ICMAP Operational Level flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Accounting Equation
- Assets equal liabilities plus equity. Every recorded transaction keeps this balance, so total debits always equal total credits across the ledger.
- Accrual Basis
- Revenue is recorded when earned and expenses when incurred, regardless of when cash moves. It matches costs to the period that benefited from them.
- Trial Balance
- A list of closing debit and credit balances. Equal totals confirm arithmetic accuracy only; errors of omission or principle can still exist.
- Straight-Line Depreciation
- Annual charge equals cost less residual value, divided by useful life. It spreads the depreciable amount evenly across each accounting period.
- Quick Ratio
- Current assets excluding inventory and prepayments, divided by current liabilities. It tests short-term liquidity without relying on selling stock.
- Bank Reconciliation
- A statement reconciling the cash book balance to the bank statement by adjusting for unpresented cheques, uncredited deposits, bank charges and errors.
- Large Language Model
- A neural network trained to predict the next token, generating text from context. It can produce fluent output that is factually wrong.
- Hallucination
- A confident but fabricated model output, such as an invented figure or citation. It occurs because the model predicts plausible text rather than verifying facts.
- Retrieval-Augmented Generation
- Supplying relevant documents to the model at query time so answers are grounded in retrieved source text, reducing fabrication compared with relying on memory alone.
- Prompt Engineering
- Structuring instructions with task, role, context, format and examples to steer model output. Clear constraints reduce ambiguity and improve usefulness.
- Absolute Cell Reference
- A reference such as $A$1 that stays fixed when a formula is copied across rows or columns, unlike relative references which shift.
- Valid Contract Elements
- Offer, acceptance, consideration, intention to create legal relations and capacity. Consent must also be genuine, free from fraud, coercion or misrepresentation.
- Counter-Offer
- A response changing the terms of an offer. It operates as a rejection, destroying the original offer so it cannot later be accepted.
- Condition Versus Warranty
- A condition is fundamental, so breach permits termination and damages. A warranty is minor, so breach permits damages only, not termination.
- Apparent Authority
- Authority a third party reasonably believes an agent has because of the principal's conduct. The principal is bound by acts within that apparent scope.
- Bill of Exchange
- An unconditional written order requiring the drawee to pay a sum on demand or at a fixed date. A cheque is one drawn on a bank.
- Price Elasticity of Demand
- Percentage change in quantity demanded divided by percentage change in price. Demand is elastic when the absolute value exceeds one.
- Profit Maximisation Condition
- Profit is greatest where marginal revenue equals marginal cost. Producing beyond that point adds more cost than revenue.
- Real Versus Nominal GDP
- Nominal GDP uses current prices; real GDP holds prices constant to isolate changes in output volume rather than inflation.
- Diminishing Returns
- Adding more variable input to fixed capacity eventually lowers the marginal product, so average cost falls then rises with output.
- Monopoly
- A market with a single seller facing no close substitutes, with high entry barriers, allowing price-setting power and potential inefficiency.
- Compound Interest Formula
- Amount equals principal multiplied by (1 plus the periodic rate) raised to the number of periods. Interest earns interest each period.
- Present Value
- Future cash flow divided by (1 plus the discount rate) raised to the number of periods, expressing future money in today's terms.
- Standard Deviation
- A measure of dispersion around the mean. A larger value indicates data points spread more widely, signalling greater variability or risk.
- Coefficient of Variation
- Standard deviation divided by the mean, usually as a percentage. It compares relative variability across datasets measured in different units.
- Break-Even Quantity
- Fixed costs divided by contribution per unit. It is the sales volume at which total revenue exactly covers total cost, giving zero profit.
- Prime Cost
- The sum of direct materials, direct labour and direct expenses. It excludes all production overhead, which is added later to give production cost.
- Contribution Per Unit
- Selling price minus variable cost per unit. It measures how much each sale adds toward covering fixed costs and then generating profit.
- Overhead Absorption Rate
- Budgeted production overhead divided by budgeted activity base, such as labour or machine hours. It allocates overhead to units produced.
- Over-Absorption
- Occurs when overhead absorbed into production exceeds overhead actually incurred. The difference is credited, reducing the period's cost of sales.
- Relevant Cost
- A future incremental cash flow that differs between alternatives. Sunk costs and apportioned fixed costs are excluded from decision analysis.
- Activity-Based Costing
- A method assigning overhead through cost drivers such as set-ups or orders, rather than one volume-based rate, giving more accurate product costs.