These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these 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.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these 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.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
Derivatives are exactly the same as shares except they are based on fixed assets of the company and not on market value.
Many firms use permanent overdraft facilities to smooth out variations in cash flow.
The cash flow position of many firms means that internal financing is not an option.
State funding and state control of business still plays a significant role in many countries.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these 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.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
Fixed costs are the same as direct costs.
Variable costs are the same as indirect costs.
Variable costs are generally direct costs.
Direct costs refer to overheads that can be measured with some degree of accuracy.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
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.
Activity-based costing is a modern extension of the principles of absorption costing.
Net present value methods of investment appraisal are especially useful in assessing with some accuracy 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.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these 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
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these 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.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
Some firms present profit and loss data for two accounting periods but this is not a legal requirement in the UK.
Administrative costs and costs associated with distribution of goods to customers are shown as direct costs on a profit and loss account.
Distributions on a profit and loss account relate to the transfer out of part of the profit.
The accounting period on a profit and loss account is always a year.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
The balanced scorecard takes a balanced view across all accounting ratios.
The balanced scorecard looks at non-accounting information as well as accounting ratios.
The balanced scorecard compares profitability ratios with gearing and market ratios.
The balanced scorecard is a measure of the firm’s ability to maintain consistent ratios over an accounting period.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these 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.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
Budgetary control systems in global firms are a major mechanism for organizational integration.
The lack of clear and available accounting information is a major handicap to cost allocation in the global firm.
Budgetary control systems in global firms can create departmental selfishness and act as a source of potential conflict.
Since accounting is an advisory function, accountants seldom have much power and influence in organizations.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
Transfer pricing is an accounting technique to determine the relative price of goods and services across different national markets.
The WTO prohibits global firms selling goods and services to subsidiaries at a low price and then buying back finished products at a high price.
Transfer pricing is only an issue in global companies.
Transfer pricing has become much more of an issue with the growth of the global economy.
These questions are designed to test your understanding of the material contained within each chapter. For each question you are given a choice of 4 statements. Only one of these statements is correct.
Accounting information is objective and can be used with confidence as a basis for planning.
Financial statements are summaries based on selective information.
The auditing process in most countries is a legal requirement and ensures that published accounts are an accurate representation of a firm’s financial position.
Most aspects of business can be measured in financial terms and, as a result, most strategies can be based on financial information.