Question 1(2.5 points)

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Accounting can best be defined as the:

Question 1 options:

a)

Financial representation of business activity

b)

Systematic recording and reporting of business transaction

c)

Systematic recording, reporting, and analysis of financial transactions

d)

Analysis of financial information for users

Question 2(2.5 points)

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Accounting is traditionally seen as fulfilling three functions:

Question 2 options:

a)

Financial accounting, management accounting and corporate finance

b)

Income Statement, Balance Sheet and Statement of Cash Flows

c)

Planning, decision-making and control

d)

Scorekeeping, attention-directing and problem-solving

Question 3(2.5 points)

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Financial statements are regulated by:

Question 3 options:

a)

Legislation, accounting standards and audit

b)

Accounting standards and audit

c)

The accounting profession

d)

Legislation and accounting standards

Question 4(2.5 points)

Financial accounting is useful for managers because:

Question 4 options:

a)

The decisions of managers are influenced by how those decisions will be presented to users

b)

The accounting information is used by managers for planning, decision making and control

c)

Both a and b above

d)

It is not useful because it is produced annually, is highly aggregated and provides no comparison to target

Question 5(2.5 points)

According to Rappaport (1998), the focus of increasing shareholder wealth is to:

Question 5 options:

a)

Obtain funds at competitive rates from capital markets

b)

Invest funds to exploit imperfections in product markets

c)

Both of the above

d)

None of the above

Question 6(2.5 points)

Value-based management emphasizes shareholder value, because this is the:

Question 6 options:

a)

Primary goal of every business

b)

Function of accounting processes

c)

Required under Corporations legislation

d)

Necessary for economic growth

Question 7(2.5 points)

For shareholder value to be created, a business must:

Question 7 options:

a)

Generate profits in product markets that exceed the cost of capital in capital markets

b)

Generate profits in capital markets that exceed the cost of capital in product markets

c)

Borrow from lenders at a cost that is lower than the cost of capital

d)

Sell its products in product markets for more than they cost to produce

Question 8(2.5 points)

Decisions made using management accounting information are made in the context of:

Question 8 options:

a)

Whether those decisions are likely to lead to shareholder value in the longer term

b)

How those decisions will appear when they are reported in the annual financial statements

c)

Both a and b above

d)

None of the above. Management accounting information has no relevance to shareholder value or financial statement

Question 9(2.5 points)

Use the following information to answer Questions 9 and 10

Toshyo purchases an inventory of spare parts on credit from its suppliers for $15 000. During the month Toshyo pays its suppliers $10 000 and sells spare parts (which cost the business $8 000) to its customers on credit for $20 000. Customers pay Toshyo $12 000 during the month.

Inventory increases by:

Question 9 options:

a)

$2,000

b)

$5,000

c)

$7,000

d)

$8,000

e)

$12,000

Question 10(2.5 points)

Payables increases by:

Question 10 options:

a)

$2,000

b)

$5,000

c)

$7,000

d)

$8,000

e)

$12,000

Question 11(2.5 points)

The process by which results are compared with plan, with variations leading to corrective action is termed:

Question 11 options:

a)

Performance gap

b)

Feedback

c)

Budgeting

d)

Feedforward

Question 12(2.5 points)

A predictive model is best described as:

Question 12 options:

a)

The organization's budget for the year

b)

The organization's strategy for the next 3-5 years

c)

The action-outcome relationships to meet the organization's competition

d)

The cause-effect relationships to meet the organization's strategy and competitive environment.

Question 13(3 points)

Non-financial performance measures are more likely to be:

Question 13 options:

a)

Long-term indicators

b)

Short-term indicators

c)

Lagging indicators

d)

Leading indicators

Question 14(3 points)

The way of looking at the world which sees accounting as a method of representing economic reality for an organization is termed:

Question 14 options:

a)

Social construction paradigm

b)

Interpretive paradigm

c)

Critical paradigm

d)

Rational paradigm

Question 15(3 points)

Research in accounting and management control can best be described as:

Question 15 options:

a)

Describing practice

b)

Developing practical theories

c)

Developing theories in isolation from practice

d)

Developing theories that explain practice

Question 16(3 points)

The normative approach to research in accounting and management control describes:

Question 16 options:

a)

What ought not to happen in practice

b)

What does happen in practice

c)

What ought to happen in practice

d)

What does not happen in practice

Question 17(3 points)

The interpretive approach to research in accounting and management control is most commonly carried out through:

Question 17 options:

a)

Statistical analysis

b)

Quantitative studies

c)

Qualitative studies

d)

Both quantitative and qualitative studies

Question 18(3 points)

Accounting standards reflect

Question 18 options:

a)

The basic principles generally accepted by the accounting profession

b)

Laws that govern how financial statements are presented

c)

How a particular company standardizes its financial statements from year to year

d)

A consensus between international and USA standard-setting agencies

Question 19(3 points)

The three most important financial statements are the:

Question 19 options:

a)

Statement of Financial Position, Income Statement and Statement of Cash Flows

b)

Statement of Financial Position, Statement of Cash Flows and Statement of Changes in Equity

c)

Income Statement, Statement of Cash Flows and Explanatory Notes to the Financial Statements

d)

Profit & Loss, Balance Sheet and Statement of Changes in Equity

Question 20(3 points)

The IASB'sFramework for the Preparation and Presentation of Financial Statementsis mostly concerned with:

Question 20 options:

a)

The format of financial statements

b)

The setting of accounting standards

c)

The definition, recognition and measurement of the elements in financial statements

d)

Satisfying shareholders' demands for information

Question 21(3 points)

Use the following information extracted from ABC's Income Statement and Balance Sheet to answer the next three questions:

Sales 4,200,000; Gross profit 2,700,000; Receivables 630,000; Payables 275,000; Inventory 300,000. ABC calculates its financial ratios based on being open for business 6 days per week for 50 weeks per year.

ABC's days' sales outstanding were:

Question 21 options:

a)

40

b)

45

c)

50

d)

55

Question 22(3 points)

ABC's inventory turn was:

Question 22 options:

a)

5

b)

7

c)

9

d)

14

Question 23(3 points)

ABC's days' payables outstanding were:

Question 23 options:

a)

30

b)

45

c)

50

d)

55

Question 24(3 points)

Information systems that include both financial and non-financial information which can be presented graphically with highlighting of performance relative to target are:

Question 24 options:

a)

Management information systems

b)

Expert systems

c)

Transaction processing systems

d)

Enterprise resource planning systems

Question 25(3 points)

Information systems that integrate financial and non-financial information and provide holistic information across multiple business activities are:

Question 25 options:

a)

Transaction processing systems

b)

Management information systems

c)

Enterprise resource planning systems

d)

Expert systems

Question 26(3 points)

Pricing of product/services depends on:

Question 26 options:

a)

Cost

b)

Competitor prices

c)

What customers are willing to pay

d)

All of the above

Question 27(3 points)

Fixed costs are costs that:

Question 27 options:

a)

Change when activity reaches a critical level

b)

Change with increases in business activity

c)

Never change

d)

Do not change with increases in business activity

Question 28(5 points)

Use the following information to answer the remaining questions:

Fixed costs

240,000

Selling price per unit

18.00

Variable costs per unit

12.60

Target profit

120,000

The breakeven point in units is closest to:

Question 28 options:

a)

44,444

b)

55,500

c)

66,667

d)

88,888

Question 29(5 points)

The breakeven point in is closest to:

Question 29 options:

a)

1,200,000

b)

841,120

c)

800,000

d)

560,747

Question 30(5 points)

The number of units to be sold to achieve the target profit is closest to:

Question 30 options:

a)

44,444

b)

55,500

c)

66,667

d)

88,888

Question 31(5 points)

The sales needed to achieve the target profit is closest to:

Question 31 options:

a)

1,200,000

b)

841,120

c)

800,000

d)

560,747

Question 32(5 points)

If expected sales are 50,000 units, the margin of safety is closest to:

Question 32 options:

a)

11.1%

b)

12.5%

c)

30%

d)

50%