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Question;Chapter;12;Contemporary;issues in financial reporting;1.Which of the following factors is not a;defect of the traditional historical cost method of accounting;under;inflationary conditions?;(a);Assets which have not been revalued are recorded at historic cost.;(b);Debtors and other monetary assets lose value with inflation.;(c);Asset values are objectively recorded at historic cost.;(d);Depreciation charges tend to be understated if based on the historic cost of;fixed assets.;2.FRS 10 deals with accounting for goodwill.;Which of the following is an acceptable treatment of;purchased;goodwill?;(a);Include under fixed assets, permanently, on the balance sheet.;(b);Include under intangible assets, permanently, on the balance sheet.;(c);Amortize on a systematic basis over the life of an asset.;(d);Write off immediately following acquisition by deducting from share capital.;3.Which of the following factors is likely;to be an area of difficulty in a large multinational group of;companies?;(a);Compliance with international accounting standards.;(b);Foreign currency translation.;(c);The preparation of the group financial statements.;(d);All of the above.;Accounting for Non-Accounting Students, 5th edition,Lecturer?s;Guide. ? Pearson Education Limited 2001115;Chapter;13;The;framework of management accounting;1.The main purpose of a management;accounting system is to;(a);Provide information for the financial accounting function.;(b);Protect the senior staff from criticism.;(c);Comply with the Companies Act 1985.;(d);To supply data and information to management.;2.Which of the following is not a major;function of management accounting?;(a);Human resource management.;(b);Budgeting.;(c);Cost accounting.;(d);Internal auditing.;3.Which of the following statements is true?;(a);Amanagement accountant should instruct other staff what to do.;(b);Amanagement accountant provides a service for other managers.;(c);Amanagement accountant must remain aloof from other staff.;(d);A management accountant?s job is largely to crunch numbers.;4.Which of the following items is not an;essential ingredient of a planning and control system?;(a);A clear statement of the entity?s objectives.;(b);A detailed budget for each department.;(c);Disciplinary action when actual costs exceed budgeted costs.;(d);A formalized organizational managerial structure.;Chapter;14;Cost;accounting;1.Which of the following is likely to be;classified as a direct material cost of a motor car wheel?;(a);The metal used to manufacture it.;(b);The metal used to manufacture one of the tools used in the car wheel factory.;(c);The cost of operating the raw material stores in the factory.;(d);The cost of the quality operation on the finished car wheels.;2.The first in, first out method of pricing;raw material issues, exhibits which one of the following;features?;(a);The issue price is recalculated each time new deliveries are made into stock.;(b);The issue price is always at the latest price.;(c);The goods are always issued strictly in the physical order in which they are;received.;(d);The issue price is always at the earliest price.;3.Which of the following is not a method of;pricing raw material issues from stock?;(a);Standard costing.;(b);Unit cost.;(c);Marginal cost.;(d);Continuous weighted average.;4.Which of the following is a direct labour;cost?;(a);Supervisors? salaries in the factory.;(b);Costs of the payroll accounting section.;(c);A bonus paid to the storeman.;(d);The wages of an operative paid on the basis of output achieved.;5.Production overheads are absorbed into;production units by the use of an overhead absorption;rate.;Which one of the following best describes how the absorption rate is;calculated?;(a);Total number of units produced divided by the total cost centre overheads.;(b);Total number of units produced multiplied by the unit overhead cost.;(c);Total cost centre overheads divided by the cost centre activity level.;(d);Total indirect costs for the business divided by the total number of units;produced.;6.XYZ Ltd has a labour intensive assembly;department. Which of the following methods of absorbing;overheads;is likely to used for that department?;(a);Direct labour hours method.;(b);Direct labour cost method.;(c);Direct material cost method.;(d);A percentage of prime cost.;7.XYZ Ltd has the following data relating to;its assembly plant in the year ended 31 December 2001;?000;Direct;material costs 500;Direct;labour cost 250;Assembly;plant indirect costs 100;In;addition, the stores department has total costs of ?30 000 and spends 50% of;its time servicing;the;assembly plant. There were 50 000 labour hours worked and 25 000 machine hours;run in the;assembly;plant in 2001.;The;overhead cost per direct labour hour was;(a);?2.;(b);?4.;(c);?2.3.;(d);?4.6.;8.If a company uses predetermined overhead;recovery rates and at the end of a period finds that;there;has been an under-recovery of overhead, which of the following best explains;how the underrecovery;has;occurred?;(a);Actual overhead cost has exceeded the amount used as a basis for the;establishment of the;predetermined;rate.;(b);Actual overhead cost has been less than the amount used as a basis for the;establishment of the;predetermined;rate.;(c);Actual activity levels were higher than planned due to an increase in demand.;(d);An expected price increase in the overhead costs which was built into the;overhead recovery;rate;did not take place.;9.;If there has been an over recovery of overheads, at the end of the accounting;period the amount;concerned;should be?;(a);Debited to the company profit and loss account.;(b);Credited to the company profit and loss account.;(c);Carried forward to the next accounting period as a cost saving.;(d);Used to reduce next period?s overhead recovery rate.;118;Accounting for Non-Accounting Students, 5th edition,Lecturer?s;Guide. ? Pearson Education Limited 2001


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