Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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The
cash flow statement of a business is concerned with: a. | The
profitability of the business | c. | The liquidity of
the business | b. | The financial position of the
business | d. | All of the
above | | | | |
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2.
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The
amount of interest paid by a business during an accounting period would be shown under the following
heading in a cash flow statement: a. | Operating activities | b. | Returns on
investment and servicing of finance | c. | Investing activities | d. | Financing
activities | | |
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3.
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If a
business repays a loan during an accounting period, the resulting cash outflow would be shown under
the following heading in a cash flow statement: a. | Operating activities | b. | Returns on
investment and servicing of finance | c. | Investing activities | d. | Financing
activities | | |
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4.
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The
accounts of private company must be audited if the company's annual turnover is at
least: a. | £1
million | c. | £5.6
million | b. | £1.4 million | d. | £10 million | | | | |
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5.
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Which
of the following statements is true? a. | An independent external auditor usually reports to the
directors of a company | b. | The annual audit report is usually written by the company's
finance director | c. | The audit report states an opinion as to whether the company is
in a healthy financial position | d. | The audit report states an opinion as to whether the accounts
show a true and fair view | | |
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6.
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One
drawback of a company's published accounts is that: a. | They omit items
which cannot be measured in monetary terms | b. | They are not allowed to disclose more information than the
maximum permitted by company law | c. | They include unsubstantiated future
projections | d. | They are concerned primarily with non-financial
information | | |
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