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 - (correct 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 - (correct 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 -
(correct 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 - (correct 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 - (correct 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 - (correct 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 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 - (correct 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 - (correct 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 -
(correct 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 - (correct 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 - (correct 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 - (correct 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?
