Single choice

1)
The finance director of company has made two assertions regarding the preparation of the
annual report; which are correct? 1. The reducing balance approach is an accepted method for
calculating accelerated depreciation 2. Irrespective of whether a cost is capitalized or expensed
the impact on overall pre-tax cash flows is the same

Only assertion 1 is correct

Only assertion 2 is correct

Both assertions are correct

Neither assertion is correct

Single choice
2)
A company generates CU2,000 sales revenue from the sale of 500 units and incurs a fixed cost
of CU600. If the variable cost per unit is CU1.50 what profit has it made?

CU650

CU1,250

CU1,400

CU2,000
Single choice
3)
Which of the following may be used to set up a page border in Excel?

From the Border tab of the Format Cells dialog box

From the Border tab of the Page Layout toolbar

From the Border tab of the Format toolbar

It is not possible to set page borders in Excel

Single choice

4)
When calculating return on equity using the three stage DuPont approach which of the
following defines the calculation?

Operating profit margin × Asset turnover × Equity multiplier

Net profit margin × Asset turnover × Equity multiplier

Net profit margin × Asset turnover × Equity

Operating profit margin × Asset turnover × Equity

Single choice
5)
A company issues 100 new shares each with a nominal value of CU1 for CU2.50. What is the
impact on equity disclosures?

Share capital increases by CU250

Share capital increases by CU100 and share premium increases by CU150

Share capital increases by CU100 and retained earnings increase by CU150

Share capital increases by CU100 and the Statement of other comprehensive income increases
by CU151
Single choice
6)
Which of the following is not an example of a non-current asset?

Property, plant and equipment

Computers

Inventory

Fixtures and fittings

Single choice

7)
Which of the following results in a cash movement?
1. Amortization of intangible assets
2. Share based payments
3. Asset impairment

Share based payments only

Asset impairment only

Amorization of intangible assets and asset impairement

None have a direct impact on cash

Single choice
8)
If calls A1 to A26 contain the letters A to Z in alphabetical order, what would be returned by the
function =INDEX(A2:A26,0,5)?

The function would return the number 5

The function would return the letter E

The function would return the letter F

The function would return #REF

Single choice
9)
Which of the following is not a typical characteristic of a supermarket business?

High trade payables

High current ratio

Low trade receivables

Low working capital
Single choice
10)
What format approach is being used for the Statement of profit or loss when costs are allocated
between selling, general and administration?

Costs allocated by function

Costs allocated by nature

Costs allocated between current and non-current

Costs allocated by location

Single choice
11)
When one company is controlled by another usually through a >50% share stake it is known as
a:

Trade investment

Associate

Subsidiary

Joint venture

Single choice

12)
How many arguments are required by the COUNTA function?

The COUNTA function requires 1 argument

The COUNTA function requires 2 arguments

The COUNTA function requires 3 arguments

The COUNTA function requires 4 arguments

Single choice
13)
EBITA is an accounting abbreviation for which of the following?

Earnings before interest, tax and appreciation of intangible assets

Earnings before interest, tax and allowances

Earnings before investment income, tax and amortization of intangible assets

Earnings before interest, tax and amortization of intangible assets

Single choice
14)
Which of the following is another name sometimes given to selling, general and administration
expenses?

EBIT

Overheads

Cost of sales

Post-tax charges
Single choice
15)
Costs deducted from sales to derive gross profit should be classified as:

Direct costs

Fixed costs

Indirect costs

Variable costs
Single choice
16)
If an investor wants to identify the dividends declared for the financial year which financial
statement would provide this disclosure?
Statement of profit or loss (also referred to as the Income statement)

Statement of other comprehensive income

Statement of changes in equity

Statement of cash flows

Single choice
17)
The lease liability disclosed on the Statement of financial position represents?

The discounted value of the leased asset

The cash value of the lease rentals due

The present value of the minimum lease payments

The principal value of the total lease payments

Single choice
18)
A company has a growth rate of 5% and pays out 60% of its profits by way of a dividend. What is
the return on equity?

The ROE is 1%

The ROE is 2%

The ROE is 3%

The ROE is 5%
Single choice
19)
Company Z has made a bargain purchase of another entity currently in distress and has created
negative goodwill. Adopting best practice under IFRS rules what will be the impact on reported
profits?

Profits will increase

Profits will decrease

It is not possible to determine the likely impact on reported profits

Profits will remain unchanged as only the Statement of financial position is impacted
Single choice
20)
You find that the ribbon has been hidden and wish to reinstate it. Which of the following
shortcut keys will achieve this?

Ctrl+F1

Ctrl+F2

Ctrl+F3

Ctrl+F4
Single choice
21)
Which of the following is not a correct description of the use of shortcut keys in Excel?

Ctrl+C copies the contents of the selected range

Ctrl+V pastes the contents of the selected range

Ctrl+X cuts the contents of the selected range

Ctrl+D deletes the contents of the selected range

Single choice
22)
Under the IFRS where will interest paid be disclosed in the Statement of cash flows?

CFI (Investing)

CFF (Financing)

CFO (Operating) or CFI (investing)

CFO (Operating) or CFF (Financing)

Single choice

23)
How many arguments are required by the SUMIF function?

The SUMIF function requires 1 argument

The SUMIF function requires 2 arguments

The SUMIF function requires 3 arguments

The SUMIF function requires 4 arguments

Single choice
24)
Which of the following is not a method that may be used to assign a name to a selected cell or
range of cells?

Use the Name Manager tool

Use the Create from Selection tool

Type the name into the Name box

Use the =Name function

Single choice
25)
Items reflected in the Statement of profit or loss are usually:

Those exclusively settled with cash

Unrealized

Capital costs

Realized
Single choice
26)
Which of the following statements about provisions is/are correct? 1. A provision can only be
made when there is a present obligation as the result of a past event 2. Provisions are always
made for both possible and probable contingent liabilities

Only statement 1 is correct

Only statement 2 is correct

Both statements are correct

Neither statement is correct

Single choice
27)
If calls A1 to A26 contain the letters A to Z in alphabetical order, what would be returned by the
function =INDEX(A2:A26,5)?

The function would return the number 5

The function would return the letter E

The function would return the letter F

The function would return #REF

Single choice
28)
Which of the following is not a primary accounting concept?

Prudence

Cash accounting

Accruals

Consistency
Single choice
29)
Which of the following elements of an annual report for a large listed company are subject to
an audit?
1. Financial statements
2. Vision statement
3. Corporate governance report

1 only

2 only

3 only

1, 2 and 3
Single choice
30)
When drafting financial covenants which of the following would not be an example of event
risk?

Merger or acquisition

Corporate restructuring

Decrease in interest cover

Expansion through acquisition

Single choice
31)
Consolidated financial statements are an example of the application of which accounting
principle?

Commercial substance

Strict legal form

Off balance sheet finance

Prudence
Single choice
32)
Which of the following is not a valid reason for disclosing information on operating segments in
the financial statements?

Additional disclosures help reduce the impact of offsetting which can distort or hide true trends

Segmental reporting helps the analyst to better understand the rewards and risks of the
business activities.

Diverse companies may be involved in manufacture, sales and post-sale services all of which
have different returns that can only be observed through segmental disclosures

Disclosing the results of operating segments reduce the administrative cost burden of the
preparer
Single choice
33)
If the interest cover ratio is calculated using the net interest expense instead of the gross
interest expense, how will this impact on the ratio?

The interest cover will increase

The interest cover will decrease

The interest cover will remain unchanged

It is not possible to determine the impact on interest cover

Single choice
34)
Inventory is carried in the Statement of financial position at what amount?

The lower of cost and net realizable value

Historic cost

Fair value

Depreciated historic cost

Single choice
35)
How can you edit the name applied to a given cell or range of cells?

By highlighting it in the Name box and editing it

Using Name Manager to edit it

Both of the above

Neither of the above

Single choice
36)
If you to automatically format any cells containing a number less than 20 with red text, which of
the following methods could be used?

Use the =if function to select and format the text

Use the Conditional Formatting function to select and format the text

Neither of the above alternatives may be used to format the text

Both of the above alternatives may be used to format the text

Single choice
37)
Which of the following is the correct definition of the accounting equation?

Assets + Liabilities = Equity

Assets – Equity = Liabilities – Equity

Assets – Liabilities = Equity

Liabilities – Equity = Assets

Single choice
38)
Which of the following would not be a valid explanation for a high non-current asset turnover
ratio?
The company is genuinely more efficient in the use of its assets

The assets have been subject to accelerated depreciation

The assets are old and towards the end of their useful life

The assets depreciate very slowly because they have been given long useful economic lives

Single choice

39)
Company X (the Parent) acquires an 80% stake in Company Z (the Subsidiary) for CU400,000
when the retained earnings of the latter were CU50,000.
As at the current reporting date the statement of financial position of the two companies were
as follows:

Based on this information, answer the following questions.

What is the value of share capital in the Consolidated statement of financial position?

CU200,000
CU240,000

CU280,000

CU300,000

Single choice

40)
Company Z moved out of its current premises, which are leased, into a new larger office
complex. The original lease has 7 years remaining and the company has been unable to sub-let;
consequently the property lies empty. This is an example of?

A contingent liability

A deferred liability

An onerous lease

A contingent lease
Single choice
41)
What is the correct accounting treatment for negative external goodwill (assume IFRS applies)?

Recognized as a liability in the Statement of financial position

Recognized as an offset to positive goodwill in the Statement of financial position

Recognized immediately within the Statement of profit or loss

Recognized immediately within the Statement of comprehensive income

Single choice
42)
The accounting equation states that:

Assets - Liabilities = Equity

Gross assets = Equity

Gross assets - Cash + Liabilities = Equity

Assets + Liabilities = Equity

Single choice
43)
You have been informed by a client that they currently operate a negative cash conversion
cycle. Is this generally favorable or unfavorable?

Favorable

Unfavorable

It is neither favorable nor unfavorable

It is not possible to determine

Single choice
44)
When assessing whether a performance obligation exists, consideration must be given to the
inter-dependence of difference elements of the contract and:

Whether risks and rewards will be transferred

Whether each performance obligation has a measureable value in its own right

Whether separation has been agreed by both the customer and supplier

Whether the service has been provided

Single choice
45)
A company has a cash conversion cycle of 30 days (positive). If the receivable days are 48 days
and the payable days are 97 days what are the inventory days?

19 days

79 days

115 days
175 days
Single choice
46)
What are the two principal methods by which companies raise long term finance?

Asset sales and debt

Trading cash flows and borrowings

Equity issues and asset sales

Debt and equity issues

Single choice
47)
The carrying value of inventory in the Statement of financial position is:

The higher of cost and net realizable value

The higher of cost and market value

The lower of current purchase price and net realizable value

The lower of cost and net realizable value

Single choice
48)
Cell E7 contains the formula "=$C$4" which has been copied from cell E7 to cell H15. What cell
will the formula in cell H15 reference?

The formula in cell H15 will be referencing cell C4

The formula in cell H15 will be referencing cell C12

The formula in cell H15 will be referencing cell F4

The formula in cell H15 will be referencing cell F12

Single choice
49)
Company Y is a large supermarket chain and has gross revenues of CU1,000. During the period
there are returns of CU50, and CU20 of the revenues that are identified as arising from sundry
activities not associated with food retail. What amount will be disclosed as revenue on the
Statement of profit or loss?

CU1,000

CU980

CU950

CU930
Single choice
50)
Cells B1 to B7 contain the values 15, 10, 16, 29, 63, 11, 49 respectively, what would be displayed
by a cell containing the following formula: =IF(AND(B1>B2,B2>B3),B4,B5)?

The value displayed would be 29

The value displayed would be 63

The value displayed would be 11

The value displayed would be 49

Single choice
51)
Cells B1 to B7 contain the values 15, 10, 16, 29, 63, 11, 49 respectively, what would be displayed
by a cell containing the following formula: =IF(OR(AND(B1>B2,B2>B3),B4>B5),B6,B7)?

The value displayed would be 29

The value displayed would be 63

The value displayed would be 11

The value displayed would be 49

Single choice
52)
Where would the provision for a legal claim made against the entity be disclosed in the
Statement of financial position for that entity?

As either a current or non-current asset dependent upon the anticipated time to settlement

As an offset to retained earnings within equity

As a 'negative' non-current asset

As either a current or non-current liability dependent upon the anticipated time to settlement
Single choice
53)
One of the principles underlying IFRS is that information given in one period should be
prepared on a similar basis to the previous period unless there is a strong reason for change.
This principle is known as:

Accruals

Consistency

Fair presentation

Materiality
Single choice
54)
Cell A5 contains the formula "=$A$1", when editing this formula how many times would you
press F4 to convert it to a relative reference? In other words, how many times would you press
F4 to turn "=$A$1" into "=A1"?

1 time

2 times

3 times

4 times
Single choice
55)
Which of the following methods for determining the cost of inventory is permitted under IFRS?
1. FIFO
2. LIFO
3. Weighted average

FIFO only

FIFO and LIFO only

LIFO and Weighted average only

FIFO and Weighted average only

Single choice
56)
You have been approached by a company director who wants to have a better understanding
of the liquidity position of their business. They provide you with the following information:
- Property, plant and equipment = CU40,000
- Inventory = CU30,000
- Receivables = CU20,000
- Cash = CU5,000 - Payables = 15,000
- Long-term loans = 25,000
Calculate the cash ratio.

The cash ratio is 0.2

The cash ratio is 0.33

The cash ratio is 1.67

The cash ratio is 3.0

Single choice
57)
Which of the following statements is/are correct?
1. IFRS are based on principles and not dictated by rules
2. It is not uncommon for countries to apply different GAAP to different sizes and types of
company
Both statements are correct

Neither statement is correct

Only statement 1 is correct

Only statement 2 is correct

Single choice
58)
Which of the following statements is/are correct?
1. It is mandatory that key performance indicators (KPIs) comply with accounting standards
2. A mission statement describes the fundamental purpose of a business

Neither statement is correct

Only statement 1 is correct

Only statement 2 is correct

Both statements are correct

Single choice
59)
Cells B1 to B7 contain the values 16, 15, 10, 29, 63, 11, 49 respectively, what would be displayed
by a cell containing the following formula: =IF(OR(B1>B2,B2>B3),B4,B5)?

The value displayed would be 63

The value displayed would be 11

The value displayed would be 29

The value displayed would be 49

Single choice
60)
Based on the following statement of financial position calculate financial gearing.
 

The financial gearing is 0.57

The financial gearing is 0.7

The financial gearing is 0.8

The financial gearing is 3.0