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27 Cards in this Set

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The rate of unemployment caused by changes in the composition of employment opportunities over time.
Structural unemployment
Personal Income components
National income plus transfer payments less corporate taxes, undistributed profits, and social security contributions
The concept that the cost of internal control should not exceed the benefits expected to be derived
Reasonable Assurance
The expressing of all financial statement figures as a percentage of base-year figures is called...
Horizontal common size analysis
Sherman Act
Sherman Act of 1890 makes illegal every contract, combination, or conspiracy to restrain trade in interstate or foreign commerce.
The Clayton Act Prohibits
Mergers that inhibit competion
Acquisition of stock that may lessen competition
Sales requirements that prevent buyer from dealing with competition
Tie-in sales
Price discrimination between buyers
Sitting as director of a competitor in certain situations
Economic Profit
Sales Revenue - Explicit Costs - Implicit Costs
Indifference Curve
Represents all possible combinations of two different products quantities that will yield the same level of satisfaction to the consumer
Constant Dollar Financial Statements
Monetary items consist of assets and liabilities whose amounts are fixed by contract or otherwise in terms of dollars, regardless of price-level changes.
Sampling Risk
Probability that a conclusion based on a sample might be different than a conclusion based on an audit of the entire population
Edit Programs
Routines that utilize the computer to check the validity and accuracy of transaction data during input
Markhov Process
Future of the process depends only on the current state and not upon the history of the process
Net Domestic Product
Gross Domestic Product less Depreciation
Book Value Per Share
(Total Shareholder Equity - Preferred Equity) / total share outstanding
Calculate GDP using the "expenditure approach"
GDP = Personal Consumption + Gross Private Domestic Investment + Government purchases + Net Exports
Define Countertrade
Deal to purchase goods from the exporter while at the same time the exporter agrees to purchase back goods from the importer
Circumstances where an auditor may issue an unqualified opinion with an explanatory paragraph
1. substantial doubt about an entity's ongoing concern status accounted for in conformity with GAAP
2. an opinion based in part by the report of another auditor
3. uncertainty accounted for in conformity with GAAP
Dividend Yield formula
Annual dividends per common share divided by the latest market price per share
Earnings quality is affected by
1. choices management makes among alternative accepted accounting principles
2. provisions for maintenance of assets and spending on advertising and research
3. the effect of cyclical or economic forces
As the interest rate increases, demand for money
decreases
Organizational independence is achieved by separation of the four basic accounting functions. What are these functions?
1. Authorization
2. Record Keeping
3. Custody of Assets
4. Periodic reconciliation
Internal Control Components
1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
Financial Statement Assertion Categories
1. Existence
2. Completeness
3. Rights and Obligations
4. Valuation and Allocation
5. Presentation and Disclosure
How are bank reserves affected by the Federal Reserve's open market activities?
When the Federal Reserve sells a security, it receives the buyer's check drawn upon its own deposits in a commercial bank. The Federal Reserve presents the check to the bank for payment, thus the commercial bank's reserves are reduced.
What does solvency measure?
A company's long-term liquidity
What is lapping?
Lapping is a means of concealing a cash shortage by manipulating credits to the accounts receivable ledger. To accomplish this, the employee must have access to the incoming cash receipts, the cash receipts journal, and the detailed accounts receivable journal.
Sustainable Equity Growth Rate formula
Net Margin x Asset Turnover x Leverage x Retention %
where Leverage = Assets / Equity