The Finance Function

Question 1

What are the qualities of good accounting information? CCCRROT

Answer 1

Relevance
Comprehensibility
Reliability
Completeness
Objectivity
Timeliness
Comparability

Question 2

What are the different types of accounting?

Answer 2

Financial Accounting - Routine accounting, providing reports, cashier duties
Management accounting - cost, budgets, financial management of projects
Treasury - Raising funds, cash flow control, investments
Internal Audit - preventing fraud, following regulations

Question 3

Define: Financial Accounting

Answer 3

A method of reporting the results and financial position of a business in its financial statements

Question 4

Earnings per share formula

Answer 4

Profit after tax (less preference shares) / Weighted average of ordinary shares in issue

Question 5

Price per earnings ratio

Answer 5

Share price / Earnings per share

Question 6

Dividends yield formula

Answer 6

Dividends per share / Current share price x 100

Question 7

What is in a cost card?

Answer 7

Direct material costs
Direct labour
Variable costs
Fixed overheads

Question 8

Why are budgets used? CRUMPET

Answer 8

Co-ordination
Responsibility
Utilisation
Motivation
Planning
Evaluation
Telling

Question 9

What are the main roles of a treasurer?

Answer 9

Working capital management
Funds management
Currency management
Corporate finance
Tax management

Question 10

Gearing ratio formula

Answer 10

Long term debt / shareholder funds x 100

Question 11

What are the different types of tax processes?

Answer 11

Tax avoidance - legal but not in the spirit of the law
Tax evasion - illegal
Tax mitigation - Legal and in the spirit of the law

Question 12

What are the two types of conflict?

Answer 12

Interdependent - eg, all finance works together as each are is dependent of each other.
Independently - eg. The audit team needs to work separately from the finance team to ensure work is being done correctly.

Question 13

Define: BPR

Answer 13

Business Process Re-engineering
Is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, service and speed

Question 14

What are hammer and Champy’s four themes of BPR

Answer 14

Process Reorientation - Focus on resources, tasks and constraints
Creative use of IT - Should be explored
Ambition - Do be restricted
Challenge and break the rules