Term
| Carrie Ran Cattle in Montana (COSO) |
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Definition
Five elements of internal control:
-Control env. (tone at the top)
-Risk management
-Control activities (policies and procedures)
-Information and communication
-Monitoring (data and systems) |
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Term
| HIS CPA Responsibility (Control env. elements) |
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Definition
Control environment elements:
-HR policies and practices
-Integrity and ethical values
-Structure of org. (size and mission)
-Commitment to competence
-Philosophy and operating style of management
-Assignment of authority and responsibility |
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Term
| TIPPSI (Control activities) |
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Definition
Control activities:
-Top-level reviews (actual vs. budget)
-Interacting daily with managers of line personnel
-physical controls
-Performance indicators,
-segregation of duties,
-information processing. |
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Term
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Definition
Foundation (tone at the top, org. structure, IC effectiveness)
Design and execute monitoring procedures (prioritize risks, identify controls, identify persuasive information, implement monitoring procedures)
Assess and report results (prioritize findings, report to appropriate levels, follow up on corrections) |
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Term
| Studying Obsessively Really Counts (when safeguarding assets) (COSO Risk Mgmt. Framework) |
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Definition
Strategic objectives = mission.
Operations address effectiveness and efficiency. |
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Term
| IPPEN (determinants of demand) |
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Definition
Incomes of consumers (normal and inferior goods)
Preferences of consumers
Prices of related goods (substitutes vs. complements)
Expectations of consumers
Number of consumers |
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Term
| CNET (determinants of supply) |
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Definition
Costs of inputs (increased costs shifts supply curve leftward)
New technologies (rightward)
Expectations about price changes (rightward if expected increase)
Taxes and subsidies (rightward for T decrease or S increase) |
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Term
| What are the hazards of the kinked demand theory? (SLMC) |
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Definition
Small increase in price leads to a large decline in Qd (elastic portion).
Large price decrease is needed to generate even a modest increase in sales (inelastic portion).
Marginal revenue falls drastically upon the occurrence of a small price cut. Competitors must also reduce their prices so that the first firm gains no market share. |
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Term
| Stalin's Red Influence Promoted Communism (national income (NI)) |
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Definition
salaries and wages
rents
interest
proprietor and partnership incomes
corporate profits |
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Term
| I Bought Two Nets For Fishing Income (NDP) |
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Definition
Indirect business taxes and net foreign factor income.
NDP = GDP – capital consumption allowance (amount of capital stock consumed in the process of generating income (depreciation of capital)) |
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Term
| causes of a recession (CIM) |
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Definition
consumer confidence declines
innovations have a destabilizing effect on the economy
miscalculation in fiscal or monetary policy. |
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Term
| Creativity Increases Germany's Net eXports |
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Definition
C- largest portion; determine by incomes
I- most volatile portion; inversely related to interest rate
G- transfer payments; Soc. Sec. not included)
Net exports (NX) = exports (X) – imports (M) |
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Term
| WASP (determinants of supply (AS)) |
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Definition
-Workforce competence = more education and training = more productivity
-Amount of capital. more capital = more automation = more productivity.
-State of technology = more technology = more productivity.
-Productivity (real GDP / hours worked). More work per hour = more productivity. |
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Term
| tools of monetary policy (OFD) |
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Definition
open-market operations-purchase Treasury securities (to loosen the money supply for predicted recession (inject money) and take securities off the market (fed. funds rate falls)), or sell Treasury securities (to tighten the money supply for predicted high inflation and give securities in exchange (fed. funds rate rises))
federal funds rate- rate at which banks loan to each other to keep each other above the required reserve ratio
discount rate- rate at which the Fed loans money to commercial banks short-term |
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Term
| negative economic effects of tariffs and quotas (WRIT) |
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Definition
workers shifted from efficient export industries to less efficient protected industries.
real wages and total output decline
Import quotas are not equal for all importers.
Tariffs go to government officers. |
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Term
| What must a firm do to address transaction exposure (EMU)? |
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Definition
Estimate its net cash inflows
If inflows and outflows are equal, transaction exposure is minimal.
Measure potential effect of exposure
Use hedging tools to mitigate exposure to exchange rate fluctuations |
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Term
| exposure to translation risk determined by (PLA) |
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Definition
proportion of total business conducted by foreign subsidiaries (over 1/2 = high risk)
location of foreign subsidiaries
applicable accounting method |
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Term
| aspects of regression analysis (LAD) |
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Definition
Linear relationship between x and y is only valid across the relevant range.
Assumes that past relationships can be validly projected into the future.
Does not determine causality. |
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Term
| advantages to issuers of common stock (DCT) |
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Definition
Dividend paid by profits, not a fixed dividend.
Common stock carries no fixed maturity date for repayment of capital.
The sale of common stock increases the creditworthiness of the firm by providing more equity. |
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Term
| disadvantages to issuers of common stock (CNUT) |
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Definition
Cash dividends on common stock are not tax-deductible and must be paid out of after-tax profits.
New common stock sales dilute earnings per share available to existing shareholders.
Underwriting costs are typically higher common stock issues.
Too much equity may raise the average cost of capital of the firm above its optimal level. |
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Term
| accrued liabilities (SWIDT) |
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Definition
| salaries, wages, interest, dividends, and taxes payable- are another source of interest-free spontaneous financing. |
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Term
| Keynes' three motives for holding cash (TPS) |
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Definition
transactional motive (medium of exchange)
precautionary motive (cushion for unexpected contingencies)
speculative motive (take advantage of unexpected opportunities) |
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Term
| assumptions underlying the EOQ model (DON) |
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Definition
Demand or production is uniform (and periodic demand is known).
Order (setup) costs and carrying costs are constant.
No quantity discounts are allowed. |
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Term
| capital budgeting requirements (IDPR) |
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Definition
Companies must:
Identify appropriate projects,
Determine level of required resources,
Predict expected amounts and timing of returns, and
Rank the desirability of alternative projects. |
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Term
| four major tasks of information systems (ITOS) |
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Definition
capture, convert, communicate, store
input- capture data
transformation- convert data into information
output- communicate data to people
storage- of data in database |
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Term
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Definition
| Plan (need for new system recognized), analyze (definition), design, build/buy (development), implementation, deploy (maintenance). |
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Term
| advantages to outsourcing IT (ASACFA) |
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Definition
| access to expertise, superior service quality, avoidance of changes in the organization's IT infrastructure, cost predictability, freeing of human and financial capital, and avoidance of fixed costs. |
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Term
| disadvantages to outsourcing IT (ILVD) |
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Definition
| inflexibility of the relationship, the loss of control, vulnerability of important information, and often dependency on a single vendor. |
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Term
| four main domains of COBIT (PADM) |
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Definition
| planning and organization, acquisition and implementation, delivery and support, monitoring |
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Term
| Control Objectives for Information and Related Technology (COBIT) |
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Definition
| best known control and governance framework that addresses IT |
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Term
| enablers & categories of enablers (PPOCISP) |
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Definition
principles, policies, and frameworks
processes
organizational structures
culture, ethics, and behavior
information
services, infrastructure, and applications
people, skills, and competencies |
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Term
| 3 principal goals for IS programs (CIA) |
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Definition
| confidentiality, integrity, availability of data |
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Term
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Definition
Establishing standards of performance (the budget)
Measuring actual performance
Analyzing and comparing performance with standards
Devising and implementing corrective actions
Reviewing and revising the standards |
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Term
| four types of SBUs (CRIP) |
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Definition
| cost center, revenue center, investment center, profit center |
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Term
| steps in TOC analysis (IDMIR) |
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Definition
Identify constraint
Determine most profitable product mix given constraint
Maximize flow through constraint
Increase capacity at the constraint
Redesign the mfg. process for greater flexibility and speed |
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Term
| Fishbone/cause-and-effect diagrams (HOPS) |
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Definition
TQM process improvement technique useful in studying causation (why actual and desired situations differ)
Head of skeleton represents statement of problem.
Organizes the analysis of causation and helps to identify possible interactions among causes.
Principal classification of causes are represented by lines (bones) drawn diagonally from the heavy horizontal line (spine).
Smaller horizontal lines are added in their order of profitability in each classification. |
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Term
| kinds of benchmarking (PICS) |
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Definition
organizations with similar processes regardless of industry.
This method may introduce new ideas that produce a significant competitive advantage.
Internal- application of best practices in one part of the organization to its other parts
Competitive- studies organization in the same industry
Strategic- search for successful competitive strategies |
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