Quiz Questions In Lectures

Question 1

Who is responsible for financial statements, planning and tax?

 Chief Financial Officer
 Treasurer
 Controller

Answer 1

 Controller

Question 2

Which of the following is true?

 Annual statements don’t require a Directors reports
 Annual statements don’t require a cash flow statement
 The prudence convention dictates that the most optimistic value should always be used

Answer 2

 Annual statements don’t require a cash flow statement

Question 3

Which two of the following are true?

 Balance sheets take a long-term view of financial performance
 Cash flow can be assessed using balance sheets
 Value can be assed using balance sheets
 Profit can be assessed using profit and loss statements

Answer 3

 Value can be assed using balance sheets

 Profit can be assessed using profit and loss statements

Question 4

Which two of the following are true?

 Long term assets should always balance with short term assets
 Long term assets should always balance with long term liabilities
 Assets should always balance with liabilities
 Double entry accounting is a dishonest practice that involves counting things twice to ‘cook the books’
 Double entry is the mechanism for creating accurate balance sheets

Answer 4

 Assets should always balance with liabilities

 Double entry is the mechanism for creating accurate balance sheets

Question 5

Which two of the following are true?

 A balance sheet should always balance
 A balance sheet should never balance
 A balance sheet can’t always balance
 A balance sheet provides a snap-shot of a companies value but can be manipulated or ‘cooked’
 A balance sheet provides an objective, accurate and reliable assessment of value

Answer 5

 A balance sheet should always balance

 A balance sheet provides a snap-shot of a companies value but can be manipulated or ‘cooked’

Question 6

What would you use to help establish whether a company could meet their liabilities?

 The Balance sheet
 The Profit & Loss account
 The Directors summary
 The Auditors report

Answer 6

 The Balance sheet

Question 7

Which of the following is true?

 A profit and loss statement provides a comprehensive view of a companies financial health
 A range of different financial statements and some ‘reading between the lines’ is required to establish a sense of a companies financial health
 A comprehensive view of financial health can be obtained by ensuring there is consistency between the various financial reports

Answer 7

 A range of different financial statements and some ‘reading between the lines’ is required to establish a sense of a companies financial health

Question 8

What do shareholder ratios show?

 Show return on stakeholder equity
 Show how productively a firm is using its assets
 Show the firms return on investments
 Show how quickly the firm can get its hands on cash
 Show the ability of a firm to honor its depts.

Answer 8

 Show return on stakeholder equity

Question 9

A business has a ‘acid test’ value of 0.4. Which of the following is correct?

 The business is definitely on the rocks
 The business has loads of cash sitting around that could perhaps be working harder (maybe they are just about to make a big investment).
 The business is appealing to someone looking to get their hands on quick cash
 The business probably has high levels of inventory

Answer 9

 The business probably has high levels of inventory

Question 10

A business has a ‘acid test’ value of 8.2 Which of the two following are correct?

 The business is definitely on the rocks
 The business has loads of cash sitting around that could perhaps be working harder (maybe they are just about to make a big investment).
 The business is appealing to someone looking to get their hands on quick cash
 The business has high levels of inventory

Answer 10

 The business has loads of cash sitting around that could perhaps be working harder (maybe they are just about to make a big investment).
 The business is appealing to someone looking to get their hands on quick cash

Question 11

If you were using ‘acid test’ to assess how productive a company is and they have a low value (0.3), which other measure would be appropriate to evaluate performance?

 Inventory turnover ratio because it would indicate
how well they were using their stock (a acid test
value of 0.3 could suggest high inventory levels).
 Inventory turnover ratio because it would indicate
that they profitability (a value of 0.3 would suggest
that they were struggling to be profitable)
 Return on assets because it would tell you how much
return they were getting on assets and assets are a
key term used to calculate the acid test value

Answer 11

 Inventory turnover ratio because it would indicate how well they were using their stock (a acid test value of 0.3 could suggest high inventory levels).

Question 12

Based on the Transition Systems Architect accounts, which two of the following statements are true?

 There is nothing to be alarmed about, everything looks in order
 It is always a healthy to see that total receivables and revenue are increasing
 As long as either revenue or receivables is increasing, everything is ok
 The increase in unbilled receivables is cause for concern, especially during a period where sales increase.
 The accounts suggest an overly aggressive approach to revenue recognition

Answer 12

 The increase in unbilled receivables is cause for concern, especially during a period where sales increase.
 The accounts suggest an overly aggressive approach to revenue recognition

Question 13

Same Store Sales is an example of a financial metric which falls outside GAAP. Which two of the following are true?

 It can be useful but should be considered with caution and in conjunction with other metrics
 It is the best means of assessing performance of retail and restaurant businesses
 Changes to the definition of SSS are normal and reflect changes in the business environment.
 Changes in the definition of SSS are a cause for concern and require further investigation

Answer 13

 It can be useful but should be considered with caution and in conjunction with other metrics
 Changes in the definition of SSS are a cause for concern and require further investigation

Question 14

Which two of the following are true?
❑ Cost accounting feeds into financial reports
❑ Is a formality and has very little impact on
practice
❑ Is only required in large organizations who can
afford an accountant
❑ Helps inform management decision making

Answer 14

❑ Cost accounting feeds into financial reports

❑ Helps inform management decision making

Question 15

Direct costs are:
❑ Labour cost and material cost explicitly associated
with a particular cost object
❑ Labour cost, material cost and overheads
associated with a particular cost object
❑ Direct insurance and equipment such as PPE which
are integral to safe and efficient manufacturing

Answer 15

❑ Labour cost and material cost explicitly associated

with a particular cost object

Question 16

Manufacturing overheads are:
❑ All production costs
❑ All production costs (except indirect costs such as
insurance and depreciation)
❑ All production costs (except direct materials and
direct labour)
❑ All production costs (except indirect labour and
indirect mateirals)

Answer 16

❑ All production costs (except direct materials and

direct labour)

Question 17

Indirect costs include:
(Please choose three of the following)
❑ Personal Protective equipment
❑ Specially skilled manufacturing operators
❑ Raw materials (pre-processing)
❑ Electricity
❑ Recruitment costs

Answer 17

❑ Personal Protective equipment
❑ Electricity
❑ Recruitment costs

Question 18

Semi-fixed costs:
❑ Are changeable depending upon the customer or
the business strategy
❑ Reflect seasonal variation in the cost of raw
materials
❑ Reflects stepped increases in cost as volume
increases
❑ Have a variable element and a fixed element

Answer 18

❑ Reflects stepped increases in cost for as volume

increases

Question 19

Semi-variable costs:
❑ Have a fixed element (for example, planned
maintenance) and a variable element (for example,
unplanned maintenance)
❑ Are changeable depending upon the customer or
the business strategy
❑ Reflect seasonal variation in the cost of raw
materials
❑ Reflects stepped increases in cost as volume
increases

Answer 19

❑ Have a fixed element (for example, planned
maintenance) and a variable element (for example,
unplanned maintenance)

Question 20

With regards to sunk costs:
❑ It is critical to consider costs already invested when
making decisions about the best course of action.
❑ It is critical that sunk costs are ignored when making
decisions about the best course of action

Answer 20

❑ It is critical that sunk costs are ignored when making

decisions about the best course of action

Question 21

Opportunity costs :
(Please select two of the following)
❑ Compare the value of an investment with the value
of the next best alternative
❑ Compare the value of an investment with the value
of all other alternatives
❑ Are an objective way to consider costs
❑ Don’t allow for trade-off’s
❑ Are associated with the concept of scarcity

Answer 21

❑ Compare the value of an investment with the value
of the next best alternative
❑ Are associated with the concept of scarcity

Question 22

Overhead allocation
❑ The one stage method allocated overheads and
direct costs to cost centres
❑ The two stage method allocates overheads to cost centres then cost objects and direct costs to cost objects
❑ Allocation basis are only required for a two step
process

Answer 22

❑ The two stage method allocates overheads to cost centres then cost objects and direct costs to cost objects

Question 23

Blanket overheads
❑ Are overheads that are applied to duvet production
❑ Are suitable when processes don’t vary and
overheads can be allocated on a consistent basis
❑ Are a convenient way to allocate overheads for
complex processes (for example, bespoke
products)

Answer 23

❑ Are suitable when processes don’t vary and

overheads can be allocated on a consistent basis

Question 24

Which one of the following is true:
❑ Variable costing often results in under/over
absorption of costs
❑ Absorption costing can result in under/ over
absorption of costs
❑ Variable costing combines variable and fixed costs
and allocates to work in progress cost objects
❑ Absorption costing separates variable and fixed
costs, only fixed costs are attributed to work in
progress cost objects

Answer 24

❑ Absorption costing can result in under/ over

absorption of costs

Question 25

Which of the following is true:
❑ The matching principle means that incurred
costs reflect on the balance sheet but don’t
impact P&L until revenue is collected
❑ The matching principle is a means of ensure
the P&L account matches the balance sheet
❑ The matching principle is a means of ensuring
that companies can’t hold stock as a’favour’
for another business.

Answer 25

❑ The matching principle means that incurred
costs reflect on the balance sheet but don’t
impact P&L until revenue is collected

Question 26

The break even point
❑ Is the point an investment becomes worthwhile
❑ Is the point of zero profit
❑ Is the ‘sweet spot’ between investment and
volume sold

Answer 26

❑ Is the point of zero profit

Question 27

Total Absorption costing
❑ Involves dividing costs between service and
production cost centers and then allocating
the service cost center costs to production
cost centers before allocating to the cost of
finished products.
❑ Involves allocating the cost of finished goods
between cost centers (including service cost
centers)

Answer 27

❑ Involves dividing costs between service and
production cost centers and then allocating
the service cost center costs to production cost
centers before allocating to the cost of finished
products.

Question 28

Standard costing
❑ Is very complicated and should be avoided
unless really necessary
❑ Is really simple but often misleading
❑ Is best used when output is difficult to measure
and input can’t be specified

Answer 28

❑ Is really simple but often misleading

Question 29

Activity-based costing
❑ Can expose inefficiencies and change
behaviors but can also create personnel
problems
❑ The same cost drivers must be applied
consistently and selection must follow a stepby-step protocol
❑ Doesn’t require any system support

Answer 29

❑ Can expose inefficiencies and change
behaviors but can also create personnel
problems