Questions and Answers of Financial And Management Accounting

Write a short commentary on each ledger account prepared in S1, to enable a nonaccountant to understand their purpose and content.Data from S1Prepare ledger accounts to report the transactions and
The directors of Transport plc produced the following income statement (profit and loss account) for Year 2 and balance sheet at the end of Year 2.Further information 1. The dividend paid during
Define a ‘non-controllable cost’.
What is e-business?
What is e-commerce?
The following financial statements relate to Hope plc:Required (a) Calculate ratios which measure:(i) liquidity and the use of working capital;(ii) management performance; and (iii) gearing.(b)
Using the totals from the columns of the spreadsheet of question B5.1, prepare for the dental practice in the month of April:(a) a cash flow statement;(b) a balance sheet; and(c) a profit and loss
What are:(a) A cost centre; (Section 17.9 .1)(b) A profit centre; (Section 17.9 .2) and(c) An investment centre? (Section 17.9 .3)Data from section 179.1Data from section 17.9.2Data from section
Define a ‘non-controllable cost’. (Section 23.3 .2)Data from section 23.3.2 In planning how to report, the general principles applied will be those of respons- ibility and the separation of
Define ‘business strategy’. (Section 25.2)Data from section 25.2 The successful management of a business depends on having a successful business strategy. It has been argued that if the business
What is e-business? (Section 25.7)Data from section 25.7 This section gives a very brief summary of some aspects of e-business and shows how management accounting has a role to play in e-business.
What is e-commerce? (Section 25.7)Data from section 25.7 This section gives a very brief summary of some aspects of e-business and shows how management accounting has a role to play in e-business.
Directors are expected to exercise their judgement when making decisions in the best interests of the Society as a whole, mindful of their responsibilities to members and other stakeholders. What is
Explain how the structure of the statement of cash flows represents another subsection of the accounting equation. (Section 3.6)Data from section 3.6 It was shown in Chapter 1 that liquidity is of
Explain what is meant by each of the following: (Section 4.2 )(a) Relevance.(b) Reliability.(c) Faithful representation.(d) Neutrality.(e) Prudence.(f) Completeness.(g) Comparability.(h)
How is reducing-balance depreciation calculated? (Section 8.7 .3)Data from section 8.7.3 Those who believe that the asset depreciates most in earlier years would calculate the depreciation using the
Record the transactions of question B9.3 in ledger accounts for L1 Receivables (debtors), L2 Provision for doubtful debts, L3 Cash and L4 Profit and loss account.Data from B9.3At the end of Year 3
Record the transactions of question B9.4 in ledger accounts for L1 Receivables (debtors), L2 Provision for doubtful debts, L3 Cash and L4 Profit and loss account.Data from B9.4The Bed Company
Record the transactions of question B9.5 in ledger accounts for L6 Expense of insurance and L7 Prepayment.Data from B9.5On 1 December Year 1 a company paid £2,400 as an insurance premium to give
The group makes full provision for the future cost of decommissioning oil and natural gas production facilities and related pipelines on a discounted basis on the installation of those facilities.
The following technical terms appear for the first time in this Supplement. Check that you know the meaning of each.Profit l Credit purchase Sales revenue l Creditor Cash sale l Trade payable Credit
Some football clubs include the players in the balance sheet as an asset. Others do not.Give the arguments to support each approach.
Explain how the structure of the balance sheet corresponds to the accounting equation.
Explain how the structure of the cash flow statement represents another subsection of the accounting equation.
List three features of a balance sheet format which are particularly useful in making the format helpful to readers.
Explain the accounting measurement principles of each of the following:(a) going concern;(b) accruals;(c) consistency;(d) the concept of prudence.
Explain how the monitoring of financial statements is carried out by each of the following:(a) the auditors; and(b) the Financial Reporting Review Panel.
What are the main headings to be found in most company balance sheets?
When Rachel Lilley started her florist’s business in Bath nearly three years ago, it was an instant success. With a steady stream of customers at her small shop and a run of weddings to cater for,
Flying Brands is a company which delivers goods to customers. The business began some years ago by flying flowers from the Channel Islands to the UK mainland.Flying Flowers’ contribution declined
The House of Commons Committee of Public Accounts produced a report on the budget for the London 2012 Olympic and Paralympic Games, to investigate the reasons for budget increases announced by the
The sales budget for the BeeSee Company for the first six months of the year is: January February March April May June 12,000 13,000 14,000 13,500 12,600 11,100 There are no debtors at the start of
In the following extract, the College of Charleston, USA, describes on its website how it estimates the standard cost of attendance in respect of a student.To consider a student for federal financial
Shell uses a number of key performance indicators to evaluate the overall performance of Shell from a financial, efficiency, social and sustainable development perspective and collectively they
The following report indicates that Network Rail was focused on investment appraisal procedures in 2004 at the start of a five-year regulatory period.John Armitt, chief executive of Network Rail, the
The Group’s gross transaction value grew by 0.2% during the 52 weeks ended 29 August 2009 to £2,339.7 million (2008: £2,336.0 million) and revenue was up by 4.2% to £1,915.6 million (2008:
We are the UK’s leading home and general merchandise retailer. Argos and Homebase are two of the UK’s leading retail brands, with large customer bases across the UK and Ireland. Between them, our
Our stores The Group operates from 466 stores and the strategic focus remains in the development of the two formats of choice, the superstore and the smaller format Compact store, previously referred
Prepare ledger accounts to report the transactions and events of questions C8.1 and C8.2.Data from C8.1The Biscuit Manufacturing Company commenced business on 1 January Year 1 with capital of
This case extracts information from the annual report of Cadbury plc to show how the company explains its management of current assets.The cost of inventories recognized as an expense for the period
The Group’s policy is to agree terms of transactions, including payment terms, with suppliers and, provided that suppliers perform in accordance with the agreed terms, it is the Group’s normal
In 2008, Portugal Telecom changed the accounting policy regarding the measurement of real estate properties and the ducts infrastructure from the cost model to the revaluation model, since the latter
(a) Using the information provided in question C12.1, prepare a spreadsheet containing a trial balance, adjustment and resulting figures for income statement (profit and loss account) and statement
Five year summaryDiscussion points1 What does the reader learn from the ratios and performance measures presented by the company?2 What major ratios are not shown in this summary? Consolidated income
These processes [of governance] are supported by stakeholder engagement, which helps to ensure Vodafone is aware of the issues relevant to the business and to provide a clear understanding of
Operating cash flow was £43.0 million (2008: £30 million), representing 93% of adjusted operating profit, despite an increase in stock and debtors commensurate with the growth of the business. Net
The following technical terms appear for the first time in this chapter. Check that you know the meaning of each. (If you can’t find them again in the text, there is a glossary at the end of the
The following technical terms appear in this supplement. Check that you know the meaning of each.• Profit.• Creditor.• Sales revenue.• Trade payable.• Cash sale.• Discount received.•
Shareholders’ funds as at 21 March 2009 were £4,376 million (2008: £4,935 million), a reduction of £559 million, primarily as a result of the deterioration of the pension surplus into a deficit,
Cash flows Extracts from management reviews within annual reports Marks and Spencer plc We took a number of actions to improve our cash flow in 2008/09. In addition to reducing capital expenditure to
Cash flow After deducting interest, tax and dividend payments, £467 million of operating cash flow was available to fund our capital investment programme, demonstrating BAA’s continued strong
The Financial Reporting Review Panel today announced that its review activity in 2010/11 will focus on the following sectors: Commercial property. Advertising.Recruitment. Media.Information
Employees as assets of a service business The following extracts are taken from the annual reports of two companies that rely heavily on a skilled workforce.Although the workforce is not recognized
Explain the purpose of long-range planning.
Explain the purpose of setting a strategy.
Define the term 'budget'.
What is the role of the budget committee?
What is the role of the accounting department?
What is the sequence of the budgetary process?
How does budgeting help the management function of planning?
How does budgeting help the management function of control?
How does budgeting help the management function of communication and coordination?
What are the behavioural aspects of budgeting which may give rise to problems?
How may these behavioural problems be avoided or minimised?
What are the limitations of line item budgets?
Explain the nature and purpose of planning, programming budgeting systems (PPBS).
Explain the nature and purpose of zero-base budgeting (ZBB).
A company has 1,000 units of finished goods held in store at the start of the month. It produces a further 4,000 units during the month and sells 4,200 . How many units are in store at the end of the
The sales budget for the BeeSee Company for the first six months of the year is:There are no debtors at the start of January. One month's credit is allowed to customers. What is the budgeted cash
Trade creditors at the start of January are \(£ 12,500\). They are all paid during January. During the month, goods costing \(£ 18,000\) are purchased, and at the end of January there is an amount
The cost of indirect materials in any month is \(40 \%\) variable (varying with direct labour hours) and \(60 \%\) fixed. The total cost of indirect materials during the month of March was budgeted
Why are standard costs useful?
How are standard costs related to levels of output?
How are standard costs used in the control process?
How are direct materials price and usage variances calculated?
Give three possible causes of an adverse direct materials price variance.
Give three possible causes of a favourable direct materials usage variance.
How are direct labour rate and efficiency variances calculated?
Give three possible causes of a favourable direct labour rate variance.
Give three possible causes of an adverse direct labour efficiency variance.
Explain how you would identify which variances to investigate.
Explain the importance of using a flexible budget with variance analysis.
Give three reasons for regarding variance reports as a useful tool of management.
It was budgeted that to produce 20,000 concrete building blocks in one month would require \(100,000 \mathrm{~kg}\) of material. In the month of May, only 16,000 blocks were produced, using \(80,080
The standard cost of direct labour in the month of August is \(£ 36,000\). There is a direct labour rate variance of \(£ 6,000\) adverse and a direct labour efficiency variance of \(£ 2,500\)
Fixed overhead for the month of October has been budgeted at \(£ 16,000\) with an expectation of 8,000 units of production. The actual fixed overhead cost is \(£ 17,500\) and the actual production
Define 'feedback control'.
Define 'feedforward control'.
Define 'responsibility centre'.
What are the three basic questions to be asked in relation to report preparation?
How does an organisation decide on the frequency of internal reporting?
What is required of the management accountant in carrying out performance evaluation?
Define a 'controllable cost'.
Define a 'non-controllable cost'.
Define an 'avoidable cost'.
Define an 'unavoidable cost'.
What are the behavioural aspects of performance evaluation?
Explain what is meant by 'benchmarking'.
Explain the meaning of 'non-financial performance measures'.
Give two examples of quantitative non-financial performance measures.

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