ACCA F3 KIT
MANAGEMENT ACCOUNTING
Questions and Answers
1 Which of the following statements is true?
A The directors of a company are liable for any losses of the company
B A sole trader business is owned by shareholders and operated by the proprietor
C Partners are liable for losses in a partnership in proportion to their profit share
ratio
D A company is run by directors on behalf of its members - ANSWER-D A company
is run by directors on behalf of its members
2 Which of the following best describes management accounts?
A Management accounts are mandatory accounts which reflect the past
performance of a business and are prepared in accordance with strict accounting
requirements
B Management accounts are normally prepared monthly on a rolling basis and
include details of past performance as well as budgets and forecasts
C Management accounts are required by law and include sufficient detail for
managers control the business and prepare for the future
D Management accounts include information computed to be relevant to managers
and are generally prepared annually - ANSWER-B Management accounts are
normally prepared monthly on a rolling basis and include details of past
performance as well as budgets and forecasts
3 Which of the following best explains why employees are interested in the financial
statements of their employer?
A To compare the business with its competitors in order to decide whether to seek
employment with one of those competitors
B To assess the effect of the business on the local economy, community and
environment
C To assess whether the business will continue into the foreseeable future
D To assess the profitability of the business in order to decide whether to invest in
it - ANSWER-C To assess whether the business will continue into the foreseeable
future
4 Which of the following user groups require the most detailed financial
information?
, A The management
B Investors and potential investors
C Government agencies - ANSWER-A The management
5 Which of the following statements are true?
1 Accounting can be described as the recording and summarising of transactions.
2 Financial accounting describes the production of a statement of financial position
and income statement for internal use.
A 1 only
B 2 only - ANSWER-A 1 only
6 The main aim of financial accounting is to:
A record all transactions in the books of account
B provide management with detailed analyses of costs
C present the financial results to the organisation by means of recognised
statements
D calculate profit - ANSWER-C present the financial results to the organisation by
means of recognised statements
7 Which one of the following sentences does NOT explain the distinction between
financial accounts and management accounts?
A Financial accounts are primarily for external users and management accounts are
primarily for internal users
B Financial accounts are normally produced annually and management accounts are
normally produced monthly
C Financial accounts are more accurate than management accounts
D Financial accounts are audited by an external auditor and management accounts
do not normally have an external audit - ANSWER-C Financial accounts are more
accurate than management accounts
242 The Standards Advisory Council are responsible for:
(1) issuing guidance in relation to emerging issues.
(2) advising the IASB on major standard-setting projects.
A 1 and 2
B 1 only
C 2 only
D Neither 1 nor two - ANSWER-C 2 only
243 Which of the following assumptions underlie the Framework for the
presentation and preparation of financial statements?
A Accruals and consistency
B Prudence and going concern
C Accruals and going concern
D Consistency and prudence - ANSWER-C Accruals and going concern
MANAGEMENT ACCOUNTING
Questions and Answers
1 Which of the following statements is true?
A The directors of a company are liable for any losses of the company
B A sole trader business is owned by shareholders and operated by the proprietor
C Partners are liable for losses in a partnership in proportion to their profit share
ratio
D A company is run by directors on behalf of its members - ANSWER-D A company
is run by directors on behalf of its members
2 Which of the following best describes management accounts?
A Management accounts are mandatory accounts which reflect the past
performance of a business and are prepared in accordance with strict accounting
requirements
B Management accounts are normally prepared monthly on a rolling basis and
include details of past performance as well as budgets and forecasts
C Management accounts are required by law and include sufficient detail for
managers control the business and prepare for the future
D Management accounts include information computed to be relevant to managers
and are generally prepared annually - ANSWER-B Management accounts are
normally prepared monthly on a rolling basis and include details of past
performance as well as budgets and forecasts
3 Which of the following best explains why employees are interested in the financial
statements of their employer?
A To compare the business with its competitors in order to decide whether to seek
employment with one of those competitors
B To assess the effect of the business on the local economy, community and
environment
C To assess whether the business will continue into the foreseeable future
D To assess the profitability of the business in order to decide whether to invest in
it - ANSWER-C To assess whether the business will continue into the foreseeable
future
4 Which of the following user groups require the most detailed financial
information?
, A The management
B Investors and potential investors
C Government agencies - ANSWER-A The management
5 Which of the following statements are true?
1 Accounting can be described as the recording and summarising of transactions.
2 Financial accounting describes the production of a statement of financial position
and income statement for internal use.
A 1 only
B 2 only - ANSWER-A 1 only
6 The main aim of financial accounting is to:
A record all transactions in the books of account
B provide management with detailed analyses of costs
C present the financial results to the organisation by means of recognised
statements
D calculate profit - ANSWER-C present the financial results to the organisation by
means of recognised statements
7 Which one of the following sentences does NOT explain the distinction between
financial accounts and management accounts?
A Financial accounts are primarily for external users and management accounts are
primarily for internal users
B Financial accounts are normally produced annually and management accounts are
normally produced monthly
C Financial accounts are more accurate than management accounts
D Financial accounts are audited by an external auditor and management accounts
do not normally have an external audit - ANSWER-C Financial accounts are more
accurate than management accounts
242 The Standards Advisory Council are responsible for:
(1) issuing guidance in relation to emerging issues.
(2) advising the IASB on major standard-setting projects.
A 1 and 2
B 1 only
C 2 only
D Neither 1 nor two - ANSWER-C 2 only
243 Which of the following assumptions underlie the Framework for the
presentation and preparation of financial statements?
A Accruals and consistency
B Prudence and going concern
C Accruals and going concern
D Consistency and prudence - ANSWER-C Accruals and going concern
