Deck 6 Flashcards
The method that recognizes the time value of money by discounting the after-tax cash flows over the life of a project, using the company’s minimum rate of return is what?
NPV
IRR is similar to NPV, but does not assume a desired rate of return. The rate is calculated that produces a NPV of zero.
Is factory overhead that is overapplied (actual
A credit
When actual overhead expenses are incurred, the factory overhead control account is debited. As overhead is applied, the account is credited.
How do you calculate the opportunity costs of a option?
you would take the amount you would receive - any costs you’d pay for taking the option.
So if you were to receive 600 with a 25% contribution margin. The opportunity cost would be 600*.25 = 150
When sales exceed production, Variable cost NI is > Absorption costs NI
When production exceeds sales, Absorption cost NI >Variable Costs NI
b
When the overall price level is rising, nominal interest rates tend to be what?
Rising.
The relationship between nominal interest rates and inflation can be seen by rearranging the equation for real interest rates as follows:
Nominal Interest Rate = Real Interest Rate + Inflation
Economic fluctuations (or business cycles) are best described as what?
Fluctuations in the level of economic activity, relative to a long-term growth trend.
Which types of controls are the following, input or output?
Exception Report
Report distribution log
Edit check
Run control total
Exception Report & Report distribution log - Not controls, but do deal with output
Edit check - is is an application input control that validates data before the data is successfully input.
Run control total - Output control
Which of the factor has the greatest impact on the design of an effective management reporting system?
Types of decisions to be made
Management reporting systems are designed to provide data to help managers and executive leaders of an organization make decisions. In order to design the most effective reporting system, the key driver comes from the ultimate goal of the reports, which is to help managers make decisions.
To prevent interrupted information systems operation, which controls are typically included in an organizations disaster recovery plan?
Back up and downtime controls
Downtime (or the complete lack thereof) is a key factor in the disaster recovery plan. Backup is always essential in any disaster recovery plan.
SOX requires that the management report on internal control include all of the following except what?
Financial statement disclosures include management’s assumption of responsibility for internal control, management’s assessment of internal control effectiveness and a statement that the auditor has reported on management’s evaluation. Management does not describe disagreements, if any, between management and the auditor.
statistical quality control procedures are appraisal costs
b
The impact of a government price support program would most likely result is what?
Lead to surpluses
A government price support program acts as a subsidy that will encourage suppliers to increase supply beyond an equilibrium point (the point where supply and demand curves intersect). This excess of supply over demand will create surpluses in the market.
