MCQ's

1.What are the two primary characteristics of management accounting information which lead to better decisions in business?

a.Relevance and verifiability

b.Understandability and timeliness

c.Comparability and timeliness

d.Quality and relevance

2.Which of Porter's 5 forces is most applicable to a wealthy and powerful company that runs a monopoly and has many customers?

a.Threat of new entrant

b.Powerful suppliers

c.Powerful buyers

d.Threat of substitution

e.Competitive rivalry

f.All the above

3.Which of Porter's 5 force is most applicable to Mercedes Benz? (Benz is a product differentiator, a powerful company, has a highly recognizable brand and has few competitors)

a.Threat of new entrant

b.Powerful suppliers

c.Powerful buyers

d.Threat of substitute

e.Competitive rivalry

f.All the above

4.A weakness of the payback method is:

a.It does not consider cash flows after the payback period

b.It may be difficult to determine future cash flows

c.It does not consider the time value of money

d.All the above are weaknesses of the payback method

5.The accounting department at a manufacturing facility is an example of a:

a.Profit centre

b.Revenue centre

c.Cost centre

d.Investment centre

6.Chunderbuggie Ltd is considering purchasing a new machine to manufacture products. The machine will cost $120,000 and has an 8 year useful life. After 8 years it has zero residual value. The company uses straight line depreciation. The tax rate is 30%. What is the tax shield (annual cash saving based on tax) that the company can apply as a cash flow in its NPV calculation?

a.$4,500

b.$10,500

c.$15,000

d.$36,000

7.In a manufacturing company, which of the following measures would be MOST likely to be found in the internal business process perspective of the balanced scorecard?

a.Economic Value Added

b.Number of receipts processed per hour

c.Set up costs

d.Monthly productivity rate

8.According to Integrated Reporting, when a mining company generates revenue by selling a commodity, it is an example of value creation by transforming:

a.Financial capital and natural capital into human capital

b.Natural capital into financial capital

c.Intellectual capital and natural capital into financial capital

d.Intellectual capital, natural capital and social capital into financial capital

e.Intellectual capital, natural capital, social capital, manufactured capital and human capital into financial capital.

9.According to Integrated Reporting value can be ....... Over time. (Fill the blank)

a.Preserved or destroyed

b.Preserved, created, transformed or maintained

c.Preserved, transformed or invested

d.Preserved, created, transformed or destroyed

10.A company is more likely to gain brand recognition if:

a.The company is first in the industry

b.The company sells their product at a lower price than competitors

c.The company makes products that are similar to the best product in the industry

d.The company sells its product overseas