Myanmar DA Part I Module II flashcards

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 equity. Every transaction affects at least two elements but keeps the equation balanced, which underpins the double-entry system and the statement of financial position.

Accrual concept

Revenue is recognised when it is earned and expenses when they are incurred, regardless of when cash is received or paid. It matches costs with the income they helped generate.

Straight-line depreciation formula

Annual charge equals cost minus estimated residual value, divided by the expected useful life in years. The same amount is charged each period, so the carrying amount falls evenly.

Net realisable value

The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventory is held at the lower of cost and this amount.

Trial balance limitations

A trial balance proves only that total debits equal total credits. It does not reveal errors of principle, complete omission of a transaction, compensating errors, or a posting to the wrong account of the same class.

Current ratio

Current assets divided by current liabilities. It measures short-term liquidity; a result below one indicates that obligations falling due within a year exceed the resources available to settle them.

Bank reconciliation statement

A schedule explaining differences between the cash book and the bank statement, such as unpresented cheques, deposits not yet credited, bank charges and errors, so as to arrive at an agreed corrected balance.

Simple interest formula

Interest is calculated only on the original principal: I equals P multiplied by r multiplied by t, where r is the annual rate written as a decimal and t is the time in years.

Break-even point in units

Fixed costs divided by contribution per unit, where contribution equals selling price minus variable cost per unit. It is the sales volume at which total revenue equals total cost and profit is zero.

Net present value rule

Discount all expected cash flows at the cost of capital and subtract the initial outlay. Accept the project when the result is positive; among mutually exclusive projects choose the highest positive value.

Coefficient of variation

The standard deviation divided by the arithmetic mean, usually expressed as a percentage. It compares relative dispersion between data sets whose means or measurement units differ.

Laspeyres price index

A weighted price index using base-period quantities: the sum of current prices times base quantities, divided by the sum of base prices times base quantities, multiplied by one hundred.

Conditional probability

The probability of event A given that event B has occurred equals the probability of both events occurring divided by the probability of B, provided B has a non-zero probability.

Median of grouped data

Estimated by adding to the lower class boundary the fraction of the class interval needed to reach the n divided by two position, using cumulative frequency and class frequency.

Price elasticity of demand

The percentage change in quantity demanded divided by the percentage change in price. Demand is elastic when the absolute value exceeds one, so a price cut raises total revenue.

Income elasticity of demand

The percentage change in quantity demanded divided by the percentage change in consumer income. Positive values indicate normal goods, negative values inferior goods, and values above one luxuries.

GDP expenditure approach

Gross domestic product equals consumption plus gross investment plus government spending plus exports minus imports. It counts final goods and services produced within the country's borders during a period.

Money multiplier

The maximum expansion of bank deposits from a given increase in reserves, equal to one divided by the reserve requirement ratio in a simple banking system with no cash leakage.

Opportunity cost

The value of the next best alternative forgone when a choice is made. It explains the shape of the production possibility curve and the gains from specialisation and trade.

Consumer price index

A weighted index of the cost of a fixed basket of goods and services bought by a typical household, expressed relative to a base year and used to measure consumer inflation.

Essentials of a valid contract

Offer, acceptance, consideration, intention to create legal relations, capacity of the parties and a lawful object. Missing any element makes the agreement void, voidable or unenforceable.

Invitation to treat

A preliminary statement inviting offers rather than making one, such as goods displayed in a shop, a price list or a tender notice. The customer or bidder makes the offer.

Consideration

Something of value exchanged between the parties, such as a promise, money, goods or forbearance to sue. It must be real and lawful, but it need not be adequate.

Holder in due course

A person who takes a negotiable instrument in good faith, for value, before maturity and without notice of any defect in the transferor's title, and can sue on it in their own name.

Mitigation of loss

An injured party must take reasonable steps to reduce the loss flowing from a breach. Damages cannot be recovered for loss that the claimant could reasonably have avoided.

Agent and principal

An agent acts on behalf of a principal and can bind that principal to contracts with third parties when acting within express, implied or apparent authority, subject to disclosed or undisclosed agency rules.

Seven Cs of communication

Principles of effective messages: clear, concise, concrete, correct, coherent, complete and courteous. They guide revision of business writing and help prevent ambiguity and misunderstanding.

Full block letter format

A business letter layout in which every line, including the date, inside address, salutation, paragraphs and signature block, begins at the left margin with no indentation.

Minutes of a meeting

The official record of decisions, resolutions and action points, with owners and deadlines. They are not a verbatim transcript and are normally confirmed at the following meeting.

Active voice

The subject performs the action, as in the manager approved the budget. It is shorter and clearer than the passive and is preferred for direct business writing.

Affect versus effect

Affect is normally a verb meaning to influence, while effect is normally a noun meaning the result. Effect used as a verb means to bring about, as in effect a change.

Faithfully versus sincerely

Use Yours faithfully when the letter opens with Dear Sir or Madam and the reader's name is unknown; use Yours sincerely when it opens with the recipient's actual name.