BS3009 End of Module Quiz

Q1. Which financial statement shows you the accumulated wealth of a business?

• Statement of Financial Position

• Income Statement

• Statement of Changes in Equity

• Statement of Cash Flows

Q2. Which of the following represents the accounting equation? Select all that apply.

• Assets = Equity + Liabilities

• Equity = Assets + Liabilities

• Assets – Liabilities = Equity

• Equity – Liabilities = Assets

Q3. Which section of the Statement of Cash Flows will you find the issuing of ordinary shares, if applicable?

• Operating activities

• Investing activities

• Financing activities

Q4. Which ratio measures the contribution of long-term lenders to the long-term capital structure of the business?

• Return on Capital Employed

• Price to Earnings Ratio

• Gearing Ratio

• Current Ratio

Q5. From the following information, calculate the Return on Ordinary Shareholders’ Funds to 2 decimal places:

 

Profit for the year - £113K

Net assets for the year - £200K

Fixed assets - £530K

Ordinary share capital - £100K

Cash balance - £180K

Reserves - £450K

• 37.74%

• 20.55%

• 36.36%

• 25.67%

Q6. What type of cost measures sacrifice?

• Relevant cost

• Fixed cost

• Opportunity cost

• Outlay cost

Q7. What budget preparation method ignores previous budgets and requires all spending to be justified?

• Incremental Budgeting

• Zero-based Budgeting

• Traditional Budgeting

• Continual Budgeting

Q8. Which of the following are criticisms of budgeting? Select all that apply.

• Makes managers focus on long-term targets

• Can be out of date before the budgetary period starts

• Based around departments rather than business as a whole

• Time consuming process

• Budgetary slack may be built in

Q9. In January, ABC Ltd needs to buy 100kg of granite at £200 per kilo. It is able to buy 80% of the granite on credit terms of two months, but the remaining amount it has to pay half with cash and half on one month’s credit. Which of the following represents its cash outflows for purchases?

• Jan - £1,000, Feb - £1,000, Mar - £8,000

• Jan - £2,000, Feb - £4,000, Mar - £14,000

• Jan - £2,000, Feb – £2,000, Mar - £16,000

Q10. JKL Ltd is considering an investment and wants to know the payback period based on the following information:

 

Initial investment                   £350,000

Cash inflow in year 1             £100,000

Cash inflow in year 2             £230,000

Cash inflow in year 3             £100,000

Cash inflow in year 4             £50,000

• 3.2 years

• 2.2 years

• 2.6 years

• 3.4 years