Cash Discrepancy: Analyzing Operating Loss and Cash Increase

A business may incur an operating loss in a given financial year yet have more cash in the bank at the end. A reason for this could be that

a. Trade payables were allowed a longer period of credit

b. Some non-current assets were sold for cash

c. Payments to trade payables were made more promptly

d. Dividends paid were higher this year than last

Which of the following is not an explanation for rising profit occurring at the same time as cash shortage

a. Purchase of new premises

b. Repayments of loans

c. Disposal of non-current assets for profit

d. Rapid expansion of sales and output

Which of the following is a period cost?

a. Salary for the vice president of finance

b. Raw materials costs

c. Manufacturing plant maintenance

d. Wages for production line workers

The predetermined overhead rate is determined as:

a. Estimated overhead costs divided by estimated allocation base

b. Actual overhead costs divided by estimated allocation base

c. Estimated overhead costs divided by actual allocation base

d. Actual overhead costs divided by actual allocation base.

Direct material is traced to jobs using:

a. An overhead allocation base

b. Material requisition forms

c. Predetermined rates

d. All of the above

A university is divided into three teaching faculties. Which of the following costs would most likely be apportioned (rather than allocated) to ascertain the costs per graduate?

a. Salaries of teaching staff

b. Heating costs

c. Class handouts

d. Social insurance (PRSI) of teaching staff.

A manufacturing company has a highly automated manufacturing plant producing many different products. What is the most appropriate basis of applying factory overhead costs to units of output?

a. Direct labour hours

b. Direct labour cost

c. Machine hours

d. Cost of materials used.

Which of the following is true for a service firm? A service firm will:

a. Not absorb overheads because it does not produce tangible goods

b. Absorb overheads on the basis of  labour hours/costs

c. Generally ignore overheads since they will be insignificant

d. Absorb overheads on the basis of direct machine hours.

Overhead absorbed represents which of the following?

a. Actual activity multiplied by predetermined overhead rate

b. Estimated activity multiplied by predetermined overhead rate

c. Actual activity multiplied by actual overhead rate

d. Estimated activity multiplied by actual overhead rate.

Over-applied factory overhead cost is the excess of applied overhead cost over:

a. Budgeted overhead cost

b. Actual overhead cost

c. Predicted overhead cost

d. None of the above.

a. A direct cost is one which:

b. Needs to be apportioned for cost tracing purposes

c. Changes directly in proportion to the volume of output

d. Can be specifically identified with the cost objective Both b) and c) above.

Which of the following statements is false?  
 

a. There are no formal requirements for producing and presenting management accounting information

b. Financial accounting information is intended mainly for users outside the organization (such as shareholders and creditors)

c. Companies are not legally required to produce financial accounting information

d. Management accounting information is often private, whereas financial accounting information is public