KASNEB CS33 flashcards
KASNEB CS33 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Accounting equation
- Assets equal liabilities plus owner's equity; every transaction preserves this balance by affecting at least two accounts.
- Accrual basis
- Revenues and expenses are recognised when earned or incurred, not when cash is received or paid, matching income to the period it relates to.
- Straight-line depreciation
- Annual depreciation equals cost minus residual value, divided by useful life; it allocates an asset's depreciable amount evenly over its service period.
- Trial balance
- A list of ledger balances at a date, with total debits expected to equal total credits; it detects arithmetic errors but not errors of principle or omission.
- Bank reconciliation
- Process reconciling the cash book balance to the bank statement by adjusting for timing differences, unpresented cheques, deposits in transit and bank charges.
- Current ratio
- Current assets divided by current liabilities; it measures short-term liquidity and the ability to meet obligations falling due within one year.
- Going concern
- Financial statements are prepared assuming the entity will continue operating for the foreseeable future without liquidation or forced cessation.
- Time value of money
- A shilling today is worth more than a shilling later because it can earn interest; future value equals present value times (1+r)^n.
- Net present value
- Sum of discounted future cash flows minus initial investment; a positive NPV means the project adds value at the given cost of capital.
- Internal rate of return
- Discount rate at which a project's NPV equals zero; accept a project when the IRR exceeds the required rate of return.
- WACC
- Weighted average of equity and after-tax debt costs using market-value weights; used as the discount rate for average-risk projects.
- Capital asset pricing model
- Required return equals the risk-free rate plus beta multiplied by the market risk premium; beta measures systematic risk.
- Gordon growth model
- Share value equals next year's dividend divided by cost of equity minus dividend growth rate; assumes constant perpetual growth.
- Five Cs of credit
- Character, capacity, capital, collateral and conditions; a framework for assessing a borrower's willingness and ability to repay debt.
- Credit score
- A numerical rating derived from payment history, debt levels and credit history; higher scores generally indicate lower default risk.
- Days sales outstanding
- Days sales outstanding equals receivables divided by credit sales, multiplied by 365; it shows average days taken to collect credit sales.
- Cost of forgoing discount
- Annualised cost equals discount rate divided by one minus discount rate, multiplied by 365 divided by extra credit days.
- Aging schedule
- Classifies receivables by time outstanding, such as 0-30, 31-60 and over 90 days, to highlight overdue balances and collection risk.
- Non-performing loan ratio
- Non-performing loans divided by total gross loans; measures the proportion of the loan book that is overdue or doubtful.
- Agency problem
- Conflict arising when managers, as agents, pursue personal interests rather than shareholders' interests because ownership and control are separated.
- Corporate governance
- System of rules, practices and processes by which a company is directed and controlled, covering accountability, transparency, fairness and responsibility.
- Audit committee
- Board committee of independent directors overseeing financial reporting, external audit and internal controls; it strengthens objectivity and reduces management override.
- Internal control
- Process designed to provide reasonable assurance on reliable reporting, effective operations and compliance; components include control environment, risk assessment, control activities, information and monitoring.
- Segregation of duties
- No single person should control all stages of a transaction; separating authorisation, custody, recording and reconciliation reduces fraud and error risk.
- SWOT analysis
- Framework assessing internal strengths and weaknesses plus external opportunities and threats to inform strategy formulation and resource allocation.
- Risk treatment options
- Avoid, reduce, transfer or accept; chosen after identifying and assessing risks against the organisation's risk appetite and cost-benefit.
- CIA triad
- Confidentiality, integrity and availability; the three core goals of information security used to classify and evaluate controls.
- Encryption
- Converts plaintext into ciphertext using a key so only authorised parties can read it; symmetric uses one key, asymmetric uses a key pair.
- Hashing
- Produces a fixed-length digest from data; any change alters the digest, so hashing verifies integrity but does not provide confidentiality.
- RTO and RPO
- Recovery time objective is the maximum acceptable downtime; recovery point objective is the maximum acceptable data loss measured in time.
- Firewall
- Filters network traffic against rules to block unauthorised access while permitting approved traffic between networks or security zones.
- 3-2-1 backup rule
- Keep at least three copies of data, on two different media types, with one copy stored offsite to improve recovery from loss.