Section A

Question 1

Define Integrated Reporting

Answer 1

A methodology to disclose financial results along with measures of non-financial performance that support long-term value in a way that shows the interrealation among the two

Question 2

Primary Purpose of Integrated Reporting

Answer 2

To improve corporate reporting by demonstrating an understanding of the relationship between financial and non-financial performance measures

Question 3

Six types of Capital

Answer 3

Natural, Human, Financial, Physical, Intellectual, and Social

Question 4

Define Gains

Answer 4

Increase in equity (net assets)

Question 5

Define Losses

Answer 5

Decrease in equity (net assets)

Question 6

Where are gains and losses reported?

Answer 6

Gains and Losses are usually reported in the income statement at net amount and added or subtracted from operating income

Question 7

Define Comprehensive Income

Answer 7

The change in equity of a business enterprise during a period of transactions and other events and circumstances from non-owner sources

Question 8

Define Budgetary Slack

Answer 8

The practice of underestimating budgeted revenue and /or overestimating costs to easily achieve targeted amounts

Question 9

Budgetary Slack and Goal Congruence

Answer 9

Budgetary slack leads to sub-optimal decisions and is detrimental to the goals of the company as a whole

Question 10

Define multiple regression equation

Answer 10

An equation that is affected by more than one independent variable

Question 11

Benefits of Regression Analysis

Answer 11

The use of of regression analysis is quantitative and objective
Regression analysis is a useful tool in separating mixed costs into variable and fixed costs for budgeting purposes

Question 12

Shortcomings of Regression Analysis

Answer 12

Regression analysis cannot be used if historical data is not available.

Even if historical data is available, the use of regression analysis will be obsolete if the data are not relevant to the company’s current situation

Question 13

Six types of budgeting methodologies

Answer 13

Annual or Master Budgets
Project Budgeting
Activity-Based Budgeting
Zero-Based Budgeting
Continuous (Rolling) Budgets
Flexible Budgets

Question 14

Define Pro-forma Income Statement

Answer 14

Financial statement that presents the company’s expected profit for the period

Question 15

Define Pro-forma Balance Sheet

Answer 15

Statement of company’s representation of the company’s expected financial position for the upcoming year.

Question 16

Define Pro-forma Statement of Cash Flows

Answer 16

Statement of cash flows identifies the future sources and uses of cash

Question 17

Define standard cost system

Answer 17

A system for applying standard cost into the accounting system

Question 18

Reasons to Adopt Standard Cost System

Answer 18

The standard cost system is useful in planning such as budgeting and developing project bids

For control purposes the implementation of a standard cost system results in the comparison of actual and standard costs enabling variance analysis

Standard costs provide immediately available cost information, which is useful in pricing decisions

Question 19

Define transfer pricing

Answer 19

The setting of transfer price for a transfer within an organization

Question 20

Define Return on Investment

Answer 20

The fundamental performance measure of an investment center

Question 21

Define ResIsidual Income

Answer 21

Is the excess of income over the desired return

Question 22

Define Key Performance Indicators

Answer 22

The leading performance metrics that are the most relevant to an organization’s strategy

Question 23

Define Balanced Scorecard

Answer 23

The concept of incorporating the mission and strategy of an organization into performance measures

Question 24

Four perspectives of Balanced Scorecard

Answer 24

Financial Perspective
Customer Perspective
Internal Business Process Perspective
Learning and Growth Perspective

Question 25

Define Lean Manufacturing

Answer 25

Process of reducing or eliminating waste in the manufacturing process