ACG TEST PAPER 2025/2026 QUESTIONS AND
SOLUTION RATED A+
✔✔ROI - ✔✔Incremental Profit(OI)/Incremental Cost(Cost) or Change Cm- Change
FC/Change in cost
✔✔Breakeven Unit - ✔✔Fixed cost/ Contribution Margin per Unit
✔✔Breakeven Dollars - ✔✔Fixed cost/Contribution Margin Ratio
✔✔Total contribution - ✔✔Sales- Variable Cost
✔✔if the marginal tax rate of 35% to its effective rate of 27.8% which of the following the
company reports would find most helpful? - ✔✔Reconciliation of income tax rate
(details how its marginal tax rate changed to its marginal tax rate to its effective rate)
✔✔Effective tax rate - ✔✔Provision for income tax(income tax expenses)/ Income
before tax(EBT)
✔✔Record as deferred tax liability - ✔✔when it deduct too much on its reports relative
to the income statement
✔✔Financial Statement - ✔✔EBT
Income Tax Expense
Deffered Tax
Reconciliation
✔✔DOL "Degree Operating Leverage" - ✔✔CM/Operating Income(EBIT)
S-V/S-V-F
✔✔Effective tax rate to determined foreign effect tax rate has changed where to look
information - ✔✔components of income tax before tax and tax expense in tax
disclosure.
✔✔13 Shenanigans "Recent Financial misstatements" - ✔✔Earning Manipulation
(Expenses)
Cash Flow (Operating activities)
Key Metric
✔✔Earnings Manipulation - ✔✔1. Recording Revenue too soon
2. Recording Boogus Revenue
3. Boosting Income using one time/ unsustainable
4. Shift current expense to later period
5. Employing other technique to hide expenses or losses
, 6. Shifting current income to a later period
7. Shifting future expense to earlier period
✔✔Cash flow - ✔✔1. Shifting financial cash inflows to operating section
2. Shifting normal operating cash outflow to invest section.
3. inflating operating cash flow using acquisition or disposals.
4. Boosting Cash flow using unsustainable activities
✔✔Key Metric - ✔✔1. Show casing Misleading metrics that overstate performance
2. Distorting Balance Sheet metrics to avoid show deterioration
✔✔independent auditors responsible for... - ✔✔access firms accounting policies
✔✔Total Cost - ✔✔Mixed Cost+Variable Cost
✔✔Marginal of safety - ✔✔Current sales(operating income+FIxed expense/CM ratio)-
BE Sales
✔✔Marginal of safety Ratio - ✔✔Margin Safety/Sales
✔✔Maximum Charge - ✔✔ROI=(Change CM/Max Price)-1
✔✔Contribution margin ratio - ✔✔CM/Sales(revenue)
✔✔indifference Volume Ratio - ✔✔Company A: Fixed Expense+Variable
Expense(Units)= Company B: Fixed Expense+Variable Expense(Units)
Solve for Units
✔✔Operating Income Effect - ✔✔Change in Net Income
✔✔Taxable Income - ✔✔Sales
(COGS)
-----------
Gross Profit
(Operating Expenses:
-Advertising Expense
-Selling Expense
-Wage & Salaries
-Administration Expense)
-----------------------------------------
EBIT
+ Dividend Income (Refer to Divided rule)
(Interest Expense)
------------------------------------------
SOLUTION RATED A+
✔✔ROI - ✔✔Incremental Profit(OI)/Incremental Cost(Cost) or Change Cm- Change
FC/Change in cost
✔✔Breakeven Unit - ✔✔Fixed cost/ Contribution Margin per Unit
✔✔Breakeven Dollars - ✔✔Fixed cost/Contribution Margin Ratio
✔✔Total contribution - ✔✔Sales- Variable Cost
✔✔if the marginal tax rate of 35% to its effective rate of 27.8% which of the following the
company reports would find most helpful? - ✔✔Reconciliation of income tax rate
(details how its marginal tax rate changed to its marginal tax rate to its effective rate)
✔✔Effective tax rate - ✔✔Provision for income tax(income tax expenses)/ Income
before tax(EBT)
✔✔Record as deferred tax liability - ✔✔when it deduct too much on its reports relative
to the income statement
✔✔Financial Statement - ✔✔EBT
Income Tax Expense
Deffered Tax
Reconciliation
✔✔DOL "Degree Operating Leverage" - ✔✔CM/Operating Income(EBIT)
S-V/S-V-F
✔✔Effective tax rate to determined foreign effect tax rate has changed where to look
information - ✔✔components of income tax before tax and tax expense in tax
disclosure.
✔✔13 Shenanigans "Recent Financial misstatements" - ✔✔Earning Manipulation
(Expenses)
Cash Flow (Operating activities)
Key Metric
✔✔Earnings Manipulation - ✔✔1. Recording Revenue too soon
2. Recording Boogus Revenue
3. Boosting Income using one time/ unsustainable
4. Shift current expense to later period
5. Employing other technique to hide expenses or losses
, 6. Shifting current income to a later period
7. Shifting future expense to earlier period
✔✔Cash flow - ✔✔1. Shifting financial cash inflows to operating section
2. Shifting normal operating cash outflow to invest section.
3. inflating operating cash flow using acquisition or disposals.
4. Boosting Cash flow using unsustainable activities
✔✔Key Metric - ✔✔1. Show casing Misleading metrics that overstate performance
2. Distorting Balance Sheet metrics to avoid show deterioration
✔✔independent auditors responsible for... - ✔✔access firms accounting policies
✔✔Total Cost - ✔✔Mixed Cost+Variable Cost
✔✔Marginal of safety - ✔✔Current sales(operating income+FIxed expense/CM ratio)-
BE Sales
✔✔Marginal of safety Ratio - ✔✔Margin Safety/Sales
✔✔Maximum Charge - ✔✔ROI=(Change CM/Max Price)-1
✔✔Contribution margin ratio - ✔✔CM/Sales(revenue)
✔✔indifference Volume Ratio - ✔✔Company A: Fixed Expense+Variable
Expense(Units)= Company B: Fixed Expense+Variable Expense(Units)
Solve for Units
✔✔Operating Income Effect - ✔✔Change in Net Income
✔✔Taxable Income - ✔✔Sales
(COGS)
-----------
Gross Profit
(Operating Expenses:
-Advertising Expense
-Selling Expense
-Wage & Salaries
-Administration Expense)
-----------------------------------------
EBIT
+ Dividend Income (Refer to Divided rule)
(Interest Expense)
------------------------------------------
