Questions and Answers of Financial And Management Accounting

Give two examples of qualitative non-financial performance measures.
What are the four main aspects of a Balanced Scorecard?
Give one example of a goal and one example of a matching measurement, for each of the four main aspects of a Balanced Scorecard.
What are the benefits and problems of linking rewards and penalties to a performance measurement system in an organisation?
What is the purpose of capital investment appraisal?
What is meant by the assumption of certainty of cash flows?
What are the main steps in making a decision about a capital investment?
What is the payback method of evaluating a project?
What are the advantages and limitations of the payback method?
What are the advantages and limitations of the accounting rate of return as a technique for use in capital investment appraisal?
What is meant by the present value of a cash flow?
Define net present value and explain how it is calculated.
State the net present value decision rule to be used in capital investment appraisal.
Define internal rate of return and explain how it is calculated.
State the internal rate of return decision rule to be used in capital investment appraisal.
Explain the problems which may arise in choosing between mutually exclusive projects.
Explain the processes necessary for authorisation and review of capital projects.
Explain what is meant by advanced manufacturing technologies.
Explain why present value techniques may not be suitable for project evaluation where a business uses advanced manufacturing technologies.
Calculate the present value of \(£ 100\) receivable at the end of (a) one year, (b) two years and (c) three years, using a discount rate of \(8 \%\) per annum.
Calculate the present value of \(£ 100\) receivable at the end of five years using a discount rate of (a) \(4 \%\), (b) \(6 \%\) and (c) \(8 \%\) per annum.
Intel warned of lower than expected revenues in the second half of the year as PC makers hold back from ordering its computer chips in the face of economic uncertainty and the October launch of
Define 'business strategy'.
How does strategic management accounting make use of information about competitors?
How does just-in-time management reduce costs of control of an inventory of raw materials?
What is meant by a cost-reduction approach to value chain analysis? How does it differ from product differentiation?
What is the management philosophy represented by total quality management?
What are the main components of the cost of quality?
What is the stated purpose of business process re-engineering?
What are the three goals of business process re-engineering?
What is e-business?
What is e-commerce?
How can management accounting contribute to planning, decision making and control in e-business and e-commerce?
We produce a wide range of specialist, high-specification materials that have extraordinary attributes and properties. Engineered into products, they deliver enhanced performance, often under extreme
What is a Directive?
The following technical terms appear in this chapter. Check that you know the meaning of each. (If you cannot find them again in the text, they are defined at the end of the book.)(a) revenue(b)
Continuing to use the annual reports of companies which you obtained for Chapters 1 and 4 , find the financial statements and the notes to the accounts.1 Compare the financial statements with the
Explain the categories:(a) tangible non-current (fixed) assets;(b) intangible non-current (fixed) assets; and(c) non-current (fixed) asset investments;and give an example of each.
Assume that fee income and costs are the same in Year 2 as in Year 1. Record the transactions and events of Year 2 in an accounting equation spreadsheet. Prepare the statement of financial position
Angela's Employment Agency sells the building for \(£ 285,000\) on the final day of December Year 3. Record the transactions and events of Year 3 in an accounting equation spreadsheet. Assume
Across our beverage can sectors our vision is to keep the metal in a closed material loop: our aim is for zero cans ending up in landfill following consumers' use of the product. This makes good
The following extracts relating to suppliers and accounts payable are taken from the annual report of the John Lewis Partnership.Customers, products and suppliers (Extract from Business Review, p.
Turn to the annual report of a listed company which you have used for activities in previous chapters. Find every item of information about liabilities. (Start with the financial statements and notes
What is the purpose of the statement of total recognised income and expenses?
The Group's key risks are outlined below:1 Regulatory decisions and changes in the regulatory environment could adversely affect our business.2 We could suffer loss of consumer confidence and/or
What is a special purpose entity?
One of the joys of Amazon's business model is that customers pay straight away while suppliers are paid later. When a company is growing quickly, this mismatch (that is, the difference between days
The following extracts are taken from the website of the Chartered Institute of Management Accountants. The leading global professional body of Management Accountants.CIMA is the world's largest
Explain why management decisions will normally require more than a management accounting input.
Why is management accounting required to take on an outward-looking role of contributing to business strategy by identifying, measuring and communicating financial information about a wider business
Explain the needs of internal users for management accounting information.
Explain, giving a suitable example in each case, how management accounting may serve the purposes of:(a) directing attention(b) keeping the score(c) solving problems.
Describe, and explain each stage of, the cycle of profit planning and control.
A record company is planning to launch an Internet music service. Subscribers who pay \(£ 15\) per month will be allowed to download 100 songs per month to a personal computer. If the subscription
Explain the meaning of 'activity' and 'output'.
For each of the following cost classification terms, give a definition and give one example of how the definition applies in practice to a person providing car repairs from a rented garage:(a)
Classify each of the following as being primarily a fixed cost or a variable cost, and, if necessary, explain why you think such a classification would be difficult without more information being
Explain how cost classification must be matched to the purpose of planning, decision making or control.
How does cost classification vary to meet particular circumstances?
Almost two-thirds of average supply chain expense for UK supermarkets comes from the cost of taking goods the 'last mile' to stores, according to research by strategy consultants Roland Berger.The
How may a system of materials-control procedures ensure accurate accounting information for job-costing purposes?
Which source documents should be used to create the accounting record for direct materials costs?
What are the problems of accounting for wastage and scrap?
Is direct labour cost a fixed cost or a variable cost? Explain your answer.
For each of the following overhead costs, suggest one method of apportioning cost to cost centres:(a) employees' holiday pay;(b) agency fee for nurse at first-aid centre;(c) depreciation of
Explain how each of the following service department costs could be apportioned over production centres:(a) Cleaning of machines in a food-processing business.(b) Vehicle maintenance for a fleet of
Explain how each of the following transactions is dealt with in a job-costing system:(a) The production department orders 16 components from store at a cost of \(£ 3\) each, to be used on job 59.(b)
BHP Billiton is to abandon its involvement in titanium mining and has also confirmed cutbacks in nickel ore production in response to weaker metal prices and the impact of a strengthened Australian
Define 'variable cost' and 'fixed cost'.
Contrast the economist's view of costs and revenues with that taken in management accounting.
Explain the algebraic method for determining the break-even point.
Explain the formula method for determining the break-even point.
Sketch, and explain the main features of, a break-even chart.
Sketch, and explain the main features of, a profit-volume chart.
What happens to the break-even point when the sales price per unit falls?
What happens to the break-even point when the variable cost per unit falls?
What happens to the break-even point when fixed overheads increase?
State the limitations of break-even analysis.
Give three examples of applications of cost-volume-profit analysis.
Explain how cost-volume-profit analysis may help in:(a) decisions on special orders(b) abandonment decisions(c) situations of limiting factors; and(d) a decision on buying in services.
Explain how economic factors usually dictate prices of goods and services.
Explain the situations where full cost pricing may be appropriate.
What are the limitations of full cost pricing?
Explain the situations where marginal cost pricing may be appropriate.
Transport for London: extracts from Annual Report 2012Transport for London (TfL) is a statutory corporation established by section 154 of the Greater London Authority Act 1999 (GLA Act 1999). It is a
The following technical terms appear for the first time in this chapter. Check that you know the meaning of each. accountancy firm accountancy profession accounting agency agency theory annual
Discussion points1 How does the summary statement of financial position (balance sheet) reflect the accounting equation?2 To what extent is the statement of financial position reflected in 'Who we
Use the definition to explain why each of the items in your answer to A.2.3 is an asset.
State the conditions for recognition of an asset.
Explain why an item may pass the definition test but fail the recognition test for an asset.
Give three examples of items which pass the definition test for an asset but fail the recognition test.
Use the definition to explain why each of the items in your answer to A2.11 is a liability.
State the conditions for recognition of a liability.
Explain why an item may pass the definition test but fail the recognition test for a liability.
Set out the accounting equation which represents the position after a change has occurred.
The following information has been gathered from the accounting records of Pets Parlour:RequiredUsing the accounting equation, calculate:(a) The amount of ownership interest at 31 December Year 4.(b)
Shareholders' funds as at 17 March 2012 were \(£ 5,629\) million (19 March 2011: \(£ 5,424\) million), an increase of \(£ 205\) million. This is mainly attributable to the continued profitable
John Timms is the sole owner of Sunshine Wholesale Traders, a company which buys fruit from farmers and sells it to supermarkets. All goods are collected from farms and delivered to supermarkets on
Prepare a statement of financial position (balance sheet) from the following list of assets and liabilities, regarding the ownership interest as the missing item.Explain how the statement of
Return to the annual reports your group obtained for the exercise in Chapter 1. Find the statement of financial position (balance sheet), income statement (profit and loss account) and statement of

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