Questions and Answers of Accounting For Non-Accounting Students

The following information applies to Ayre Limited for the two years to 31 March 2018 and 2019 respectively:Required:Assuming that the cost relationships had remained as given in the question,
What is meant by ‘incremental costing’?
What is (a) a fixed cost, (b) a variable cost?
The following information relates to Carter Limited for the year to 30 April 2017: During 2018 the company would like to increase its sales substantially, but to do so it would have to reduce
What is meant by the term ‘contribution’?
Puzzled Limited would like to increase its sales during the year to 3l May 2018. To do so, it has several mutually exclusive options open to it:● Reduce the selling price per unit by 15 per
The following information relates to Mere’s budget for the year to 31 December 2018: The directors are worried about the loss that product M is budgeted to make and various suggestions have
What is the marginal cost equation?
List four main assumptions that underpin marginal costing.
What is a break-even chart?
What is a profit/volume chart?
List six assumptions that are adopted when preparing a marginal cost statement.
What is the formula for calculating(a) The break-even position in sales value terms,(b) The break-even position in units,(c) The margin of safety in sales value terms,(d) The margin of safety in
What is meant by a ‘limiting factor’?
Give three examples of limiting factors.
State the rule that is used when activity is restricted by the presence of a limiting factor.
Define what is meant by a ‘decision’.
What action was taken by the directors of the company to safeguard its future in the months leading up to the time when it went into administration?
List seven main characteristics of decision-making data.
Bearing in mind the general economic climate at that time, were there any other measures that could have been taken?
Identify six ways of classifying costs.
How far do you think that the company’s severe financial difficulties took the senior managers by surprise?
What is meant by a closure or a shutdown decision?
What is meant by a make or buy decision?
What is meant by a pricing decision?
What are the two main types of pricing decisions?
What is meant by a market price?
What is the basic problem in determining pricing between segments within the same entity?
How might it be resolved?
What is meant by a special order?
How does it differ from the general pricing problem?
What is the distinction between capital and revenue expenditure?
Do you think that protecting the dividend payment should be a higher priority than investing in capital projects?
What is a directors’ remuneration report?
Name two items that you might find in a statement of changes in equity.
What is meant by the terms ‘current’ and ‘non-current’ in a company’s statement of financial position?
What is (a) a ratio and (b) ratio analysis?
You are presented with the following information relating to Hedge public limited company for the year to 31 May 2016: ● The company has an issued and fully paid share capital of £500,000
When do IASB standards normally become effective?
What is meant by ‘management accounting’?
Do you think it makes sense not to record leased aircraft as assets in the accounts of airlines? What are the arguments pro and against treating them as assets of the lessee airline company?
The following balances have been extracted from the books of Margo Ltd for the year to 31 January 2017: Additional information:1 Corporation tax owing at 31 January 2017 is estimated to be
What impacts do you think the absence of these assets has on the accounts? Can you think which balances in the financial statements would be materially affected?
When was it first incorporated into company law?
Harry Ltd was formed in 2003. The following balances as at 28 February 2017 have been extracted from the books of account: Additional information:1 Corporation tax owing at 28 February 2017 is
Why do you think revenue (sales) is often at the heart of accounting scandals? What are the moral as well as legal responsibilities of managers with respect to reporting valid revenue accurately,
How far do you think that the information presented in a limited liability company’s financial statements is useful to the owners of a small business?
Why was it found necessary to do so?
Distinguish among the authorised, issued and fully paid share capital of a company.
Name two main types of shares.
What is the basic difference between them?
What are the two main types of limited liability companies?
What is a debenture loan?
What is meant by ‘disclosure of information’?
Why do companies have to let the Registrar of Companies have certain types of information?
What is a director?
Name two types of dividend.
What name is given to the tax that a company pays on its profits?
Name three ways in which a company’s profits are appropriated.
List three types of assets.
Name three items that may be included under the heading of ‘current liabilities’.
Distinguish between a capital reserve and a revenue reserve.
What is a share premium reserve?
What is meant by ‘shareholders’ funds’?
What is the difference between a current liability and non-current liability?
What is a manufacturing account?
While you may have never seen the complex accounts of government departments, how reassured you are that they are audited by the NAO? What is the benefit of audits to society?
As a taxpayer, what information do you want to see about how public money is spent?
What is meant by the term ‘prime cost’?
The following information relates to Megg for the year to 31 January 2017:RequiredPrepare Megg’s manufacturing account for the year to 31 January 2017. Inventory at 1 February 2016 Raw
What could be the implications for a business or a government department if more junior members of staff are reluctant to challenge the decisions of their superiors for fear of risking their career
How does an allowance for profit in the manufacturing account affect the cash position of the entity?
To which account is the ‘market value of goods produced’ transferred?
The following balances have been extracted from the books of account of Moor for the year to 28 February 2017: RequiredPrepare Moor’s manufacturing account for the year to 28 February 2017.
The following balances have been extracted from the books of Stuart for the year to 31 March 2017: RequiredPrepare Stuart’s manufacturing account for the year to 31 March 2017. Administration:
The following balances have been extracted from the books of the David and Peter Manufacturing Company as at 30 April 2017: Additional information The factory equipment is to be depreciated
What is meant by the ‘service sector’?
List five different groups of service sector entities.
Name four different types of businesses operating in the service sector.
What is meant by a ‘not-for-profit’ entity?
What terms are applied to its main financial statement?
Can a not-for-profit entity make profits?
What name is given to the balance that is transferred to the accumulated fund at the end of a financial period?
What is meant by an ‘accumulated fund’?
What term does the government use to describe its method of accounting?
Name two types of local government activities.
List five reasons why the accounting profit for a period will not necessarily result in an improvement in an entity’s cash position.
Why is access to cash so important to a business?
Identify two statements of financial position items that may change an entity’s cash position.
The following statements of financial positions have been prepared for Frank Limited. Additional information:There were no purchases or sales of plant and machinery during the year.Required:(a)
Why is access to cash particularly significant during a recession?
What factors may cause inefficient cash management during periods of boom?
Does a statement of cash flows serve any useful purpose?
How does depreciation affect the cash balance?
The following is a summary of Gregory Limited’s accounts for the year ended 30 April 2017. Additional information:There were no sales of non-current assets during the year ended 30 April
How does the existence of counterfeit bank notes in an economy impact business?
What two methods may be used in preparing a SCF?
Which Financial Reporting Standards cover the preparation of SCFs?
Does an increase in (a) inventory, (b) trade receivables and (c) trade payables increase or decrease the cash position?
Does a decrease in (a) inventory, (b) trade receivables, and (c) trade payables increase or decrease the cash position?

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