the pricing strategy for products and services bought and sold across international borders between related parties. it is mainly part of tax planning.

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33
Q

BEC

capital structure refers to:

A

all long-term debt and equity

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34
Q

BEC

the market price of a bond is the present value of the principal amount plus:

A

the present value of future interest payments at the market rate of interest

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35
Q

BEC

cost of capital for newly issued preferred stock?

A

net proceeds per share / annual costs40 sales price less 5 issuance costs = 35.if par value is 20, @9% int. payments are 1.80calculation is 1.8/35=5.1%

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36
Q

BEC

what is the CAPM formula?

A

Expected return= RF + B(RM-RF)RF means risk free rate.B means betaRM means return on market

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37
Q

BEC

between 2 investments with the same expected return, choose the one with:

A

lower projected standard deviation

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38
Q

BEC

between 2 investments with different expected returns and standard deviations, choose the one with:

A

lower coefficient of variation

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39
Q

BEC

What is NPV?

A

net present value is the present values of future cash flows less the cost of the investment. If the NPV is above zero then it’s a good investment.

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40
Q

BEC

How do you calculate NPV?

A

it’s the present value of future cash flows discounted to present value using the COST OF CAPITAL

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41
Q

BEC

what is the basic FV calculation?

A

FV= current amount x(1+i)^nor1,000 times(1+0.1)^5

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42
Q

BEC

what is the rule of 72?

A

a very close estimate for seeing how long it takes for an investment to double. You just divide 72 by the interest rate. If the interest rate is 8% you divide 72/8=9

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43
Q

BEC

what does the security market line(SML) graph?

A

the relationship between expected return and risk as measured by the beta coefficient

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44
Q

BEC

How to calculate the benefit cost (profitability) index?

A

present value of cash flows / net investment. an index greater than 1 means the project is acceptable

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45
Q

BEC

what does the equivalent annual annuity(EAA) technique evaluate?

A

projects that have different durations(lives)

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46
Q

BEC

times interest earned calculation?

A

Earnings before interest and taxes / interest expenseThis is telling you how many times you earned your interest during the period

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47
Q

BEC

cash conversion cycle?

A

period beg with paying cash for inventory and ending with the collection of cash from the sale of products made with that inventory

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48
Q

BEC

what is underwriting?

A

investment bank buys an entire offering then tries to sell it to the public at a profit

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49
Q

BEC

least expensive long-term source of capital?

A

long term debt because interest is tax deductible and debt is repaid first so it has less risk

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50
Q

BEC

formula to determine the cost of common stock:

A

next period’s dividend / proceeds such as 2/50 which equals 4%. then you add this to the firms growth rate in dividends. If growth rate the cost of common stock would be 7+4 for 11%

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51
Q

BEC

what are the chronological events in the dividend payment process?

A

1-declaration date when board approves dividend2-ex dividend date is first date you buy stock without being entitled to the dividend3-date of record is date you must own shares by to receive dividend4-payment date is when checks are mailed

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52
Q

BEC

how is financial leverage calculated?

A

It is calculated by taking the percentage increase in earnings per share which is then divided by the percentage increase in earnings before interest and taxes. Here, earnings per share starts as $4.00 and increases by $2.00, a 50 percent increase. Earnings before interest and taxes starts as $300,000 and increases by $60,000, only a 20 percent increase. Therefore, the degree of financial leverage is 50 percent divided by 20 percent or 2.5.

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53
Q

BEC

what are the 4 reasons to hold cash?

A

transactions to meet day to day cash outflows, compensating balances required by banks, precautionary balances to meet unexpected events, and speculative balances to take advantage of opportunities

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54
Q

BEC

cash conversion cycle?

A

age of inventory + age of receivables - age of payables

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55
Q

BEC

4 parts of a company’s credit policy?

A

(1) Credit period–when the payment is due; (2) Credit standards–criteria as to which customers are granted credit; (3) Collection policy–enforcement of the collection process; and, (4) Discount–reductions offered to speed up payments.

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56
Q

BEC

Your supplier gives you credit terms of 2/10 net 30. This means that if you pay within 10 days you take a 2% discount. If not, the balance is due in full within 30 days. What is the annual percentage cost to you of not taking the discount and paying on the 30th day?

A

Your choice is to pay $.98 on the dollar on day 10 or $1 on day 30. The extra cost is .02/.98 or .0204081. You save 20 days (30-10) by paying later. To annualize the cost take 365 days and divide by the days saved. 365/20=18.25 and multiply this by the .0204081 percent cost: (.0204081) (18.25) = 37.24%

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57
Q

BEC

A manufacturer of single engine aircraft operates 365 days per year and produces 3,650 aircraft per year. Its engine supplier takes 5 days from the time an order is placed to deliver engines. Assuming the manufacturer does not wish to carry a safety stock, at what level of engine inventory should they place an order (reorder point) for new engines to ensure that production is not interrupted?

A

Economic Order Quantity points (EOQ) tells you how many engines to order at one time. It is determined by taking the square root of the following result: 2 times annual demand (1,600 units) times the cost of placing an order ($50) divided by the cost of carrying a unit for a year ($1). So, (2 x 1,600 x 50) or 160,000. That is then divided by $1 so that it stays 160,000. The square root of 160,000 is 400. That is the number of units that should always be ordered. Because 1,600 are needed, the orders of 400 are placed four times per year.

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58
Q

BEC

A manufacturer of single engine aircraft operates 365 days per year and produces 3,650 aircraft per year. Its engine supplier takes 5 days from the time an order is placed to deliver engines. Assuming the manufacturer does not wish to carry a safety stock, at what level of engine inventory should they place an order (reorder point) for new engines to ensure that production is not interrupted?

A

In the absence of a safety stock, reorder point is equal to daily usage times the time it takes for a supplier to deliver. Daily usage is 3,650/365 or 10 x 5 days to deliver (lead time) is equal to 50 engines as a reorder point.

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59
Q

BEC

average days sales in inventory?

A

360 / inventory turnoverinventory turnover= COGS/ Avg inventory

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60
Q

BEC

What does a TPS do?

A

it supports the day to day activities of a business such as purchasing goods, sales to customers, and payroll

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61
Q

BEC

ROI calculation?

A

net income / avg investment

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62
Q

BEC

alternate ROI calculation?

A

asset turnover x profit margin on sales

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63
Q

BEC

what is the dupont ROA?

A

(net income/net sales) x (net sales/avg total assets)

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64
Q

BEC

asset turnover?

A

sales / assets

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65
Q

BEC

which risk cant be mitigated through diversification of investments?

A

systematic risk because it deals with the macro environment

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66
Q

BEC

what does the systems analyst do in an IT environment?

A

designs systems, prepares specifications for programmers, and serves as intermediary between users and programmers

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67
Q

BEC

what detects errors in data transmission?

A

a parity check

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68
Q

BEC

margin of safety?

A

difference between your actual or expected profitability and the break even point

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69
Q

BEC

what is the floor and ceiling in a transfer pricing decision?

A

the floor is opportunity cost plus costs of outlay. the ceiling is the market price

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70
Q

BEC

target pricing?

A

set prices based on what you think customers are willing to pay based on perceived value

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71
Q

BEC

economic value added?

A

net operating profit after taxes less cost of capital

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72
Q

BEC

does deflation encourage or discourage borrowing?

A

deflation discourages borrowing because people want to borrow money in times of inflation because you can repay it with money with less purchasing power

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73
Q

BEC

when interest rates increase, bond prices:

A

decrease. and vice versa

74
Q

BEC

how is the overhead rate calculated?

A

dividing estimated overhead costs(both variable and fixed) by a budgeted or estimated quantity of a cost driver. Example: total overhead costs of 75,000 divided by 20,000 budgeted direct labor hours for a overhead application rate of 3.75 per direct labor hour

75
Q

BEC

conversion cost?

A

direct labor + overhead

76
Q

BEC

how is a spoilage question done?

A

normal spoilage is a manufacturing cost because it’s an inherent part of production, so it is included in finished goods.Abnormal spoilage is treated as a period cost.If total units completed are 5500 with 5000 being saleable, 200 being normal spoilage, and 300 being abnormal spoilage, then 5200 is included in finished goods. so 5200/5500 times the total cost:(5200/5500)*99,000=93,600 which is what will be debited to finished goods

77
Q

BEC

how to use high-low method:

A

total costs y=a+b(x)y=total costsa=fixed costsb=variable cost per unitx=number of kilos,etcb is change in costs divided by change in kilos, or (y2-y1)/(x2-x1)

78
Q

BEC

what does the CPU contain?

A

primary storage, a control unit, and an arithmetic/logic unit

79
Q

BEC

what is primary storage?

A

temporary main memory portion of the CPU which is part RAM part ROM. Secondary storage consists of devices external to the CPU such as disks, flash drives, & hard drives

80
Q

BEC

elements of assembly language:

A

must be translated into machine language by an assemblereasier to write programs in than machine languageit’s an efficient form of second gen language

81
Q

BEC

elements of a procedural language:

A

3rd gen language that concentrates on the procedures and functions of the programs. written in source code then translated into object code. source code is more similar to english but object code is the machine language for the type of computer. FORTRAN, COBOL, and BASIC are all forms of procedural languages

82
Q

BEC

what does a JCL do?

A

Job control language initiates programs, specifies priorities and running sequences, and which databases are used and which files are used

83
Q

BEC

What is the order of creating master budget?

A

sales budget is first, then production budget, budgeted income statement then budgeted balance sheet

84
Q

BEC

absorption costing?

A

assigns all 3 factors(direct material, direct labor, and both fixed and variable manufacturing overhead) to inventory

85
Q

BEC

direct costing?

A

assigns only variable manufacturing costs to inventory- which means variable manufacturing overhead

86
Q

BEC

what does r squared actually mean?

A

percentage of variation in the dependent variable explained by the variation in the independent variables

87
Q

BEC

what are x and y in a line equation?

A

x is the independent variable, and y is the dependent variable.

88
Q

BEC

overhead efficiency variance?

A

The overhead efficiency variance is the difference between actual direct labor hours worked, and the standard quantity of hours allowed for actual production, times the variable overhead rate per hour.

89
Q

BEC

overhead volume variance?

A

The overhead volume variance equals the difference between the master budget for fixed overhead and applied fixed overhead. The variance has one cause only: producing a number of units different from that specified in the master budget.

90
Q

BEC

labor efficiency variance

A

The labor efficiency variance is the difference between actual direct labor hours worked, and the standard quantity of hours allowed for actual production, times the direct labor wage rate per hour.

91
Q

BEC

material usage variance?

A

This variance is the difference between the actual quantity of material used, and the standard quantity allowed for the output achieved, times the standard price of material.

92
Q

BEC

Diff between spending variance for fixed overhead and variable overhead?

A

The spending variance for variable overhead is the difference between the actual overhead and the budgeted overhead based on actual direct labor hours. The spending variance for fixed overhead is the difference between the actual overhead and the master budget for fixed overhead. Neither variance is affected by the denominator used for allocating fixed overhead.

93
Q

BEC

what is incremental or differential cost?

A

the total difference in cost of two alternatives.

94
Q

BEC

Residual income formula?

A

Residual income = operating income - required rate of return (invested capital)

95
Q

BEC

using PERT or CPM, activity slack is?

A

max amount of time an activity can be delayed without delaying the entire project

96
Q

BEC

what are the 2 distinct functions of the information systems department?

A

systems development and data processing

97
Q

BEC

liason between end-users and the processing center?

A

the control group.

98
Q

BEC

what are the 3 main types of system documentation?

A

data flow diagramssystem flowchartsentity relationship diagrams

99
Q

BEC

What AICPA framework relates to “reliable systems”?

A

AICPA’s Trust Services provides assurance on systems.

100
Q

BEC

what 3 IT functions need to be separated?

A

programming, operations, and the library

101
Q

BEC

daily operations of the website?

A

Web coordinator

102
Q

BEC

control activities defined?

A

Control activities include all of the policies and procedures used within a sytem to help ensure that all management directives are performed as anticipated. Each system is supposed to perform designated tasks. Control activities are installed to ensure those tasks get accomplished efficiently and effectively.

103
Q

BEC

5 examples of information goals?

A

(1) input validity - where input data be approved and reflect accurate economic events (2) input completeness - all valid events are captured (3) input accuracy - all events are captured correctly (4) update completeness - all events are reflected in respective master files (5) update accuracy - all events are reflected correctly within master file.

104
Q

BEC

controlling computer operations is controlled by:

A

Segregation controls, backup and recovery, contingency processing, file protection rings and internal and external labels represent methods to control computer operations. Segregation controls represent controlling access to programs and data.

105
Q

BEC

There are five risks associated with e-commerce, according to the Trust Services framework established by the AICPA. These risks are:

A

1) security, 2) availability, 3) processing integrity, 4) online privacy, and 5) confidentiality.

106
Q

BEC

4 categories of IT resources under COBIT:

A

applications, which include systems and manual procedures to process information; the information itself; infrastructure, which includes hardware, equipment, and operating systems needed to process information; and people.

107
Q

BEC

4 components of the COBIT framework’s IT process model:

A

1) plan and organize, 2) acquire and implement, 3) deliver and support, and 4) monitor and evaluate. Abbreviated, these components are referred to as: Plan, Build, Run, and Monitor.

108
Q

BEC

Who established COBIT?

A

The Information Systems Audit and Control Association (ISACA)

109
Q

BEC

definition of net present value?

A

present value of cash inflows minus the net investment

110
Q

BEC

definition of internal rate of return?

A

the specific discount rate that makes the present value of the inflows equal to the net investment and forces the NPV to be equal to zero

111
Q

BEC

market value added?

A

market value of the firm minus the book value of the capital investment in the firm

112
Q

BEC

economic value added?

A

net operating profit after taxes minus the firm’s cost of capital in dollar terms

113
Q

BEC

ROA (return on assets):

A

net income divided by total assets

114
Q

BEC

ROE(return on equity):

A

net income divided by total equity

115
Q

BEC

ROIC (return on invested capital)

A

net income plus interest divided by average total invested capital. invested capital is just interest bearing debt plus owners equity

116
Q

BEC

what are the 4 elements of a balanced scorecard?

A

financial, customer, internal processes, and learning & growth

117
Q

BEC

after a performance measure has been accepted, what is the next step?

A

the current level of performance should be determined (baseline performance), a designated performance rate or a designated improvement rate should be set (targets), and actions needed to achieve those targets should be designated (strategic initiatives)

118
Q

BEC

free cash flow?

A

net operating profit after taxes (NOPAT), add in depreciation expense, then subtract money set aside for capital expenditures and any need for increasing working capital

119
Q

BEC

receivables turnover?

A

net credit sales / avg acc receivable

120
Q

BEC

number of days sales in inventory?

A

COGS divided by 365. Then divide avg inventory by the first number.

121
Q

BEC

financial planning process:

A

1) analyzing the investment and financing alternatives available to a firm, 2) forecasting the future consequences for each of the alternatives, 3) deciding which alternatives to undertake, 4) measuring subsequent performance against established goals. Measuring the subsequent performance is the final step in that process.

122
Q

BEC

what are the steps to process improvement?

A

1) design, 2) modeling (which involves simulation of the process), 3) execution (including training of personnel and testing of the process), 4) monitoring, and 5) optimization.

123
Q

BEC

what is a pareto chart?

A

a bar chart or histogram that ranks the causes of variations in a process from most to least frequent, which is intended to indicate their effects on quality

124
Q

BEC

what is a control chart?

A

measures deviations from process standards, a fishbone diagram identifies causes of defects and their effects

125
Q

BEC

steps in project management:

A

project initiation, project planning, project execution, project monitoring and control, and project closure

126
Q

BEC

a cost management system is:

A

a planning and control system that measures the cost of significant activities, identifies non value-added cost, and identifies activities.

127
Q

BEC

relevant range?

A

level of activity where fixed costs remain fixed

128
Q

BEC

diff between theoretical capacity and practical capacity?

A

Theoretical capacity assumes output is produced 100% of the time. Practical capacity adjusts theoretical capacity for non-production time such as holidays and maintenance shutdowns.

129
Q

BEC

Utilizing the expected annual capacity approach to overhead application, can result in overapplied overhead when:

A

Actual overhead costs were less than expected and/or production was higher than expected.Overhead is applied based on a calculated rate per unit. This calculated rates uses estimate overhead costs divided by an estimated activity level. If either the estimated overhead is higher than the actual overhead or the estimated activity level is lower than the actual activity level, overhead can be overapplied.

130
Q

BEC

labor rate variance?

A

actual rate paid minus standard hourly rate times the total hours worked

131
Q

BEC

labor efficiency variance?

A

number of hours worked less hours supposed to have been worked times the standard rate

132
Q

BEC

material price variance?

A

diff of total price paid and total price should have paid for the same amount

133
Q

BEC

fixed overhead spending variance

A

It is the difference between the actual overhead spending and the budgeted overhead spending.

134
Q

BEC

when doing weighted avg cost of capital calculations, what needs to have taxes removed?

A

the cost of capital for DEBT must be computed net of the tax benefit provided by the deductibility of the interest expense

135
Q

BEC

how to find effective rate of interest on a compensating balance question?

A

cost of borrowing / funds available for useIf you have 500,000 at 8% interest that equals 40,000 in interest expense. but if you can only use 400,000, then the calculation is 40k/400k for an effective rate of 10%, not 8%

136
Q

BEC

difference between performance standards and attribute standards

A

attribute standards describe the characteristics of organizations and people who perform internal audit services.performance standards describe internal auditing and identify the quality criteria applicable to the performance of the internal audit services

137
Q

BEC

what percentage can a whistleblower get for a dodd-frank award?

A

10% and 30% of sanctions imposed

138
Q

BEC

what is the slope of a demand curve?

A

it is negative. the lower the price, the greater quantity demanded

139
Q

BEC

a positive GDP gap exists when:

A

potential GDP exceeds real GDP. This means that the economy is operating at less than full capacity- which implies unemployment and under-utilized plant and equipment

140
Q

BEC

2 largest export countries?

A

germany and china- each about 9%

141
Q

BEC

US share of worldwide GDP is:

A

approximately 25%

142
Q

BEC

which type of employment is not considered in calculating full employment?

A

cyclical- the other 3 types can exist and still have “full employment”

143
Q

BEC

a supply schedule shows the relationship between the quantity of a commodity that will be supplied during a period of time and:

A

the selling price of the commodity. A supply curve is basically saying that as price increases, more sellers would enter the market and more of the good would be supplied

144
Q

BEC

freely fluctuating exchange rates:

A

automatically correct a lack of equilibrium in the balance of payments

145
Q

BEC

what would the Federal Reserve NOT do to stimulate the economy?

A

Reduce tax rates. The Fed Reserve does not change tax rates. This would stimulate the economy, but tax rates are set by Congress, not the Fed. The Fed could reduce the reserve requirement, reduce the discount rate which would increase loan activity, and they could increase the money supply.

146
Q

BEC

who controls fiscal and monetary policy?

A

The Fed controls monetary policy(money supply), and Congress controls fiscal policy(gov spending and taxes)

147
Q

BEC

calculate marginal propensity to consume:

A

change in spending over change in disposable income

148
Q

BEC

calculate avg propensity to consume:

A

% of disposable income spent on consumable goods

149
Q

BEC

the preventive measure for deflation?

A

increase the money supply. this stimulates demand and increases the general price level

150
Q

BEC

how does deflation distort reported income?

A

depreciation is NOT reflective of current fixed-asset replacement costs?

151
Q

BEC

what is SWOT concerned with?

A

the relationship between an entity and its environment

152
Q

BEC

what is the 5 forces concerned with?

A

the nature, operating attractiveness, and probably long-run profitability of a competitive industry

153
Q

BEC

what is the basis for a natural monopoly?

A

economics of scale- or an increasing return to scale.

154
Q

BEC

in a perfectly competitive market, what is the best level of output for the firm?

A

Marginal revenue = marginal cost.

155
Q

BEC

the direct exchange rate expresses the domestic price (in dollars) of:

A

one unit of foreign currency. 1 euro to $1.15

156
Q

BEC

PEST is acronym for:

A

political, economic, social, and technological

157
Q

BEC

What does PESTEL add to PEST?

A

E= environmental factorsL= legal factors

158
Q

BEC

required rate of return for an investment:

A

riskfree rate + beta(expected rate - riskfree rate)

159
Q

BEC

diff in financial structure and capital structure:

A

financial structure includes all items of liabilities and owners equity, and capital structure includes LONG-TERM liabilities and owners equity.

160
Q

BEC

what time series model reduces random fluctuations in data?

A

exponential smoothing

161
Q

BEC

what source of new capital usually has the lowest after tax costs?

A

bonds. less risk to investors so they’re cheaper than equity, and the interest payments are tax deductible

162
Q

BEC

what states the terms of a bond?

A

an indenture

163
Q

BEC

what is the profitability index used for?

A

to rank potential investments by taking into account both the time value of money and the initial cost of the project

164
Q

BEC

what is commercial paper?

A

short term, unsecured promissory notes

165
Q

BEC

calculate profitability index of a project?

A

divide present value of annual after tax cash flows by the original cash invested in the project

166
Q

BEC

what is residual income that remains after the cost of all capital, including equity capital, has been deducted?

A

economic value added. it measures economic profit, not accounting profit. NOPAT minus cost of capital

167
Q

BEC

accounting rate of return?

A

dividing accrual based net income by the initial cost of the project

168
Q

BEC

what is EDI for?

A

electronic data interchange allows companies to place orders with suppliers electronically

169
Q

BEC

what kind of network is used to process EDI?

A

Value added network- VANs provide the additional security and addressing capabilities necessary to process EDI transactions

170
Q

BEC

rollback and recovery procedures are most common in:

A

online real-time systems. periodic snapshots are taken of a master file, and upon detection of a problem, the system reprocesses all transactions that have occurred since the snapshot

171
Q

BEC

who designs, creates, and tests program?

A

application programmers

172
Q

BEC

a fire supression system in a computer facility should include:

A

halon and other chemical suppressents that dont harm computer hardware

173
Q

BEC

which critical function is most likely to be missing in a small business computing environment?

A

authorization

174
Q

BEC

in a large firm, who would maintain custody of the entity’s data?

A

the data librarian

175
Q

BEC

what allows a database management system to add new records, delete old records, and update records?

A

a data manipulation language (DML)

176
Q

BEC

What is used to verify that a program was free of unauthorized changes?

A

a source code comparison program. this compares an archived program to the program actually in use

177
Q

BEC

What is PaaS?

A

PaaS is the use of the cloud to create (not access) software

178
Q

BEC

what is systematic risk?

A

market risk. large scale economic events that typically affect all companies

179
Q

BEC

most likely strategy to reduce breakeven point?

A

decrease fixed costs and increase contribution margin

180
Q

BEC

what is six sigma similar to?

A

total quality management

181
Q

BEC

what are the 4 types of costs of quality?

A

prevention costsappraisal costsinternal failure costsexternal failure costs

182
Q

BEC

steps for business continuity plan

A

create framework and structure, identify the scope of the plan, its key roles, and assign individuals to roles. Understand and evaluate organizational risks. Define alternative methods to ensure delivery of products and services. Strategy for handling crisis incidents. embed plan in organizational culture. educate, train, and make aware.

CPA Exam (8 decks)

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