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BTF > Chapter 6, 7, 8, 9 > Flashcards

Chapter 6, 7, 8, 9 Flashcards

1
Q

ACCURATE Mnemonic

A

Used to remember the qualities of good information. Accurate, Complete, Cost effective, User targeted, relevant, authoritative, timely and easy to use

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2
Q

CATIVA Mnemonic

A

Used to remember the issues related to effective processing of data into information. Completeness, Accurate, Timeliness, Inalterability, verifiability and assess-ability.

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3
Q

Transaction processing system

A

Systems which perform and record routine transactions

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4
Q

Examples of Transaction processing systems

A

Finance/accounting systems
HR systems
Manufacturing/production systems
Sales/marketing systems

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5
Q

Management information systems

A

Systems to produce information allowing managers to make effective decisions

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6
Q

Examples of Management information systems

A 
Executive support systems
Decision support systems
Expert system
Knowledge work system
Office automation system
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7
Q

ACIANA mnemonic

A

Used to assess data security issues. Availability, confidentiality, integrity, authenticity, non reputation and authorisation.

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8
Q

Big data

A

Datatsets whose size is beyond the ability of typical database software to capture, store, manage and analyse

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9
Q

Key features of Big data (4V’s)

A

Volume, Veracity, velocity and variety

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10
Q

The internet of things

A

The growth in smart tech has seen the internet of things become a very significant source of data. Such as home automation and vehicles

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11
Q

Data science

A

Deals with collecting, preparing, managing, analysing, interpreting and visualising large complex data sets.

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12
Q

Data analytics

A

The process of extracting value from big data.

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13
Q

Risks of big data, data science and analytics

A

Storage, Skills, Data dependency and overload

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14
Q

4 main functions of finance

A

Recording financial transactions
Financial reporting
Management accounts
Treasury management

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15
Q

Recording financial transactions role

A

Books of prime entry, ledgers and reconciliations

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16
Q

Financial reporting role

A

Financial statements, tax and regulatory info

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17
Q

Management accounts

A

costing, budgeting, pricing decisions and performance measurement

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18
Q

Treasury management

A

Cash, working capital and foreign exchange management. Managing financial risks. Raising short, medium and long term finance.

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19
Q

Business Partnering

A

Sees members of the finance function partnering with functional areas of the business in a value adding capacity

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20
Q

Common performance measures

A

Profitability, Activity and Productivity

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21
Q

Economy

A

Control over input costs

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22
Q

Effectiveness

A

Output measure (against objectives)

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23
Q

Efficiency

A

Achieving objectives at a minimum cost (Combination of economy and effectiveness)

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24
Q

Critical success factors

A

Product features that are particularly valued by a group of customers

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25
Q

Key performance indicators

A

measures of the level of performance in an area where a target level must be achieved in order for a business to outperform rivals

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26
Q

Benchmarking

A

Is the establishment of targets and comparatives by which relative performance can be established

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27
Q

Limitations of financial performance indicators

A

Historical, Internal, short term, easily manipulated and whole picture.

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28
Q

Balanced scorecard approach

A

Ensures that a mixture of financial and non financial perspectives are considered when selecting performance indicators

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29
Q

Sustainability

A

Is the ability to meet the needs of the present without compromising the ability of future generations to satisfy their own needs

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30
Q

Internal control

A

Is a process effected by the entities board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance.

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31
Q

Control processes

A 
Control environment 
Control activities 
Maintaining controls
IS
Risk assessment process
32
Q

Roles of Financial intermediaries

A 
Making a market 
Risk Diversification
Aggregation
Maturity transformation
Advice
33
Q

Financial intermediaries

A

Bring together investors/lenders with borrowers/users funds. Mirror the real world by providing a relatively risk free lending environment.

34
Q

Bailor/bailee relationship

A

Safeguard property

35
Q

Receivable/payable relationship

A

Contractually owe each other depending on whether overdrawn or in credit

36
Q

Principal/agent relationship

A

Bank acts as agent for the customer. e.g paying a third party sums promised on a customer cheque

37
Q

Mortgagor/mortgagee relationship

A

Bank has the right to assets of customer if customer defaults on loan

38
Q

Fiduciary relationship

A

banks are expected to act in good faith in its relationship with the customer

39
Q

Primary bank

A

involved with Day to day money transmission

40
Q

Secondary bank

A

involved with tailored advice to large commercial clients. E.g. a merchant bank

41
Q

BACS

A

Bank automated clearing system - deals with salaries, standing orders and direct debits

42
Q

CHAPS

A

Clearing home automated payments system. Covers items greater than 10,000

43
Q

SWIFT

A

Same as CHAPS but for international transfers

44
Q

Two main roles of Bank of England

A

Carrying out monetary policy

Ensuring financial stability

45
Q

Monetary policy

A

Lends money to banking sector at the base rate. Banks then lend and borrow money among themselves at rates such as LIBOR which then affects the rates offered to customers

46
Q

FPC (financial stability) responsibility

A

To remove systematic risks

47
Q

PRA (financial stability) responsibility

A

Prudential regulation and supervision of banks

48
Q

FCA responsibility

A

Promote effective competition

Ensuring that relevant markets function well

49
Q

Money markets

A

Marketable securities are short term highly liquid investments that are readily convertible to cash

50
Q

Capital markets

A

Provides a source of funds

51
Q

Risk - Debt vs Equity

A

Debt holders face a lower risk than Equity holders so Debt holders get a lower return

52
Q

Cost of holding cash

A

Lost interest on deposits or other investments

53
Q

Cost of running out of cash

A

Loss of settlement discounts
Loss of supplier goodwill
poor industrial relations
Winding up of a business

54
Q

Use of Short term finance

A

Operational needs of a business including paying for goods, services and wages as they fall due

55
Q

Use of long term finance

A

Purchase of NCA and financial growth

56
Q

Sources of Equity finance

A

Retained earnings
Rights issue of shares
New issue of shares

57
Q

Rights issue of shares

A

Issue of new shares for cash to existing shareholders in proportion to their existing shareholders

58
Q

Placing (issue of shares)

A

Most common method of issuing shares when a company first comes onto the market. Shares sold to investment bank who then sells the shares to its clients

59
Q

Public offers (issue of shares)

A

Can be sold to investment banks which then sell to general public or can be sold directly to general public.

60
Q

Underwriting

A

Institution agreeing to purchase any securities not subscribed by the public

61
Q

Offer for sale by tender

A

Minimum price is set.

62
Q

Sources of Debt finance

A 
Overdraft 
Debt factoring
Term loan
Loan stock
Leasing
63
Q

Debt factoring

A

When a business receives loan finance and insurance, known as non resources factoring, so that in the event that a customer does not pay, the business does not have to repay the loan.

64
Q

Loan stock

A

Is debt capital (bonds and Debentures) in the form of securities issued by companies, the government and local authorities

65
Q

Leasing

A

Transfers substantially all the risks and rewards of ownership of an asset from the lessor to the lessee

66
Q

Bills of exchange

A

Drawn up by exporter and sent to buyers bank. Bank accepts the obligation to pay the bill by signing it

67
Q

Letters of credit

A

Exporter receives immediate payment. Buyer gets a period of credit

68
Q

Export credit insurance

A

Insurance against the risk of non payment by foreign customers for export debts

69
Q

Accountancy profession role

A

Concerned with the measurement, disclosure or provision of assurance about financial information that helps managers, investors , tax authorities and other decision makers make resource allocation decisions

70
Q

Common attributes of professions

A 
Formal regulatory process
Great degree of autonomy
Professional values
Self regulation
Co regulation
71
Q

The three aspects of the Professional accountants work

A

Managing control and safeguarding assets
Financial management
Financial reporting

72
Q

Role of Managing control and safeguarding assets

A

The professional accountant will seek to ensure that assets are kept safe through complete, timely and accurate recording of transactions

73
Q

Role of Financial management

A

Management of all the processes associated with the raising and use of financial resources in business

74
Q

Role of Financial reporting

A

The transactions and activities of the business as represented in its accountancy records, must be reported to external stakeholders

75
Q

Expectations of the accountancy profession

A

Uphold the ICAEW code of ethics
Be able to identify likely threats to their principles
Be able to safeguard against those threats

BTF (4 decks)

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