ICMAP Operational Level cheat sheet

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognizes revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.

Accounting equation: Assets = Liabilities + Equity; every transaction preserves this equality.

Double-entry rule: each transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Accrual basis recognises revenue when earned and expenses when incurred, regardless of cash timing; cash basis records only on cash movement.

Trial balance lists closing debit and credit balances; equality proves arithmetic only, not absence of errors (e.g., omitted or misposted entries).

Depreciation methods: straight-line = (Cost − Residual)/Useful life; reducing balance applies a fixed rate to carrying amount each period.

Closing entries transfer revenue and expense balances to profit or loss, then to retained earnings; temporary accounts reset to zero.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and prepayments from current assets.

Bank reconciliation adjusts book balance for items like unpresented cheques and uncredited deposits, and bank balance for errors and unrecorded charges.

Inventory cost flow: FIFO leaves newer costs in closing inventory; weighted average smooths price changes across units.

Large language models predict the next token from context; they generate plausible text and can produce fluent but incorrect 'hallucinations'.

Prompt quality levers: explicit task, role, context, output format, and examples; constraints reduce ambiguous outputs.

Temperature controls randomness: low values give deterministic, repeatable output; high values increase diversity.

Retrieval-augmented generation grounds answers in supplied documents, reducing fabrication versus relying on model memory alone.

Token limits cap combined prompt and response length; long inputs must be summarised or chunked to fit the context window.

Confidential or personal data should not be pasted into public AI tools without an approved data-handling policy.

AI outputs used in reports require human verification against source records; automation shifts effort to review and exception handling.

Spreadsheet productivity: absolute references ($A$1) lock cells on copy; pivot tables summarise large datasets by rows, columns, and values.

A valid contract requires offer, acceptance, consideration, intention to create legal relations, and capacity; consent must be free from coercion, undue influence, fraud, and misrepresentation.

An offer lapses on rejection, counter-offer, revocation before acceptance, death, or expiry; a counter-offer destroys the original offer.

Consideration must be sufficient but need not be adequate; past consideration is generally not valid consideration.

Conditions vs warranties: breach of a condition allows termination plus damages; breach of a warranty allows damages only.

Agency: the principal is bound by acts of an agent with actual or apparent authority; undisclosed principals may still sue and be sued.

Sale of goods implied terms: title, description, fitness for purpose, and satisfactory quality; remedies include rejection, damages, and specific performance.

Negotiable instruments: a bill of exchange is an unconditional written order to pay; a cheque is a bill drawn on a banker payable on demand.

Partnership: partners are jointly and severally liable for firm debts; a limited company provides separate legal personality and limited liability.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply slopes upward with price.

Price elasticity of demand = % change in quantity / % change in price; demand is elastic when the absolute value exceeds 1.

Revenue maximisation occurs where marginal revenue = 0; profit maximisation occurs where marginal revenue = marginal cost.

Elastic demand: a price cut raises total revenue; inelastic demand: a price rise raises total revenue.

Fixed costs do not vary with output in the short run; variable costs do; average total cost falls then rises with diminishing returns.

Perfect competition: many sellers, homogeneous product, free entry, price takers; monopoly: single seller with price-setting power and entry barriers.

Inflation erodes purchasing power; central banks raise policy rates to dampen demand and reduce inflation.

GDP measures final goods and services produced domestically in a period; real GDP adjusts for price changes, nominal GDP does not.

Simple interest = P × r × t; compound amount = P(1 + r)^n, where n is the number of compounding periods.

Present value = Future value / (1 + r)^n; discounting converts future cash flows to today's value for comparison.

Mean = sum of values / count; median is the middle value when ordered; mode is the most frequent value.

Standard deviation measures dispersion around the mean; a higher value indicates greater variability of the data.

Coefficient of variation = standard deviation / mean; it compares relative risk across datasets with different scales.

Probability of an event lies between 0 and 1; for independent events P(A and B) = P(A) × P(B).

Index numbers express a value relative to a base period (base = 100); a Laspeyres index uses base-period quantities as weights.

Break-even quantity = Fixed costs / (Selling price − Variable cost per unit), assuming constant unit prices and costs.

Prime cost = direct materials + direct labour + direct expenses; conversion cost = direct labour + production overhead.

Absorption costing allocates fixed production overhead to units; marginal costing treats fixed overhead as a period cost.

Overhead absorption rate = budgeted overhead / budgeted activity base (e.g., labour hours or machine hours).

Contribution per unit = Selling price − Variable cost per unit; contribution covers fixed costs before profit arises.

Under- or over-absorption = actual overhead incurred − overhead absorbed; over-absorption occurs when absorbed exceeds incurred.

Relevant costs for decisions are future incremental cash flows; sunk costs and apportioned fixed costs are irrelevant.

Standard costing computes variances: material price = (Standard − Actual price) × Actual quantity; material usage = (Standard − Actual quantity) × Standard price.

Process costing uses equivalent units to spread costs across partly completed output; normal loss is absorbed, abnormal loss is valued and reported separately.

Activity-based costing assigns overhead via cost drivers (e.g., set-ups, orders) rather than a single volume-based rate.