Accounting for Non-Specialists Pre-Test Questions
Course Introduction
This course provides an accessible introduction to accounting principles and practices for students from non-accounting backgrounds. It covers the fundamentals of financial and management accounting, including interpreting financial statements, understanding key accounting concepts, and utilizing accounting information for effective decision-making. Emphasis is placed on developing practical skills needed to analyze financial data, manage budgets, and communicate accounting information in a business context, enabling non-specialists to confidently engage with financial matters in their future careers.
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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Sample Questions
Q1) What is the primary goal of management accounting?
A)provide information that can be quantified in monetary terms.
B)provide information that improves the quality of managers' decisions.
C)provide information that conforms to the accounting regulations.
D)provide information to shareholders.
Answer: B
Q2) The best description of the primary purpose of providing accounting information is:
A)to allow the preparation of a taxation return.
B)to assist users in making informed decisions.
C)to calculate the bank account balance.
D)to enable the financial statements to be prepared.
Answer: B
Q3) Management reports, compared to financial reports, are:
A)summarised.
B)aggregated.
C)standardised.
D)detailed.
Answer: D
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3
Chapter 2: Measuring and Reporting Financial Position
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Sample Questions
Q1) Which of the following is a non-current asset?
A)5-year loan to Ti Finance.
B)Machinery.
C)Long-term investment.
D)All of the above.
Answer: D
Q2) Which of these does not belong with the others?
A)Bank overdraft.
B)Prepaid wages.
C)Accounts payable.
D)Mortgage loan.
Answer: B
Q3) Which aspect of business performance does the statement of financial position directly provide insight into?
A)Cash flows.
B)Profitability.
C)Share price.
D)The relative proportions of funds contributed by owners and outsiders.
Answer: D
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Page 4
Chapter 3: Measuring and Reporting Financial Performance
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Sample Questions
Q1) A forklift had a purchase price of $18,000, delivery costs of $2,000, a physical life of 6 years and a useful life of 4 years. Estimated residual value is zero. The annual depreciation charge using the straight-line method is:
A)$1,667.
B)$3,000.
C)$2,500.
D)$5,000.
Answer: D
Q2) The recognition criteria that must be satisfied under the Conceptual Framework for an expense to be included in the income statement is:
A)Probable that the outflow of resources has occurred.
B)Outflow of resources able to be reliably measured.
C)Outflow of resources virtually certain.
D)Both A and B.
Answer: D
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Chapter 4: Introduction to Limited Companies
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Sample Questions
Q1) Redeemable preference shares:
A)are the same as bonus shares.
B)can be repurchased by the company.
C)allow the holders full voting rights.
D)can be exchanged for ordinary shares.
Q2) What are bonus shares?
A)shares issued to employees.
B)shares issued at no cost to shareholders.
C)shares issued to the board of directors.
D)shares issued to valued customers.
Q3) A company issued 120,000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:
A)$5,000.
B)$10,000.
C)$20,000.
D)$12,000.
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Page 6
Chapter 5: Regulatory Framework for Companies
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Sample Questions
Q1) Which of these is a reason why companies are more heavily regulated than sole proprietorships or partnerships?
A)The owners (shareholders)are often removed from the day-to-day running of the business.
B)As companies have limited liability, there is a greater need to protect creditors from financial loss.
C)The members of a company operate under the mutual agency principle.
D)Both A and B.
Q2) Which of the following is included in the statement of changes in equity?
A)share issues.
B)changes to reserves.
C)changes to retained profits.
D)all of the above.
Q3) Which of the following would be regarded as 'other comprehensive income'?
A)Foreign exchange gains.
B)Cash flow hedges.
C)Revaluation of property.
D)All of the above.
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7
Chapter 6: Measuring and Reporting Cash Flows
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Sample Questions
Q1) If $90,000 is owed by customers at the beginning of the year, $75,000 is owed at the end and credit sales are $120,000, the cash received from customers is:
A)$120,000.
B)$80,000.
C)$125,000.
D)$135,000.
Q2) Which of the following are not operating cash flows?
A)income tax paid.
B)interest received.
C)payments to suppliers.
D)dividends paid to shareholders.
Q3) Which of the following is a cash transaction?
A)declaration of a divided from a general reserve.
B)payment of a dividend to shareholders.
C)transfer from retained earnings to a general reserve.
D)all of the above.
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8
Chapter 7: Corporate Social Responsibility and Sustainability Accounting
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Sample Questions
Q1) For a business to be seen as socially responsible, the business must:
A)assess the social costs and benefits of the actions it takes.
B)develop and implement policies and practices in the area of social responsibility.
C)ensure the media is aware that it takes social responsibility seriously, even though there may be no real indicators.
D)Both A and B.
Q2) Once there is a complete move to sustainability reporting, TBL:
A)will still be required.
B)may have to be extended.
C)will be absorbed by sustainability reporting.
D)may have to be modified.
Q3) Which of the following is a reason that a business might engage in activities that are less profitable to itself but which are beneficial to society?
A)Because of expectations of future legislation
B)Because of enlightened self-interest
C)To publish the results and put pressure on competitors
D)All of the above
Q4) Briefly outline the essence of the balance scorecard approach.
Page 9
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Chapter 8: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) Which of these is a factor that can influence the amount a company is prepared to distribute as dividends to its shareholders?
A)The availability of cash.
B)Investors expectations.
C)The need to retain funds within the business for future growth.
D)All of the above.
Q2) What does the current ratio measure?
A)use of assets.
B)profitability.
C)investments.
D)liquidity.
Q3) 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.
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Page 10
Chapter 9: Cost-Volume-Profit Analysis and Relevant
Costing
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Sample Questions
Q1) L Ltd can subcontract out one of its components at $18 each. The business can produce the component internally for a total cost of $19 including the allocation of fixed costs at $5 per component. L Ltd has spare capacity. Should it make the component internally or contract it out?
A)Make the component as the variable cost of $14 ($19-$5)for internal production is cheaper than the $18 cost of subcontracting.
B)Subcontract as the total cost of subcontracting at $18 is cheaper than the cost of $19 for internal production.
C)Subcontract as it will be easier.
D)None of the above.
Q2) Semi-fixed costs are best defined as:
A)having both fixed and variable elements.
B)varying over time.
C)costs ignored in cost-volume-profit analysis.
D)none of the above.
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11
Chapter 10: Full Costing
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Sample Questions
Q1) Refer to the table above. The overhead recovery rate (rounded), using direct labour hours as the allocation base, is:
A)$3.90 per DLH.
B)$7.20 per DLH.
C)$5.90 per DLH.
D)$7.00 per DLH.
Q2) By the end of the 20th Century, the manufacturing sector had fundamentally altered from the sector in the 1920s. The sector is now characterised by the following features, except for:
A)low levels of depreciation.
B)a highly competitive international market.
C)capital-intensive and machine-paced production.
D)a high level of overheads relative to direct costs.
Q3) The approach to overhead costs under activity-based costing is that:
A)overheads provide service to cost objects.
B)overheads are caused by activities.
C)overheads happen.
D)overheads can be traced to cost objects.
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Chapter 11: Budgeting
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Sample Questions
Q1) Which of these is not a limitation of the traditional approach to control through budgets?
A)The difficulty of separating the causes of variances into controllable or uncontrollable factors.
B)The difficulty of creating clear lines of demarcation between areas of responsibility of various managers.
C)The expense of preparing a budget is too great for the average business.
D)None of the above, i.e., all are limitations.
Q2) Which of these involve a projection of future cash receipts and cash disbursements?
A)Cash budget.
B)Statement of comprehensive income.
C)Statement of financial position.
D)None of the above.
Q3) Coordination between budgets refers to a situation when:
A)activities of one department match and are complementary to those of other departments.
B)different parts of the organisation operate at cross-purposes.
C)more than one entity in an industry adopts similar goals.
D)a plan comes together with industry and government targets.
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Page 13
Chapter 12: Capital Investment Decisions
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Sample Questions
Q1) The decision rule for the accounting rate of return method of assessing investment projects is to accept all projects with:
A)a positive return.
B)the highest return.
C)the highest return subject to a minimum required return.
D)none of the above.
Q2) What is the assessment method widely used in practice which enables managers to screen investment projects to determine which projects can recoup their investment outlay the fastest?
A)internal rate of return method.
B)accounting rate of return method.
C)payback method.
D)net present value method.
Q3) What investment decision method takes the average profit and expresses it as a percentage of the average investment?
A)Accounting Rate of Return.
B)Net Present Value.
C)Payback.
D)Internal Rate of Return.
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Page 14
Chapter 13: The Management of Working Capital
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Sample Questions
Q1) A firm has daily credit sales of $50,000, and its average collection period is 50 days. Its average accounts receivable balance is:
A)$1,000.
B)$1,000,000.
C)$2,500,000.
D)$50,000.
Q2) Gordon Enterprises usually takes 60 days to pay its suppliers. In order to encourage prompt payment, supplier Y offers Flash Enterprises a 2% discount for payment within 10 days. What is the annual percentage discount forgone if Flash Enterprises does not take up the discount offer?
A)11%.
B)14.6%.
C)9.1%.
D)1.5%.
Q3) What is the formula for the average inventory turnover period in days?
A)(Average inventory held/Cost of sales)× 365.
B)Average inventory held/Sales.
C)Cost of sales/Average inventory.
D)None of the above.
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Page 15
Chapter 14: Financing the Business
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Sample Questions
Q1) 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.
Q2) A form of debt finance which pays low or zero interest is called a:
A)eurobond.
B)deep discount bond.
C)financial derivative.
D)convertible loan.
Q3) Covenants imposed on a loan may include:
A)a requirement to submit regular financial information.
B)limitations on dividend payments.
C)maintenance of a certain level of liquidity.
D)all 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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Page 16