4. Finance function

Question 1

Five key activities of the finance function

Answer 1

Accounting operations
Analysis
Planning
Decision making
Control

Question 2

Sound stewardship

Answer 2

The recording of financial transactions

Question 3

Record keeping and stewardship

Answer 3

preparation of financial statements in accordance with legal rules and accounting standards

Question 4

Components of the finance function

Answer 4

Financial accounting
Management accounting
Treasury management
Internal audit

Question 5

Financial accounting

Answer 5

production of financial statements in accordance with IFRS and legislation

Question 6

External reports

Answer 6

Statement of Profit or Loss
Statement of financial position
Statement of cash flow

Question 7

Investor ratios

Answer 7

Earnings per share
Price/ earnings P/E ratio
Dividend yeild

Question 8

Earnings per share

Answer 8

profit after tax (less preference shares)
/
weighted average number of ordinary shares in issue

Question 9

Price/ earnings ratio

Answer 9

Share price
/
EPS

Question 10

Dividend yield

Answer 10

Dividend per share
/
Current share price
x 100

Question 11

Integrated reporting

Answer 11

combines reporting on environmental and social issues within the financial reports

Question 12

Common management accounts reports

Answer 12

Cost schedules
budgets
variance reports

Question 13

Cost schedules

Answer 13

show the expenses involved in manufacturing units - can be called a cost card

Question 14

Responsibility of budgets and budgetary control

Answer 14

management accountant

Question 15

Budgets

Answer 15

CRUMPET

Coordination
Responsibility
Utilisation
Motivation
Planning
Evaluation
Telling

Question 16

Variance reports

Answer 16

shows actual vs budget

Question 17

Feedforward control

Answer 17

comparing budgeted results against forecast

Question 18

Treasury management

Answer 18

working capital management
cash management
financing
foreign currency
tax

Question 19

Evaluating and obtaining finance

Answer 19

Debt - interest payments are tax deductible

Equity - shares are sold

Question 20

Tax avoidance

Answer 20

the legal use of rules to reduce one’s tax liability

Question 21

Tax evasion

Answer 21

to use illegal means to reduce one’s tax liability

Question 22

Tax mitigation

Answer 22

to reduce tax liabilities without frustrating the intentions of parliament

Question 23

Internal audit

Answer 23

report on the effectiveness of internal controls

report via the audit committee to the board of directors

Question 24

Prerequisites of fraud

Answer 24

Dishonesty
Opportunity
Motivation

Question 25

Company secretarial

Answer 25

Duties determined by the board

normally in relation to stat accounts, annual returns, companies house