Wiley CPAexcel Exam Review July 2020 Study Guide: Business Environment and Concepts

Table of Contents:
About the Authors ix About the Business Professors xi Welcome to Business Environment and Concepts xiii Corporate Governance 1 Internal Control Frameworks 2 Introduction to COSO, Internal Control, and the COSO Cube 2 17 Principles of Internal Control 7 Types and Limitations of Accounting Controls 11 Internal Control Roles and Responsibilities 14 Internal Control Monitoring—Purpose and Terminology 17 Internal Control Monitoring and Change Control Processes 21 Enterprise Risk Management Frameworks 27 Introduction to Enterprise Risk Management: Strategy and Risk 27 ERM Components, Principles, and Terms 34 Governance and Culture 37 Strategy and Objective Setting 42 ERM Performance, Review, and Communication 52 Monitoring, Review, and Revision 62 Communication and Reporting 66 Fraud Risk Management 72 Other Regulatory Frameworks and Provisions 79 Economic Concepts and Analysis 85 Introduction to Economic Concepts 86 Microeconomics 90 Introduction and Free-Market Model 90 Demand 92 Supply 95 Market Equilibrium 98 Elasticity 101 Consumer Demand and Utility Theory 107 Inputs and the Cost of Production 109 Market Structure and Firm Strategy 113 Introduction to Market Structure 113 Perfect Competition 115 Perfect Monopoly 118 Monopolistic Competition 120 Oligopoly 122 Summary of Market Structures 124 Macroeconomics 125 Introduction to Macroeconomics 125 Aggregate Demand 127 Aggregate Supply 134 Aggregate (Economy) Equilibrium 136 Gross Measures—Economic Activity 138 Gross Measures—Employment/Unemployment 142 Business Cycles and Indicators 145 Price Levels and Inflation/Deflation 149 Money, Banking, and Monetary/Fiscal Policy 153 International Economics 160 Introduction and Reasons for International Activity 160 Issues at the National Level 163 Role of Exchange Rates 166 Issues at Entity Level 170 Currency Exchange Rate Issue 170 International Transfer Price Issue 175 Globalization 179 Introduction to Globalization 179 Globalization of Trade 182 Globalization of Production 186 Globalization of Capital Markets 188 Globalization and Power Shifts 192 Becoming Global 196 Business Strategy and Market Analysis 201 Introduction to Business Strategy and Market Analysis 201 Macro-Environmental Analysis 204 Industry Analysis 206 Entity/Environment Relationship Analysis 209 Generic Strategies 211 Summary and Extensions 215 Financial Management 219 Introduction to Financial Management 220 Concepts and Tools 221 Cost Concepts 221 Time Value of Money Tools 226 Interest Rate Concepts and Calculations 235 Financial Valuation 243 Introduction to Financial Valuation 243 Valuation Techniques—General 246 Valuation Techniques—CAPM 248 Valuation Techniques—Option Pricing 252 Valuation Techniques—Business Entity 255 Hedging and Derivatives 263 Capital Budgeting 271 Introduction and Project Risk 271 Evaluation Techniques 274 Introduction and the Payback Period Approach 274 Discounted Payback Period Approach 277 Accounting Rate of Return Approach 279 Net Present Value Approach 282 Internal Rate of Return Approach 285 Project Ranking 289 Capital Project Ranking Decisions 292 Financing Options 295 Introduction and Financial/Capital Structure 295 Short-Term (Working Capital) Financing 296 Introduction to Short-Term Financing 296 Payables 297 Standby Credit and Commercial Paper 300 Receivables and Inventory 302 Long-Term (Capital) Financing 305 Introduction to Long-Term Financing 305 Long-Term Notes and Financial Leases 306 Bonds 309 Preferred Stock 314 Common Stock 317 Cost of Capital and Financing Strategies 321 Working Capital Management 324 Introduction to Working Capital Management 324 Cash Management 326 Short-Term Securities Management 332 Accounts Receivable Management 336 Inventory Management 340 Current Liabilities Management 344 Ratios and Measures for Working Capital Management 345 Introduction to Ratios and Measures 345 Liquidity Measures 347 Operational Activity Measures 350 Financial Management Risk Concepts—Summary 353 Information Technology 357 Information Technology Governance 358 Risks and Controls in Computer-Based Accounting-Information Systems 358 The COBIT Model of IT Governance and Management 361 Introduction to Enterprise-Wide and Cloud-Based Systems 363 IT Functions and Controls Related to People 366 Role of Information Technology in Business 370 IT and Business Strategy 370 System Types by Activity 372 System Types by Data Structure 374 Data Structures, Software, and Databases 376 Information Systems Hardware 380 Transaction Processing 382 Emerging Technologies 386 Emerging Technologies in AIS 386 Data Analytics 390 Data Analytics 390 Emerging Technologies in AIS: Big Data 396 Data Visualization 399 Statistics in Business Analytics 411 Simple Linear Regression in Business Analytics 419 Bitcoin and Blockchain: Implications for Accounting and Control 423 Artificial Intelligence and Machine Learning 428 Information Security/Availability 432 Protection of Information 432 IT Security Principles 432 Managing Cyber Risk: Part I—Applying COSO Principles to Cyber Risk 435 Managing Cyber Risk: Part II—A Framework for Cybersecurity 438 IT Policies 444 Introduction to E-Business and E-Commerce 446 E-Commerce Applications 449 ERM for Cloud Computing 452 Mobile Device, End-User, and Small Business Computing 454 Multi-Location System Structure 457 Computer Networks and Data Communication 459 The Internet—Structure and Protocols 463 Logical and Physical Access Controls 465 Logical Access Controls 465 Physical Access Controls 468 Encryption and Secure Exchanges 470 System Disruption/Resolution 473 Organizational Continuity Planning and Disaster Recovery 473 Backup and Restoration 476 Computer Crime, Attack Methods, and Cyber-Incident Response 479 Processing Integrity (Input/Processing/Output Controls) 483 Program Library, Documentation, and Record Management 483 Input and Origination Controls 486 Processing, File, and Output Controls 489 Accounting System Cycles 492 The Accounting System Cycle: Introduction 492 Revenue Cycle 495 Expenditure Cycle 499 Production Cycle 502 HR and Payroll Cycle 505 General Ledger, Reporting, and Financing Cycle 509 Systems Development and Maintenance 512 System Development and Implementation 512 Operations Management 517 Financial and Non-Financial Measures of Performance 518 Quality Management 518 Benchmarking, Best Practices, and the Balanced Scorecard 522 Competitive Analysis 527 Ratio Analysis 532 Risk Management 537 Performance Improvement Tools 540 Cost Accounting 545 Manufacturing Costs 545 Spoilage, Cost, and Inventory Flow 551 Cost Behavior Patterns 555 Cost-Volume-Profit Analysis 558 Absorption and Direct Costing 566 Job Costing 573 Process Costing 577 Joint and By-Product Costing 584 Sales and Direct Cost Variance Analysis 587 Overhead Variance Analysis 594 Process Management 599 Non-Routine Decisions: Relevant Costs 599 Non-Routine Decisions: Special Decisions 604 Transfer Pricing 609 Activity-Based Costing and Process Management 613 Planning Techniques 619 Budgeting 619 Forecasting Techniques 624 Index 629

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