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Certified ACCounting teChniCiAn exAminAtion
SAmple multiple ChoiCe queStionS – June 2009
Paper T10Managing Finances
Sc A y
All questions are compulsoryNote: Section B of the actual exam paper will contain four written questions
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2
t w ss a yca s a w aa Sc A aa a J 2009was. t w b a a ss sc A.A ss Sc A w b w w aks ac.1
The following statements have been made about the benefits of debt finance compared to equity finance:Statement 1: Interest payments on debt attract tax relief.Statement 2: Control of the company is diluted.
Wc abv sas s ?A
Both of them
B
Statement 1 only
C
Statement 2 only.
d
Neither of them.
(2 aks)2
The selling price for a product is $62. It takes 2 hours of skilled labour to make the product and 3 kg of materials. Fixedoverheads are $435,000 per annum. The cost of labour is $11 per hour and materials cost $6 per kilogram. Variableoverheads are absorbed at the rate of $5 per direct labour hour. The company’s budgeted sales for the product for thenext year are 100,000 units.
Wa s cb c?A
$12
B
$22
C
$23
d
$17
(2 aks)3
The break-even sales revenue for a product is $235,000. The selling price of the product is $25 per unit.
i b sas a 10,000 s, wa s a say, s? A
400
B
10,000
C
9,400
d
600
(2 aks)
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3
4
Extracts from a company’s accounts show the following balances:
$000
Inventories 114Trade receivables 216Cash 42Trade payables 180Bank overdraft 60
Wc w s cay’s ck a, caca as w ca acs?A
1.55
B
1.08
C
2.07
d
1.43
(2 aks)5
The following statements have been made about inflation:Statement 1: Inflation leads to a distribution of income and wealth.Statement 2: If a country has a higher rate of inflation than its partners, its imports become relatively more expensiveand its exports become relatively cheaper.
Wc abv sas s ?A
Both of them
B
Statement 1 only
C
Statement 2 only
d
Neither of them
(2 aks)
6
The net present value of a proposed project is $20,000 at a discount rate of 5% and $(28,000) at 10%.
Wa s a a jc, as ca ac?A
7.1 %
B
7.5 %
C
2.3 %
d
8.6%
(2 aks)7
A company is considering increasing its credit period to customers from one month to two months. Annual revenue iscurrently $1,200,000. It is expected that the increased credit period would increase sales by 25% and result in anincrease in profit of $45,000, before any INCREASE in finance charges have been taken into account. The company’scost of capital is 10%.
Wa s aca c s sa, a ak acc ay cas acs cas?A
Increase in profit of $35,000
B
Decrease in profit of $35,000
C
Increase in profit of $30,000
d
Decrease in profit of $30,000
(2 aks)
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