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KR accounting > accounting exam > Flashcards

accounting exam Flashcards

1
Q

BREAK EVEN POINT FORMULA

A

Total FC divided by Contribution

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2
Q

GROSS PROFIT

A

sales - cost of goods sold

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3
Q

GROSS PROFIT MARGIN

A

Gross profit divided by Sales revenue x100

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4
Q

OPERATING PROFIT

A

Gross profit - operating expenses

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5
Q

OPERATING PROFIT MARGIN

A

operating profit divided by sales revenue x 100

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6
Q

PRIME COST

A

Direct material + direct labour

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7
Q

Conversion Cost

A

direct labour + manuf overhead

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8
Q

TOTAL COST

A

Fixed costs + (vc x number of units )

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9
Q

Manufactoring Costs

A

Material+ Labour+ manuf Overheads DO NOT INCLUDE SELLING COSTS

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10
Q

Contribution

A

SP-VC-Overheads-Manuf costs

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11
Q

assets

A

equity+ SR- expenses+ liabilities

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12
Q

hi-lo method

A 
identify low and high levels 
calculate difference in cost and levels 
calculate VC by cost divide by level 
calculate FC by VC x High level. 
High level cost - total vc
repeat for low level
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13
Q

ROCE

A

operating profit / share capital=+ reserves + non current liabilities

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14
Q

depreciation- straight line method

A

purchased value - expected value/ amount of years

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15
Q

depreciation - reducing balance method

A

use percentage of depreciation and take from purchased value with the new value, take the same depreciation value from that too

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16
Q

Margin of Safety

A

expected units - BEP/expected units

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17
Q

£3000 proceeds would be recorded in the…… part of the cash flow statement

A

Investing activities

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18
Q

recordings of accruals and prepayments is an example of what

A

Matching

19
Q

Verifiability is where

A

the value has to be the same? ASK NADIA

20
Q

PRUDENCE

A

Never underestimate or overestimate e.g. costs, inventory, profit

21
Q

acid test

A

CA - inventory/ CL

22
Q

current ratio

A

CA -CL

23
Q

how can you help liquidity?

A

Offer early payments to discuss outstanding receivables

24
Q

Operating gearing

A

Contribution / Profit

25
Q

profit

A

units x contribution

26
Q

four enhancing qualitative characteristics of accounting

A

understandability
timeliness
verfiyability
comparability

27
Q

fundamental qualitative characteristics of accounting

A

faithful representation and relevance

28
Q

role of income statement

A

shows the financial performance of an organisation over a particular period of time

29
Q

what is the income statement

A

Account of profit and loss

30
Q

role of Statement of financial position

A

shows a SNAPSHOT of financial position of the organisation at a PARTICULAR PERIOD OF TIME

31
Q

role of Cash flow statement

A

Shows cash inflows and outflows

32
Q

company is suffering from poor liquidity, what action can it take?

A

CASH IS KING!!!!!!!

INCENTIVISE SALES STAFF TO SELL CASH OPPOSED TO CREDIT

33
Q

Limitation of traditional ratio analysis

A

different organisations may use different accounting policy therefore comparing results isn’t a fair comparison

34
Q

ideal current ratio figure?

A

it depends on the nature of the organisation

35
Q

dangers of reducing a organisations capital by buying assets

A

managers may avoid replacing old, inefficient assets as they will increase the asset base (via the issuing of finance) and therefore reduce ROCE

36
Q

why might a company be over trading?

A

high receivables and loan

37
Q

a …… budget is where the budget for each period is determined with reference to what was spent in the previous period plus an allowance for anticipated inflation.

A

incremental budget

38
Q
  1. Types of responsibility centres include all of the following EXCEPT

A. Cost centre
B. Profit centre
C. Investment centre
D. Contribution centre

A

contribution centre

39
Q
  1. Assuming all other things are equal, a company’s Return on Investment (ROI) would INCREASE when:

A. operating expenses increase
B. operating income increases
C. operating income decrease
D. average operating assets increase

A

operating income increases

40
Q
  1. Assuming all other things are the same, fixed costs must have ______ if there was a decrease in the break-even point.
A

decreased

41
Q
  1. Which of the following BEST describes relevant costs?

A. present costs with similar decision alternatives
B. future costs that differ between competing decision alternatives
C. past costs that correspond solely on competing decision alternatives
D. present costs that differ between competing decision alternatives

A

b. future costs that differ between competing decision alternatives

42
Q

ROI

A

Return on sales (ros) X Turnover

43
Q

Gearing ratio

A

Total contribution/ net profit

KR accounting (1 decks)

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