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Account for Manager Online Assignment Set 4
Study Account for Manager Online MCQ for your amity mba bba courses, ignou mba, imt cdl, smu and upes management program. This is important online mcq question answer for various distance learning program.
Q1: Fixed cost per unit remains constant-T/F
Answer
Answer: False
Q2: Direct cost is that cost which can not be easily allocated to cost units-T/F
Answer
Answer: False
Q3: Selling overheads form a part of cost of production-T/F
Answer
Answer: False
Q4: Manufacturing and administrative overheads are different-T/F
Answer
Answer: True
Q5: Total fixed cost remains unaffected by the change in volume of output
Answer
Answer: True
Q6: Variable cost per unit remains fixed-T/F
Answer
Answer: True
Q7: In chemical industries unit costing is used-T/F
Answer
Answer: False
Q8: The output of a process is transferred to next process-T/F
Answer
Answer: True
Q9: Good units bear the abnormal loss arising in the process costing-T/F
Answer
Answer: False
Q10: Excess of pre-estimated loss over actual loss is known as abnormal loss-T/F
Answer
Answer: False
Q11: Marginal costing is a method of ascertaining cost-T/F
Answer
Answer: False
Q12: A firm earns no profit or incurs no loss at BEP-T/F
Answer
Answer: Correct – True
Q13: Margin of Safety implies ‘Break Even Point’-T/F
Answer
Answer: False
Q14: In marginal costing, stock is valued at fixed costs-T/F
Answer
Answer: False
Q15: Sales below BEP mean profit-T/F
Answer
Answer: False
Q16: What is the main source of new long-term finance for UK limited companies?
Answer
Answer: Retained profit
Q17: During last year, Dartington Ltd sold a machine for £3,000 that cost £5,000 and had a written down value of £2,300. Under which of the following headings should the profit on the sale of the machine be shown in the cash flow statement?
Answer
Answer: Cash flows from operating activities
Q18: The P/E ratio is
Answer
Answer: the share price divided by the after-tax profit per share.
Q19: In a profit-volume chart, what does the point at which the contribution line touches the vertical axis represent?
Answer
Answer: Total fixed costs
Q20: Nanyang Ltd produces a single product. The selling price is £50 a unit and the variable costs is £30 a unit. The annual fixed costs of the business are £4,000. The business aims to make £10,000 profit during the forthcoming year. How many units must be sold to achieve this target?
Answer
Answer: 700 units
Q21: With traditional full costing in a multi-product business, indirect costs should be apportioned on the basis of
Answer
Answer: the benefits received by each cost unit
Q22: The net present value of a particular investment project represents
Answer
Answer: The increase or decrease in wealth that the project will generate for the investing business.
Q23: A business is considering an investment which will generate a cash flow in exactly five years’ time. The discount rate associated with the investment is 15% a year. To deduce the present value of the projected cash flow, we have to multiply the amount of the cash flow to be received in five years’ time by
Answer
Answer: 1/(1.15)5
Q24: You have just assessed a project, involving an immediate cash outflow followed by a series of cash inflows over the next seven years, by deducing the NPV and the IRR.
You have now discovered that you have underestimated the discount rate. Correcting for the underestimation will have the following effects, relative to your original deductions:
Answer
Answer: NPV———–IRR
reduce——-no changes
Q25: The internal rate of return can best be described as
Answer
Answer: the discount rate at which a set of cash flows have a zero net present value.
Q26: When a wealth maximising business uses the internal rate of return approach to assess an investment project, an assumption is being made which is not usually valid. This assumption is that:
Answer
Answer: a project with a higher IRRs than another project is better than the other project, irrespective of the relative sizes of the two projects.
Q27: Sienna plc has deduced the net present value of a potential investment project at two discount rates. The relevant data are as follows:
What is the approximate internal rate of return of the project?
Answer
Answer: 23.3%
Q28: Use of which one of the common investment appraisal methods directly promotes wealth maximisation
Answer
Answer: Net present value
Q29: How do you assess the following two statements?
1. Interest payments on money borrowed to make the investment should not be treated as one of the projects cash flows when deducing the NPV.
2. Over the life of a project, the accounting operating profits will equal its undiscounted net cash flows.
Answer
Answer: Correct – True
Q30: Reducing the receivables collection period is:
Answer
Answer: possibly a good thing or possibly a bad thing depending on the circumstances
Q31: The operating cash cycle, in the context of a wholesaler of goods which buys and sells on credit, is
Answer
Answer: the period of time which elapses between paying creditors and receiving cash from the debtor, in respect of the sale of the same item of inventories.
Q32: In relation to inventories, what is usually meant by ‘lead time’
Answer
Answer: The period between placing an order for inventories and receiving them
Q33: How do you assess the following two statements?
1. The investment in current assets represents a fairly consistent proportion of long-term investment funds from one industry to the next.
2. Compared with total long-term investment, the investment in current assets tends to be significant in most businesses
Answer
Answer: False – True
Q34: How do you assess the following two statements?
1. A warrant is a loan stock which can be exchanged for equities, at the shareholders’ discretion, at a predetermined price and time.
2. A finance lease is virtually the same as a financier providing finance as a loan and that finance being used to buy a particular asset needed by the effective ‘borrower’.
Answer
Answer: False – True
Q35: How do you assess the following two statements?
1. Invoice discounting tends to be more expensive than debt factoring.
2. Invoice discounting tends to be less confidential to the business than debt factoring.
Answer
Answer: False – False
Q36: How do you assess the following two statements?
1. With finance leasing, the risks of operating the asset stay with the provider of the finance.
2. Finance leasing is a way of borrowing without this fact being shown on the business’s balance sheet.
Answer
Answer: False – False
Q37: How do you assess the following two statements?
1. A convertible loan stock is a form of financial derivative.
2. Convertible loan stocks tend to be self liquidating.
Answer
Answer: True – True
Q38: How do you assess the following two statements?
1. Preference shareholders normally expect higher returns than ordinary shareholders do.
2. Preference shares have lost their popularity recently because they tend to be more expensive to service than loans.
Answer
Answer: False – True
Q39: One purpose of accounting information is to help certain users assess how effectively the managers are running the business and to make judgements about likely levels of risk and return in the future. Which one of the following user groups is most likely to use accounting information for this purpose
Answer
Answer: Owners
Q40: Which one of the following is not considered to be a key qualitative characteristic of accounting
Answer
Answer: Timeliness
Q41: The generally accepted major financial objective of a business is assumed to be
Answer
Answer: Enhancement/maximisation of the wealth of the owners
Q42: One purpose of accounting information is to help certain users make decisions and plans for the business and to exercise control so that the plans come to fruition. Which one of the following user groups is most likely to use accounting information for this pupose
Answer
Answer: Managers
Q43: The study of business investment and financing decisions is known as
Answer
Answer: Finance
Q44: Accounting exists to help people make better___
Answer
Answer: decisions
Q45: ___is concerned with the collection, analysis and communication of economic information
Answer
Answer: Accounting
Q46: The two broad classes of accounting are management accounting and___accounting
Answer
Answer: financial
Q47: The process of ensuring that planned events actually occur is known as___
Answer
Answer: control
Q48: The generally accepted___of businesses is to maximise the wealth of the owners
Answer
Answer: objective
Q49: Deciding whether to produce an item of accounting information is a question of balancing the___against the cost
Answer
Answer: benefit
Q50: There are five key qualitative characteristics of accounting; these are relevance, reliability, comparability,___and materiality
Answer
Answer: understandability
Q51: Accounting can be seen as part of the total___system of the business
Answer
Answer: information
Q52: ___is concerned with financing and investment activities of the business
Answer
Answer: Finance
Q53: Accounting seeks to meet the___of various users
Answer
Answer: needs
Q54: Which one of the following is used as a criterion for deciding whether a resource should be regarded as an asset for accounting purposes
Answer
Answer: it must arise from a past transaction or event
Q55: Which one of the following statements is correct? The basis for valuing inventories in the balance sheet is
Answer
Answer: the lower of historic cost and net realisable value
Q56: Which one of the following items appearing on the balance sheet of a business is an intangible asset
Answer
Answer: Trade receivables
Q57: To appear on a balance sheet as an___the item needs to meet several tests, one of which is that it must represent a probable future economic benefit
Answer
Answer: asset
Q58: An asset that has physical presence is said to be a___one
Answer
Answer: tangible
Q59: ___is the name given to the claim of the owner(s) of a business
Answer
Answer: Capital
Q60: The claim of anyone other than the owner(s) of a business is called a___
Answer
Answer: liability
Q61: The assets of a business total £50,000 and the liabilities total £20,000, so capital must be___
Answer
Answer: £30,000
Q62: To a retail business, its premises would be one of its___assets
Answer
Answer: non-current
Q63: To a retail business, its trading inventories would be part of its ___assets
Answer
Answer: current
Q64: The___convention says that assets should be shown on balance sheets at values based on what was paid to acquire them
Answer
Answer: historic cost
Q65: The___convention says that the business and the owner(s) are separate, for accounting purposes
Answer
Answer: business entity
Q66: The___convention says that financial statements should err on the side of caution
Answer
Answer: prudence
Q67: Correct definition of profit, or loss, for a period? Profit, or loss, is the difference between
Answer
Answer: revenue and expenses
Q68: At what point is revenue normally recognised by a manufacturing business
Answer
Answer: When the goods are passed to, and accepted by, the customer
Q69: Which of the following best describes the conventional view of the purpose of accounting for depreciation
Answer
Answer: To charge to each period in which the asset is used, a fair share of the costs of using the asset
Q70: Jutland plc intends to change its accounting policies regarding inventories valuation for the forthcoming year. It intends to switch from the AVCO method to the FIFO method. It is expected that during the forthcoming period, prices of goods purchased will rise. If this is the case, what will be the effect of the change in inventories valuation method
Answer
Answer: An increase in profit and an increase in the value of closing inventories held
Q71: P. Patel and J. Singh Ltd has total trade receivables of £650,400 at the end of the most recent year. It is considered that £22,200 of the trade receivables will not pay and a further 2 per cent of the remainder are doubtful. Represent the net amount of trade receivables to be shown on the balance sheet at the end of the year
Answer
Answer: £615,636
Q72: When valuing inventories at the lower of cost or net realisable value, which one of the following conventions is being applied
Answer
Answer: Prudence
Q73: Profit is the difference between___and expenses
Answer
Answer: revenues
Q74: ___profit is the difference between sales revenue and cost of sales
Answer
Answer: Gross
Q75: If the level of inventories alters during a period, the cost of sales for that period cannot equal___
Answer
Answer: purchases
Q76: The___convention deals with what expenses are charged in the income statement for a particular period
Answer
Answer: matching
Q77: The___convention, in effect, says that net cash increase and profit for a particular period need not be equal
Answer
Answer: accruals
Q78: The___convention deals with extent to which other conventions are strictly followed where the amounts concerned are insignificant
Answer
Answer: materiality
Q79: Recognition of the expense arising from the ownership of most non-current assets is known as___
Answer
Answer: depreciation
Q80: A receivable that proves uncollectable is usually called a___debt
Answer
Answer: bad
Q81: The depreciation method where each year’s expense is the same is known as___
Answer
Answer: straight line
Q82: Accounting for depreciation is concerned with___the expense of owning the asset
Answer
Answer: allocating
Q83: Limited companies can have___life
Answer
Answer: perpetual
Q84: The___are the most senior managers of a limited company
Answer
Answer: directors
Q85: ___are the routine, normally-annual payments made by the limited company to its shareholders
Answer
Answer: Dividends
Q86: ___are profits or gains made by the company that form part of the shareholders’ claim
Answer
Answer: Reserves
Q87: A___issue of shares is an issue for cash that is made to existing shareholders according to how many shares each one held at the time
Answer
Answer: rights
Q88: Debentures are a form of___
Answer
Answer: loan
Q89: In the UK, limited companies pay___tax on their profits
Answer
Answer: corporation
Q90: The___are people who examine the financial statements of companies and express an opinion on the extent to which they comply with the legal requirements
Answer
Answer: auditors
Q91: Reserves arising from revaluing non-current assets are known as___reserves
Answer
Answer: capital
Q92: Where reserves are turned into shares and issued to shareholders as “free”, they are known as___shares
Answer
Answer: bonus
Q93: The cash that comes from day-to-day trading activities is known as “net cash flow from___activities”
Answer
Answer: operating
Q94: An increase in the inventories held during a period would have the effect of___the cash balance over the period
Answer
Answer: decreasing
Q95: An increase in the level of trade payables during a period would have the effect of___the cash balance over the period
Answer
Answer: increasing
Q96: Deriving the net cash flow from operating activities using the profit figure, rather than by analysing the cash records, uses the___method
Answer
Answer: indirect
Q97: A decrease in the level of trade receivables during a period would have the effect of___the cash balance over the period
Answer
Answer: increasing
Q98: Starting with the operating profit, it is necessary to___the annual depreciation charge when working towards the net cash flow
Answer
Answer: add
Q99: The section of the cash flow statement that deals with cash received from a new share issue is known as cash flows from___activities
Answer
Answer: financing
Q100: The word ‘___’ in the context of the cash flow statement refers to rewarding suppliers of finance for the use of their money
Answer
Answer: servicing
