Accounting Quiz
1. The main objective of management accounting is
A: To provide important financial information for management decision making
B: To provide important information to satisfy the government legal tax reporting requirements
C: To find the true cost of products
D: All of the above
2. Which is correct about the Cash Flow Statement?
A: It has three main sections - operating, investment and financial
B: It is critical in determining whether a company can pay its bills
C: It is used to find the true cost of products
D: A and B
3. Say an organization spent $1.5m on developing a new product in a given year. Where would this be on the Cash Flow Statement and how would it affect the ending cash balance?
A: It would be under investment and would decrease the ending cash balance by $1.5m
B: It would be under operations and would decrease the ending cash balance by $1.5m.
C: It would be under operations and would increase the ending cash balance by $1.5m.
D: It would be under investment and would increase the ending cash balance by $1.5m.
4. Your product RockHopper has sales revenues of
$13.6m and Cost of Goods Sold of $7.8m. If sales doubled, and cost of goods sold increased by 50%. Approximately what is the gross margin?
A: $23.3m
B: $11.6m
C: $15.5m
D: None of the above
5. Which of the following values would you not find on a typical Income (Profit and Loss) Statement?
A: Total Revenue
B: Total Financial Expenses
C: Total Profit After Taxation
D: Total Plant Purchase Cost
E: Total Administration Expenses
6. Assuming a tax rate of 28%, what would happen to the after-tax profit in a typical Income (Profit and Loss) Statement if the Gross Margin increased by $200,000 but all other figures (sales, etc) remained constant?
A: No change
B: Profit would increase by $100,000, tax would increase by $33,000, after-tax profit would increase by $67,000
C: Profit would increase by $200,000, tax would increase by $133,000, after-tax profit would increase by $67,000
D: Profit would increase by $200,000, tax would increase by $56,000, after-tax profit would increase by $144,000
7. The most common methods of depreciation are straight-line depreciation, and diminishing balance (or diminishing value) depreciation. If your initial plant value is $2.5m at the start of the simulation then using a 20% depreciation rate and the diminishing balance method, what would be the depreciation expense in the second year?
A: $0.40m
B: $0.50m
C: $1.50m
D: $1.60m
E: $2.10m
8. If your firm has total equity worth $9.6m, total liabilities worth $0.7m, and non-current assets worth $3.6m, then the total assets of your firm will be?
A: $0.7m
B: $3.6m
C: $10.3
D: $6.0m
E: $8.9m
9. If a long-term debt of $1.8m was drawn from the bank, how would this affect the Balance Sheet and the Total Equity?
A: Total Assets and Total Liabilities higher by $1.8m and Total Equity essentially unchanged
B: Total Assets and Total Liabilities lower by $1.8m and Total Equity lower by $1.8m
C: Total Assets and Total Liabilities unchanged and Total Equity lower by $1.8m
D: Total Assets and Total Liabilities lower by $1.8m and Total Equity essentially unchanged
10. Your firm had a starting equity of $3m including retained earnings of $2m. In the last financial year you issued more shares raising $2m more equity. If your after tax profit (or surplus) for that year was $3m, what was your year-end equity?
A: $10m
B: $8m
C: $6m
D: None of the above
11. Your firm had a starting equity of $5m. In the last financial year you issued more shares raising $2m more equity. If your after tax profit (or surplus) for that year was $3m and your year end equity was $9 million, then given that your firm had 500,000 shares issued, what was the dividend that you paid per share last year?
A: $0.00 per share
B: $0.50 per share
C: $1.00 per share
D: $2.00 per share
E: $4.00 per share
12. If Gross Margin decreases, shares are issued and all other numbers remain unchanged which reports would be affected?
A: Income Statement, Balance Sheet, Movements in Equity, Gross Margin
B: Income Statement, Cash Flow, Movements in Equity, Gross Margin
C: Income Statement, Balance Sheet, Cash Flow, Movements in Equity, Gross Margin
D: Income Statement, Balance Sheet, Cash Flow, Gross Margin
13. Which of the following costs must be excluded when calculating full production costs for financial reporting purposes?
A: Direct Material Cost
B: Advertising Cost
C: Direct Labor Cost
D: Factory Overhead Cost
14. The difference between the sale price and the variable cost is known as contribution. Assume that the variable cost per unit is $212. If the volume sold was 20,000 and the contribution percentage was 50% then what was the sale price? (Note: in MikesBikes this would be the wholesale price, not the final retail price.)
A: $106
B: $159
C: $212
D: $318
E: $424