Questions and Answers of Cambridge International AS And A Level Accounting

Give two examples of fixed costs that might appear in a marginal cost statement.
Marginal costing can only be used when a business is considering whether or not to undertake a 'one off' contract. True/False?
Outline two conditions that must apply when a special price based on marginal. costing techniques is accepted by a business.
Outline two reasons why the manager of a business might accept an order even when the order yields a negative contribution.
Explain the term 'key factor'.
Give an example of a key factor.
Would the shortage of a component used in the production of computers be classified as a key factor?
A key factor should be used to produce the product that gives the highest profit. True/False?.
State the formula used to calculate the break-even point using the unit contribution method.
Explain when the contribution/sales method would be used to find the break-even point.
Another name for break-even is margin of safety. True/False?
Break-even output = 7500 units; total production = 10000 units. What is the margin of safety in units?
A graph should be used where possible to find the break-even point since it is the most accurate of the methods. True/False?
Give another name for break-even analysis.
Explain the term 'sensitivity analysis'.
Inventories cannot be valued using marginal cost techniques. True/False?
What is meant by the term 'job'?
Identify a business that is likely to employ a system of job costing.
Ali runs a mobile DJ business. He will cost out each booking using job costing techniques. True/False?
Explain the term 'batch'.
Identify an industry that would employ a system of batch costing.
A custom car company adapts production cars into racing cars. It would use a system of batch costing. True/False?
A manufacturer of television remote controls would use a system of batch costing. True/False?
Job costing is a type of process costing. True/False?
Which of the following industries is likely to use a system of batch costing - a producer of breakfast cereals; a house builder; a potato chip manufacturer?
Linas installs swimming pools using the customer's specification. What type of costing system is Linas likely to use?
What does the term 'OAR' stand for?
Nine thousand units of a product are 30 per cent complete. What is the equivalent number of complete units?
A budget is an accounting term used to describe a forecast. True/False?
Explain the term 'budget'.
Who would generally prepare the budgets for a business?
Outline two advantages that managers of a business would hope to achieve by preparing budgets.
Outline two drawbacks of budgeting that might be encountered by managers.
The Companies Act 1985 requires that all limited companies must prepare budgets and distribute them to all shareholders. True/False?
Explain the difference between a forecast and a budget.
Only large public companies use a system of budgetary control. True/False?
Explain how a system of budgetary control might demotivate a departmental manager.
Identify how poor outcomes in a sales department budget might affect other departmental budgets.
Name two businesses that would prepare a manufacturing account.
Identify two costs that would be included in the calculation of prime cost.
The sales managers' wages are included as part of prime cost. True/False?
Identify two expenses incurred by a manufacturing business that would be included as factory overheads.
A factory produces rice noodles. Which section of a manufacturing account would you expect to find the wages of the owner's personal assistant?
Repairs to manufacturing machinery is a prime cost. True/False?
Name two businesses that would prepare manufacturing accounts.
Identify two costs that would be included in the calculation of prime cost.
Identify two costs that would be included as factory overheads.
Name the three types of inventory generally held by a manufacturing business.
Define the term 'direct costs'.
'The main role of a director is the application of the management function of accounting; while the main role of auditors is stewardship'. How true is this statement?
Sales + Number of shares = Earnings per share. True/False?
A limited company has issued ordinary share capital $100000; preference shares $50000; reserves $120000; debentures $70000. This company is highly geared. True/False?
Total variance = Standard cost- ___________ .
The allocation of overheads using labour hours is a much more accurate method of apportioning overheads than using machine hours. Do you agree?
A business produces 850 units of a product. Allocated direct costs - materials $10000; labour $2000; apportioned overheads $1175. Calculate the cost of producing one unit of the product.
A limited company has an issued ordinary capital of $200 000. Each share was issued a number of years ago for $0.25. The total dividend paid for the year is $56000. The current market price is $0.70
Explain the difference between allocating costs and apportioning costs.
What is meant by an investment ratio?
Explain one method of placing a value on goodwill.
Give two examples of direct costs that might be used in a marginal cost statement.
How would total contribution be calculated?
What is the difference between a marginal cost statement and an income statement?
Identify the difference between a private limited company and a public limited company.
In which account would goods purchased for resale be entered?
Denzil pays the rent on his factory with $300 cash. The entries to record this transaction are debit rent account $300; credit cash account $300. True/False?
Capital expenditure is included in a trading account. True/False?
A restaurant would include the purchase of a new cooker in the trading account of an income statement. True/False?
A vehicle repair business would include electricity charges in the trading account of an income statement. True/False?
How is the cost of goods available for sale calculated?
Gross profit is calculated by taking the cost of purchases from the revenue generated by making sales. True/False?
In what way is 'gross profit' different to 'profit for the year'?
The trading account of an income statement is prepared to calculate______ .
In the first year of trading purchases cost $100000, closing inventory valued at cost amounted to $20000. What is the cost of sales?
Identify two types of goods that a furniture manufacturer would include as closing inventory.
Is it possible for some items held as opening inventory to be held as closing inventory?
Define depreciation.
What are the book-keeping entries required to record the annual charge for depreciation?
What is meant by the term 'accumulated depreciation'?
What is meant by the term 'carrying amount'?
Sales Cost of sales - Expenses = ?
Closing capital - Opening capital + Drawings = ?
Total assets - Total liabilities = _______ .
Opening capital + Profit for year - Drawings = _________ .
Closing capital - Opening capital = ___________ .
Partners have unlimited liability. True/False?
Explain two advantages of being in partnership.
Give the date of the Partnership Act that governs the basic rules that apply if a partnership does not have a partnership agreement.
List four rules that apply if a partnership does not have a partnership agreement.
Explain the term 'appropriation'.
Why is an appropriation account included in an income statement for a partnership?
Explain the term 'residual profit'.
Explain why a partner may be entitled to a partnership salary.
Interest on capital is paid to a partnership by the business's bankers. True/False?
Profit for the year is $40 000, partners' salaries are 12000 and interest on capital is $16000. Calculate the amount of residual profits.
A partner works as a sales assistant in the partnership store. Explain how his partnership salary should be shown in an income statement.
Partners have unlimited liability. True/False?
Explain two advantages of being in partnership.
Give the date of the Partnership Act.
List four financial rules to be applied if a partnership does not have a partnership agreement.
Interest on drawings cannot be charged if partners are entitled to interest on capital. True/False?

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