GISI Intermediate - independent subject foundations cheat sheet

Distinguish a budget flow, a debt stock and the financing transactions.

A bank loan can create a corresponding deposit; a 1/r multiplier is a deliberately simplified model.

Policy rates influence, but do not equal, every retail borrowing rate.

Real and nominal measures need the relevant price index and base normalization.

Spending and tax multipliers require their model and sign conventions.

An index-point change is not automatically an equal percentage change.

State the initial-base, midpoint or point elasticity convention.

A sample standard error differs from individual-observation dispersion.

Correlation and fitted prediction do not by themselves establish causation.

Use exact growth-factor ratios when precision matters.

Cost of sales includes carriage inwards and excludes carriage outwards

Closing inventory affects both the trading account and the balance sheet

Drawings reduce capital and are never an expense

An increase in the doubtful debts provision is charged to profit and loss

Capital = opening capital + net profit − drawings

Issued capital and actual cash received are different concepts.

Share premium in the supplied par-value model is not sales revenue.

Distinguish equity distributions from interest on liabilities.

Prime cost includes direct materials consumed, direct labour and direct expenses

Cost of production adds production overheads and adjusts for work in progress

Selling and administration costs are not production costs

Inventory is valued at the lower of cost and net realisable value

Define incremental cash flows and the valuation date.

Discount rate, cash-flow timing and risk assumptions must be consistent.

NPV, IRR, payback and accounting return measure different things.

Expected value does not eliminate downside or estimation uncertainty.

Supplied model rates are not current market or tax facts.

Separate instrument claims, timing, fees and risk.

Expected return is not a guaranteed outcome.

Covariance matters for portfolio volatility and diversification has limits.

Use coherent cash-flow, benchmark and valuation assumptions.

State direction, size, timeline and contract assumptions.

Payoff differs from profit after premiums and costs.

Hedging can introduce basis, liquidity and counterparty risk.

Margin is collateral and does not generally cap losses.

Expected loss is an average under a stated model, not a maximum.

VaR does not bound losses or fully describe the tail.

Funding and market liquidity can deteriorate together.

Validate models and monitor assumptions, data and intended use.