Which one of the following four statements is correct?
Share capital is the most common way used by public limited companies (plcs) to raise finance.
Golden shares are those shares that guarantee a minimum annual dividend irrespective of the financial performance of the firm.
The owners of ordinary shares with voting rights can vote to elect the directors of a UK public limited company
Finance derived from new share issues or rights issues is used mainly to invest in current activities to strengthen the position of the firm.
Which one of the following four statements is correct?
Loan capital presents less risk than share capital because the owners can retain control of the firm.
Bank borrowing is more common in Germany than in the UK and German banks generally play a more supportive role in individual firms.
UK banks are more conservative than banks in other European countries and this limits the amount they are prepared to lend to business.
Factoring is a process used by firms to consolidate their loans into a single payment.
Which one of the following four statements is correct?
The use of budgets to allocate funds and to delegate decision-making is just as important as the use of budgets to control spending.
The most important role of budgeting in most organizations is to ensure that spending does not exceed specified limits.
Budgets are usually accurate because they are based on historic data collected internally.
The most effective budgeting process is invariably carried out by the most experienced managers using reliable data and it should not be open to negotiation or bargaining.
Which one of the following four statements is correct?
In a manufacturing firm, direct costs relate to expenditure on such items as raw materials and components, whilst indirect costs refer to such items as labour.
Absorption costing is a traditional form of costing whereby costs are shared amongst the various departments of the organization on the basis of some agreed formula.
Net present value methods of investment appraisal are especially useful in assessing the viability of long-term investments.
Cash flow management in small manufacturing firms should focus primarily on limiting the amount of stock that is held.
Which one of the following four statements is correct?
The balance sheet makes a distinction between fixed and current assets and acts as a summary of the firm’s financial position at a certain point in time.
Intangible assets such as goodwill may not be presented as an asset on the balance sheet under UK law.
International firms operating in the UK must present financial reports using both UK GAAP and USA GAAP rules.
In the UK there are strict laws governing the presentation of accounts and no variation is allowed.
Which one of the following four statements is correct?
The rules governing the presentation of accounts make it almost impossible for managers to manipulate the data to present the company in the most favourable light possible.
In most countries the legal requirement of auditing invariably ensures that accounts are a full and accurate reflection of the company’s financial health.
Published financial accounts are of little concern to employees, most of whom anyway would be unable to interpret the financial information contained within them.
The development of rules governing disclosure was stimulated by the need for public companies to be accountable to their shareholders and potential investors.
Which one of the following four statements is correct?
Inflation accounting and its associated techniques is still important in many advanced industrial economies.
Systems of accounting will vary according to the nature of the economy, so that in some Third World countries simple cash accounting is the main requirement.
The behaviour of the stock market is broadly similar in the UK and Japan since in both countries around 75% of all shares are owned by institutions.
There is considerable evidence that methods of financial reporting around the world are becoming standardized as a result of globalization.
Which one of the following four statements is correct?
Accounting information is objective and can be used with confidence as a basis for planning.
Financial statements are summaries, but they are based on publicly available information that has been audited by independent professional accountants.
It is too easy to present financial information in a number of different ways so that a particular group within an organization can achieve its own political ends.
Most aspects of business can be measured in financial terms and, as a result, most strategies can be based on financial information.