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Accounting Exam > Complete exam revision deck (all lectures) > Flashcards

Complete exam revision deck (all lectures) Flashcards

1
Q

List GPFS

A
  • Statement of cash flows
  • Balance sheet
  • Income statement
  • Statement of changes in equity
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2
Q

ASX stands for and purpose…

A

Australian Securities Exchange: protect investors

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3
Q

ASIC stands for and purpose…

A

Australian Securities and Investment commission: protect consumers, investors and creditors by enforcing company and financial service laws

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4
Q

ACCC stands for and purpose…

A

Australia Competition & Consumer Commission: protect consumers

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5
Q

RBA stands for and purpose…

A

Reserve Bank of Australia: set monetary policy

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6
Q

ATO stands for and purpose…

A

Australian Taxation Office: collects taxes

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7
Q

Equity is…

A

Equity is the true value of Assets after all the liabilities have been paid off.

Equity = Assets - Liabilities

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8
Q

List the 4 Theories of business sustainability

A
  1. Corporate social responsibility
  2. Shareholder value
  3. Stakeholder theory
  4. Stewardship theory
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9
Q

Theory: Corporate social responsibility is…& reason

A

the responsibility an entity has to all stakeholders, including society and the environment in which it operates in.

Reasons: it’s profitable to do so and it reduces to interference from government and lobby groups.

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10
Q

Theory: Shareholder value is…

A

Shareholder (owner) returns are the primary focus of an organisation.

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11
Q

Theory: Stakeholder theory is…

A

The purpose of the entity is to work for the good of all stakeholders - not just maximise shareholder wealth.

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12
Q

Theory: Stewardship theory is…

A

Directors act in the interest of a group(s) of stakeholders and not shareholders.

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13
Q

Triple bottom line refers to…

A
  • Economic performance
  • Environmental performance
  • Social performance
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14
Q

2 Ethical theories are…

A
  • Teleological theory = consequences of decisions.

- Deontological theory = examine the decisions and actions in terms of morality.

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15
Q

Assets =

A

Liabilities + Equity

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16
Q

(DEBIT) Assets + Expenses =

A

Liabilities + Equity + Revenue (CREDIT)

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17
Q

Current is…

A

Anything within 12 months

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18
Q

Non-current is…

A

Anything longer than 12 months

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19
Q

Profit =

A

Revenue - Total cost

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20
Q

Total cost =

A

Variable cost + Fixed cost

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21
Q

GAAP stands for…

A

Generally Accepted Accounting Principles

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22
Q

Accrual accounting is…

A

Accrual accounting is a system in which transactions and events are recorded in the periods they occur.

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23
Q

Cash accounting is…

A

Cash accounting is a system in which transactions and events are recorded in the periods the entity receives or pays the related cash.

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24
Q

Cash flow statements enables… & provides…

A

…enables the evaluation of an entity’s ability to generate positive cash flows in the future, pay dividends and finance growth.
…provides a summary of cash and types of cash flows in and out of an equity

25
Q

Financial analysis is…& assists…

A

…is assessment of an entity’s financial position and profitability.
…assists users in decision making

26
Q

A Budget is..

A

Is the quantitative expression of an entity’s plan.

27
Q

A Cash budget is…

A

A statement of expected future cash receipts and payments.

28
Q

Variance is..

A

A comparison of actual cash number and budget numbers, the difference between the two is known as variance.

  • Favourable variance = (F)
  • Unfavourable variance = (U)
29
Q

(Formula) Variance =

A

Budget number - Actual number

30
Q

Fixed costs are…

A

Fixed costs are cost which remain the same in total (given range of activity and time-frame) irrespective of the total level of activity.

Example = Lease costs, Bills, Utility

31
Q

True or False: Fixed costs per unit will decrease as the number of units produced increase..

32
Q

Viable costs change ..

A

Change in total as the level of activity changes.

Example = cost of bricks to build a house

33
Q

Break-even occurs…

A

when total revenue and total costs are equal resulting in zero profit.
i.e. when revenue = FC+VC

34
Q

Break-even (units) =

35
Q

Contribution margin =

A

Revenue - VC

36
Q

Units to earn a desired profit =

A

(FC + expected profit / CM per unit) = x sales units

37
Q

Pre-tax profit =

A

After-tax profit / (1 - tax rate)

38
Q

Pre-tax profit example: to make a profit of $50,000 after 30% tax, you will need to make a pre-tax profit of =

A

50,000 / (1-0.30) = $71,428

39
Q

Target pre-tax profit =

A

(FC + pre-tax profit target / CM per unit) = x sale units

40
Q

Contribution margin ratio =

A

CM / Total sales

41
Q

Margin of safety provides …

A

an indication of how much revenue can decrease before reaching the break-even point.

42
Q

Margin of safety =

A

Actual or estimated units or revenue - Units or revenue at break even

43
Q

Make or buy decision requires =

A

An entity to choose whether to make or buy a product or service OR to outsource the production of that product.

44
Q

Cost drivers provide…

A

a measure of activity that explains the cost object’s use of the indirect cost.

45
Q

Cost drivers can be classified as …

A
  • Volume drivers
  • Resource drivers
  • Activity drivers
46
Q

Volume drivers relate to..

A

Volume drivers relate to volume of output.

E.g. labour hours, machine hours

47
Q

Resource drivers measure..

A

resource consumption by activities.

48
Q

Activity drivers can be..

A

either volume or non-volume related.

49
Q

Cost-based pricing applies..

A

Applies a mark-up to some calculation of product or service cost.

Cost to make product + mark up

50
Q

Market-based pricing is based on…

A

measure of customer demand.

51
Q

Peak load pricing example =

A

Flowers industry on valentines day.

52
Q

Price skimming example =

A

Highest prices when new product is released.

53
Q

Penetration pricing is..

A

when companies price products significantly less than their competitors.

54
Q

ARR =

A

(Average profit / Average investment) * 100

55
Q

NPV =

A

CF1/(1+r) + CF2/(1+r) …INV

56
Q

Internal rate of return (IRR) =

A

0 = -INV + CF1/(1+i)^1 + CF2/(1+i)^2 …

57
Q

An entity is often divided into business units known as segments or divisions to..

A
  • localise decision making
  • free central management time for strategic planning tasks
  • Assign responsibility and local authority
58
Q

Can you provide an example of a short and long term finance option?

A
  • Selling more shares

- Buy assets in aim of helping business

Accounting Exam (2 decks)

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