BUSS1030 final examination revision questions

The BUSS1030 final exam includes several descriptive questions where your response is strictly limited. E.g. Your answer should not exceed 50 words. Only the first 50 words of your response will be considered in determining your mark. Use these revision questions to practice writing such concise responses.

1. Break-even /CVP analysis seems to be a great tool. Does it have any weaknesses?

2. Why do we bother with break-even analysis? A business is formed to earn profit, not just to not make a loss (e.g. break-even). Discuss.

3. As a first year accounting student, Irene is confused. She thought she was learning that accrual accounting provided more useful information about the financial performance and position of an organisation. The cash flow statement is a step in the wrong direction in her opinion. Help Irene with her dilemma.

4. How does the accountant decide whether to classify an interest payment or receipt as an operating activity?

5. Provide a discussion of CVP analysis to illustrate the concept of risk.

6. Would you expect the operating profit margin to be higher or lower than the gross profit margin? What?s a good operating profit margin?

7. You?ve been trying to explain cash flow statements to your arts major flatmate. He thinks a company that makes a large profit will obviously have a large increase in cash. Complete the following table as a means of explaining to your flatmate how this will not always be the case.

Effect on profit

Effect on cash

Description of transaction

1

Increase

No effect

2

Decrease

No effect

3

No effect

Increase

4

No effect

Decrease

8. Which accounting standard covers financial ratio calculations? Discuss.

9. ?Financial accounting statements reflect past events. Therefore they are not useful in assisting users make decisions as decisions can only be made about future actions.? Discuss.

10. When do you use average amounts in your financial ratio calculations?

11. A classification of ratios that you may encounter is ?solvency?. Where would solvency ratios fit in with the classification system used in this textbook? Which term would be preferred by companies with substantial borrowings and why?

12. When asked whether he wanted his pizza cut into ten or twelve pieces the financial accountant replied ?Ten pieces please. I couldn?t possibly eat twelve?. Discuss from an overhead allocation viewpoint.

13. Describe some limitations of the analysis of financial statements. Provide suggested remedies for each of the limitations cited.

14. What costs would be included in the full cost of a box of cereal for a corner grocery store that offers free delivery within 1 km of the store? Why would this information be useful to the manager of the store?

15. Your dentist has decided to use process costing for the month of August. Should you reschedule your 30 August appointment? Discuss.

16. Equipment was acquired on 1 July 2010 for $50,000 by HiLite Ltd. Its life was determined as being:

Useful = 5yrs

Economic = 8yrs

Physical = 10yrs

The estimated residual values at the end of these respective periods are:

After 5 yrs = $20,000

After 8yrs = $4,000

After 10yrs = NIL

(a) Over what period should HiLite depreciate the equipment?

(b) What would the difference in the depreciation expense for the year ending 30 June 2012 based on using either the straight-line method or the reducing-balance method?

(c) On what basis should management select from these two methods to depreciate the equipment

(d) "Costs are always expenses? Do you agree?

BUSS1030 final examination revision questions The BUSS1030 final exam includes several descriptive questions where your response is strictly limited. E.g. Your answer should not exceed 50 words. Only the first 50 words of your response will be considered in determining your mark. Use these revision questions to practice writing such concise responses. 1. Break-even /CVP analysis seems to be a great tool. Does it have any weaknesses? 2. Why do we bother with break-even analysis? A business is formed to earn profit, not just to not make a loss (e.g. break-even). Discuss. 3. As a first year accounting student, Irene is confused. She thought she was learning that accrual accounting provided more useful information about the financial performance and position of an organisation. The cash flow statement is a step in the wrong direction in her opinion. Help Irene with her dilemma. 4. How does the accountant decide whether to classify an interest payment or receipt as an operating activity? 5. Provide a discussion of CVP analysis to illustrate the concept of risk. 6. Would you expect the operating profit margin to be higher or lower than the gross profit margin? What's a good operating profit margin? 7. You've been trying to explain cash flow statements to your arts major flatmate. He thinks a company that makes a large profit will obviously have a large increase in cash. Complete the following table as a means of explaining to your flatmate how this will not always be the case. Effect on profit Effect on cash 1 Increase No effect 2 Decrease No effect 3 No effect Increase 4 No effect Decrease Description of transaction 8. Which accounting standard covers financial ratio calculations? Discuss. 9. \"Financial accounting statements reflect past events. Therefore they are not useful in assisting users make decisions as decisions can only be made about future actions.\" Discuss. 10. When do you use average amounts in your financial ratio calculations? 11. A classification of ratios that you may encounter is \"solvency\". Where would solvency ratios fit in with the classification system used in this textbook? Which term would be preferred by companies with substantial borrowings and why? 12. When asked whether he wanted his pizza cut into ten or twelve pieces the financial accountant replied \"Ten pieces please. I couldn't possibly eat twelve\". Discuss from an overhead allocation viewpoint. 13. Describe some limitations of the analysis of financial statements. Provide suggested remedies for each of the limitations cited. 14. What costs would be included in the full cost of a box of cereal for a corner grocery store that offers free delivery within 1 km of the store? Why would this information be useful to the manager of the store? 15. Your dentist has decided to use process costing for the month of August. Should you reschedule your 30 August appointment? Discuss. 16. Equipment was acquired on 1 July 2010 for $50,000 by HiLite Ltd. Its life was determined as being: Useful = 5yrs Economic = 8yrs Physical = 10yrs The estimated residual values at the end of these respective periods are: After 5 yrs = $20,000 After 8yrs = $4,000 After 10yrs = NIL (a) Over what period should HiLite depreciate the equipment? (b) What would the difference in the depreciation expense for the year ending 30 June 2012 based on using either the straight-line method or the reducing-balance method? (c) On what basis should management select from these two methods to depreciate the equipment (d) "Costs are always expenses\" Do you agree