BA2

Question 1

Historical cost

Answer 1

Original cost paid for an asset

Question 2

Five fundamental ethical principles

Answer 2

Integrity
Objectivity
Professional competence & due care 
Confidentiality
Professional Behaviour

Question 3

ROCE

Answer 3

Operational profit / long term capital x 100

Question 4

Long term capital

Answer 4

Total assets - current liabilities

Question 5

GP margin

Answer 5

Gross Profit / Sales revenue x 100

Question 6

Operating (net) profit margin

Answer 6

Operating profit / Sales revenue x 100

Question 7

A higher ROCE percentage figure indicates?

Answer 7

A company is using its

resources more efficiently to generate profits

Question 8

Efficiency ratios measures?

Answer 8

The use of assets

Question 9

Asset turnover

Answer 9

Sales revenue / Assets

Question 10

Financial performance indicators limitations

Answer 10

Historical data only
Manipulated through careful selection of accounting
policies
Short term feedback only

Question 11

Non-financial performance indicators examples

Answer 11

Competitiveness
Productivity
Quality
Customer satisfaction

Question 12

Advantages of NFPIs

Answer 12

Forward looking
Allows all areas of the business to be measured
Easily understood by all personnel
Gives a good indication of long term performance, as opposed to financial indicators which are mostly focused on the short term
Cannot be easily manipulated through accounting policies
Provide a mixture of qualitative and quantitative performance measures

Question 13

Balanced Scorecard

Answer 13

Kaplan & Norton

Customer perspective
Internal business perspective
Innovation and learning perspective
Financial

In each category, the organisation must follow through from the business strategy, to ensure they are focused on the long term direction of the business.
Clear objectives should be set under each category according the SMART criteria (Specific, Measurable, Achievable, Relevant and Timebound)

Question 14

Qualities of the service sector

Answer 14

Variability
Transitory - the services that companies offer cannot be stored, saved or reused. (Hotel room)
Simultaneity - produced/consumed at the time of purchase
Intangibility - No physical presence

Question 15

SERVQUAL quality assurance model

Answer 15

Parasuranam and colleagues

Designed to measure the quality of a service by capturing customers expectations and perceptions in five key areas

Tangibles
Reliability
Responsiveness
Assurance
Empathy

Question 16

NPV

Answer 16

Project appraisal technique

Uses relevant net cash flows generated by a project over its total lifetime to calculate a project’s net contribution to an organisation

Question 17

Internal rate of return (IRR)

Answer 17

What level the cost of capital should be so that the
project at least breaks even (neither making a profit nor a loss). This is the
break even cost of capital.

Question 18

4 Global Principles

Answer 18

Influence
Relevance
Trust
Value

Question 19

OAR

Answer 19

Production overhead / activity level

Question 20

Contribution

Answer 20

Selling price - variable cost (Marginal cost )

Question 21

Marginal cost

Answer 21

Direct materials + Direct labour + var overheads per unit

Question 22

Accurate

Answer 22

Accurate
Complete
Cost beneficial
Understandable
Relevant
Authoritative
Timely
Easy to use

Question 23

Standard deviation

Answer 23

NPV - EV = Deviation
Square then x by probability
= Weighted amount
Add all and square root = SD

Question 24

Coefficient

Answer 24

Standard deviation / Expected Value
X 100

Question 25

Cost of sales

Answer 25

Opening inventory
+ purchases
- returns
- closing inventory

Question 26

Break even point

Answer 26

Fixed costs / (selling price - variable costs)

Question 27

Margin of safety

Answer 27

Predicted sales - Breakeven point