Questions and Answers of Accounting For Non-Accounting Students

The following information is available for Carmen Limited.The balance in the bank account of the business at 1 July 2016 was £30,000.During the 12 months that followed the following transactions
Which International Accounting Standard covers the preparation of a SCF?
The following information is available for Zonka Limited.The balance in the bank account of the business at 1 January 2017 was £30,000 overdrawn. During January 2017 the following transactions took
How many headings does this standard require?
What type of EU entity must adopt IAS 7?
List the assumptions and estimates that have to be made when compiling a SCF.
What action would you expect a manager to take on receiving a SCF based on (a) historical data and (b) forecasted data?
What do you think are the needs of users of the annual report and accounts for narrative reporting? Think about the various user groups we have identified in an earlier chapter.
List three items that may be included in the introductory section of a company’s annual report.
What might be the practical implications for companies and their managers from having to comply with new narrative reporting requirements? How might that impact your work as a manager?
What mandatory requirement covers the contents of a chairman’s statement?
How is comprehensive narrative reporting contributing to ‘homogenising the European market’?
List three items that will normally be included in a chairman’s statement.
Identify three main sections under which the ‘report of the directors’ may be classified.
What three items should be included in the general contents section of a directors’ report?
Identify six items that it should include.
What information about the auditors should directors include in their report?
Name six matters that should be included in it.
Identify three items that may be included in ‘shareholder information’.
What is meant by ‘disclosure’?
What do you think are the implications for Toshiba and its shareholders from the financial irregularities that were found to exist in its published accounts over a number of years?
What items do you think could be taken out of a listed company’s published statement or profit or loss and other comprehensive income and its statement of financial position without affecting the
What is a group of companies?
What do you think are the implications for the auditors who signed off on those accounts in prior years?
What are consolidated accounts?
Do you think accounts are worth the paper they are printed on, given what happened with Toshiba (and many other high profile corporate scandals in recent times)?
Which main international accounting standard covers the presentation of accounts?
What is meant by the ‘operational’ and ‘type of expenditure’ formats for the presentation of the statement of profit or loss?
Which of the statements are prepared ‘for a reporting period’ and which are prepared ‘as at the reporting period end’?
Give an example of a non-current liability.
What international accounting standard covers the preparation of a listed company’s statement of cash flows?
How many main headings are there in a listed company’s statement of cash flows?
Why are ‘notes to the accounts’ used?
What opinion does an independent auditor usually express about a company’s financial statements?
What mandatory requirements cover the publication of a periodic summary statement?
What is meant by the term ‘interpretation of accounts’?
Do you think financial accounts or Big Data are more useful in assessing the performance and position of a business? Why?
Give three reasons why the absolute data shown in financial accounts may need to be interpreted.
What problems do you see with the use of financial accounts in assessing a business?
List the users of accounts and suggest one piece of information that each user group may require from a set of financial accounts.
The following information has been extracted from the books of account of Betty for the year to 31 January 2017: Required:Calculate the following accounting ratios:(a) Gross profit ratio(b)
The following information relates to Helena Limited: Required:Calculate the following accounting ratios for each of the five years from 30 April 2013 to 2017 inclusive:(a) Gross profit(b)
You are presented with the following summarised accounts: Required:Calculate the following accounting ratios(a) Return on capital employed(b) Gross profit(c) Capital turn(d) Debt to
You are presented with the following information relating to three companies: Required:Calculate the following accounting ratios:(a) Return on capital employed(b) Capital gearing. Statement of
The following information relates to Style Limited for the two years to 30 June 2016 and 2017, respectively: Required:(a) Calculate the following accounting ratios for the two years 2016 and
What problems do you see with the use of Big Data in assessing a business?
What five main categories may be used for classifying accounting ratios?
What does ‘ROCE’ mean and how may it be calculated?
What is the difference between the gross profit ratio and operating profit ratio?
Why might it be misleading to compare the net profit ratio of one entity with that of another entity?
Why is liquidity important and which ratios may be used for assessing it?
What is meant by ‘EPS’ and where might you find it in a set of published accounts?
What is capital gearing and how might it be calculated?
Outline the main steps you would take if you were asked to appraise the financial performance of a company using its annual report and accounts.
What are the names of some big corporate fraud cases?
What do you think are the reasons for the cases of financial reporting lacking clarity?
What are the most commonly misrepresented or falsified balances in the financial statements?
What could directors and managers do to improve the clarity of their company’s reporting?
Assess the likely future of the UK’s Financial Reporting Council as a financial reporting standards setter?
What could auditors do to improve the clarity of reporting?
Discuss the concept of ‘independence’. Why is that so important for audits?
What is an external auditor’s basic job?
Design a possible fraud scheme. Consider what its impact would be on the financial statements and how auditors may uncover a similar fraud.
Give three reasons why an external auditor’s independence may be compromised.
Give a reason why auditors need to be rotated often.
What are the disadvantages of audit rotation?
What do the initials IASB and FRC stand for?
According to the article, what skills do management accountants need that may justify paying them such high salaries?
List six ways in which it is different from financial accounting.
What sort of skills does business need in order to ‘support’ decision-making?
Suggest two reasons why in pre-industrial times there was no need for entities to have a management accounting system.
What is meant by the phrases ‘driving value’ and ‘managing risk’?
For what purposes did nineteenth-century managers need a more detailed costing system?
Describe the role of a management accountant in a large manufacturing entity.
How does it differ from budgeting?
What are the six steps involved in preparing a strategic plan?
Describe briefly the nature of cost accounting.
The following information relates to material ST 2: Required:Calculate the value of closing stock at 28 February 2015 assuming that the continuous weighted average method of pricing materials to
What is meant by ‘decision-making’?
What is the main purpose of financial management?
To what extent are management accountants involved in auditing?
You are presented with the following information for Trusty Limited: Required:Calculate the value of closing stock at 31 March 2016 using each of the following methods of pricing the issue of
Why should management accountants be aware of the behavioural impact of information supply?
What is meant by ‘responsibility accounting’?
Do you think that the selling price of Jaguar and Land Rover vehicles is a strong determining factor in being able to sell them?
Which of the various types of costs mentioned in the article would you identify as being a ‘direct cost’?
The following stocks were taken into stores as follows: 1.1.15 1000 units @ £20 per unit.15.1.15 500 units @ £25 per unit. There were no opening stocks. On 31.1.15 1250 units were
What is (a) a direct cost and (b) an indirect cost?
How ambitious is the drive to cut costs by £4.5bn ‘by the end of the decade’, i.e. in about five years time?
The following information relates to Steed Limited for the year to 31 May 2017: Closing stock value using the following pricing methods: Required:Calculate Steed Limited’s gross profit
Iron Limited is a small manufacturing company. During the year to 31 December 2015 it has taken into stock and issued to production the following items of raw material, known as XY1:Required:(a)
What is meant by the ‘elements of cost’?
What is meant by ‘prime cost’?
What four methods may be used for charging direct materials out to production?
What is meant by ‘direct labour’?
How is it collected and charged out to production?
Give an example of a direct cost other than materials or labour.
What criteria are used to determine whether items are relevant?
What is a reporting entity?
List six bookkeeping errors that a trial balance does not detect.

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