IBP JAIBP Stage I cheat sheet

Communication process components: sender, encoding, message, channel, receiver, decoding, feedback, and noise; noise at any stage distorts meaning.

Channel richness hierarchy (highest to lowest): face-to-face, video call, telephone, email/instant message, formal written report, bulletin notice.

Grapevine is informal, fast, and largely oral; it carries rumour, so managers should feed it accurate information rather than try to eliminate it.

Barriers to listening: physical distraction, semantic differences, psychological bias, and information overload; active listening requires paraphrasing and clarifying feedback.

Memo format: To, From, Date, Subject heading, then body; no salutation or complimentary close, unlike a business letter.

Business letter structure: sender address, date, inside address, salutation, body, complimentary close, signature, and enclosures notation.

A report follows: terms of reference, procedure/methodology, findings, conclusions, recommendations; conclusions interpret findings while recommendations propose action.

7 Cs of effective writing: clear, concise, concrete, correct, coherent, complete, courteous; conciseness means cutting redundant words, not content.

Non-verbal cues (kinesics, proxemics, paralanguage, chronemics) can contradict verbal messages; when they conflict, receivers tend to trust the non-verbal signal.

Accounting equation: Assets = Liabilities + Capital (owner's equity); every transaction preserves this equality.

Double-entry rule: every transaction has equal debits and credits; total debits must equal total credits in the ledger.

Debit/credit effects: debit increases assets and expenses, decreases liabilities, capital, and income; credit does the reverse.

Trial balance lists closing ledger balances; it detects arithmetic and one-sided errors but not errors of principle, omission, or compensating errors.

Accrual basis: revenue recognised when earned and expenses when incurred, regardless of cash movement; matching principle links expenses to the revenue they generate.

Depreciation methods: straight-line = (cost − residual value) / useful life; reducing balance = fixed percentage of carrying amount each year.

Bank reconciliation: adjusted bank balance = adjusted cash book balance; items in bank statement only include unpresented cheques and uncredited deposits.

Final accounts order: trading account gives gross profit = sales − cost of goods sold; profit and loss account gives net profit = gross profit + other income − expenses.

Balance sheet is a statement at a point in time; income statement covers a period; capital + net profit − drawings = closing capital.

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

Equilibrium price occurs where quantity demanded equals quantity supplied; a price ceiling below equilibrium creates shortage, a floor above creates surplus.

Price elasticity of demand = % change in quantity demanded / % change in price; demand is elastic when |E| > 1, inelastic when |E| < 1.

Income elasticity > 1 indicates a luxury good; negative income elasticity indicates an inferior good.

GDP measures output within a country's borders; GNP adds net factor income from abroad. Nominal GDP uses current prices, real GDP uses base-year prices.

Inflation measured by CPI (consumer basket) or WPI; demand-pull inflation arises from excess aggregate demand, cost-push from rising input costs.

Central bank policy tools: open market operations, policy/ discount rate, reserve requirements, and moral suasion; selling securities drains liquidity.

Money supply: M1 = currency in circulation + demand deposits; broader aggregates add time and saving deposits.

Phillips curve shows short-run inverse trade-off between inflation and unemployment; stagflation breaks this trade-off.

Simple interest = P × r × t; compound amount A = P(1 + r/n)^(nt); continuous compounding uses A = Pe^(rt).

Present value = future value / (1 + r)^n; used to discount future cash flows for NPV and loan valuation.

Annuity present value factor = [1 − (1 + r)^(−n)] / r; used for equal periodic instalments such as loan EMIs.

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

For grouped data, median = L + [(N/2 − cf) / f] × h, where L is lower class boundary, cf cumulative frequency before, f class frequency, h class width.

Standard deviation is the square root of variance; coefficient of variation = (standard deviation / mean) × 100, used to compare dispersion across datasets.

Correlation coefficient r ranges from −1 to +1; r near 0 indicates weak linear relationship, not necessarily independence.

Probability: P(A or B) = P(A) + P(B) − P(A and B); for independent events P(A and B) = P(A) × P(B).

Index numbers: Laspeyres uses base-year quantities, Paasche uses current-year quantities; base year value is set to 100.

Central bank functions: currency issue, lender of last resort, monetary policy, banker to government and banks, and exchange-rate management.

Commercial bank functions: accepting deposits, lending, payments and remittances, trade finance, and agency services such as collections.

Credit creation: a bank can create deposits up to the initial deposit multiplied by 1 / reserve ratio (deposit multiplier).

Types of bank accounts: current (no interest, cheque facility), savings (interest, limited withdrawals), fixed deposit (term, higher interest, penalty on early withdrawal).

NPV rule: accept a project if NPV > 0; IRR is the discount rate at which NPV = 0, and accept if IRR exceeds the cost of capital.

Basel capital adequacy: capital adequacy ratio = eligible capital / risk-weighted assets, with minimum requirements set by the regulator.

Non-performing loan classification is based on overdue status; provisioning rises as classification deteriorates.

Islamic banking prohibits riba (interest) and gharar (excessive uncertainty); profit-and-loss sharing modes include mudarabah and musharakah.

Money market instruments (treasury bills, commercial paper, certificates of deposit) mature within one year; capital market instruments are long-term.