China Securities Analyst Competency Test - independent subject foundations key terms

A framework classifying growth options by existing or new products and markets. It supports comparison of strategic changes, but the actual risk depends on capabilities, commitment and the particular situation.

The long-term plan of action a firm adopts to achieve its objectives and gain advantage over rivals, given its resources and environment. It involves choices about markets, products and methods of competing.

A review of a firm's internal strengths and weaknesses and external opportunities and threats. It informs strategy by matching capabilities to the environment, though it can become a static list if not updated.

An examination of political, economic, social and technological influences on a business. It helps anticipate external change and shape strategy, but it is descriptive and does not by itself prescribe action.

Acquiring control of another business by buying enough of its shares, often as a faster route to growth than internal expansion. It brings immediate capacity but risks overpaying and clashing cultures.

The joining of two businesses into a single organisation, usually presented as a partnership of equals. It can create synergies and market power, but integration problems often erode the expected benefits.

Estimated amount of receivables expected to be irrecoverable, charged to profit or loss and deducted from trade receivables in the statement of financial position.

A receivable removed as irrecoverable under the applicable model. The entry may use an existing allowance or an expense, so do not automatically charge an amount a second time.

Cash, goods or other assets taken from the business by the owner for personal use, deducted from capital rather than treated as an expense of the business.

A debt instrument issued by an entity, creating borrowing rather than ordinary equity. Maturity, security, interest terms and measurement depend on the instrument and applicable accounting model.

In a supplied par-value share model, the amount received above nominal share value, credited separately within equity. It is not customer sales revenue; legal distribution restrictions require local verification.

Free shares issued to existing shareholders by capitalising reserves such as share premium or retained earnings, increasing share capital without raising new cash.

Account calculating cost of goods produced: direct materials consumed, direct labour, direct expenses and production overheads, adjusted for work in progress, with the result transferred to the trading account.

Partly completed units or unfinished production at the period end, valued at cost and deducted from total manufacturing cost so only finished output is transferred to the trading account.

Systematic allocation of the depreciable cost of a non-current asset over its useful life, reflecting consumption of economic benefit rather than a fall in market value.

Depreciation method charging a fixed percentage on the asset's net book value each year, giving higher charges early in the asset's life and a declining charge thereafter.

Temporary account used when a non-current asset is sold, receiving the asset's cost and accumulated depreciation and the sale proceeds, with the balance transferred to profit or loss.

Statement classifying cash movements into operating, investing and financing activities to explain the change in cash and cash equivalents over the period.

Profit before interest and tax divided by capital employed, showing how efficiently long-term funds have been used to generate operating profit.

Operating profit divided by interest payable, indicating how many times the business could pay its finance costs from current profit; a low figure signals financial risk.

Costing method that assigns both variable and fixed production overheads to units produced, usually through predetermined overhead absorption rates, so inventory includes a share of fixed cost.

Costing method charging only variable costs to units, treating fixed costs as period costs, and using contribution to judge profitability and short-term decisions.

Selling price less variable cost per unit, the amount each unit contributes towards covering fixed costs and then generating profit; used in break-even and limiting-factor decisions.

Level of sales at which total contribution equals fixed costs, so the business makes neither profit nor loss, expressed in units or in revenue.

A future cash flow that differs between the alternatives under consideration, including opportunity costs but excluding already unavoidable sunk expenditure.

Sales revenue less variable costs within the stated decision model; it first covers fixed costs before producing an operating profit.

A scarce resource that restricts feasible activity, requiring comparison of contribution per unit of that resource when the assumptions justify it.

A budget recalculated for a specified activity level using the applicable cost behavior assumptions, allowing more meaningful performance comparisons.

An approach assigning resource costs to activities and then to products using drivers reflecting their consumption of those activities.

The allowable cost derived from a market-based price less the desired profit, used to investigate design and process alternatives.