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Accounting and Finance: Test 3 - Question Bank

Question Bank ''Accounting and Finance: Test 3'' with interactive revision questions on a variety of business topics.

Question Bank - Business Studies

Accounting and Finance: Test 3

Q1. In the context of accounting, the margin is

(Select one answer)

(a) * the value of materials wasted during production.
(b) * the percentage added to costs to determine the price.
(c) * the difference between the price of something and all the costs involved in its production and sale.
(d) * the edge of the balance sheet.

Source: bized

Q2. All of the following are examples of current assets except

(Select one answer)

(a) * stocks of raw materials.
(b) * unpaid bills.
(c) * customers who have not paid their bills yet.
(d) * money in a current account.

Source: bized

Q3. The main disadvantage of an overdraft is that it

(Select one answer)

(a) * can only be repaid at the end of the agreed period.
(b) * the bank can demand repayment at a moments notice.
(c) * is very inflexible.
(d) * must be supported by some security.

Source: bized

Q4. A firm has budgeted for sales of 10,000 units in a month at a price of £100 each. After the event it finds that it actually sold 9,500 units in the month at an average price of £102 each. The accountants have calculated and reported a sales variance of

(Select one answer)

(a) * £969,000
(b) * Favourable + £31,000
(c) * Favourable - £31,000
(d) * Unfavourable - £31,000

Source: bized

Q5. In the context of accounting, liabilities are

(Select one answer)

(a) * things that you have to put up with.
(b) * items of money owed to a business.
(c) * a firms debts.
(d) * people who do not work efficiently.

Source: bized

Q6. A firm had budgeted its material costs in a department for a month at 25 tonnes at a price of £300 per tonne. It actually used 26 tonnes at an average cost of £280 per tonne. The accountants have calculated and reported a materials variance of

(Select one answer)

(a) * 1 tonne, unfavourable
(b) * £220 favourable.
(c) * £20 favourable.
(d) * £220 unfavourable.

Source: bized

Q7. All of the following are examples of fixed assets except

(Select one answer)

(a) * a firms buildings.
(b) * a firms stock of fuel oil and lubricants.
(c) * a firms motor vehicles.
(d) * a firms computer equipment.

Source: bized

Q8. A firm may raise money internally or externally. All of the following are internal sources, except

(Select one answer)

(a) * retaining profits within a business rather than paying them out as dividends.
(b) * selling assets that are not needed any more.
(c) * reducing the working capital requirements.
(d) * organising and using an overdraft.

Source: bized

Q9. All of the following are aims of budgeting, except

(Select one answer)

(a) * to establish priorities.
(b) * to assign responsibilities.
(c) * to be able to assign blame.
(d) * to encourage forward planning.

Source: bized

Q10. What is meant by the term cost-plus pricing?

(Select one answer)

(a) * Charging a higher price to those customers who will pay it.
(b) * Setting the price at the average cost plus the agreed sum of profit needed to make the investment viable for the company.
(c) * Setting a price that covers variable costs and makes a contribution to fixed costs.
(d) * Looking at ones rivals and copying their prices.

Source: bized

Q11. All of the following are examples of short-term liabilities except

(Select one answer)

(a) * debentures with a repayment date in 2 years time.
(b) * unpaid VAT.
(c) * declared but unpaid dividends.
(d) * overdrafts.

Source: bized

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