JCE Commerce & Accounting 26 cheat sheet

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Accrual basis recognizes revenue when earned and expenses when incurred, regardless of cash timing; cash basis uses cash movement.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Depreciation methods: straight-line = (cost − salvage) / useful life; double-declining = 2 × straight-line rate × beginning book value.

Inventory costing: FIFO assigns oldest costs to cost of goods sold; LIFO assigns newest; weighted average uses total cost / total units.

Lower of cost or net realizable value (LCNRV) writes inventory down when NRV falls below recorded cost.

Revenue recognition five steps: identify contract, identify performance obligations, determine price, allocate price, recognize when satisfied.

Current ratio = current assets / current liabilities; quick ratio excludes inventory and prepaids from current assets.

Statement of cash flows classifies cash flows as operating, investing, or financing; noncash transactions are disclosed separately.

Contribution margin = sales − variable costs; contribution margin ratio = contribution margin / sales.

Break-even units = fixed costs / unit contribution margin; break-even dollars = fixed costs / contribution margin ratio.

Target profit in units = (fixed costs + target profit) / unit contribution margin.

Product costs flow through raw materials, work in process, and finished goods; period costs are expensed as incurred.

Predetermined overhead rate = estimated total overhead / estimated allocation base (e.g., direct labor hours).

Underapplied overhead occurs when actual overhead exceeds applied overhead; overapplied is the reverse.

Relevant costs are future costs that differ among alternatives; sunk costs and allocated fixed costs are irrelevant.

Flexible budget restates budgeted amounts for actual activity volume, isolating volume versus price/spending variances.

Contract formation requires offer, acceptance, consideration, capacity, and legality; mutual assent must be objectively manifested.

UCC Article 2 governs sales of goods and relaxes common-law rules: firm offers by merchants, gap fillers, and the perfect tender rule.

Statute of Frauds requires writing for sale of goods over $500, land interests, suretyship, marriage consideration, and contracts not performable within one year.

Agency: principal is bound by agent's actual authority (express or implied) and apparent authority created by principal's manifestations.

Negotiable instrument requirements: writing, unconditional promise or order, fixed sum, payable on demand or at definite time, payable to order or bearer.

Secured transactions: attachment requires value given, debtor rights in collateral, and security agreement; perfection commonly by filing a financing statement.

Bankruptcy Chapter 7 is liquidation; Chapter 11 reorganization; Chapter 13 individual debt adjustment with a repayment plan.

Antitrust: Section 1 Sherman Act targets agreements restraining trade; Section 2 targets monopolization; Clayton Act addresses mergers and price discrimination.

Price elasticity of demand = % change in quantity demanded / % change in price; demand is elastic when absolute value exceeds 1.

GDP = C + I + G + (X − M); real GDP adjusts nominal GDP using a price index.

Monetary policy: central bank buying securities expands reserves and money supply; selling contracts them.

Fiscal policy: expansionary uses increased government spending or tax cuts; contractionary does the reverse.

Comparative advantage drives trade: a nation gains by specializing where its opportunity cost is lowest.

Phillips curve depicts short-run inverse relation between inflation and unemployment; long-run curve is vertical at natural rate.

Exchange rate appreciation makes exports dearer and imports cheaper, tending to worsen the trade balance.

Business cycle phases: expansion, peak, contraction (recession), trough; frictional, structural, and cyclical unemployment are distinct types.

Management functions: planning, organizing, leading, controlling; controlling compares performance to standards and takes corrective action.

Span of control: narrow spans create tall hierarchies with more levels; wide spans create flat structures.

Division of labor raises efficiency but creates coordination costs requiring integration mechanisms.

Maslow's hierarchy orders needs physiological, safety, social, esteem, self-actualization; lower needs dominate until satisfied.

Expectancy theory: motivation = expectancy × instrumentality × valence; any factor at zero yields no motivation.

Fiedler contingency model matches leader style (task- or relationship-oriented) to situational favorableness.

SWOT analysis pairs internal strengths and weaknesses with external opportunities and threats.

Unity of command means each employee reports to one supervisor; violating it produces conflicting directives.

Time value: present value = future value / (1 + r)^n; future value = present value × (1 + r)^n.

Net present value discounts all cash flows at the required rate; accept projects with NPV greater than zero.

Internal rate of return is the discount rate making NPV zero; accept when IRR exceeds the hurdle rate.

Regression line y = a + bx; slope b measures change in y per unit change in x; R-squared measures explained variation.

Expected value = sum of (probability × outcome); standard deviation measures dispersion around that expected value.

Internal controls: segregation of duties, physical safeguards, authorization, reconciliation, and independent verification.

Batch processing accumulates transactions for periodic runs; online real-time processing updates records immediately.

Data hierarchy: bit, byte/field, record, file/table, database; a primary key uniquely identifies each record.

Sampling risk is the chance a sample misrepresents the population; nonsampling risk stems from human or procedural error.