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BEC > Final Review > Flashcards

Final Review Flashcards

1
Q

What are the requirements of the audit committee financial expert?

A

Understanding of generally accepted accounting principles Experience with internal controls Experience with preparation or auditing of financial statements of similar issuers

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2
Q

What is the duty of the program librarian?

A

Maintain company databases, files, and programs in a separate and secure storage area. Only person allowed to make changes to production library. Programmers, operators are not allowed to access the library because they could make unauthorized and undetected changes to the computer programs Librarian should only allow changes into production once the change has been tested in the test environment by someone other than the programmer

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3
Q

What is ROI?

A

ROI = Net Income / Average invested capital

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4
Q

Calculate equivalent units using under FIFO

A

Units completed

+ Equivalent units at beginning of period

  • Equivalent units at end of period

= Total Equivalent Units

Under FIFO only current period costs are considered

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5
Q

Define imputed cost

A

A cost that must be estimated because the real cost is not known yet

Implied cost

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6
Q

What is a negative aspect of using encryption?

A

Encryption slows down system processing.

The machine instructions necessary to encrypt and decrypt data use up system overhead

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7
Q

What is the high-low method?

A

Change in cost / change in # of variable

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8
Q

Calculate equivalent units using the weighted-average method

A

Units completed and transferred

+ Units in process at end of period*

= Equivalent units (weighted-average method)

*weighted as to % labor, material, and overhead added to date

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9
Q

What is the forumla for effective interest?

A

Interest Paid

Usable Funds

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10
Q

What is IRR?

A

The discount rate that gives a net present value (NPV) of zero

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11
Q

What is the duty of each member of the board of directors

A

Each member of the board of directors has a fiduciary duty to act in the best interests of the corporation. This fiduciary duty holds the board members to a higher standard of care than would be exersiced in discharge of those people’s personal affairs.

Duty of Care - use reasonable care in making decisions that might result in harm to others

Duty of Loyalty - place the interest of the corporation before personal interests

Duty of Due Diligence - seek proper information prior to making a decision

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12
Q

What is the forumla for inventory turnover?

A

COGS

Average inventory

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13
Q

What is the EOQ formula?

A

Square root of:

2(Demand per year of units*Setup/order cost per order)

Cost per unit*carrying cost expressed as % of inventory cost

The quantity of inventory that should be ordered at one time to minimize carrying cost and order cost

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14
Q

Which risks are unique to small firms?

A

Unable to use broader capital markets

Unable to diversify operations

Small firms generally have few suppliers

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15
Q

What is interest rate risk?

A

Risk that an investor could suffer as a result of changes in the price of a bond due to variations in the market interest rate.

Affects both small and large organizations

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16
Q

Name some detective control activities

A

audits

required vacations

reconciliations

rotation of duties

variance analysis

physical inventories

activities designed to detect unwanted activities

17
Q

name some preventive controls

A

separation of duties

use of passwords

required authorizations

required approvals

alarm systems

use of locks

security guards and cameras

education, training and monitoring of employees

designed to prevent or minimize errors or fraud

18
Q

what is the focus of the drum-buffer-rope theory

A

focus only on the queuing area that is in front of the bottleneck (constraint)

manufacturing firms only

19
Q

What is a direct material? What is the formula for direct materials used?

A

The cost of any material that can economically be traced directly to units of finished product. It is included in product cost and prime cost

Beginning raw materials inventory

+ purchases

  • ending raw materials inventory

= Direct materials used

20
Q

What is the most important separation of duties in an organization’s IT department?

A

Separation of programming from processing.

Programmers and analysts never process data.

They could change programs or files

21
Q

Which costs more, short-term debt or long-term debt?

A

Interest on long-term debt costs more than interest on short-term debt because of risk associated with long term interest rates

22
Q

Define M1, M2, M3

A

M1 = cash + deposits

M2 = M1 + highly liquid deposits

M3 = M2 + large time deposits

23
Q

What is aggregate demand?

A

The amount of goods and services that will be purchased at each price level

24
Q

What are assumptions under the EOQ forumula?

A

Periodic demand is known

Total carrying costs vary with quantity ordered

Cost of placing an order are unaffected by quantity ordered

Purchase costs per unit are not affected by quantity discounts

25
Q

What are the 3 types of responsibility centers?

A

Cost centers -

Profit centers - costs and revenues

Investment centers - costs and revenues of investments

26
Q

What is Real GDP? What is the formula for Real GDP?

A

Nominal GDP adjusted using the price index.

Nominal GDP

Price index

27
Q

What is the formula for Cost of Goods Sold? Gross Profit?

A

Beginning Finished Goods

+ Cost of Goods Manufactured

  • Ending Finished Goods

=Cost of Goods Sold

Sales

  • Cost of Goods Sold

= Gross Profit

28
Q

Are dividends on common stock decuctible?

A

No

29
Q

How is price elasticity of demand determined?

A

% change in quantity demanded

% change in price

30
Q

What is Material Requirements Planning?

A

Planning system used to determine the amount and timing of inventories that are dependent on the demand for finished goods.

31
Q

What is a risk likely to be increased with a switch from a manual puchasing system to an online purchasing system?

A

Duties are less segrageted.

Computer combines many operations that previously could have been performed by separate persons.

BEC (10 decks)

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