Chapter 4

Question 1

Finance (accounting) operations includes

Answer 1

Financial reporting
Management Accounting
Treasury management
Internal auditing

Question 2

Finance reporting

Answer 2

It is concerned with the production of finance information for external users

Question 3

Financial statement

Answer 3

Statement of profit and loss(SOPL) (balance sheet)
Statement of financial position (SOFP) income statement
Statement of cash flow

Question 4

Why do business need to prepare financial statements

Answer 4

To satisfy stakeholders who have an interest in the financial performance

Question 5

Stakeholder interested in the financial performance of the organisation

Answer 5

Owners
Managers
Banks
Employees
Suppliers and consumers
Government

Question 6

Earning per share (EPS)

Answer 6

EPS=net income/shares outstanding

Question 7

Price earning ration

Answer 7

P/E ration =price per share / earnings per share

Question 8

Dividends yield

Answer 8

= dividence per share /current share price *100

Question 9

Define management Accounting

Answer 9

Is the provision of information to help managers and other internal users in their decisions making, performance measurement, planning and control activities.

Question 10

3 key management reports

Answer 10

1. Budget
2. Cost schedule
3. Various reports

Question 11

Various report

Answer 11

Compares the budget to the actual results achieved for the budget period and identifies any significant difference

Question 12

Why the budget is useful

Answer 12

CRUMPET
coordination
Responsibility
Utilasation
Motivation
Planning
Evaluation
Telling

Question 13

What do budget do

Answer 13

They shows the total planned revenues and costs for the business for the upcoming period

Question 14

Treasury management

Answer 14

Is the management of funds of the business

Question 15

Key roles of treasury functions includes

Answer 15

Working capital management
Cash management
Financing
Tax
Foreign currency

Question 16

Internal audit

Answer 16

An independent activity, established by management to examine and evaluate the organisation’s risks management process and system of control

Question 17

Role (purpose of internal audit)

Answer 17

Monitor the cash balance and working capital to ensure that it never runs out of money

Question 18

Legal basis (purpose internal audit)

Answer 18

Preparation of cash budget and arrangement of overdraft where necessary

Question 19

Scope of work ( purpose internal audit)

Answer 19

Monitor the investment and borrowing to limit exposure and increase returns

Question 20

Approach ( purpose of internal audit)

Answer 20

Manage exchange rates and minimize losses due to foreign exchange rates

Question 21

Responsibility (purpose of internal audit)

Answer 21

Manage affairs legally to avoid as much tax as possible