Accounting for Non-Specialists Exam Review
Course Introduction
Accounting for Non-Specialists provides students with a foundational understanding of accounting principles and practices, focusing on the essential concepts required for interpreting and applying financial information in non-accounting roles. The course explores key topics such as the preparation and analysis of financial statements, budgeting, cost behavior, and financial decision-making. Through real-world examples and practical exercises, students learn how accounting information supports business operations and strategic planning, equipping them with the skills to communicate effectively with financial professionals and make informed decisions in managerial or entrepreneurial contexts. No prior accounting background is required, making this course ideal for students from diverse academic disciplines seeking financial literacy in a business environment.
Recommended Textbook
Accounting for Non Specialists 7th Australian Edition by Atrill McLaney
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14 Chapters
935 Verified Questions
935 Flashcards
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Page 2
Chapter 1: Introduction to Accounting
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71 Flashcards
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Sample Questions
Q1) Financial accounting reports concentrate on:
A)current events.
B)current and future events.
C)past events.
D)future events.
Answer: C
Q2) Why do businesses tend to resist providing forecast data to those outside the organisation?
A)because it is too costly
B)because it is too difficult
C)because the data is inaccurate
D)because of the fear of the loss of competitive advantage
Answer: D
Q3) The term that describes differences between actual and budgeted results is:
A)divergence.
B)discrepancy.
C)mistake.
D)variance.
Answer: D
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Page 3
Chapter 2: Measuring and Reporting Financial Position
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Sample Questions
Q1) The accounting assumption that a business will continue to operate into the foreseeable future is the:
A)entity assumption.
B)going concern assumption.
C)accounting period assumption.
D)historical cost assumption.
Answer: B
Q2) What is the effect on the statement of financial position of a business buying supplies for cash?
A)increase asset supplies; increase asset bank.
B)decrease asset supplies; decrease asset bank.
C)decrease asset supplies; increase asset bank.
D)increase asset supplies; decrease asset bank.
Answer: D
Q3) Which of these is not an asset?
A)Accounts payable.
B)Loan to J Troja.
C)Accounts receivable.
D)Both A and B.
Answer: A
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Chapter 3: Measuring and Reporting Financial Performance
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70 Flashcards
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Sample Questions
Q1) What is the estimated residual value of an asset?
A)its estimated disposal value at the end of its useful life.
B)its carrying value.
C)its historical cost.
D)its book value.
Answer: A
Q2) Which of the following is a measure of wealth created for owners?
A)Operating profit.
B)Gross profit.
C)Net profit.
D)All of the above.
Answer: D
Q3) The accounting principle underpinning the inventory valuation rule 'the lower of cost and net realisable value' is:
A)prudence (conservatism).
B)historical cost.
C)matching costs with revenue.
D)going concern.
Answer: A
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Page 5
Chapter 4: Introduction to Limited Companies
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Sample Questions
Q1) The disadvantages of a company business structure include all of the following except:
A)extensive regulatory requirements.
B)more expensive to establish.
C)less management flexibility.
D)mutual agency.
Q2) Which feature is not a characteristic of a company?
A)limited liability.
B)less government regulation than other types of entities.
C)legal entity.
D)perpetual life.
Q3) Which of the following is not a reason for a company making a bonus issue of shares?
A)To use cash.
B)As a signal to the market of the company's confidence in its future.
C)To reduce its share price when it has become too high.
D)None of the above, i.e., all are reasons for making a bonus issue.
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6
Chapter 5: Regulatory Framework for Companies
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Sample Questions
Q1) If a company's investment in another company is between 20% and 50%, the company invested in is typically known as a/an:
A)subsidiary company.
B)associate company.
C)parent company.
D)holding company.
Q2) Which of the following statements is true about the order of repayment for a company in liquidation?
A)creditors rank before ordinary shareholders.
B)ordinary shareholders rank before preference shareholders.
C)wages owing to employees rank last.
D)All of the statements are true.
Q3) Which of the following financial statements does not have to be prepared by a publicly listed company?
A)Statement of comprehensive income.
B)Statement of changes in equity.
C)Statement of cash flows.
D)All of the above must be prepared.
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Chapter 6: Measuring and Reporting Cash Flows
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Sample Questions
Q1) $54,000 is owed to suppliers for inventory purchases at the beginning of the year and $44,000 is owed at the end of the year. If annual credit purchases of inventory are $180,000, the cash paid to suppliers for the year is:
A)$170,000.
B)$150,000.
C)$190,000.
D)$214,000.
Q2) The difference between operating profit or loss after tax and net cash provided by operating activities is due to:
A)changes in non-current liabilities.
B)changes in non-current assets.
C)changes in working capital items.
D)changes in equity items.
Q3) Which transaction would not appear in the body of a statement of cash flows?
A)Acquisition of assets by means of a share issue.
B)Purchase of a building by incurring a mortgage to the seller.
C)Conversion of a liability to equity.
D)All of the above.
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Chapter 7: Corporate Social Responsibility and Sustainability Accounting
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Sample Questions
Q1) Aspects of corporate social responsibility are:
A)impact on employment and job creation.
B)health and safety.
C)pollution.
D)all of the above.
Q2) On what does sustainability reporting tend to report?
A)social sustainability.
B)issues impacting on the environment.
C)Both A and B.
D)Neither A nor B.
Q3) The major challenge seen for triple bottom line reporting is:
A)Not everything can be measured financially.
B)The production of each of the three parts of the report.
C)Environmental activities are often measured negatively.
D)The integration of economic prosperity, social justice and environmental quality.
Q4) Briefly outline the essence of the balance scorecard approach.
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Chapter 8: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) Which ratios are specifically concerned with assessing the returns and performance of shares held for investment purposes?
A)liquidity ratios.
B)gearing ratios.
C)investment ratios.
D)efficiency ratios.
Q2) Which of these ratios is not directly relevant to the evaluation of a company's short-term liquidity position?
A)Operating profit ratio.
B)Current ratio.
C)Quick ratio.
D)Acid test ratio.
Q3) A firm has total assets of $900,000 and total liabilities of $400,000. There are no preference shareholders. Earnings before interest and taxes are $100,000. Interest is $21,000 and taxes are $34,000. The return on ordinary shareholders' funds is:
A)8.0%.
B)12.5%.
C)9.0%.
D)3.8%.
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Chapter 9: Cost-Volume-Profit Analysis and Relevant
Costing
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Sample Questions
Q1) If the sales output of a firm increases, what will be the impact on the break-even point?
A)Increase.
B)Reduce.
C)No change.
D)Equal the margin of safety.
Q2) Hawk Co sells T-shirts. If the sales price per shirt is $10, the variable production costs are $7.00 per shirt and the fixed costs are $21,000 p.a., calculate the break-even point in sales dollars.
A)$24,000.
B)$30,000.
C)$7,000.
D)$3,000.
Q3) The contribution margin is so called because it contributes to:
A)variable costs.
B)fixed and variable costs.
C)fixed costs and profit.
D)fixed costs.
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Chapter 10: Full Costing
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Sample Questions
Q1) Refer to the information above. The direct costs incurred in providing a perm to a client would be:
A)all costs mentioned above.
B)hairdresser salary, shampoo, and conditioner.
C)hairdresser salary, colour and perm solution.
D)hairdresser salary.
Q2) Which of the following statements is incorrect?
A)Full costs are useful in decision-making, because this approach focuses on future costs.
B)The use of full costs is criticised, because it focuses on past costs.
C)Full costing can lead to incorrect decision-making, because it can distort figures.
D)Actual costs do not always follow the direction that the recovery rate may suggest.
Q3) Refer to the table above. Total budgeted direct costs for the year are:
A)$350,000.
B)$340,000.
C)$375,000.
D)$300,000.
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Chapter 11: Budgeting
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Sample Questions
Q1) Which statement is not correct?
A)The existence of budgets tends to provide motivation to improve performance.
B)The 'top down' approach to budgeting tends to improve motivation.
C)Setting demanding, but achievable, targets is a better motivator than setting undemanding targets.
D)Unrealistic targets have adverse effects on managers' performance.
Q2) Refer to the table above. The raw materials variance can best be described as:
A)an adverse variance resulting from a rise in the price of raw materials.
B)an adverse variance resulting from excessive use of raw materials and/or an increase in their price.
C)an adverse variance resulting from excessive use of raw materials.
D)a favourable variance resulting from efficient use of raw materials.
Q3) What is the calculation of closing inventory for a finished goods inventory budget?
A)(opening balance plus inventories manufactured)less sales of finished goods.
B)(opening balance plus sales of finished goods)less inventories manufactured.
C)(opening balance plus inventories manufactured)plus cash sales of finished goods.
D)none of the above.
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Page 13
Chapter 12: Capital Investment Decisions
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Sample Questions
Q1) George is considering setting up a business selling free-range chickens. He estimates his establishment costs will be $600,000 and his net cash flows for the first five years will be $100,000 in year 1, $200,000 in year 2, stabilising at $300,000 in year 3. The payback period for the investment is:
A)3 years.
B)3.2 years.
C)5 years.
D)3.8 years.
Q2) What is the factor in Net Present Value analysis that normally involves the least degree of uncertainty?
A)the future cash flows.
B)the cost of the initial investment.
C)the life of the project.
D)the discount rate.
Q3) The finding from surveys of the methods of business investments that is true is:
A)businesses generally only use one method to assess each investment decision.
B)there is a tendency for larger businesses to use the discounting methods.
C)the payback method is hardly used in practice.
D)All of the statements are true.
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Page 14
Chapter 13: The Management of Working Capital
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Sample Questions
Q1) If accounts payable are paid 10 times a year, what, on average, is the accounts payable turnover period in days?
A)20 days.
B)12 days.
C)36.5 days.
D)None of the above.
Q2) If the planned level of sales is $146,000 and the planned average collection period is 40 days, the planned average level of accounts receivable will be:
A)$3,650.
B)$14,600.
C)$16,000.
D)$18,500.
Q3) Which statement concerning the operating cash cycle is true?
A)It is possible to have a negative operating cash cycle.
B)The longer the operating cash cycle, the greater the amount of working capital required.
C)Reducing the time period for which inventory is held shortens the operating cash cycle.
D)All of the statements are true.
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15
Chapter 14: Financing the Business
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Sample Questions
Q1) The firm's financial structure relates to how the firm:
A)finances its assets.
B)manages its accounts receivable.
C)meets its daily financial payments.
D)all of the above.
Q2) Which of the following statements about securitisation is incorrect? Securitisation:
A)capitalises the future cash flows arising from illiquid assets.
B)does not have any inherent problems to make it problematic.
C)is an illegitimate business practice for raising finance.
D)may also be used to assist in managing risk.
Q3) A firm with low business risk could safely consider finance using:
A)high debt.
B)little debt.
C)no debt.
D)none of the above.
Q4) Discuss the advantages and disadvantages of a company issuing long-term debt, e.g., debentures, compared to raising funds through an issue of shares.
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