WorksheetsBTF adasd
Total questions: 81
Worksheet time: 42mins
A consultant has made two statements about the primary focus of the users of financial statements of an entity. Statement (1) – The primary focus of suppliers is on the entity’s liquidity; Statement (2) – The primary focus of shareholders is on the entity’s risk and return. Identify whether each statement is true or false.
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Statement (1) is false; Statement (2) is true.
Statement (1) is true; Statement (2) is false
Statement (1) is false; Statement (2) is false.
Statement (1) is true; Statement (2) is true.
………..refers to the situation in which the finance function becomes one of providing advice and support to other areas of the business to help them maximize their performance.
Business strategy.
Business alliance.
Business analysis.
Business partnering.
Tan works in the finance function of BA Ltd., which trades with many companies around the world. His duties involve managing the company’s foreign exchange requirements. Tam is employed by BA Ltd in its finance function’s:
Financial transactions recording section.
Treasury management section.
Financial reporting section.
Management accounting section.
In what area does the finance function provide advice on pricing based on the analysis of sales volumes?
Research and Development.
Operations/Production.
Human Resources.
Marketing.
Regarding types of performance measures, numbers of orders received from customers or number of machine breakdowns are included in:
Liquidity measures.
Profitability measures.
Solvency measures.
Activity measures.
What is the primary limitation of financial measures?
Lack of historical data
Difficulty in industry comparison
Summarized information
Inability to adapt to changing environments
What role do accountants play in measuring sustainability and natural capital?
Responding to uncertainty and risk
Developing new markets
Improving operational efficiency
Engaging employees in sustainability efforts
Financial instruments issued by large companies, which can be held to maturity or sold to a third party before maturity, are:
Treasury bills.
Certificate of Deposit.
Bonds.
Commercial paper.
In the bailor/bailee relationship, what is the bank's obligation regarding the customer's property stored in its safe deposit?
The bank must keep the property for its own use.
The bank must safeguard the property against loss or damage.
The bank must sell the property if requested by the customer.
The bank must return the property to the customer's heirs upon their demise.
Which of the following statements concerning preference shares is correct?
Preference shares carry the same voting rights as ordinary shares
The payment of a preference share dividend is guaranteed each year.
Preference shares carry the right to a fixed rate of dividend each year.
Preference shares are always a type of debt capital.
To pay for non-current assets such as machinery, vehicles, and buildings, a firm needs:
Long-term finance.
Short-term finance.
Temporary finance.
Medium-term finance.
In relation to a listed company that is raising new finance, an offer for the sale of stocks is a form of:
Retained earnings.
Factoring.
Public offering.
Borrowing.
What right does the bank have according to the bank/customer fiduciary relationships?
To charge unreasonable bank fees.
To refuse repayment of overdraft balances.
To use the customer's money illegally.
To be repaid overdrawn balances on demand.
A bank undertakes to store and take reasonable care of a customer’s property and to re-deliver it to the customer when required. In regards to the bank and customer relationship, in which capacity is the bank acting:
Bailee.
Mortgagor.
Mortgagee.
Bailor.
A market where securities already issued are traded is:
A secondary market.
A primary market.
A money market.
A future market.
…………….is a wholesale market that provides financial institutions with a means of borrowing and investing to deal with short-term fluctuations in their own assets and liabilities.
Financial market.
Stock market.
Money market.
Capital market.
Which market is primarily for large companies seeking finance?
Retail market
Wholesale market
Primary market
Secondary market
Marketable securities are:
Highly liquid investment converted into cash easily.
Long-term equity investment.
Note payable.
Bank loan matures in 5 years.
Which of the following is the advantage of going public?
Cost bearing.
Share price dilution.
Threats of takeover.
Access to a large source of finance.
What is a primary function of primary banks?
Providing investment services
Managing pension funds
Operating current accounts
Offering mortgage loans
To obtain new finance through a new share issue, a company should go to:
A primary market.
A future market.
A money market.
A secondary market.
What is a recommended action for a business with a short-term surplus of cash?
Return it to shareholders as dividends
Invest in long-term projects to increase shareholder wealth
Invest in various financial products in the money markets
Keep the surplus as cash reserve for future needs
Which attribute of a profession involves the ability to make independent decisions?
Great degree of autonomy
Formal regulatory process
Co-regulation
Lack of professional values
Which of the following elements is least likely to characterize a profession?
Restriction on membership to ensure the skills and competence of members.
The profession’s rules and regulations are established solely by the government.
Core values, which members are expected to maintain, are established.
A high degree of autonomy and independence.
Which of the following is NOT a reserved area for professional accountants in public practice
Probate
Financial management
Insolvency
Investment business
What defines a professional?
Lack of responsibility to operate in the public interest
Disregard for professional values
Limited skill resulting from study and training
Continual development of skills through education and experience
What skill should students develop to understand financial reporting and assurance?
Blind acceptance of reported numbers
Application of basic accounting skills
Memorization of accounting rules
Avoidance of critical thinking
What is a key responsibility of the professional accountant in maintaining control and safeguarding assets?
Implementing inadequate internal controls
Ensuring incomplete recording of transactions
Ensuring complete, timely, and accurate recording of transactions
Overlooking the business's overview of internal controls
Which of the following is a “reserved area” of professional accountancy practice?
Forensic accounting.
Insolvency.
Banking.
Mergers and acquisitions.
The stakeholder perspective on corporate governance means:
Directors disguise the true financial performance of the company from shareholders.
Directors act in the best interest of the company when acting as “stewards” of the company’s resources.
Senior management should balance the interest of shareholders with those of other stakeholders to achieve long-term sustained value for shareholders.
A balance between economic and social goals and between individual and communal goals.
Caau này khum ccos ddaps an
Which of the following statements about whistle-blowing is/are true?
Statement (1): Whistle-blowing involves the disclosure by an employee of illegal or unethical behaviour in the workplace.
Statement (2): Employees should always report concerns about unethical behaviour to their line manager in the first instance.
Statement (2) only.
Both of them.
Statement (1) only.
Neither of them.
Bank-based financial systems can be characterised by:
Bank lending is the least important source of business finance.
Banks and businesses are less integrated.
Households prefer to bear more risk and so hold more equity.
Banks are highly concentrated and integrated in terms of providing both banking and non-banking services.
The agency problem underlies the need for sound corporate governance. In this context, the “agents” are the company’s:
Shareholders.
Auditors.
Directors.
Customers.
WM plc adopts corporate responsibility as a key element in its strategies. This will mean that the company seeks to:
meet the minimum obligations it owes to stakeholders.
exceed the minimum obligations it owes to stakeholders.
exceed the minimum obligations it owes to shareholders.
meet the minimum obligations it owes to shareholders.
In ABC plc, the chairman is Jonathan, and the CEO is his daughter. All the directors receive bonuses based on annual profits. The company’s sales are made by individual salespeople who routinely bypass the company’s strict credit check procedures, which leads to several irrecoverable debts. From this information, what are the likely corporate governance issues at ABC plc:
Domination by a small group; Emphasis on short-term profitability; Lack of supervision of employees.
Emphasis on short-term profitability.
Lack of supervision of employees.
Domination by a small group.
The directors of Clamin plc state in the annual report that they comply with the requirements of the UK Corporate Governance Code. This is because they believe that the aim of the company is to balance economic and social goals, and individual and communal goals by encouraging the efficient use of resources through efficient investment. The directors of Clamin plc have adopted the:
Public policy perspective on corporate governance.
Stewardship perspective on corporate governance.
Corporate perspective on corporate governance.
Stakeholder perspective on corporate governance.
Good practice in corporate governance is LEAST LIKELY concerned with:
Risk management.
Unethical and unsustainable behaviors.
Reducing the potential for conflict.
Transparency.
With regard to the board of directors of a premium listed company (excluding the chairman), the UK Corporate Governance Code requires that the proportion who are independent non-executive directors should be:
50% or over.
between 40% and 49%.
between 10% and 24%.
between 25% and 39%.
Portmanteau plc aims to comply with the UK Corporate Governance Code. There are to be six members of the company’s nomination committee, so the number of independent non-executive directors on the committee must be at least:
Four.
Three.
Six.
Two.
According to the Corporate Governance Code, the board should state the appropriateness of adopting the going concern basis of accounting in its financial statements:
annually only.
half-yearly only.
only if the company fails to make a profit in a financial year.
annually and half-yearly.
According to the UK Corporate Governance Code, a company should seek to improve corporate governance by ensuring that:
the chairman and chief executive are different individuals in case one dies or becomes incapacitated by ill health.
the chairman and chief executive are the same individual to avoid confusion over who has responsibility for running the company.
the chairman and chief executive are different individuals to prevent one person from having too much power in a company.
the company chairman does not take up outside directorship.
Trent plc's Chief Executive Terence Darby has been appointed by the Board as its next Chair. The company has consulted major shareholders about this. It should set out its reasons for the appointment to all shareholders:
in the next annual report only.
at the time of appointment and in the next three annual reports.
at the time of appointment and in the next annual report.
at the time of appointment and also publish them on the company's website.
A shareholder in Mistral plc, a premium listed company, has raised a serious concern about the company with the Chair and other senior directors. To date the shareholder has been dissatisfied with the response she has received. To progress the matter further, the shareholder must be given access by the company to:
The chairman of the audit committee.
The senior independent director.
All non-executive directors.
The company secretary.
Marchant plc is a premium listed company. Which of the following statements about its compliance with the UK Corporate Governance Code is true?
It may, in particular circumstances, depart from the principles and provisions of the Code
It must comply with all the requirements of the Code.
It can be flexible in how it applies the Code.
It is not affected by the requirements of the Code.
The audit committee should comprise:
a balance of non-executive and executive directors.
only independent non-executive directors, at least one of whom should have recent and relevant financial experience.
both non-executive and executive directors, at least one of whom should have recent and relevant financial experience.
both independent and non-independent non-executive directors.
Feedback
Fixed costs
Activity levels
Budgets and standards
Which of the following is not a feature of effective feedback reports?
Made available in a timely fashion
Produced on a regular basis
Distributed to as many managers as possible
Sufficiently accurate for the purpose intended
Which of the following describes exception reporting?
Reporting of exceptional activities within an organisation
Reporting only controllable matters to managers
Reporting only of variances which exceed a certain value
Reporting of all variances to the relevant manager
4 Which two of the following statements about management control reports are correct?
Reports should be completely accurate.
Reports should be clear and comprehensive.
Reports should not include information about uncontrollable items.
Based on the information contained in reports, managers may decide to do nothing
Which of the following is not an example of budget bias?
A manager overestimates costs when setting the budget, to guard against overspending during the period.
A manager's advertising budget is disproportionately large in comparison with the budgeted revenue to be generated.
A manager underestimates revenues when setting the budget to ensure that the budget target can be easily exceeded.
A manager overestimates revenues when setting the budget in order to make a favourable impression on senior managers.
Which of the following statements is correct?
Since management accounts are prepared for a different purpose from that of external financial reports, there is no need for any convergence between the two.
The setting of appropriate performance measures will ensure that an organisation's performance management is effective
Since the board of directors is not concerned with the day to day management of a business they do not require regular management reports.
Management control activity might involve a comparison of the latest forecast results with the original budget.
Which of the following is not a style of performance evaluation identified in Hopwood's studies?
Budget constrained
Non-accounting
Revenue focused
Profit conscious
Select which of the following styles of using budgetary information is most likely to lead to each of the situations described. Job related tension is caused by which of the following styles:
Budget constrained
Profit conscious
Non-accounting
Less focus on cost control is caused by which of the following styles:
Budget constrained
Profit conscious
Non-accounting
Incidence of budget bias is caused by which of the following styles:
Budget constrained
Profit conscious
Non-accounting
A company have recently implemented a new budgetary planning and control system after several years of trading. Having made a significant investment in the new system, the company's management team were surprised to learn that it is not designed to do which of the following?
Improve control of actual performance
Improve coordination of activities
Improve gross profit
Improve communication of ideas and plans
Which of the following is a reason for adopting a decentralised rather than a centralised organisational structure?
Improved goal congruence between the goals of divisional management and the goals of the organisation
Rapid management response to changes in the trading environment
Availability of objective performance measures
Improved communication of information between the group's managers
Division P is an investment centre within PC Ltd. Over which of the following is the manager of division P likely to have control? (1) Transfer prices (2) Level of inventory in the division (3) Discretionary fixed costs incurred in the division (4) Apportioned head office costs
(1), (2), (3) and (4)
(1), (2) and (3) only
(1) and (2) only
(1) only
[C – F] – [(N + D + B) R]
[C – F] – [(N + D + I + B) R]
C – [(N + D) R]
G – (T R)
3 Division D of Distan Ltd is considering a project which will increase annual profit by £15,000 but will require average receivables levels to increase by £100,000. The company's target return on investment is 10% and the imputed interest cost of capital is 9%. Division D currently earns a return on investment of 13%. Would the return on investment (ROI) and residual income (RI) performance measures motivate the manager of Division D to act in the interest of the Distan company as a whole?
(A+B: ROI; C+D: RI)
Manager would wish to act in the interest of Distan Ltd
Manager would not wish to act in the interest of Distan Ltd
Manager would wish to act in the interest of Distan Ltd
Manager would not wish to act in the interest of Distan Ltd
Division B of a national house-building group is projected to earn profits of £4.5 million in the current year on capital employed at the year end of £25 million. The division has been set a target return on investment (ROI) of 20%. The manager of division B is considering disposing of some slow-moving houses which have a full market value of £16 million, but are held in the books at cost of £12 million, for a reduced figure of £14 million. Which of the following statements is true?
The revised divisional ROI will be below 20% and the manager will make a goal congruent decision.
The revised divisional ROI will be above 20% and the manager will not make a goal congruent decision.
The revised divisional ROI will be below 20% and the manager will not make a goal congruent decision.
The revised divisional ROI will be above 20% and the manager will make a goal congruent decision.
On the last day of the financial year a division has net assets with a total carrying amount of £300,000. The return on investment for the division is 18%. The division manager is considering selling a non-current asset immediately before the year end. The non-current asset has a carrying amount of £15,000 and will sell for a profit of £5,000. What would be the division's return on investment (ROI) immediately after the sale of the asset at the end of the year?
17.7%
19.3%
20.3%
20.7%
Which of the following is not a perspective that is monitored by the balanced scorecard approach to performance measurement?
Financial
Customer
Supplier
Innovation and learning
Indicate which of the following statements are true. (1) If a company uses a balanced scorecard approach to the provision of information it will not use ROI or residual income as divisional performance measures. (2) The residual income will always increase when investments earning above the cost of capital are undertaken. (3) The internal business perspective of the balanced scorecard approach to the provision of information is concerned only with the determination of internal transfer prices that will encourage goal congruent decisions. (4) An advantage of the residual income performance measure is that it facilitates comparisons between investment centres.
(1) only
(2) only
(3) only
(1) and (4) only
Which of the following describes a flexible budget?
A budget comprising variable production costs only
A budget which is updated with actual costs and revenues as they occur during the budget period
A budget which shows the costs and revenues at different levels of activity
A budget which is prepared using a computer spreadsheet model
Which of the following statements is/are correct? (1) Fixed budgets are not useful for control purposes. (2) A prerequisite of flexible budgeting is a knowledge of cost behaviour patterns. (3) Budgetary control procedures are useful only to maintain control over an organisation's expenditure.
(1), (2) and (3)
(1) and (2) only
(1) and (3) only
(2) only
What would be the total cost in a budget that is flexed at the 77% level of activity?
£330,300
£370,300
£373,300
£377,300
Within decentralised organisations there may be cost centres, investment centres and profit centres. Which of the following statements is true?
Cost centres have a higher degree of autonomy than profit centres.
Investment centres have the highest degree of autonomy and cost centres have the lowest.
Investment centres have the lowest degree of autonomy.
Profit centres have the highest degree of autonomy and cost centres have the lowest.
Which of the following is the correct formula for calculating the controllable residual income of the division?
P – [(F + S) R]
N – [(F + S) R
N – (Z R)
P – (Z R)
Which of the following sentences best describes what is necessary for a responsibility accounting system to be successful?
Each manager should know the criteria used for evaluating his or her own performance.
The details on the performance reports for individual managers should add up to the totals on the report of their superior.
Each employee should receive a separate performance report.
Service department costs should be apportioned to the operating departments that use the service.
11.9%
13.9%
17.9%
23.9%
A division has a residual income of £480,000 and a net profit before imputed interest of £1,280,000. If it uses a rate of 10% for computing imputed interest on its invested capital, what is its return on investment?
10%
22%
6%
16%
No Yes
Yes Yes
No No
Yes No
K, L, M and N
K, L and M only
K and L only
K only
Gross book value-Profit after charging depreciation on a reducing balance basis
Gross book value- Profit after charging depreciation on a straight-line basis
Net book value- Profit after charging depreciation on a straight-line basis
Net book value-Profit after charging depreciation on a reducing balancebasis
Consider the following statements: (1) Cloud accounting software allows multi-user access. (2) Cloud accounting software is more expensive than accounting software packages. Which of the following is correct with regards to the statements above?
(1) and (2) are correct
(1) and (2) are incorrect
(1) is correct and (2) is incorrect
(2) is correct and (1) is incorrect
Which two of the following are true when management information is provided by a shared service centre (SSC)?
Management information quality is improved as best practice can be implemented
There is a more consistent management of business data
Specific finance issues affecting individual departments will be taken into account
The costs of providing management information will increase L
Which of the following statements about cloud accounting is/are correct? (1) Data can be accessed from anywhere with an internet connection. (2) It helps businesses stay up to date with latest technological advances. (3) Cloud accounting applications remove risks of data theft.
(1), (2) and (3)
(1) and (2) only
(3) only
(2) and (3) only
When a company decides to use cloud accounting, which of the following does it no longer need?
Accounting software update manager
Trained accounts staff
Management reporting timetables
Internet access
3 The shared service centre (SSC) of Brilliant Job Ltd contains its human resource management, payroll, accounting and IT functions. It has developed a service level agreement (SLA) with its internal clients in the various business units of Brilliant Job Ltd. This SLA places great importance on service quality, and particularly focuses on the accuracy of the work that the SSC performs. Which of the following performance measures reflects this focus on accuracy?
Percentage of employment contracts sent out without errors
Speed in dealing with IT user queries
Number of sales invoices raised
Timely removal of ex-employees from the payroll database
The shared service centre (SSC) of Oilspill Ltd operates its payroll, finance and project management functions. It has adopted the balanced scorecard for measuring its performance. Which two of the following would be appropriate for the SSC to use as performance measures in the ‘customer perspective’ quadrant?
Cost per accounting transaction processed
Time saved updating payroll file for overtime payments
Number of complaints about processing delays
Number of new projects set up
Percentage of reports issued to department heads on time
