MISC Flashcards
1
Q
CAPM
A
=RFR+Beta(Mkt Rate-RFR)
2
Q
Negotiable CDS
A
- Negotiable CDs generally carry interest rates slightly lower than bankers’ acceptances (which are drafts drawn on deposits at a bank) or commercial paper (which is unsecured debt issued by credit worthy customers).
- have a formal secondary market
- are regulated by the Fed
- sold in denominations of $100,000
3
Q
Avg gross receivable
A
Average daily sales × average collection period.
4
Q
COSO- tone at the top
A
- creates compliance-supporting culture committed to risk management
- navigates gray areas
- promotes willingness to seek assistance and report problems before it is too late
5
Q
activity based costing- external or internal
A
not OK for external
OK for internal
6
Q
job costing - external or internal
A
OK for external
OK for internal
7
Q
variable costing - internal or external
A
not OK for external
OK for internal
8
Q
process costing - internal or external
A
OK for internal
OK for external
9
Q
direct labor
A
“operators”
NOT “mechanics” or “foreman”
10
Q
cost of ending inventory
A
Beg Inventory + Production costs (includes direct labor, direct material, and applied overhead) - COGS
11
Q
SOX addresses the problems related to inadequate board oversight by requiring public companies to have
A
Audit committee
12
Q
Divesting of all properties on Florida coast in response to risk of interruptions from hurricanes is an example of
A
avoidance
13
Q
database marketing
A
locating customers
promoting products to customers who use other related products
14
Q
operating objective
A
eg. conducting focus groups
15
Q
breach of duty of loyalty
A
usurping corporate opportunity
not presenting to the board of directors
16
Q
criteria for evaluating the effectiveness of enterprise risk management are:
A
the components of the ERM framework
17
Q
“someone who can get our new off the shelf production software to do what we want it to do so we can get on with running our business:
A
-systems analyst
take on the role of learning a purchased package and would have the job of integrating it into any existing software
-responsible for training staff in its use
18
Q
database management systems advantages
A
- reduced data redundancy and inconsistencies
- data accessibility increases timeliness, effectiveness, and availability of information
19
Q
batch financial totals would detect:
A
transposition error on one employees paycheck on a weekly payroll run
20
Q
cloud computing
A
allows organizations to use the internet to access and use services and applications that run on remote third party technology infrastructure
21
Q
attribute of mgmt report that has greatest impact on mgmts ability to make effective decisions
A
relevance
22
Q
business info systems
A
- transaction processing systems
- management information systems
23
Q
costs assigned to inventory under variable costing
A
variable overhead
direct material
direct labor
24
Q
employee satisfaction and retention (balanced scorecard concept)
A
learning and growth
25
delphi model relies mostly on
judgement
26
performance reports include:
- user focus
- exceptional items that are controllable
- specific time horizons
27
contribution margin
Sales price per unit- Variable cost per unit
28
breakeven formula
fixed costs/ contribution margin per unit
29
before tax profit
after tax profit/(1-tax rate)
30
units sold to achieve profit
(fixed costs + profit) / contribution margin per unit
31
for a company that produces more than one product, sales volume variance can be divided into
sales quantity variance and sales mix variance
32
total manufacturing costs
direct materials used + direct labor + overhead applied
33
value chain analysis
process of developing macro level flow charts of business processes that produce products or services and then identifying the value added by each process
34
process improvement
represents results of total quality management efforts
35
continuous quality improvement
represents an unswerving focus on customer satisfaction and quality, not necessarily the specific steps associated with value chain analysis
36
benchmarking
relates to determining the best practices and often using those practices as standards
37
imputed interest rate used in residual income
target return on investment set by company's management
38
DM price variance
actual qty purchased x (actual price-standard price)
39
DM quantity usage variance
standard price x (actual quantity used -standard quantity allowed)
40
DL rate variance
actual hours worked x (actual rate-standard rate)
41
DL efficiency variance
standard rate x (actual hours worked - standard hours allowed)
42
a large decline in investment spending caused by a sharp rise in interest rates will most likely:
shift the aggregate demand curve to shift left
43
first step in evaluation of transaction exposure is :
computation of : net currency inflows or outflows
44
annual after tax cash savings
cost of equipment/ expected payback period
45
appropriate working capital management
matches the maturity life of each asset with the length of the financial instrument used to finance that asset
46
return maximization
seeks to obtain optimal return rate by asset utilization
47
financial leverage
amount of debt used to finance an asset
48
operating leverage
degree that fixed costs are used in production process
49
strategic risk
1. risk of choosing inappropriate technology
| 2. financial risk includes risk of having financial resources lost, wasted, or stolen
50
cost of goods manufactured
direct material beg +purchases -returns + transportation in - Ending inventory = direct materials used +direct labor = total direct costs + total indirect costs
51
a firm earning a profit can increase its return on investment by
increasing sales revenues and operating expenses by the same percentage
52
monitor and evaluate
ensuring IT function complies w/in external requirements COBIt process domain
53
GDP =
Government purchases + gross private domestic investment + personal consumption expenditures + net exports (GICE)
54
real GDP is falling while aggregate price level is falling
shift left in aggregate demand curve
55
sharp rise in nominal wages =>
cost push inflation
56
mitigation of economic risk
increasing or reducing sales in foreign markets represents a restructuring technique normally associated with mitigation of economic risk
57
futures hedge is an appropriate technique to :
mitigate transaction risk
58
forward hedge is an appropriate technique
to mitigate transaction risk
59
currency option hedge is appropriate technique to
mitigate transaction risk
60
cost of preferred stock =
dividend/(Sales price-underwriting fee)
61
cost to issue commercial paper =
(original issue discount + transaction fees) / total borrowed
======******annuallly******=======
62
effective annualized percentage cost of financing
1. Actual interest (PxRatexTIme)
2. Subtract interest earned (If any ) on additinoal required compensating balance
3. Divide the difference (net interest) by the loan proceeds the company has use of
63
ad hoc report
report that does not currently exist but can be readily produced without having to get a software developer involved
64
push reports
reports that are automatically sent to an end users scree or desktop
65
query
specific question made up of various criteria that the end user can pose to a system; the question may or may not have been previously defined and programmed in to the system
66
disaster recovery
consists of plans for continuing operations in the event of destruction of not only program and data files but also processing capability
67
hot site
off site location completely equipped to take over oganization data processing
68
cold site
off site location that has all of the electrical connections and other physical requirements for data processingbu t doesn to havet he actual equipment
69
warm site
facility already equipped with the necessary hardware that creates a replication of the primary data center
70
costs included in inventoriable costs -absorption costing
direct material, direct labor, all overhead
- all product costs and no period expenses
- includes fixed overhead
71
pareto diagram
quality program used to rank an analyze individual and cumulative causes of defects
72
cost of goods transferred out
1. Cost of materials transferred out (% DM total)
2. Conversion costs transferred out (100% for equivalent units transferred out + % of Ending inventory (EQU)
3. Total
73
COGM
Total MFTG costs + beg WIP - end WIP
74
cost of goods transferred to finished goods
beg WIP + cost of manufacturing - Ending WIP
75
total manufacturing cost
direct materials + direct labor + overhead applied
76
gross profit
Sales - (Beg Inventory + COGM - EI)
77
normal spoilage
normal spoilage * percent sold
| allocated to good production
78
abnormal spoilage
allocated to income statement
79
use of activity based costing normally results in : (compared to normal costing)
substantially greater costs for low-volume products than reported by traditional costing
80
net sales value at split off point
For purposes of allocating joint costs to joint products, the sales price at point of sale, reduced by cost to complete after split-off, is assumed to be equal
81
Establishing objectives that will support the mission and vision of an organization generally involve supporting the mission with
Strategic objectives, supported by strategies and related objective
82
restricted stock option programs
may reward current performance but also emphasize future performance. The employee must typically stay through the option strike period and the option is only valuable if the stock price increases.
83
circuit level gateways
only allow data into a network that result from requests from computers inside the network.
84
Data entry and application programming (allocation)
Application programmers should not be allowed to enter data in production systems nor should they have unrestricted and uncontrolled access to application program change management systems. An application programmer is the person responsible for writing and/or maintaining application programs and should not be responsible for also controlling or handling data.
85
asymmetric encryption
uses a public key to encrypt messages and a private key to decrypt
86
profit center
responsible for revenues and costs
87
revenue center
responsible for revenues only
88
operating unit
division, not precisely defined
89
investment center
responsible for revenues, costs, and invested capital
90
Refinancing a short-term note payable with a two-year note payable would increase
working capital
91
investment turnover
sales/avg investment
92
if a multiperiod project has a positive NPV
then required rate of return is less than internal rate of return
93
If a product required a great deal of electricity to produce, and crude oil prices increased, what costs most likely increased?
conversion costs (includes direct labor and overhead)
94
Able Corporation owns numerous businesses along the coast of Florida. The company's management has identified business interruption events as a potential risk resulting from storm damages caused by hurricanes. The company elects to not only insure its properties but to "buy down" standard deductibles with additional premium. Able's response to potential risks is known as
sharing
95
risk appetite has generally been exceeded when
the likelihood and impact of negative events significantly exceeds residual risks
96
equivalent units for a period
completed and transferred out, + Ending WIP (%complete)
97
product cost
assigned to goods purchased or manufactured for resale
98
relevant costs
costs relevant to a particular decision
99
period costs
costs expensed during a period not charged to a product
100
opportunity costs
costs that would have been saved or profits that would have been earned if another decision had been made
101
weighted average and FIFO equivalent units would be the same when:
no beginning inventory exists
102
sequence of events in AIS:
1. Transaction data from source documents is entered by end user
2. Original source documents are filed
3. Transactions recorded in appropriate journal
4. Transactions are posted to the general and subsidiary ledgers
5. Trial balances are prepared
6. Financial reports are generated
103
authoritative standards
standards set by management without employee input
104
participative standards
standards set by management with collaborative input
105
ideal standards
based on optimum conditions
106
attainable standards
represent per unit budgets that assume normal conditions
107
underlying assumptions of cost-volume-profit
All costs can be divided into fixed and variable elements.
Volume is the only relevant factor affecting cost.
Selling prices are to be unchanged
108
variable costs include
direct materials, direct labor, delivery per unit, sales commissions
109
difference in net income using variable costing or absorption costing
will be the amount of fixed manufacturing cost per unit times change in inventory
110
The best basis upon which cost standards should be set to measure controllable production inefficiencies is
engineering standards based on attainable performance
111
As a company becomes more conservative in its working capital management, it tends to have an
Increase in the ratio of current assets to units of output
112
Refinancing of accounts payable with a two year note payable would:
increase working capital
113
working capital increases when:
current assets increase or current liabilities decrease
114
product demand is more elastic when:
more substitutes are available
115
to increase money supply, the Fed could
reduce the discount rate
116
a period of inflation increases:
price level, which is negatively related to purchasing power of money
117
a decrease in the average age of the workforce would cause:
frictional unemployment
| -younger workers tend to switch jobs
118
internal failure costs
tooling changes
119
appraisal costs
testing, quality checks, inspection
120
external failure costs
lost customers
121
prevention costs
preventative maintenance , employee training
122
globalization is often associated with :
comparative advantage and increased specialization
123
increased globalization is made possible by:
deregulation of international financial markets
reduced transportation costs
technological advancements
124
control chart
goalpost conformance, zero defects
125
ROI
Income/Investment
| Investment includes working capital + avg assets
126
cost of equity =
(Expected dividend/current share price) + Growth Rate
127
payback period method
uses expected cash flows, not annual income
128
financial leverage increases when
debt to equity ratio increases (use more debt)
129
effect on revenue if demand for a product is unit elastic
no effect
130
Under pure competition, strategic plans focus on
maintaining market share
| being responsive to the mkt conditions related to sales price
131
PEG ratio
=(Price / Earnings)/(Growth rate * 100)
132
performance of quality assurance occurs in the
implementation process, after the standard of quality has been defined
133
prime costs
direct labor + direct material
134
conversion cost
direct labor + manufacturing overhead
135
traditional costing application of overhead
1. calculated overhead rate = budgeted overhead costs/estimated cost driver
2. applied overhead = actual cost driver/ overhead rate
136
COGM
WIP Beg + DM used + Direct Labor + Mftg overhead applied = total costs available - WIP inventory, end = COGM
137
DM Used
Beg DM + purchases + Freight in - returns = Available - EI DM = materials used
138
COGS
FG Beg + COGM =COGAS - FG End Inventory= COGS
139
BASE
Beg Inventory Add purchases/ used Subtract materials used/ transferred Equals Ending Inventory
140
FIFO Equivalent units components
Beg WIP * (1-%complete) + EQU Started and completed - Beg WIP (total) + End WIP (% complete)
141
Weighted average equivalent units components
1) units completed during the month (beg WIP + units started and completed)
2) Units partially complete at the end of the period
142
An application programmer would have the responsibility to
code approved changes to a payroll program
143
Systems analysis is the first step in the systems development life cycle
xxx
144
cash conversion cycle =
inventory conversion period + receivables collection period - payables deferral period
145
he Federal Reserve use to reduce inflationary pressures
increase margin requirements
146
expansionary monetary policy
purchase securities and lower discount rate
147
the primary reason for a company to agree to a debt covenant limiting the percentage of its long-term debt is
to reduce the coupon rate on NEW bonds being sold
148
project sponsor
individual at the executive level of management who is responsible for allocating funding and resources to the project. The role of the project sponsor includes responsibility for overall project delivery.
149
transaction risk
potential to lose based on changes in the exchange rates
150
translation risk
risk that assets, liabilities, equity or income of consolidate organization that includes foreign subsidiaries will change as a result of changes in exchange rate
151
economic risk
potential that the present value of an organizations cash flows could increase or decrease as a result of changes in the exchange rates
152
valuation of start ups
price to sales ratio
153
causes on fishbone diagram
method
manpower
machinery
(NOT manufacturing overhead- that is an allocated cost)
154
at capacity, minimum price for a special order =
variable costs per unit + contribution margin of next best alternative
155
annuity due
BEG of period
156
event identification occurs
AFTER the development of objectives
157
PKI refers to
system and processes used to issue and manage asymmetric keys and digital certificates
158
Capital budgeting decisions include
- Selecting among long-term investment alternatives.
- Making investments that produce returns over a long period of time
- Financing large expenditures
159
The competitive model of supply and demand predicts that a surplus can only arise if there is a
Minimum price above the equilibrium price
160
Vertical linkage analysis
nderstanding the activities of the suppliers and buyers of the product and determining where value can be created external to the firm's operation
161
peak of a business cycle
- highest point of economic activity
- firms are likely to face capacity constraints and labor shortages, which will put upward pressure on the overall price level
162
project manager is responsible for
project administration on a day-to-day basis including identifying and managing internal and external stakeholder expectations
163
Code of Ethics issued as part of the IPPF applies to
both individuals and entities that provide internal auditing services
164
effective annual interest rate
(1 + std rate)/(#of periods ^ compounding periods)
165
high low method
1. (change in units high-low)/(change in cost) = unit price
2. costs - (variable costs)= fixed costs
3. combine based on units projected
