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BEC - NINJA > Me > Flashcards

Me Flashcards

1
Q

Restricted stock

A

forces managers to think long term

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2
Q

Clawback rules

A

require executives to pay back incentive compensation when there is an accounting restatement

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3
Q

Control baselines

A

Establishing a starting point that includes a supported understanding of the existing internal control system

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4
Q

Black swan analysis

A

evaluate negative events that were unforeseen to determine why

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5
Q

Residual risk

A

residual after management’s response

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6
Q

Prime facie creditibility

A

the origin of paper documents is easier to determine

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7
Q

evidence of approvals

A

paper documents show approvals more obviously

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8
Q

Circumvention benefit of IT

A

controls are difficult to circumvent when programmed properly, and exception sare unikely to be permitted

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9
Q

Microcomputers

A

personal computers designed for use by a single individual, including desktops and laptops

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10
Q

Magnetic tape

A

sequential accesss of data

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11
Q

magnetic disks

A

random access to data

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12
Q

Utility

A

programs are used for sorts, merges, and other routine functions to maintain and improve the efficiency of a computer system

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13
Q

object program

A

in a form the machine understands

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14
Q

Decisison support system

A

Combines models and data to help in problem solving but with extensive user interpretation needed

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15
Q

COBIT

A

a framework for integrating IT with business strategy and governance

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16
Q

Applicaiton controls relate to:

A

data input

data processing

data output

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17
Q

when size of the market increases

A

positive demand curve shift

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18
Q

Price elasticity

A

percent change in demand / percent change in price

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19
Q

income elasticity

A

percentage change in quantity demanded / percent change in income

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20
Q

cross-elasticity

A

percentage change in demand for product x / percentage chang ein product Y

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21
Q

Price celing causes

A

shortage

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22
Q

price floor causes

A

surplus

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23
Q

Return to scale

A

percent increase in output / percent increase in input

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24
Q

Interest rate effect

A

price inflation causes an increase in interest rates

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25
Q

International purchasing power effect

A

domestic price inflation makes domestic goods and services more expensive relative to foreign goods and services

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26
Q

GDP Deplator

A

utilizes the total production of the economy as measured by GDP and is used to convert GDP to real GDP

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27
Q

Phillips curve

A

trade off between inflation and the unemployment rate

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28
Q

Increase in GDP:

A

Change in spendning / marginal propensity to save

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29
Q

Panic

A

a severe contraction of GDP occurring within a very short time frame

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30
Q

industrial production

A

coincident indicator

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31
Q

average prime rate

A

lagging indicator

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32
Q

stock market prices

A

leading indicator

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33
Q

This represents the time period during which people are unemployed as a result of changing jobs or newly entering the workforce

A

frictional

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34
Q

Potential workers whose job skills do not match the needs of the workforce as a result of changing demand for goods and services of technological advances that reduce or eliminate the need for the skills they possess

A

structural

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35
Q

cyclical

A

the unemployment caused by variations in the business cycle

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36
Q

Real interest rate

A

the rate adjusted for inflation

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37
Q

FED has 3 options for monetary policy

A

ROD

reserve requirements

open market operations

discount rate

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38
Q

absolute advantage

A

this exists when the country can produce the goods at a lower cost thatn the other country

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39
Q

comparative advantage

A

this exists when the cost of producing those goods relative to the cost of producing other goods is lower in that country than in the other country

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40
Q

International trade restrictions effect on foreign users

A

positive: their supply curve shifts to the right as their producers will have to do more selling in their own market

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41
Q

Balance of trade

A

difference between goods exported and goods imported

exports higher => trade surplus

imports higher => deficit

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42
Q

Balance of payments

A

combined surplus or deficit from the current and capital accounts

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43
Q

official reserve account

A

total of gold and foreign currency held by the nation

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44
Q

The currency of the country that is a net exporter =>

A

will rise in value

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45
Q

the currency in the nation with higher interest rates =>

A

will rise in value

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46
Q

Gordon eqution: total return =

A

current dividend rate + annual rate of dividend increase

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47
Q

Arthmetic average returns

A

the result of adding different returns and dividing by number of periods

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48
Q

Geometric average returns

A

consistent return that would grow to the same final result

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49
Q

standard deviation

A

most common measure of investment risk

measure of volatility of an investment

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50
Q

Determining standard deviation

A

dtermine average

difference from average for each period

square differences

determine average of differences

take square root of average of differences

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51
Q

Concentration of credit risk

A

the credit risk associated with lending to a small number of borrowers or borrowers with common sector risks. This is an unsystemtaic risk that can be elimitaed through adequate diversifacition of loan portfolios

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52
Q

Normal yield curve

A

an upward- sloping curve with rates rising as time gets longer

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53
Q

inverted yield curve

A

downward curve with rates on long-term loans being longer

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54
Q

Basis risk

A

the risk that the index used in connection with a derivative hedge willl not fluctuate by the sam eamount as the contract or asset that is being hedged

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55
Q

Fair value hedge

A

changes are reported in earnings

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56
Q

cash flow hedge

A

changes in fair value are reported in other comprehsneive income

57
Q

Interest rate swaps are usually valued using:

A

the zero-coupon method

58
Q

Accounting rate of return =

A

increase in accounting net income / investment

59
Q

accounting rate of return does not consider:

A

time value of money

60
Q

Sensitivity analysis

A

used to evaluate results of decisions under various conditions

61
Q

Operating leases

A

off balance sheet

62
Q

capital leases

A

shift risk of ownerhsip from lessor to lessee

63
Q

Inventory conversion period

A

average inventory / cost of sales per day

64
Q

receivables collection period

A

average receivables / credit sales per day

65
Q

speculative balances

A

funds to take advantage of special business opportunities

66
Q

precautionary balances

A

amounts tha tmay be needed in emergency situations

67
Q

speculative balances

A

funds to take advantage of special business oportunities

68
Q

precautionary balances

A

amount that may be needed in emergency situations

69
Q

concentration banking

A

customers pay to local branches instead of main offices

70
Q

treasury bills

A

< 1 year

71
Q

Treasury notes

A

1-10 years

72
Q

Treasury bonds

A

10 years

73
Q

Money market rund

A

shares in a mutual fund that invests in instruments with an average mautiry under 90 days and which generally maintains a stable value for investors

74
Q

reorder point =

A

average daily demand x average lead time

75
Q

safety stock =

A

maximum daily demand x maximum lead time - reorder point

76
Q

backflush approach

A

all mfg. costs charged to cost of goods sold

costs allocated from COGS to inventories at reporting dates

77
Q

pledged receivables

A

loans is obtained with the receivables offered as collateral for the loan

78
Q

Eurobonds

A

bonds denominated in U.S. dollars can be sold on the European exchanges

79
Q

Debentures

A

unsecured bonds

80
Q

Income onds

A

bonds whose interest payments will be made only out of earnings of the corporation

81
Q

serial bonds

A

principal repayment will occur in installments

82
Q

Redeemable bonds

A

the bondholder may be able to demand repayment of the bonds in advance of the normal maturity date should certain events occur

83
Q

Callable bonds

A

The borrowing firm may force the bondholders to redeem the bonds before their normal maturity date

84
Q

Floating rate bond

A

The interest payment is not fixed but fluctuates with some general index of interest rates

85
Q

Registered bond

A

The bondholder’s name is registered with the firm, and interst payments are sent directly to the registered owner

86
Q

Operating leverage

A

the degree to which a firm has built fixed costs into its operations

87
Q

Degree of operating leverage =

A

% change in operating income / % change in unit volume

88
Q

Degree of financial leverage =

A

% change in earnings per share / % change in earnings before interest and taxes

89
Q

CAPM

A

volatility of stock price relative to average stock

90
Q

Horizontal merger

A

when a firm acquires another in the same line of business

91
Q

Vertical merger

A

when a firm acquires another in the same supply chain

92
Q

conglomerate merger

A

when a firm acquires another in an unrelated line of business

93
Q

Market multiple method

A

The current earnings of the company multiplied by the price-earnings raito that is appropriate to that company

94
Q

Economic value added

A

Net operating profit after taxes - cost of financing

Cost of financing = (assets - liabilities) x weighted-average cost of capital

95
Q

Lean manufacturing

A

shorten time by eliminating waste

96
Q

Theory of constraints

A

increase throughoupt margin by decreasing investment and operating costs

97
Q

Workflow analysis

A

Focus on eliminating non-value- added activities

98
Q

Return on equity

A

Net income / average stockholdrs’equity

99
Q

Fixed asset turnover =

A

Sales / average net fixed assets

100
Q

Total asset turnover =

A

sales / average total assets

101
Q

Times interest earned ratio =

A

earnings before interest and taxes / interest expense

102
Q

Price/earnings ratio

A

common stock price per share / earnings per share

103
Q

Market capitalization

A

Common stock price per share x common stock shares outstanding

104
Q

Market/book ratio

A

common stock price per share / book value per share

105
Q

Functional benchmarking

A

industry averages

106
Q

ISO 9000 series

A

focus on quality of products and services provided by firms

107
Q

ISO 14000 series

A

standards focused on pollution reduction and other environmental goals

108
Q

Kaizen

A

Japanese art of continuous improvement

109
Q

Effective project management: Four basic elements

A

Resources

Time

Money

Scope

110
Q

Gantt chart

A

Bar chart that illustrates the scheduled start and finish of elements of a project over time

111
Q

Direct labor is:

A

both prime and conversion cost

112
Q

Job order costing

A

DM, DL, and MOH applied charged to WIP

Used when units are relatively expensive and costs can be identified to units or batches

113
Q

Scrap

A

Generally charged to cost of goods manufactured

114
Q

Absorption costing

A

used for financial statements

115
Q

Variable costing

A

used for internal purposes only

116
Q

Difference between absorption and variable costing =

A

change in inventory x fixed overhead per unit

117
Q

Static budget

A

budget as specific level of activity

118
Q

master budget

A

static budget for company as a whole

119
Q

Material price variance =

A

Act qty x (std pr - act price)

ASA

120
Q

Material usage variance =

A

Std pr x (std qty - act qty)

SSA

121
Q

Labor rate variance =

A

Actual qty x (std rate - actual rate)

ASA

122
Q

Labor efficiency variance =

A

Standard rate x (standard hrs - actual hours)

123
Q

Overhead volume variance =

A

Std hours x POHR

  • budgeted fixed OH

= OVV

124
Q

Overhead efficieny variance =

A

std hours x POHR

  • act hours x POHR
125
Q

Transfer from cost center to profit center

A

generally use standard variable cost

126
Q

Relative sales value =

A

sales value - separable costs

127
Q

Profit based on sales price:

A

Sales price

Cost: 100% - Profit %

Gross profit: profit %

128
Q

Profit based on cost

A

Sals price: 100% + Profit %

Cost: 100%

Gross profit: profit %

129
Q

CSA can be facilitated through:

A

surveys or team meetings

130
Q

CSA works best to evaluate:

A

soft controls

131
Q

audit committee oversees the hiring and performance

A

of external auditor

132
Q

audit committee is composed of:

A

members of the board

133
Q

what should be separated?

A

asset custody

record keeping

internal audit

audhtorization

134
Q

cost of capital

A

cost of debt and various equity components

135
Q

what variance is the most worrisome

A

sales volume variance

136
Q

business process re-engineering

A

focusing only radical changes to achieve breakthroughs

focus on critical business processes

137
Q

The valuation approach that is similar to the economic substitution principle is the _______ approach.

A

cost

138
Q

Employee training programs would be part of which element of the ERM framework?

A

internal environment

139
Q
A

BEC - NINJA (10 decks)

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