Chapter 7 : The business's finance function

Stewardship of the organisation's financial resources is part of which of its finance function's tasks?

• Financial reporting

• Recording financial transactions

• Treasury management

• Management accounting

Collinson plc is a medium-sized group operating at four locations in the UK. It operates a centralised finance function and is concerned that the function as a whole is not performing well. Centralisation of this finance function is least likely to be effective in

• external reporting to shareholders

• recording financial transactions

• managing cash

• internal reporting to operational managers

Maureen is employed in the finance function of Gralam plc. Her duties are to ensure that the company always has sufficient funds available to meet both its short-term and long-term financial requirements. It is clear that Maureen is employed by Gralam plc in its

• financial reporting section

• management accounting section

• treasury management section

• transaction processing section

1 Which three of the following are characteristics of management accounting information rather than financial reporting information?

• It is both forward looking and historical

• It is governed by statute

• It is primarily used by shareholders

• It is likely to include budgetary information

• It is likely to include a cash flow forecast

Harold is an accountant with Farnworth plc. He was asked to join a project team examining the company's compliance with both FRC and IASB standards. It appears, therefore, that Harold has been recruited into this project team to exploit his expertise in

• financial reporting

• performance measurement

• capital budgeting

• strategic management accounting

Novel plc is establishing its accounting and finance function. The company has been told there are two purposes of published, audited financial statements. These are to help users assess how effectively managers are running a business, and to make judgements about the likely levels of risk and return in the future.

Which of the following user groups of Novel plc's published, audited financial statements is most likely to use accounting information for these purposes?

• Community representatives

• Employees

• Shareholders

• Managers

When a company's finance function prepares financial statements in accordance with legal rules and accounting standards, it is engaged in the support activity of

• record-keeping and stewardship

• planning and control

• external reporting

• internal reporting

Mainstream Ltd's finance director is establishing an effective system in the finance function for producing management accounting reports. Which issue should be the finance director's primary consideration?

• The information needs of the company's managers

• The need for effective internal control mechanisms

• The need for cost-effectiveness

• The need for effective information security

Tram plc's finance function must provide information to management on the company's balanced scorecard. This role is undertaken as part of Tram plc's

• statutory audit requirement

• financial reporting function

• treasury management process

• performance measurement system

The finance director of Boiled Sweets plc wants to specify the levels of performance that underpin the company's control system.

Which three of the following are the main components of the company's control system?

• Measurement of actual performance and comparison against targets

• Identification of deviations from the plan

• Establishment of standards or targets to express planned performance

• Follow-up action to correct adverse results or to exploit favourable variances

• Measurement of ideal performance