Masters of Business Administration
BUSS9003_Accounting and Finance for Executives
W1 and W2 Tutorial
1. External Accounting reports can include
a) Income Statement, Statement of Financial Position and Statement of Cash Flows.
b) Income Statement, Statement of Cash Flows and Management Accounts.
c) Income Statement, Statement of Financial Position and Management Accounts.
d) Statement of Financial Position, Statement of Cash Flows and Management Accounts.
2. Which of these sources of accounting information gives us information about assets and
liabilities in a company?
a) Statement of Financial Position
b) Environmental Report
c) Statement of Cash Flows
d) Income Statement
3. Which of the following statements correctly describes the effect of the following transaction on
the accounts of your company?
You purchase a motor vehicle for cash. It costs Rf. 13,500
a) Cash decreases by Rf. 13,500 and Current assets increase by Rf. 13,500
b) Cash decreases by Rf. 13,500 and Non-current assets decrease by Rf. 13,500
c) Cash decreases by Rf. 13,500 and Non-current assets increase by Rf. 13,500
d) Purchases increase by Rf. 13,500 and Non-current assets increase by Rf. 13,500
4. Which of the following is a liability of a business?
a) Machinery owned by the business
b) Money the business has borrowed from the bank and is yet to be repaid
c) The Capital put into the business
d) Cash in the bank
5. Which of the following is not usually a function of a financial accountant?
a) Preparing a Statement of Financial Position
b) Preparing Budgets
c) Preparing Income Statement
d) Preparing a Statement of Cash Flows
6. Consider the following statements:
(1) Management accountants report internally to help the company in the decision-
making process.
(2) Management accountants are responsible for the preparation of Statements of
Financial Position and Income Statements.
What is the validity of each statement?
a) 1 True : 2 True
b) 1 True : 2 False
c) 1 False : 2 True
d) 1 False : 2 False
7. Which of the following statements correctly describes the effect of the following
transaction on the accounts of your company?
You pay a trade payable of Rf. 698
a) Cash decreases by Rf. 698: Payables increase by Rf. 698
b) Cash decreases by Rf. 698: Payables decrease by Rf. 698
c) Purchases increase by Rf. 698: Cash decreases by Rf. 698
d) Purchases increase by Rf. 698: Payables decrease by Rf. 698
8. Which of the following statements correctly describes the effect of the following
transaction on the accounts of your company?
You take out a bank loan for Rf. 50,000
a) Capital increases by Rf. 50,000: Liabilities increase by Rf. 50,000
b) Capital increases by Rf. 50,000: Cash increases by Rf. 50,000
c) Cash increases by Rf. 50,000: Liabilities increase by Rf. 50,000
d) Cash increases by Rf. 50,000: Assets increase by Rf. 50,000
9. Which of the following is not a characteristic of a Limited Company?
a) Artificial legal person
b) Owners are partners
c) Pays Corporation tax
d) Must produce annual accounts
10. Fill in the blank with the most appropriate answer below:
The three principal financial statements are Income Statement; Statement of Financial
Position and
a) Directors Report
b) Master Budget
c) Statement of Cash Flows
d) Social Report
11. The generally-accepted rules that accountants to follow when preparing financial
statements are called:
a) Common Financial Standards
b) International Financial Rules
c) European Financial Reporting Standards
d) International Financial Reporting Standards
12. One purpose of accounting information is to enable users to assess the performance of a
company. Which of the following groups is likely to receive profit related bonuses?
a) Competitors
b) Suppliers
c) Managers
d) The Local Community
13. Which of the following is not found on the Statement of Financial Position?
a) Investment Income
b) Long-term Loan
c) Motor Vehicles
d) Plant and Equipment
14. Which of the following would not be included in the Income Statement?
a) Depreciation on Fixtures and Fittings
b) Gross Profit
c) Current Liabilities
d) Cost of Sales
15. What is the accruals concept when preparing accounts?
a) All transactions are in cash
b) A company only produces accounts based on cash received and cash paid
c) A company produces accounts based on income and sales for the period whether or
not the cash has been paid or received.
d) A company only recognises income when the cash is received.
16. Happy Holidays Ltd give you the following information:
Rf. 000
Motor Vehicles 25
Fixtures and Fittings 20
Inventories 50
Trade Receivables 35
Cash at Bank 5
Share Capital 25
Retained Earnings (Profits) 75
Trade Payables 20
Taxation Payable 5
Long-term Loan ?
Using the above information answer the following questions
i. The total Assets figure for Happy Holidays Ltd is:
a) Rf. 35,000
b) Rf. 45,000
c) Rf. 135,000
d) Rf. 100,000
ii. The total Equity figure for Happy Holidays Ltd is:
a) Rf. 35,000
b) Rf. 25,000
c) Rf. 75,000
d) Rf. 100,000
iii. The total Non-current liabilities for Happy Holidays Ltd are:
a) Rf. 10,000
b) Rf. 45,000
c) Rf. 25,000
d) Rf. 35,000
iv. Which one of the following user groups is most likely to use financial information to
assess a company’s ability to meet future interest payments and loan repayments?
a) Shareholders
b) Competitors
c) Bank lenders
d) Customers
v. ‘Agency Theory’ is the term used to describe the relationship between which two
groups of stakeholders?
a) Shareholders and bankers
b) Shareholders and managers
c) Customers and managers
d) Suppliers and managers
vi. Which of the following is not usually a function of a Financial Accountant?
a) Preparing a Statement of Financial position
b) Preparing Budgets
c) Preparing an Income Statement
d) Preparing a Statement of Cash Flows
vii. Which one of the following is a correct version of the Statement of Financial Position
equation?
a) Assets + Liabilities = Equity
b) Assets = Equity - Liabilities
c) Assets = Equity + Liabilities
d) Liabilities = Equity + Assets
viii. A company has Non-current assets of Rf. 150,000, Current assets of Rf. 55,000, Non-
current liabilities of Rf. 100,000 and Equity of Rf. 25,000. What is the value of their
Current liabilities?
a) Rf. 80,000
b) Rf. 30,000
c) Rf. 105,000
d) Rf. 100,000
ix. A company has total Sales revenue of Rf. 500,000 for the year to the end of
December. Closing inventories were Rf. 50,000, Purchases for the year were Rf.
330,000 and Gross profit was Rf. 200,000. What was the Opening inventory value?
a) Rf. 280,000
b) Rf. 279,500
c) Rf. 80,000
d) Rf. 20,000
x. A business repays a bank loan of Rf. 15,000. What impact will the transaction have
on the company’s cash & profit position?
a) Increase Cash by Rf. 15,000 Increase Profit by Rf. 15,000
b) Decrease Cash by Rf. 15,000 Decrease Profit by Rf. 15,000
c) No effect on Cash Decrease Profit by Rf. 15,000
d) Decrease Cash by Rf. 15,000 No effect on Profit
xi. You purchased a company car for Rf. 25,000 which has a useful life of 5 years and the
scrap value is Rf. 7,000. You depreciate all Non-current assets on a straight line basis.
What is the net book value of the car at the end of 3 years?
a) Rf. 10,000
b) Rf. 10,800
c) Rf. 18,000
d) Rf. 14,200
xii. What is the definition for Accumulated depreciation when an asset has been held for
more than 1 year?
a) It is the sum of all depreciation charged to date which is shown on the Income
Statement.
b) It is the sum of all depreciation charged to date which is shown on the Statement
of Financial Position.
c) It is the depreciation charge for the current year, which is shown on the Income
Statement.
d) It is the depreciation charge for the current year, which is shown on the
Statement of Financial Position.
xiii. A company buys a factory machine for Rf. 580,000. It has a useful economic life of 10
years and a scrap value of Rf. 10,000. The machine is depreciated on a straight-line
basis over its useful economic life. You have owned the machine for two years.
How much depreciation will be shown on the Statement of Financial Position and the
Income Statement?
Statement of Financial Position Income Statement
a. Rf. 116,000 Rf. 58,000
b. Rf. 57,000 Rf. 114,000
c. Rf. 114,000 Rf. 114,000
d. Rf. 114,000 Rf. 57,000
xiv. Which of the following is not found on the Statement of Financial Position?
a) Trade Payables
b) Purchases
c) Land and Buildings
d) Closing Inventory
xv. Working capital can be defined as:
a) Total assets – Total liabilities
b) Non-current assets – Non-current liabilities
c) Total assets – Current liabilities
d) Current assets – Current liabilities
xvi. What is the Going Concern principle?
a) Due to concerns the business is not expected to continue trading longer than a
year.
b) A business is assumed to continue operations for the foreseeable future
c) The business has gone into liquidation.
d) Caution has been exercised when making accounting judgements.
xvii. What is the matching concept when preparing accounts?
a) Assets should be matched with liabilities.
b) Receipts should be matched with income.
c) Depreciation should be matched to the assets that result in the depreciation.
d) Expenses should be matched to the period in which the income derived from the
expenses is generated.
xviii. A company’s Operating profit (PBIT) is Rf. 42,000, the company pays interest of Rf.
600 and receives interest of Rf. 650, the Profit before tax will be?
a) Rf. 42,050
b) Rf. 41,950
c) Rf. 40,750
d) Rf. 43,250