BTF 2 - Chapter 7

Eric is an accountant for Heaven plc, which is considering a substantial new project. Eric has been asked to help in determining whether it should be financed by retained earnings, equity, loans, or a mix of all sources. It would appear that Eric is employed by Heaven plc's finance function:

• Transaction recording section

• Treasury management section

• Financial reporting section

• Financial intermediaries

Regarding the finance function, preparing internal reporting for planning and control to those charged with management and governance is the main task of:

• Management accounting

• Recording financial transactions

• Financial reporting

• Treasury management

Regarding types of performance measures, numbers of orders received from customers or number of machine breakdowns are included in:

• Profitability measures

• Activity measures

• Liquidity measures

• Solvency measures

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:

• Stewardship

• Planning and control

• External reporting

• Internal reporting

Three basic approaches to performance measures are measures of economy, efficiency, and effectiveness. “Economy” is measured by:

• The amount of resources used for the tasks that have been achieved.

• The success in achieving goals and targets.

• Team member satisfaction and the motivational climate.

• The success of the team and workgroup in controlling its costs.

Which of the following groups use published, audited financial statements for assessing how effectively managers are running a business and making judgments about the levels of risk and return?

• Community representatives

• Employees

• Shareholders

• Managers

Regarding the measure of resource use, which of the following is the definition of “Effectiveness”:

• A reduction of containment of costs

• Achieving maximum output at minimum cost

• The measure of achievement by reference to objectives

• The level of performance for the business to outperform rivals

Recording account receivables, payables, cash receipts, and payments belong to which of the following section in the finance function?

• Financial reporting section

• Management accounting section

• Treasury management section

• Financial transaction recording section

Buildings, machinery, and equipment are examples of:

• Physical assets

• Intangible assets

• Short-term assets

• Financial assets

Samantha is an accountant who was asked to join a project team examining the company’s compliance with both IFRS and IASB standards. Samantha has been recruited into this project team to exploit his expertise in:

• Performance measurement

• Corporate governance

• Financial reporting

• Information system