ICSAN CL flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Separate legal personality

A company is a legal entity distinct from its owners; it can own property, sue and be sued, and continues beyond changes in membership.

Business judgment rule

A legal principle protecting directors from liability for honest business decisions made in good faith, with due care, and in the best interests of the company.

Derivative action

A legal action brought by a shareholder on behalf of the company to remedy a wrong done to the company, typically against directors for breach of duty.

Confirmation statement

Annual filing confirming company details (directors, shareholders, registered office) are correct; must be filed at least every 12 months.

Written resolution

A decision passed by shareholders of a private company without a meeting, signed by the requisite majority; certain resolutions excluded.

Proxy

A person appointed by a shareholder to attend and vote at a general meeting on their behalf; appointment must be notified to the company in advance.

Accrual basis

Accounting method where revenue is recognized when earned and expenses when incurred, regardless of when cash is received or paid.

Lower of cost and NRV

Inventory valuation rule: inventory is valued at the lower of its cost and its net realizable value (estimated selling price less costs to complete and sell).

Going concern

Assumption that the entity will continue in operation for the foreseeable future; if not, financial statements must be prepared on a different basis.

Break-even point

The level of sales at which total revenue equals total costs, resulting in neither profit nor loss; calculated as fixed costs divided by contribution per unit.

Net present value

The sum of present values of future cash flows minus the initial investment; a positive NPV indicates a project is expected to add value.

WACC

Weighted average cost of capital: the average rate a company is expected to pay to finance its assets, weighted by the proportion of equity and debt.

Invitation to treat

An invitation to make an offer, not an offer itself; examples include goods displayed in a shop window or advertisements.

Consideration

Something of value given by each party to a contract; it must be sufficient but need not be adequate, and past consideration is not valid.

Exclusion clause

A contractual term that seeks to exclude or limit liability; it must be incorporated into the contract and is construed strictly against the party relying on it.

Capital allowances

Tax relief for capital expenditure on qualifying assets such as plant and machinery; the annual investment allowance provides 100% relief up to a limit.

VAT

Value Added Tax: an indirect tax on the supply of goods and services; businesses charge output tax and recover input tax, remitting the difference to the tax authority.

Transfer pricing

The pricing of transactions between related parties; tax rules require such transactions to be at arm's length to prevent profit shifting.

SWOT analysis

A strategic planning tool that identifies internal strengths and weaknesses and external opportunities and threats facing a business.

Porter's Five Forces

A framework analyzing competitive intensity: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes, and competitive rivalry.

SMART objectives

Objectives that are specific, measurable, achievable, relevant, and time-bound; used to set clear and trackable business goals.

Risk register

A document recording identified risks, their likelihood and impact, risk owner, and mitigation actions; used in risk management.

Customer due diligence

Anti-money laundering process of identifying and verifying customers and beneficial owners before establishing a business relationship.

Whistleblowing

Protected disclosure by a worker of wrongdoing within an organization; the worker must not be subjected to detriment for making it.

Integrity

Ethical principle requiring professional accountants to be straightforward and honest in all professional and business relationships.

Professional skepticism

An attitude of questioning mind and alertness to conditions that may indicate possible misstatement due to error or fraud.

CSR

Corporate social responsibility: a business model that helps a company be socially accountable to itself, its stakeholders, and the public.

IT governance

The framework ensuring IT aligns with business strategy, delivers value, manages risk, and optimizes resources; board is accountable.

Cybersecurity

Protection of information systems from theft, damage, or disruption; key controls include firewalls, encryption, access controls, and incident response plans.

Data backup

Regular copying of data to a separate location to enable recovery in case of loss or corruption; backups should be tested periodically.

Privacy by design

Embedding data protection into the design of systems and processes; a data protection impact assessment is required for high-risk processing.

Multi-factor authentication

A security control requiring two or more independent credentials (e.g., password plus a one-time code) to verify identity.