KASNEB CS33 cheat sheet

Accounting equation: Assets = Liabilities + Equity; every transaction has a dual effect that keeps the equation in balance.

A debit entry increases assets and expenses; a credit entry increases liabilities, equity and income.

Accrual basis recognises income when earned and expenses when incurred; cash basis recognises them when cash moves.

Straight-line depreciation = (Cost − Residual value) ÷ Useful life; reducing-balance depreciation = Net book value × Rate.

Trial balance errors not revealed include error of omission, error of commission, error of principle, compensating error and error of original entry.

Bank reconciliation adjusts for unpresented cheques, deposits not yet credited, bank charges, standing orders and dishonoured cheques.

Current ratio = Current assets ÷ Current liabilities; quick ratio = (Current assets − Inventory) ÷ Current liabilities.

Gross profit margin = Gross profit ÷ Sales; net profit margin = Net profit ÷ Sales; return on capital employed = Operating profit ÷ Capital employed.

Future value = PV(1+r)^n; present value = FV ÷ (1+r)^n.

NPV = Σ [CFt ÷ (1+r)^t] − Initial outlay; accept independent projects with NPV > 0.

IRR is the discount rate that makes NPV = 0; accept a project when IRR exceeds the cost of capital.

WACC = (E/V)Ke + (D/V)Kd(1−t), where V = E + D and t is the corporate tax rate.

CAPM: Ke = Rf + β(Rm − Rf); beta measures systematic risk relative to the market.

Gordon growth model: P0 = D1 ÷ (Ke − g), valid when g < Ke.

Payback period = time for cumulative cash inflows to equal initial outlay; ARR = average annual profit ÷ average investment.

Working capital = Current assets − Current liabilities; a positive working capital cycle requires financing.

Five Cs of credit: Character, Capacity, Capital, Collateral and Conditions.

Cost of forgoing a cash discount = [d ÷ (1−d)] × [365 ÷ (N−D)], where credit terms are d/D net N.

Days sales outstanding = (Trade receivables ÷ Credit sales) × 365.

An aging schedule buckets receivables by days outstanding to identify overdue accounts and collection risk.

NPL ratio = Non-performing loans ÷ Total gross loans.

Credit risk mitigants include collateral, guarantees, covenants, credit insurance, netting and exposure limits.

A higher credit score generally indicates a lower probability of default; scores combine payment history, leverage and repayment capacity.

Credit policy variables include credit standards, credit terms, collection effort and credit limits.

Corporate governance principles: accountability, transparency, fairness and responsibility.

The agency problem arises from separation of ownership and control; it is mitigated by board oversight, incentives and disclosure.

Board committees commonly include audit, risk, remuneration and nomination; the audit committee should comprise independent directors.

COSO internal control components: control environment, risk assessment, control activities, information and communication, and monitoring.

Segregation of duties separates authorisation, custody, recording and reconciliation.

Risk treatment options are avoid, reduce, transfer and accept; selection depends on risk appetite and cost-benefit analysis.

SWOT covers strengths, weaknesses, opportunities and threats; PESTLE covers political, economic, social, technological, legal and environmental factors.

Management functions: planning, organising, leading and controlling.

Porter's five forces: competitive rivalry, threat of new entrants, threat of substitutes, supplier power and buyer power.

CIA triad: confidentiality, integrity and availability.

AAA: authentication verifies identity, authorisation grants access rights and accounting records activity.

Symmetric encryption uses one shared key; asymmetric encryption uses a public-private key pair.

Hashing produces a fixed-length digest for integrity checking; it is not encryption and does not hide data.

RTO = maximum acceptable downtime; RPO = maximum acceptable data loss measured in time.

3-2-1 backup rule: at least three copies, on two media types, with one copy offsite.

Cloud models: IaaS provides infrastructure, PaaS provides platforms and SaaS provides applications; customer responsibility decreases from IaaS to SaaS.

A firewall filters traffic by rules; an IDS detects suspicious activity; an IPS can block it.