Wiley_CPAexcel Exam Review 2015 Focus Notes_Business Environment and Concepts

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Electronic CommerceElectronic commerce using electronic data interchange or EDI adds to the complexity of auditing.EDI enables: Communication without the use of paper Electronic funds transfers and sales over the Internet Simplification of the recording process using scanning devices Sending information to trading partners as transactions occurEDI transactions are formatted using strict standards that have been agreed to worldwide, oftenrequiring companies to acquire translation software.Focus onInformation Technology—Module 41 28
Risks of E-CommerceElectronic commerce increases the risk of improper use of information. Controls might include: Data encryption Controls to prevent electronic eavesdroppingThere is also the risk of improper distribution of transactions with information being electronicallytransmitted to an inappropriate company. Controls might include: Routing verification procedures Message acknowledgement proceduresThe reduction in the paper audit trail associated with EDI creates special challenges to the auditor. Detection risk may not be sufficiently reduced through substantive testing Control risk must be reduced adequately to achieve an acceptable level of audit risk Controls must be built into the system to insure the validity of information capturedFocus onInformation Technology—Module 41 29
Page 3: 2015WileyCPAexcel®EXAM REVIEWFOCUS
Page 6 and 7: Cover Design by WileyCover image:
Page 9 and 10: PREFACEThis publication is a compre
Page 11: ABOUT THE AUTHORRay Whittington, Ph
Page 14 and 15: Incentives to Defeat Agency Problem
Page 16 and 17: Incentives to Defeat Agency Problem
Page 18 and 19: Internal ControlsCOSO: Internal Con
Page 20 and 21: Internal Controls (continued)
Page 22 and 23: Internal Controls (continued)
Page 24 and 25: Enterprise Risk Management: Eight C
Page 26 and 27: Enterprise Risk Management: Limitat
Page 28 and 29: Benefits of ITConsistency—Compute
Page 30 and 31: Systems Design and Process Improvem
Page 32 and 33: HardwareHardware is the actual elec
Page 34 and 35: Storage DevicesMagnetic tape—Inex
Page 36 and 37: SoftwareSoftware is either system s
Page 38 and 39: Types of Computer SystemsTransactio
Page 42 and 43: NetworksIn a computer network, comp
Page 44 and 45: The Internet (continued)To make use
Page 46 and 47: Networks and Control RiskTo minimiz
Page 48 and 49: Control Objectives for Information
Page 50 and 51: Organization in a Segregated Depart
Page 52 and 53: Other Technical ServicesOther techn
Page 54 and 55: General ControlsGeneral controls en
Page 56 and 57: Application ControlsApplication con
Page 58 and 59: Edit TestsEdit tests scrutinize dat
Page 60 and 61: Output ControlsOutput controls ensu
Page 62 and 63: Controls Over MicrocomputersMicroco
Page 64 and 65: ECONOMIC CONCEPTSDemand CurveAs the
Page 66 and 67: Positive Demand Curve ShiftCertain
Page 68 and 69: Elasticity of DemandPrice Elasticit
Page 70 and 71: Supply CurveAs the price of a produ
Page 72 and 73: Factors Causing a Supply Curve Shif
Page 74 and 75: Short-Run Costs of ProductionOver s
Page 76 and 77: Measures of Economic ActivityGross
Page 78 and 79: Measuring Price InflationThere are
Page 80 and 81: Cost-Push InflationWhen production
Page 82 and 83: Business CycleExpansion—Periods o
Page 84 and 85: UnemploymentThe unemployment rate i
Page 86 and 87: Government Involvement in the Econo
Page 88 and 89: Obstacles to Free TradeFree trade i
Page 90 and 91:
Foreign Exchange RatesThe value of
Page 92 and 93:
Expected ReturnsFINANCIAL RISK MANA
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Standard DeviationThe most common m
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Portfolio RiskThe SD of a portfolio
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Yield CurveThe interest rate charge
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Risks Associated with DerivativesDe
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Valuing DerivativesFor derivatives
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CAPITAL BUDGETINGUsed to evaluate c
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Accounting Rate of ReturnIncrease i
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Net Present ValueAfter-tax net cash
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Relevant CostingIncrease or decreas
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Working Capital ManagementInventory
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Marketable SecuritiesTo maximize ea
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Inventory ManagementEconomic Order
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Just-in-Time (JIT) PurchasingCosts
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Receivables ManagementA company set
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Debt CovenantsBorrowers often must
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Provisions Affecting Repayment of B
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Variations on Bond InterestZero-cou
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Preferred StockPreferred stock shar
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Cost of CapitalDebt—The cost of d
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MergersHorizontal merger—When a f
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PERFORMANCE MEASURES ANDMANAGEMENT
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Value-Based ManagementReturn on Inv
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Business Process Management: Focus
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Asset Utilization RatiosReceivable
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Market RatiosPrice/Earnings (PE) Ra
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Quality ControlISO Quality Standard
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Cost of Quality (continued)3. Inter
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Project Management (continued)Effec
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Project Management (continued)3. Pr
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Cost Classifications (continued)Var
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Manufacturing Overhead1. Calculate
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Job Order CostingUsed when units ar
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Process Costing (continued)Process
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Process Costing (continued)4. Costs
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Activity Based Costing (ABC)Method
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Cost EstimationCalculating Total Co
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Regression AnalysisCoefficient of c
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PLANNING, CONTROL, AND ANALYSISFlex
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Preparing a Master Budget1. Estimat
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Standard CostingMaterial VariancesS
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Standard Costing (continued)Overhea
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Transfer PricingTransfer price—pr
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Graphical Approach to Breakeven$FCO
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Joint Product Costing (continued)Al
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Product and Service PricingFactors
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Costing Methods, 141Cost-push infla
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Performance Measures, 122Planning,
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Wiley_CPAexcel Exam Review 2015 Focus Notes_Business Environment and Concepts

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