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27 Cards in this Set
- Front
- Back
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The rate of unemployment caused by changes in the composition of employment opportunities over time.
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Structural unemployment
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Personal Income components
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National income plus transfer payments less corporate taxes, undistributed profits, and social security contributions
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The concept that the cost of internal control should not exceed the benefits expected to be derived
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Reasonable Assurance
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The expressing of all financial statement figures as a percentage of base-year figures is called...
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Horizontal common size analysis
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Sherman Act
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Sherman Act of 1890 makes illegal every contract, combination, or conspiracy to restrain trade in interstate or foreign commerce.
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The Clayton Act Prohibits
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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 |
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Economic Profit
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Sales Revenue - Explicit Costs - Implicit Costs
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Indifference Curve
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Represents all possible combinations of two different products quantities that will yield the same level of satisfaction to the consumer
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Constant Dollar Financial Statements
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Monetary items consist of assets and liabilities whose amounts are fixed by contract or otherwise in terms of dollars, regardless of price-level changes.
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Sampling Risk
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Probability that a conclusion based on a sample might be different than a conclusion based on an audit of the entire population
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Edit Programs
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Routines that utilize the computer to check the validity and accuracy of transaction data during input
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Markhov Process
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Future of the process depends only on the current state and not upon the history of the process
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Net Domestic Product
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Gross Domestic Product less Depreciation
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Book Value Per Share
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(Total Shareholder Equity - Preferred Equity) / total share outstanding
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Calculate GDP using the "expenditure approach"
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GDP = Personal Consumption + Gross Private Domestic Investment + Government purchases + Net Exports
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Define Countertrade
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Deal to purchase goods from the exporter while at the same time the exporter agrees to purchase back goods from the importer
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Circumstances where an auditor may issue an unqualified opinion with an explanatory paragraph
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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 |
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Dividend Yield formula
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Annual dividends per common share divided by the latest market price per share
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Earnings quality is affected by
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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 |
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As the interest rate increases, demand for money
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decreases
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Organizational independence is achieved by separation of the four basic accounting functions. What are these functions?
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1. Authorization
2. Record Keeping 3. Custody of Assets 4. Periodic reconciliation |
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Internal Control Components
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1. Control Environment
2. Risk Assessment 3. Control Activities 4. Information and Communication 5. Monitoring |
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Financial Statement Assertion Categories
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1. Existence
2. Completeness 3. Rights and Obligations 4. Valuation and Allocation 5. Presentation and Disclosure |
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How are bank reserves affected by the Federal Reserve's open market activities?
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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.
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What does solvency measure?
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A company's long-term liquidity
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What is lapping?
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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.
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Sustainable Equity Growth Rate formula
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Net Margin x Asset Turnover x Leverage x Retention %
where Leverage = Assets / Equity |
