Reference no: EM132365104

Managerial Accounting

1. FRS 14 defines which ratio?

1. Earnings per share

2. Return on capital employed

3. Dividend yield

4. Return on equity

2. Which of the following factors does not suggest overtrading is taking place?

1. Increases in sales volume

2. Lower profit margins

3. Build up of cash in bank

4. Reliance on short term finance

3. Revenue is realized when

1. Cash is withdrawn

2. Cash is received

3. Customer purchase your product

4. All of the above

4. The primary users of general purpose financial reports are:

1. Investors and employees

2. Investors and lenders

3. Investors and customers

4. Employees and lenders

5. All of the following influence capital budgeting cash flows except:

1. Choice of depreciation method for tax purposes

2. Economic length of the project

3. Projected sales (revenues) for the project

4. Sunk costs of the project

6. Which of the following would be considered a use of funds?

1. a decrease in accounts receivable.

2. a decrease in cash.

3. an increase in account payable.

4. an increase in cash.

7. Which of the following describe the investments most appropriately?

1. Investments by owners are increases in net assets of a particular enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interest (or equity) in it.

2. Investments by government are increases in net assets of a particular enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interest (or equity) in it.

3. Investments by owners are decreases in net assets of a particular enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interest (or equity) in it.

4. None of the above

8. Which of the following is NOT a qualitative characteristic of financial statements?

1. Full disclosure

2. Understandability

3. Relevance

4. Comparabilit

9. What does the the principles of objectivity require?

1. The principles of objectivity require that accounting data should be verifiable and free from bias

2. The principles of objectivity require that accounting data should not be verifiable and free from bias

3. The principles of objectivity require that accounting data should not be verifiable and should not be free from bias

4. None of the above

10. A note payable is a borrowing instrument that generally does not involve the payment of interest.

1. true

2. false

11. What do you mean by Comprehensive income?

1. Comprehensive income is the change in equity (net assets) of an entity during a period from transactions and other events and circumstances from no owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

2. Comprehensive income is the equity (net assets) of an entity during a period from transactions and other events and circumstances from no owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

3. Comprehensive income is the change in equity (net assets) of an entity during a period from transactions and other events and circumstances from no owner sources. It does not includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

4. None of the above

12. Which of the following is a contra account?

1. Accumulated Depreciation

2. Mary Smith, Capital

3. Both

4. None of the above

13. The amount reported on the balance sheet for Property, Plant and Equipment is the company's estimate of the fair market value as of the balance sheet date.

1. true

2. false

14. If a firm repays loans with cash then what will be the effect on ratios?

1. Current ratio increases

2. Stockturn increases

3. Acid test ratio decreases

4. Gearing increases

15. Depreciation Expense shown on a company's income statement must be the same amount as the depreciation expense on the company's income tax return.

1. true

2. false

16. The proportion of sales that is accounted for by total costs can be ascertained by which ratio?

1. Return on capital employed

2. Gross profit percentage

3. Stock turnover

4. Net profit percentage

17. "An entity which adopts international financial reporting standards must always adhere to the requirements of every standard, no matter what the circumstances".

1. true

2. false

18. Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current asset needs?

1. 6-month bank notes.

2. Trade credit.

3. Accounts payable.

4. Common stock equity.

19. Of the following account types, which would be increased by a debit?

1. Liabilities and expenses.

2. Assets and equity.

3. Assets and expenses.

4. Equity and revenues.

20. In proper capital budgeting analysis we evaluate incremental which cash flows.

1. Accounting

2. Operating

3. Before-tax

4. Financing

21. Maximum sulphur percentage in low sulphur heavy stock (LSHS) furnace oil is about?

1. 0.1

2. 1

3. 2.5

4. 3.5

22. What is ignored in the computation of the depreciation of a fixed asset?

1. Its length of expected useful economic life to the business

2. Its cost

3. Its cost of repair

4. Its estimated residual value at the end of its useful life in the business

23. What would be the result where two to twenty (normally) people carry on a business, with a view to profit.

1. consortium

2. partnership

3. company

4. cooperative

24. The fundamental qualitative characteristics of financial information are:

1. Relevance and faithful representation

2. Relevance and comparability

3. Faithful representation and comparability

4. Verifiability and understandability

25. What do you mean by the Management Accounting?

1. Management Accounting: This type of accounting is a tool in the hands of management for various functions; (i) to control costs (ii) to take important future decisions (forecasting).

2. Management Accounting: This type of accounting is a tool in the hands of management for various functions; (i) to recuit workforce (ii) to take important Selection decisions (forecasting).

3. Management Accounting: This type of accounting is a tool in the hands of management for various functions like pantry management, transportation of employee

4. None of the above

26. Accounting information can only be considered to be useful if it could be capable of affecting people's:

1. welfare

2. behaviour

3. thoughts

4. business

27. Why accounting is called as SCIENCE

1. Because it deals with human beings

2. Because it deal with the transaction

3. Because the transactions are recorded in the systematic manner

4. Accrual

28. In financial statement analysis, an increasing capital stock account tends to be a sign of which of the following?

1. Weak financial health

2. Insolvency

3. Economic health

4. High liquidity

29. The elements of financial statements which relate to financial position are:

1. Income and expenses

2. Income, expenses and equity

3. Assets, liabilities and equity

4. Assets, liabilities, income and expenses

30. what is cash and bank in terms of asset and liability?

1. Cash is an asset and Bank is a liability

2. Cash is an liability and Bank is a assets

3. Both are true

4. None of the above

31. A balance sheet does not Shows:

1. Present revenues and expenses of an enterprise

2. Show the financial status of an enterprise

3. Have two counterbalancing sections

4. Report the assets and claims of an enterprise at a specified moment in time

5. None of the above

32. Which item may be of concern when analyzing cash flow from operating activities?

1. Decreasing accounts receivable.

2. Increasing inventories.

3. Payments of dividends.

4. Repayment of debt.

33. Deferred credits will appear on the balance sheet with the?

1. Assets

2. Liabilities

3. Owner's/Stockholders' Equity

4. None of the above

34. Decision makers compare net income to net cash from operating activities. To make these amounts more comparable, the same accounts are included in each. The following accounts are used to compute both net income and net cash from operating activities except?

1. dividends declared and paid

2. interest expense

3. interest revenue

4. dividend revenue

35. Which of the following is used as a catalyst in fluidised bed catalytic cracking ?

1. Silica-magnesia

2. Silica-alumina

3. Bentonite clays

4. All (a), (b) and (c)

36. Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy?

1. The firm uses long-term financing to finance all fixed and current assets.

2. The firm will see an increase in its expected profits.

3. The firm will see an increase in its risk profile.

4. The firm will increase its dividends per share (DPS) this period.

37. What are the elements of Financial statement as per FASB.

1. According to FASB, the elements of financial statements are the building blocks with which financial statements are constructed

2. An entity's cash receipts and cash payments relating to its financing activities during a particular period.

3. The Financial Accounting Standards Board (FASB) has defined the following elements of financial statements of business enterprises: assets, liabilities, equity, revenues, expenses, gains, losses, investment by owners, distribution to owners and comprehensive income.

4. 1 and 3

5. 1 and 2

38. Current purchasing power accounting is concerned with:

1. Changes in replacement cost

2. Changes in net realisable value

3. Specific price changes

4. General price changes

39. All of the following are true regarding the cash flow statement except?

1. cash outflows are shown in parentheses to indicate that payments must be subtracted

2. this statement explains the causes of the change in the cash balance

3. this statement classifies cash transactions as operating, investing, or financing

4. this statement reports information as of a certain date and therefore, is dated like the balance sheet

40. Which two of the following accounts is a current liability?

1. Minority interests

2. Trade receivables

3. Trade payables

4. Taxes payable

5. Reserves

41. One of the main advantages of standardisation in financial reporting is:

1. Comparability between accounting periods and between entities

2. The production of prudent financial statements

3. Increased flexibility in financial reporting

4. The use of creative accounting practices

42. When attempting to identify accounting errors the trial balance can be relied on to detect which of the following errors:

1. amounts posted to the correct side of a wrong account

2. all accounting errors

3. posting to the wrong side of any account

4. transactions not accounted for

43. Which of the following statements is not true?

1. Returns inwards and returns outwards are both debit balances

2. Carriage inwards and carriage outwards do not both appear in the trading account

3. Both types of returns appear in the trading account

4. Carriage inwards and carriage outwards are both debit balances

44. Which of the following statement is correct?

1. We can find out from the books of account how much is due to creditors (liabilities)

2. How much the firm owns (assets).

3. One can know about the profit earned or loss suffered

4. 1 and 3

5. All of the above

45. Which of the following is not a category of ratios?

1. Efficiency

2. Solvency

3. Management

4. Profitability

46. Liquidity ratios can be used:

1. to measure the degree of protection of long-term suppliers of funds

2. to measure borrowing capacity

3. to measure the earning ability of a firm

4. to measure the firm's ability to meet its current obligations

5. to measure the worth of the firm

47. During periods of inflation, the use of FIFO (rather than LIFO) as the method of accounting for inventories causes:

1. higher inventory turnover

2. higher incomes taxes

3. lower ending inventory

4. higher reported sales

5. None of the above

48. Equity and liabilities are divided into?

1. Shareholders' funds

2. Share application money pending allotment

3. Non-current liabilities

4. Current liabilities

5. All of the above

49. A delivery van that cost $40,000 has an expected service life of eight years and a residual value of $4,000. Depreciation for the second year of the asset's life using the sum-of-the-years'-digits method is:

1. 4500

2. 7000

3. 8000

4. None of the above

50. Stock is not included in the current assets when calculating the acid test ratio because:

1. Only debtors can be included, as they will be converted into cash shortly

2. It makes comparison easier as only two current liabilities are included in the acid test ratio

3. Banks only recognise cash and debtors as liquid assets

4. Stock is not a liquid asset

51. XYZ Company has a ratio of (total debt/total assets) that is above the industry average, and a ratio of (long term debt/equity) that is below the industry average. These ratios suggest that the firm:

1. utilizes assets effectively

2. has too much equity in the capital structure

3. has relatively high current liabilities

4. has a relatively low dividend payout ratio

5. None of the above

52. After all the transactions are recorded properly in the books of account , all such data are also classified under appropriate heads:

1. So that as and when data is analysed or interpreted, correct results can be drawn if data of similar nature is available at a particular place.

2. It saves time

3. It avoid confusion

4. Avoid unnecessay wastage of money

53. The balances of opening and closing accounts receivable are Rs. 40,000 and 15,000 respectively what would be the value of cash received from customer if the net sales are 45,000.?

1. Rs. 85,000

2. Rs. 60,000

3. Rs. 70,000

4. Rs. 100,000

54. Given the following information, what is the cash conversion cycle in days of PP plc? £000 Total sales: 276 Cost of goods sold: 200 Purchases: 120 Stocks: 37 Debtors: 43 Creditors: 15?

1. 125.6 days.

2. 78.8 days.

3. 60.2 days.

4. 170.0 days.

5. 35.0 days

55. The following are extracts from an income statement for the year ended 31 December 2009 £000 Sales revenue 10,000 Cost of sales (8,500) Distribution costs (300) Administrative expenses (200) Net interest paid (150) Taxation (500) Dividends (100) The profit after tax is:

1. £750,000

2. £250,000

3. £900,000

4. £250,000

56. In 2007, the controller of the XYZ Company discovered that 2006 depreciation expense was overstated by $50,000, a material amount. Assuming an income tax rate of 40 percent, the prior period adjustment to 2007 beginnings retained would be:

1. 0

2. $30,000 debit.

3. $30,000 credit.

4. None of the above