Chapter 6

Question 1

Management accounts are:

Answer 1

used internally to manage the business

forward looking and historical
include a cash flow forecast
include budgetary info

Question 2

Financial accounts are:

Answer 2

financial reporting is regulated by standards + statue
used by shareholders

Question 3

Mainstream Ltd’s finance director is establishing an effective system in the finance function for
producing management accounting reports. Which issue should be the finance director’s primary
consideration?
A The information needs of the company’s managers
B The need for effective internal control mechanisms
C The need for cost-effectiveness
D The need for effective information security

Answer 3

A

Question 4

Which statement about critical success factors (CSFs) for a business is true?
A Low costs will always be a CSF; high sales revenue will always be a CSF.
B Low costs will always be a CSF; high sales revenue will not always be a CSF.
C Low costs will not always be a CSF; high sales revenue will always be a CSF.
D Low costs will not always be a CSF; high sales revenue will not always be a CSF.

Answer 4

D - high quality might be more important than costs; high margins might be more important than revenue

Question 5

organisations to improve reporting of economic, environmental + social impact

Answer 5

GRI = global reporting initiative
triple bottom line approach

Question 6

TCFD focus:

Answer 6

Task Force on Climate-Related Financial disclosure = financial impact of climate change

Question 7

CDSB focus

Answer 7

Climate Disclosures Standards Board = focus on natural capital

Question 8

GRI

Answer 8

global reporting initiative standards - improve reporting of economic, environmental and social impact

Question 9

triple bottom line approach

Answer 9

with GRI - improve reporting of economic, environmental and social impact

Question 10

fundamental qualitative features of FS

Answer 10

relevance

faithful representation

Question 11

enhancing qualitative features

Answer 11

verifiability
comparability
understandability
timeliness

Question 12

Planning info

Answer 12

helps people plan

Question 13

Operational info

Answer 13

helps people carry out their day-to-day activities

Question 14

Tactical info

Answer 14

short-term issues + opportunities ie monthly variance reports

Question 15

Strategic info

Answer 15

long-term decision making

Question 16

monthly variation reports - type of info:

Answer 16

tactical information

Question 17

how is data / information processed: to be effective it must be:

Answer 17

CATIVA

Completeness
Accuracy
Timeliness
Inalterability
Verifiability
Accessibility

Question 18

control totals - accuracy, completeness, both
and
data verification or validation?

Answer 18

validation - both

Question 19

range checks - accuracy, completeness, both
and
data verification or validation?

Answer 19

validation
accuracy

Question 20

Ranger plc’s information systems manager wants all data on the company’s databases to be the same
as their sources and not to have been accidentally or deliberately altered, destroyed or disclosed. His
concern, therefore, is with:
A data accuracy
B data integrity
C data authenticity
D data completeness

Answer 20

b

part of ACIANA

Question 21

secure info system - qualities acronym

Answer 21

ACIAN

Accessibility
Confidentiality
Integrity
Authenticity
Non-repudiation - the avoidance of reject
Authorisation

Question 22

The directors of Royguard plc have recently decided to establish an extensive management
information system within one of its subsidiaries. In arriving at this decision, the directors were likely
to have been conscious that the subsidiary’s operations were largely characterised by:
A structured decisions
B unstructured decisions
C non-programmable decisions
D non-routine decisions

Answer 22

A - structured decisions: reduced to a series of rules

Question 23

Zing plc’s information system automatically maintains a log of user activity. This log contains details
of identity, log-on and log-off times and details of processing carried out and access attempts made.
All transactions are tagged to identify the person responsible for that processing. The log-on details
of the user determine processing access.
Requirement
Which three of the following control objectives does this system effectively address?
A prevention
B detection
C deterrence
D correction
E accuracy
F completeness

Answer 23

A B C