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