Test Bank for Accounting and Finance for Non Specialists 6th Edition by Atrill and McLaney

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    Download full Test Bank for Accounting and Finance for Non Specialists 6th Edition by Atrill and McLaney https://digitalcontentmarket.org/download/test-bank-for-accounting-and-finance-for-non-specialists-6th-edition-by-atrill-and-mclaney  Accounting and finance for non-specialists (6th edition) Progress Test 2 Chapters 7  – 12 This paper is divided into three sections Answer all  questions in each section Time allowed  –  3 hours Total possible marks  –  100 Section A  –  Multiple-choice questions Each question in this section is worth 2 marks (Total 20 marks) For each question select the best one of the four options available 1. Let:   S = sales revenue per unit, F = fixed costs per unit, V = variable costs per unit, TF = total fixed costs and BEP = the break-even point (in units).   What is the formula to be used when calculating the break-even point (in units) for a particular product or service? A BEP = S/(V  –  F) B  BEP = F/(S  –  V) C BEP = TF/(S  –  F) D BEP = TF/(S  –  V) 2. Pelican Products plc uses a Squidget in one of its products. The Squidget takes one hour to make the following costs per unit: £ Variable costs 10 Fixed cost allocation 5 15 If the business decides to purchase the Squidget from an outside source, it can use the spare capacity in the factory to produce Didgets that have a variable cost of £12 per unit and which can be sold for £20 per unit. The Didget takes two hours to make. What is the maximum amount that Pelican Products should be prepared to pay a supplier for a Squidget? A £10 B  £14 C £18 D £20    3. Consider the following two statements concerning costs. (1) Direct costs always vary directly with the level of output (2) Fixed costs always stay the same irrespective of the time period involved. Which one of the following combinations (true/false) relating to the above statements is correct? Statement 1 2 A True True B True False C False True D False False 4. Two businesses produce the same product. Relevant information is as follows: Hawk Ltd Osprey Ltd Selling price per unit £20 £20 Variable costs per unit £6 £8 Fixed costs £1,000 £1,000 Planned output (units) 94 108 Which one of the following combinations is true concerning the performance of Hawk Ltd relative to that of Osprey Ltd? Break-even point Margin of safety (in units) A Higher Higher B  Higher Lower C  Lower Higher D  Lower Lower 5. Consider the following two statements concerning cost  – volume  – profit analysis. (1) The contribution per unit is the difference between the sales price per unit and the fixed costs per unit. (2) The marginal cost per unit will usually equal the variable cost per unit. Which one of the following combinations (true/false) relating to the above statements is correct? Statement 1 2   A  True True B  True False C  False True D  False False 6. Devril plc is considering investing in a project that has an initial cash outlay followed by a series of net cash inflows. The business applied the NPV and IRR methods to evaluate the project; but, after the evaluation had been undertaken, it was found that the correct cost of capital figure was lower than that used in the evaluation. What will be the effect of correcting for this error on the NPV and IRR figures? Effect on NPV IRR A Decrease Decrease B Decrease No change C Increase Increase D Increase No change    7. Which one of the following statements relating to sources of finance is correct? A Retained profits are a free source of finance to a business. B Invoice discounting involves the invoice discounter taking over the management of the trade receivables of a business. C Investors normally view loan capital as being more risky than preference shares. D Finance leases involves the lessee (the user of the assets) taking over substantially all the risks and rewards of ownership. 8. Dune Ltd is considering a project that will require the use of a crane that cost £600,000 when it was acquired four years ago and which has a current carrying value (written down value) of £370,000. If the project is not undertaken, the crane could be sold for £180,000 or it could be used for another project. If it is used for the other project, the business will not have to purchase another crane for £250,000. The business uses the net present value (NPV) method to appraise investment projects. What is the relevant cost of the machine when calculating the NPV of the project? A £600,000 B £370,000 C £250,000 D £180,000 9. Which one of the following methods of investment appraisal uses annual profits (losses) rather than annual cash flows when evaluating investment opportunities? A Net present value B  Accounting rate of return C Payback period D Internal rate of return 10. The economic order quantity (EOQ) for inventories can be calculated using the following equation: EOQ = √ (2 WX  / Y  ) What does Y   represent? A Cost of placing an order B  Annual demand for the item of inventories C Cost of holding one unit of inventories for one year D Cost of delivering one unit of inventories to a customer    Section B  –  Fill in the blanks Each question in this section is worth 2 marks (Total 20 marks) For each question, select the best of the four options to fill in the blanks. 1.  A(n) _______ cost is always an irrelevant cost when making decisions. A opportunity B fixed C past D indirect 2.  An activity with relatively high fixed costs compared with its variable costs is said to have a high ______________________________. A level of    financial gearing B level of operating gearing C margin of safety D contribution-to-fixed cost ratio 3.  __________    costing is used to describe the way in which we identify the full cost per unit of output where the units of output differ. A Batch B Full C Job D Process 4.  Activity-based costing sees overheads as ___________________________________. A being caused by cost units B rendering a service to cost units C being unrelated to cost units D being impossible to control 5. The difference between the srcinal and the flexed budget profit figures is called the  _________________________________. A sales price variance B sales volume variance C operating volume variance D fixed cost variance 6.  _____________________are no longer an important source of new finance for businesses. A Ordinary shares B Preference shares C Finance leases D  Loan notes 7. The ___________________________ system of inventories control is based on the idea of selective levels of control. A  ABC B  just-in-time C materials requirement planning D economic order quantity 8. Under ABC, an overhead cost __________ is established for each type of cost that can be linked to a cost-driving activity. A unit B pool C centre
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