1) Which of the following is a benefit of Activity Based Costing (ABC)? a) ABC can increase Assets b) ABC can increase Liabilities c) ABC provides more accurate cost for each unit of product or service d) ABC provides more accurate financial costs 2) Total revenue less total variable costs equals: a) Total contribution b) Total Assets c) Net capital a) Net cashflow 3) If only the fixed costs of a company increase, then: a) The break-even point will not change b) The break-even point will increase c) The break-even point is not dependent on costs d) The break-even point will decrease 4) Which of the following is the definition of a budget? a) A plan used by governments only b) A prediction of total assets c) A prediction of the total liabilities d) A short-term plan (typically for one year) 5) Which of the following is correct? .) Net contribution = net revenue + total fixed assets b) Total revenue - total variable costs= total contribution c) Marginal contribution = total costs - fixed costs d) Total contribution = total fixed costs - total variable costs 7) Historic cost is: a) The cost in the last financial year b) The best estimated cost in the market c) A cost already incurred a) The lowest cost in the last years 6) If the volume of activity of a company is higher than the break-even point, then the company: a) Makes a profit b) Makes a loss c) Makes neither a loss nor a profit d) Must reduce the number of products 9) Actual profit is equal to: a) Budgeted profit + all favourable variances b) Budgeted profit + all favourable variances - all adverse variances c) Budgeted profit + all adverse variances + all favourable variances d) Budgeted profit - profit in the last year 10) Which investment appraisal technique might ignore some parts of cash flows? a) Payback period b) Net present value c) Accounting rate of return d) Break-even point analysis 11) In the net present value technique, If the cost of capital increases from 8% to 9% then the: a) Net present value will decrease b) Present value will increase c) Present value will not change d) Net present value will not change 12) When a company make neither a profit nor a loss: a) The volume of activity is low b) The volume of the activity is equal to the break- even point c) The size of the company is small d) The volume of activity is too high 13) Which one of the following is a problem with Internal Rate of Return (IRR)? a) It does not consider the time value of money b) It ignores the total value of the project e) It is not related to the wealth maximisation objective a) It ignores cash flows after a specific date 18) in which of the following cases does a company need to use investment appraisal techniques? a) Deciding on buying a new branch b) Predicting costs for the next financial year c) Preparing the budget Predicting the return on investments for the next year 19) Which investment appraisal technique ignores some parts of cash flows? a) Accounting Rate of Return b) Net Present Value c) Payback Period d) Internal Rate of Return 20) According to the net present value method of investment appraisal, a project should be accepted when: a) Net present value is negative b) Net present value is positive c) Net present value is higher than total annual profit d) Net present value is lower than total annual profit
