Business Accounting Exam Preparation Guide
Course Introduction
Business Accounting introduces students to the fundamental principles and practices of accounting within a business context. The course covers the recording, classification, and interpretation of financial transactions, emphasizing the preparation and analysis of financial statements such as income statements, balance sheets, and cash flow statements. Students will explore key accounting concepts including assets, liabilities, revenues, expenses, and equity, as well as the role of accounting in managerial decision-making and regulatory compliance. Practical exercises and case studies are integrated to develop proficiency in using accounting information for planning, control, and performance evaluation in various business environments.
Recommended Textbook
Accounting Understanding and Practice 4th Edition by Danny Leiwy
Available Study Resources on Quizplus
19 Chapters
492 Verified Questions
492 Flashcards
Source URL: https://quizplus.com/study-set/3607 Page 2
Chapter 1: The Statement of Financial Position Balance
Sheetand What It Tells Us
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/71624
Sample Questions
Q1) Non-current liabilities include long-term borrowings such as mortgages.
A)True
B)False
Answer: True
Q2) Inventory,trade receivables and cash are classified as:
A) Current liabilities
B) Long-term assets
C) Current assets
D) Long-term liabilities
Answer: C
Q3) The main purpose of financial accounting information is to:
A) Provide financial information for taxation purposes
B) Provide financial information to managers
C) Provide financial information for external users, such as shareholders and creditors
D) Provide financial information to customers
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: The Income Statement Profit and Loss Account
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/71613
Sample Questions
Q1) A company made the following transactions last year:
A) Operating Profit is £32,000
B) Operating Profit is £19,000
C) Operating Profit is £11,000
D) Operating Profit is £27,000
Answer: C
Q2) If the cost of goods sold was £8,000 for goods which eventually sold for £20,000,what is the gross profit ratio?
A) 40%
B) 60%
C) 150%
D) 250%
Answer: B
Q3) Which of the following are ways in which managers can manipulate the income statement in order to show a higher profit?
A) Bringing forward the recognition of sales
B) Overstate closing inventory
C) Make repairs and maintenance look like capital expenditure
D) All of the above
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Development of Financial Reporting
Available Study Resources on Quizplus for this Chatper
33 Verified Questions
33 Flashcards
Source URL: https://quizplus.com/quiz/71612
Sample Questions
Q1) Published financial statements are aimed at a variety of users,including customers,the public and employees
A)True
B)False
Answer: True
Q2) Which of the following statements is false?
A) For an "intangible" asset to be recognized, there must be a probability of it generating future economic benefit and be capable of being measured
B) Research expenditure may be treated as capital expenditure
C) Development expenditure may be treated as capital expenditure
D) Internally generated intangibles, such as brands, should not be capitalized
Answer: B
Q3) Which of the following statements is correct?
A) Inventories should be shown at the lower of cost and net realizable value
B) Inventories should be shown at net realizable value
C) Inventories should be shown at cost
D) Inventories should be shown at the higher of cost and net realizable value
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Ratios and Interpretation: a Straightforward Introduction
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71611
Sample Questions
Q1) Which of the following ratios considers the relationship between inventory and cost of sales?
A) Inventory turnover ratio
B) Trade payables ratio
C) Cost of sales turnover ratio
D) Trade receivables ratio
Q2) A high price/earnings (P/E)ratio suggests:
A) Shareholders are pessimistic about future growth prospects
B) Shareholders are optimistic about future growth prospects
C) Earnings per share is high relative to the share price
D) Statements B and C are correct
Q3) The price earnings ratio,dividend cover and dividend yield provide information on:
A) Stock market performance
B) Liquidity
C) Profitability
D) Utilization of assets
Q4) Non-current liabilities are used in the calculation of the current ratio
A)True
B)False
6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: How the Stock Market Assesses Company Performance
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71610
Sample Questions
Q1) The only factor that influences a companies share price is the profit it has made A)True
B)False
Q2) The "market capitalization" of a company refers to the total market value of a companies shares
A)True
B)False
Q3) Which of the following statements is correct?
A) You can buy shares by directly contacting the company you want to buy shares in
B) It is usually quite difficult to buy the shares of unlisted companies
C) It is difficult for investors to make profits when share prices are rising
D) All of the above statements are correct
Q4) A balanced portfolio can eliminate unsystematic risk
A)True B)False
Q5) A high price/earnings (P/E)ratio indicates that a company is profitable
A)True
B)False
7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Cash Flow Statements: Understanding and Preparation
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71609
Sample Questions
Q1) Which of the following statements is false?
A) An increase in trade receivables is treated as an outflow of cash
B) Interest paid is an outflow of cash
C) An increase in trade payables is treated as an outflow of cash
D) An increase in inventory is treated as an outflow of cash
Q2) Which of the following statements is false?
A) Not all payments of cash are expenses
B) Some payments are not charged against profits
C) Some receipts do not add to cash
D) All revenues are receipts of cash
Q3) The annual depreciation expense is an outflow of cash
A)True
B)False
Q4) Which of the following would be classified as an operating activity on a cash flow statement?
A) Purchase of a building
B) Purchase of inventory
C) Repayment of loan
D) Issue of shares
8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Advanced Interpretation of Company and Group Accounts
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71608
Sample Questions
Q1) Which of the following would you associate with the Director's report?
A) Cash flow statement
B) Five year summary
C) Business review
D) Balance sheet
Q2) "Minority interest" refers to the owners of shares which have no voting rights
A)True
B)False
Q3) High levels of debt in a company is always a cause for concern
A)True
B)False
Q4) According to Altman (1983)the amount of working capital in relation to total assets is an important component in predicting the failure of a company,while measures of return on capital employed (ROCE)can not help predict failure
A)True
B)False
Q5) A company with interest cover of 10 is less safe than a company with interest cover of 2
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Current Issues in Financial Reporting
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71607
Sample Questions
Q1) Which of the following statements would normally be associated with a "right wing" proposal to curtail creative accounting practice?
A) Remove legislation and public involvement in company accounting
B) Develop more rigorous legislation and public involvement in company accounting
C) Develop more rigorous regulation and public involvement in audit practice
D) Statements B & C are both correct
Q2) "Ethics" and an "Ethics Policy Statement" drawn up by the company must follow which rules in the UK?
A) There are no RULES, merely guidelines set out in the Corporate Social Responsibility Code
B) There are strict rules and legislation laid out in the Corporate Social Responsibility Code
C) There are legal requirements laid out in the Sarbanes-Oxely Act
D) There are no RULES, but there are guidelines set out in the Sarbanes-Oxely Act
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Bookkeeping to Trial Balance
Available Study Resources on Quizplus for this Chatper
24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/71606
Sample Questions
Q1) Ronald Scott starts his own business and opens a business account with £40,000.Using double entry bookkeeping,how would this transaction be recorded?
A) Debit cash account and credit retained earnings account
B) Debit capital account and credit cash account
C) Debit retained earnings account and credit cash account
D) Debit cash account and credit capital account
Q2) Which of the following is expected to have a credit balance?
A) Trade payables
B) Trade receivables
C) Rent
D) Inventory
Q3) In general,an asset account has a debit balance
A)True
B)False
Q4) Which of the following is expected to have a debit balance?
A) Trade payables
B) Trade receivables
C) Sales
D) All of the above
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Trial Balance to Final Accounts
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71623
Sample Questions
Q1) The following information is available from the trial balance of Valentines company as at 31 Dec Year 3:
\[\begin{array} { l c c }
& \text { Debit } & \text { Credit } \\
& £ & £ \\
\text { Sales revenue } & & 110,000\\
\text { Inventory at 31st Dec Year 1 } & 7,000 \\
\text { Purchases } & 18,750 & \end{array}\]
Closing inventory as at 31st Dec year 3 is £5,250.Calculate the gross profit.
A) £141,000
B) £79,000
C) £89,500
D) £130,500
Q2) If a bad debt is written off,the accounting adjustment will be:
A) Dr: Bad debt expense Cr: Provision for bad debts
B) Dr: Provision for bad debts Cr: Bad debt expense
C) Dr: Bad debt expense Cr: Trade receivables
D) Dr: Trade receivables
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Financing a Business
Available Study Resources on Quizplus for this Chatper
24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/71622
Sample Questions
Q1) A company can reduce its share capital by buying back some of its own shares
A)True
B)False
Q2) The three main sources of funds for companies are:
A) Share capital, fixed assets and revenue
B) Share capital, borrowing and retained earnings
C) Share capital, dividends and net assets
D) Share capital, borrowing and operating profit
Q3) The total figure for equity on the balance sheet includes all of the following except:
A) Share capital
B) Share premium
C) Retained profits
D) Preference share capital
Q4) A business can raise finance by selling assets that it owns and then leasing them back again
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Management of Working Capital
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71621
Sample Questions
Q1) The Dingle company uses 12,000 units of dingits each year,and pays 75p each for them.The administration costs associated with each order is £175 and the shareholder costs are estimated at 20% per annum.Calculate the economic order quantity (EOQ).
A) 3672
B) 2050
C) 5292
D) 1184
Q2) Which of the following practical problems are associated with economic order quantity (EOQ)?
A) It is often difficult to determine ordering costs with sufficient accuracy
B) It is often difficult to determine stockholding costs with sufficient accuracy
C) Annual demand may not be so predictable
D) All of the above
Q3) Which of the following is not an approach to dealing with liquidity problems?
A) Pay suppliers by check
B) Pay suppliers by bank transfer
C) Sell off surplus assets
D) Sell off inventory at low price
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Introduction to Management Accounting
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/71620
Sample Questions
Q1) Production expenses which become part of the costs of finished goods are charged as an expense in the period in which they are incurred
A)True
B)False
Q2) The term "prime costs" refers to the operating costs which are charged as an expense during the period in which they are incurred
A)True
B)False
Q3) Which of the following statements are correct?
(i)Financial Accounting is required by law
(ii)Financial Accounting includes budgeting,forecasting and decision making
(iii)Management Accounting must follow a set pattern
(iv)Management Accounting includes budgeting,forecasting and decision making
A) (i) and (iv) are correct
B) (i), (ii) and (iii) are correct
C) (i), (ii) and (iv) are correct
D) All of them are correct
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Investment Appraisal
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71619
Sample Questions
Q1) Which of the following is not used as an investment appraisal technique?
A) IRR
B) ARR
C) NPV
D) Capital gearing
Q2) Which of the following is correct?
A) The internal rate of return (IRR) is technically flawed and can lead to incorrect decisions
B) The internal rate of return (IRR) involves less calculations than other investment appraisal methods
C) The internal rate of return (IRR) can deal with mutually exclusive projects
D) The internal rate of return (IRR) can distinguish between projects involving investment from those requiring borrowing
Q3) ROI stands for:
A) Residual or Other Income
B) Return On Investment
C) Revenue Over Investment
D) Revenue Only Income
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Budgetary Planning and Control
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71618
Sample Questions
Q1) An approach to producing a budget which is based on the previous years budget is called:
A) Planning, programming budgeting system (PPBS)
B) Zero-based budgeting (ZBB)
C) Incremental budget
D) Performance budget
Q2) Usually the actual results achieved by an organization will be different from what had been planned
A)True
B)False
Q3) The difference between a fixed budget and a flexible budget is:
A) A fixed budget assumes a given level of production and sales and a flexible budget can accommodate different levels of production
B) A fixed budget considers fixed costs only, a flexible budget considers fixed and variable costs of production
C) A fixed budget is for a single department, a flexible budget covers a range of departments and units
D) A fixed budget is modified annually, a flexible budget is modified monthly
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Absorption Costing
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71617
Sample Questions
Q1) An example of a production overhead would be:
A) Direct labour
B) Supervisory costs
C) Direct materials
D) None of the above
Q2) The manufacturing plant at Daydream plc has three departments.The budgets for each department are shown below:
\[\begin{array} { l c c c }
& \text { A } & \text { B } & \text { C } \\
\text { Production Overheads } & £ 3 \mathrm {~m} & £ 6 \mathrm {~m} & £ 30 \mathrm {~m} \\
\text { Hours worked } & 1 \mathrm {~m} & 1 \mathrm {~m} & 1 \mathrm {~m} \\
\text { Direct wages } & £ 12 \mathrm {~m} & £ 16 \mathrm {~m} & £ 20 \mathrm {~m} \end{array}\]
Calculate the production overhead for each department.
A) A= £12 per hour; B = £16 per hour; C = £20 per hour
B) A= £0.25 per hour; B = £0.36 per hour; C = £1.50 per hour
C) A= £3 per hour; B = £6 per hour; C = £30 per hour
D) A= £4 per hour; B = £2.67 per hour; C = £0.66 per hour
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Marginal Costing and Decision-Making
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71616
Sample Questions
Q1) During the Summer,Paul sells ice creams from a van in a park at weekends. His fixed costs for running the van are £200 per weekend.He buys ice cream ingredients from a wholesaler at a cost of 40p per ice cream,and sells them for £2.00 each. If he wants to make a profit of £280,how many ice creams should he sell over the weekend?
A) 175
B) 300
C) 125
D) 140
Q2) The MoneyTalks company produces and sells 125,000 units a year for £50 each.Variable costs are £40 and annual fixed costs are £600,000. Calculate the break-even point in sales revenue.
A) £266,666
B) £26,666
C) £2,400,000
D) £21,818
Q3) "Contribution" can be defined as sales minus variable costs
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Standard Costing and Variance Analysis
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71615
Sample Questions
Q1) The Standard Cost Card for a batch of 3,000 bottles of shampoo includes the following:
36 hours in Process 1 at £6.00 per hour
4 hours in Process 2 at £9.00 per hour
A batch of 3,000 bottles had the following usage:
40 hours in Process 1 at a total cost of £260
3)5 hours in process 2 at a cost of £35.
What are the labour efficiency and rate variances for the Process 2?
A) The Efficiency Variance is £3.50 Favourable and the Rate Variance is £4.50 Adverse
B) The Efficiency Variance is £4.50 Favourable and the Rate Variance is £3.50 Adverse
C) The Efficiency Variance is £4 Favourable and the Rate Variance is £1 Adverse
D) The Efficiency Variance is £4 Adverse and the Rate Variance is £5 Favourable
Q2) Direct materials price variance can be expressed as:
A) Actual quantity x (actual price - standard price)
B) Actual quantity x (standard price x standard quantity)
C) Standard price x (actual quantity x standard quantity)
D) Standard price x (actual quantity - standard quantity)
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Incomplete Records
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/71614
Sample Questions
Q1) At the end of the year,NewBiscuit company has inventory in hand at a selling price of £10,500.What was the cost of inventory assuming inventory is sold at a margin of 50%?
A) £5,250
B) £8,000
C) £3,000
D) £7,000
Q2) Not every debit has a credit
A)True
B)False
Q3) At the end of the year,Terraplane company has inventory in hand at a selling price of £20,600.What was the cost of inventory assuming inventory is marked up at 60%?
A) £12,875
B) £8,000
C) £8,240
D) £12,360
Q4) Debits are increases to liabilities and revenues
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
21