1. Net Interest income is a. Interest earned on advances b. Interest earned on investments c.

Total interest earned on advances and investment d. Difference between interest earned and interest paid 2. Interest rate risk is a type of a. Credit risk b. Market risk c. Operational risk d. All the above 3. European opinion can be exercised on any day at the option of the buyer on or before the expiry of the option.
a. b. c. d. True False None Can’t Say

4. What is the beta factor for corporate finance under Standardized approach ? a. 15% b. 18% c. 12% d. None of the above 5. A bank suffers loss due to adverse market movement of a security. The security was however held beyond the defeasance period. What is the type of the risk that the bank has suffered? a. Market Risk b. Operational Risk c. Market Liquidation Risk d. Credit Risk 6. Which of the following is not a type of credit risk? a. Default risk b. Credit spread risk c. Intrinsic risk d. Basis risk

7. 8% Government of India security is quoted at RS 120/- The current yield on the security, will be---a. 12% b. 9.6% c. 6.7% d. 8% 8. Risk of a portfolio with over exposure in steel sector will be a. More than systematic risk b. Equal to intrinsic risk c. Less than intrinsic risk d. None of these 9. A company declares RS 2/- dividend on the equity share of face value of RS 5/-. The share is quoted in the market at RS 80/- the dividend yield will be---a. 20% b. 4% c. 40% d. 2.5% 10.The risk that arises due to worsening of credit quality is a. Intrinsic Risk b. Credit spread Risk c. Portfolio risk d. Counterparty risk 11.A debenture of face value of As. 100 carries a coupon of 15%. If the current yield is 12.5%. What is the current market price? a. Rs.100 b. Rs.120 c. Rs.150 d. Rs.125 12.An increase in cash reserve ratio will cause yield curve to a. Shift downward b. Remain unchanged c. Become steeper d. Become flatter

13.The model that combines five financial ratios using reported accounting information and equity values to produce on objective measure of borrower’s financial health is a. Altman’s 2 score b. ‘Credit Metrics’ c. Credit Risk + d. None of the above 14.A bank holds a security that is rated A+. The rating of the security migrates to A. What is the risk that the bank has faced ? a. Market risk b. Operational risk c. Market liquidation risk d. Credit risk 15.When interest rates go up, prices of fixed interest bonds – a. Go up b. Go down c. Remain unchanged
d. Can’t Say

16.VaR is not enough to assess market risk of a portfolio. Stress testing is desirable because a. It helps in calibrating VaR module b. It helps as an additional risk measure c. It helps in assessing risk due to abnormal movement of market parameters d. It is used as VaR measure is not accurate enough 17.A transaction where financial securities are issued against the cash flow generated from a pool of assets is called a. Securitization b. Credit Default Swaps c. Credit Linked Notes d. Total Return Swaps 18.Growth Fund is a mutual fund that a. assures growth in income b. invests in fixed income securities c. gives fixed return d. invests primarily in equities

19.Operational Risk arises from a. Inadequate or failed internal processes b. People and systems c. External Events d. Defaults 20. Which of the following is true? a. All of them b. None of them c. (a) , (b) and (c) d. (a) , (b) and (e) 21.A decline in cash reserve ratio will cause the yield curve to a. shift upward b. shift downward c. become flatter d. remain unchanged 22.12% Government of India security is quoted at Rs.120. If interest rates go down by 1%, the market price of the security will be..... a. Rs. 120 b. Rs.133.3 c. Rs. 109 d. Rs. 140 23.A bank expects fall in price of a security if it sells it in the market. What is the risk that the bank is facing? a. Market risk b. Operational risk c. Asset Liquidation risk d. Market liquidity risk 24.11% Government of India security is quoted at Rs. 110, the yield will be – a. 11% b. 10% c. 9% d. None of these

25. 1 day VaR of a portfolio is Rs.500, 000 with 95% confidence level. In a

period of six months (125 working days) how many times the loss on the portfolio may exceed Rs.500, 000? a. 4 days b. 5 days c. 6 days d. 7 days 26. A fall in interest rates will make prices of Government Securities a. Go down b. Go up c. Remain unchanged d. None of these 27.Systemic risk the risk of a. Failure of a bank, which is not adhering to regulations b. Failure of two banks simultaneously due to bankruptcy of one bank c. Where a group of banks fail due to contagion effect d. Failure of entire banking system 28. 11% Govt. of India security is quoted at Rs.110. If the interest rates go down by 1% the market price of the security will be a. Rs.110 b. Rs.109 c. Rs.122.2 d. Rs.130 29.Balanced fund is a mutual fund that a. Assures income b. Invests in debt and equity c. Assure growth d. Gives fixed returns 30.Back testing is done to a. Test a model b. Compare model results and actual performance c. Record performance d. None of the above

31.Under Basel II, Capital requirement under the accord is a. The maximum Capital that is required to be maintained b. The minimum Capital that is required to be maintained c. The capital as specified by the regulatory authority is required to be maintained d. None of the above 32.Capital charge for credit risk requires input for PD, LGD, EAD and M. Under advanced IRB approach, who provide the input for LGD. a. Bank b. Supervisor c. Function provided by BCBS d. None of the above 33.A debenture of Rs.100 carrying 15% coupon rate is quoted in the market at Rs.135/-. The current yield on this debenture will be a. 13.5% b. 15% c. 11.11% d. 10% 34.Investment in Post Office time deposit is a. Zero risk investment b. Low risk investment c. Medium risk investment d. High risk investment 35.If the short term interest rates are temporarily higher than the long term interest rates, the yield curve will be a. Sloping upward b. Inverted c. Zigzag d. Horizontal 36. Premature payment of a term loan will result in interest rate risk of type a. Basis risk b. Yield curve risk c. Embedded option risk d. Mismatch risk

37.A company with equity capital of Rs.50 crores (Face Value of Rs.10/per share) makes gross profit of Rs.70 crores and net profit after tax of

Rs.25 crores. If the market price of its equity share is Rs.50, the PE ratio will be a. 50 b. 5 c. 10 d. 20 38. Daily volatility of a stock is 1%. What is its 10 days volatility approximately? a. 3% b. 10% c. 1% d. 4% 39.If call money rates are temporarily higher than the long term interest rates, the yield curve will be a. Slopping upwards b. Zigzag c. Inverted d. Horizontal 40.Equity oriented mutual funds a. Assure income b. Assure growth c. Invest in debentures d. Invest in shares 41.A bank funds its assets from a pool of composite liabilities. Apart from credit and operational risks, it faces a. Basis risk b. Mismatch risk c. Market risk d. Liquidity risk 42.A rise in Government securities prices will make yield curve – a. Slope upward b. Shift downward c. Remain stable d. Shift upward

43.9% Government of India security is quoted at Rs.120. The current yield on the security will be –

a. 12% b. 9% c. 7.5% d. 13.3% 44.Financial Risk is defined as a. Uncertainties resu1ting in adverse variation of profitability or outright losses b. Uncertainties that result in outright losses c. Uncertainties in cash flow d. Variations in net cash flows 45.Strategic Risk is a type of a. Interest Rate Risk b. Operation Risk c. Liquidity Risk d. None of the above 46.Objective of liquidity management is to: a. Ensure profitability b. Ensure liquidity c. Either of two d. Both 47.A mutual fund charges 1% entry load and no exit load. Its NAV is Rs.16; its sale and repurchase price will ----a. Rs.16 and Rs.15.80 b. Rs.16.16 and Rs.15.84 c. Rs.15.84 and Rs.16 d. Rs.16.16 and Rs.16 48.Banks need liquidity to: a. Meet deposit withdrawal b. Fund loan demands c. Both of them d. None of them 49.A fall in interest rate of long dated government securities with the short term interest rates remaining unchanged will make the yield curve. a. Steeper b. Slop downward c. Shift downward d. Flatter 50.Adequacy of bank’s liquidity position depends upon: a. Sources of funds

b. Anticipated future funding needs c. Present and future earnings capacity d. All of the above 51.Current yield on a government security is 5%. If the market price of the bond is Rs.160, the coupon rate on the bond will ---a. 6% b. 5% c. 8% d. 10% 52.A rise in the short term interest rates with the long term interest rates remaining unchanged will make the yield curve -----. a. Steeper b. Shift upward c. Flatter d. Slope upward 53.A scheme of mutual fund has units with face value of Rs.10 and NAV of Rs.37. The Fund declares a dividend of 35% in the scheme. The exdividend NAV will be ------- per unit. a. Rs.37 b. Rs.2 c. Rs.33.50 d. Rs.35.5 54.7.5% coupon interest Government Security is quoted at Rs.120. Its current yield will be a. 8.55% b. 6.25% c. 7.75% d. 7% 55.A company with equity capital of Rs.15 crores makes PBIDT of Rs.15 crores and PAT of Rs.10 crores. The face value of its share is Rs.5 and PE is 10, the market price will be ---a. Rs.50 b. Rs.66 c. Rs.33 d. Rs.100
56.Which term defines the process of project compliance with policies and procedures? a. Quality control b. Quality assurances c. Quality audits

d. Quality control management 57.Which process does QA provide and umbrella for? a. Continuous process improvement b. Quality assurance c. Project management plan d. Quality baseline 58.Which of the processes includes all activities of the performing organization that determines policies and responsibilities of a project? a. Performance quality control b. Project quality management c. Performance plan management d. Quality control management 59.Which of the following are negative possibilities if quality requirements are not met? a. Overworking team members and poor product quality b. Customer complaints and late product c. Poor quality d. Termination 60.Which of these terms apply to identifying quality standards and how to satisfy them? a. Quality projections b. Quality management c. Quality planning d. Quality overview 61.Which of the following definitions apply to the cost of quality? a. Left over product b. Total cost of all project efforts c. Customer satisfaction d. Redoing entire project 62.Strategic stretch involves: a. The fit between the organization and its environment. b. Creating new opportunities by stretching and exploiting capabilities in new ways. c. The skills of the senior management. d. Utilizing all the resources of an organization to their full capacity. 63.Portfolio working is working which is: a. Not attached to a single employer and contract of employment b. An individual who works at home for a single employer c. A person who demonstrates his/her work in a portfolio d. A person who chooses more than one career 64.Why has the power of managers to act unilaterally in work organizations in the UK been reduced? Is it due to: a. More powerful trade unions b. Management training

c. d. 65.What a. b. c. d. 66.What a. b. c. d.

Benevolent managers UK and European legislation changes have evolved from inward foreign investment in the UK? The harmonization of terms and conditions of employment Life time employment Multiple union recognition Comprehensive provision of welfare benefits did the Hawthorne experiments discover? That people need to belong to a 'social group' That people need heat and good lighting to work well Money is a motivator It makes no difference how you treat people at work in relation to their behavior 67.Post modernist ideas have impacted on our understanding of the role of rationality in workplaces by recognizing: a. One type of rationality prevails b. More than one type of rationality prevails in work organizations c. That managements type of rationality is the only true one to exist at work d. Employees must learn to respect managements version of rationality at work 68.According to Cloke and Goldsmith the biggest change to the history of management is: a. Decline in hierarchy and bureaucracy b. The continuation of autocratic management c. Workers directives d. Team working 69.A philosophy of management… a. Doesn't exist b. Is the assumptions managers make about people c. Is more than a single ingredient d. Is a style of management 70.Treating employees as people or as an economic resources is: a. A choice all managers have to make b. Mutually exclusive c. A question of balance which will be affected by the context of each organization d. A matter of luck 71.The creation of personnel as a specialist function dealing with people issues from the latter part of the twentieth century has been responsible in part for: a. Disenfranchising line managers in dealing with key aspects of people management b. Reducing the stress and work load of line managers

c. Creating greater workplace efficiency d. Bureaucratizing the people function in workplaces 72.The origins of Personnel Management was an outcome of: a. Welfare workers b. Legislation relating to factory reform c. The work of nineteenth century social reformers and Quaker employers d. The government 73.Scientific management contributed to the development of a more rational approach to management by developing which characteristics? a. The planning and organization of work based on scientific principles b. Time and motion studies c. Standardized pay d. The encouragement of trade unions 74.One final development influencing the practice of Personnel Management in the 1960s was: a. The effect of recession b. Powerful trade unions c. Globalization d. Growing importance of training 75.A distinction can be made between 'hard' and 'soft' types of HRM. Soft HRM can be characterized by: a. Seeing people as organizational assets b. A quantitative approach to HRM c. A mutual commitment of employees and employers to the goals of the organization d. Being driven by costs 76.The resource based view of the firm is one that believes the key human resources are: a. Those employees not members of trade unions b. Knowledge workers c. Used to create new capabilities that help achieve organizational success d. Those willing to work overtime 77.SHRM is also about strategic choice, which refers to: a. The processes and decisions that shape the organization’s philosophy towards its employees b. Managerial prerogative in decision making c. Negotiating with trade unions or employee associations over the direction of the organization d. Giving employees their 'say' in organizational concerns 78.Do HR activities have an effect on employee and managerial behavior? a. Yes, but these effects can be negative as well as positive

b. HR impacts on employee behavior but not on managerial c. HR impacts on employee behavior but not on managerial d. No, it is managerial behavior which impacts on HR 79.The view that employees are critical to organizational success is now generally accepted. Does this mean that: a. All employees have the same value or potential for the organization b. It reflects the unprecedented success of HR practitioners to deliver c. Good management of people will prevail d. Managing the human resource has become even more important because it is the one resource most difficult to replicate

80.The most common activities performed by HR, which are often outsourced, are: a. Recruitment an selection b. Occupational health, payroll, pensions and training c. Human resource planning d. Assessment centers 81.Recruitment and selection must be effective to ensure it: a. Offsets high labor turnover b. Delivers the highest caliber of individuals at optimum most c. To have a surplus in case of sickness and absence d. Encourages new blood into the organization 82.Can the assessment and selection of applicants be carried out in such a way that the 'best' or 'right' person will always be identified? a. Yes b. No c. If enough money is invested in the process d. If managers use their intuition or 'gut reaction' in making recruitment decisions 83.The solution to many so-called 'people problems' is often associated with improving the effectiveness of the recruitment process by: a. Having a robust HR department to carry out the process b. Outsourcing the HR department c. Careful selection of the right people for the job d. Devolving to line managers 84.The science and engineering sectors reflect significant under representation of which group of employees? a. Highly skilled operators b. Young people c. Over 50s d. Women

85.The target figure of the Sussex Police Race Equality Scheme to increase ethic representation in its work force is: a. 10.5% b. 20% c. 3.5% d. 5% 86.Are the best and most productive employees likely to be: a. The least costly in terms of recruitment and employment costs b. A matter of 'pot luck' in terms of recruitment decisions c. The most costly to employ d. Have no bearing on recruitment and selection costs

87.Too great a reliance on internal recruitment can result in: a. Reduced job performance b. High labor turnover c. Internal conflict d. Poor group dynamics 88.What strategies deployed by HR for attracting potential candidates to apply for vacancies might be seen to result in indirect discrimination? a. Advert in local press b. Word of mouth c. Now recruiting banners/notices d. Agency or job centre 89.According to O'Leary et al (2002) the most important property of the assessment instruments used to measure or assess applicants against set criteria is their ability to predict what? a. Whether a person will be a good team player b. Length of service c. Future job performance d. Time it will take to train the person 90.The employment contract provides a set of rights, responsibilities and obligations that structure the behavior of whom? a. Both parties b. The employee c. The employer d. Trade unions 91.What did the Whitely Councils establish? Was it: a. Tripartite employee relations b. Collective bargaining framework c. Trade unions d. Employer associations 92.Substantive rules are those which determine:

a. Rules governing redundancy b. Rules governing discipline and grievance c. Trade union recognition d. Rates of pay and how levels are determined 93.Are those employers that reflect a unitary perspective to employee relations generally: a. Welcoming of them b. Hostile to trade unions c. Seeking agreement with single unions d. None committal either way

94.What % of membership does a trade union have to demonstrate amongst the group it is wishing to represent before it can apply to the Central Arbitration Committee (CAC)? a. 10% b. 40% c. 20% d. 5% 95.If a local collective agreement on pay and conditions is in place, who benefits? a. Only those employees who are members of the trade union b. All employees regardless of union membership c. All employees in that industry nationwide d. All employees regardless of union membership who are in the grade of work covered by the agreement 96.Apart from pay what is the second most common reason for employees to join a trade union? a. Group solidarity b. Friendship groups c. Political reasons d. Wide range of personal benefits 97.In organizing industrial action a Union is encouraging its members to break their contractual obligation to attend work. Is this action: a. Protected by union immunity b. Unlawful c. Referred to as a 'wild cat strike d. Such that employers can sue the union for loss of earnings 98.What are the types of industrial action a union is most likely to engage in? a. Unofficial action b. Strike action c. Action short of a strike d. Absence

99.The psychological contract refers to the obligations that an employer and an employee perceive to exist between each other as part of the employment relationship. As such it will include: a. The loyalty and trust of employees b. Pay and working conditions c. Managers pay only 'lip service' to consultation d. Managers reneges on commitments to employees 100.Which recent case brought against a corporation's top management lead to new rules on 'corporate governance'? a. The Enron affair b. BP c. Texaco d. Northern Rock

101.The purpose and function of discipline in contemporary organizations seems at odds with developments in contemporary management thinking with its emphasis on: a. Tight control b. A disciplined workforce c. Commitment d. Sanctions and punishments 102.Why is 'procedural justice' important in the context of the management of misconduct? a. It reflects on the integrity of HR professionals b. To ensure that individuals have a sense that they have been treated fairly c. It reflects on the values and attitudes of top management d. To protect line managers 103.What does discipline mean in the context of the workplace? a. Enforcing compliance and order b. A system of rules designed to improve and correct behavior through teaching or training c. Punishment d. Exercising control 104.Why can altruism as an approach to discipline be regarded as an essential element? a. It is an essential requirement for survival b. To maintain good employee relations c. To demonstrate who's boss d. To re-establish a welfare approach to HR 105.What might be the reason for why HR is not often informed of incidents that could result in a disciplinary action being taken?

Those involved often agree to contain the incident Those involved would be concerned about reprisals Due to lenient managers It would impact on the relationships between subordinates and superiors 106.Which organization provides established guidelines for disciplinary procedures? a. TUC b. ACAS c. CIPD d. Employers 107.What is the meaning of the term 'gross misconduct' in the context of a company's disciplinary procedures? a. Breaches of standards and rules that are serious and unacceptable in any circumstances b. Stealing company property c. Being repeatedly late for work d. Absence without leave

a. b. c. d.

108.Should confidentiality be guaranteed to people who report breaches of rules which could lead to disciplinary action taken on a fellow employee? a. Depends on the circumstances b. It should not be guaranteed c. Management should attempt to guarantee confidentiality d. It should be guaranteed 109.Is it important to have two managers responsible for leading a disciplinary investigation because: a. Provides support for each other when dealing with stressful situations b. It ensures a degree of impartiality c. It a requirement by tribunals d. Provides cover in the event of absence through ill health 110.Which aspect of employment is fairness in the management of HR linked to? a. Just recruitment and selection b. Grievance and discipline c. Reward management d. All aspects of HR 111.What expresses the commitment management has made to embrace the concepts of equality and diversity? a. Investors in people b. Strategic HRM c. An 'equal opportunity employer' d. Diversity management

112.An equal opportunities approach to fairness at work is essentially about: a. Taking a business perspective b. Taking a more strategic approach c. Having a diverse workforce d. Compliance and maintaining minimum standards 113.A stereotype is a fixed idea or misconception about an individual or group of people. The basis of stereotyping is: a. Based on objective and rational considerations b. Seeing people as a group with similar characteristics rather than recognizing differences between people c. Gut reaction d. Formed from personal experience of different groups of people 114.The first elements in the legal framework for equal opportunities legislation were introduced in: a. The 1940s b. The 1970s c. The 1920s d. 2000

115.Circumstances in which discrimination can be justified include: a. Where the employer prefers to employ someone of a specific sex b. Where the employer believes the tasks are more suitable for someone of a specific sex c. Where a person is employed to provide authenticity such as employing a black person to play a black role in a play d. Where there has been a tradition of employing a person of one sex as opposed to the other sex 116.Unreasonable adjustments in light of a person's disability might include: a. Alterations to a person’s working conditions b. Acquiring or modifying equipment c. Building access ramps to buildings d. Altering hours of work or duties 117.Approximately what % of the UK working population is classified as disabled? a. One in 5 people of working age b. 1 in 10 people of working age c. 1 in 20 people of working age d. 1 in 30 people of working age 118.The CIPD survey of 2005 found that the impact of poor work-life balance affecting performance was perceived by what % of employees? a. 60% b. 40%

c. 20% d. 5% 119.Which of the following is the main reason for why harassment and bullying need to be taken seriously at work? a. It is costly for the employer b. It can lead to impairment of an employee's physical and/or mental health c. It impacts on social relations at work d. It could lead to dismissal of the perpetrator 120.A Sole Trader is a firm which a. sells fish b. is operated by a single person c. is unincorporated d. can be taken to court instead of its owner 121.The main aim of any private business is to a. increase market share b. survive c. make a profit d. employ people

122.The secondary sector of the economy is concerned with a. banking b. manufacturing c. farming d. education 123.The fourth element in a SWOT analysis is a. internal threats b. external threats c. internal trials d. external trials 124.All of the following are examples of the advantages of being a plc except a. being able to sell shares on the Stock Exchange b. being liable to hostile take-over c. being able to raise capital from many sources d. being a legal entity separate from the owners and directors 125.Limited liability when applied to an incorporated firm means that a. it only has to pay 50% of its bills b. the shareholders and the directors share the responsibility to pay any debts the firm may have c. the firm is liability limited to the fully paid-up share capital of the firm

d. the firm is only partially responsible for the safety and reliability of its product 126.What do we mean by the term 'unfair competition a. A market in which there exists output that exceeds current market demand b. A market in which participants have an opportunity to earn very high profits c. The market demand for a products exceeds its current levels of production d. The management tool used to look at internal and external factors affecting the business 127.Which type of market competition is characterized by many firms differentiating a similar product a. Perfect competition? b. Oligopolistic competition? c. Monopolistic competition? d. A monopolist? 128.Skimming pricing is best described as a. Keeping prices very low in an attempt to destroy or drive out competitors b. Setting a high price to yield a high profit margin c. The price set by the largest company in the market which influences the price other, smaller rivals must follow d. Setting the price low so as to break into a market 129.All of the following are features of a sole trader, except that a. they are very flexible to changes in circumstances or competition b. they have limited liability for their debts c. they are very private d. they are easy to start up 130.All of the following are suitable methods of market research for a new, small firm, except a. use of Yellow Pages or local directories b. market mapping c. published data in libraries, government publications, or on the Internet d. regional field surveys and market trials 131.All of the following statements are true of a patent, except a. A patent gives its holder exclusive rights to make and sell a product for 16 to 20 years b. A patent is valid in all countries of the World c. The patent holder has to take firms who seem to copy the patent to court himself, not the police d. The patent is published, so everybody can find out how it works, and can try to develop a 'legal' copy 132.A budget is

a. a statement showing how much must be spent in a period of time b. a plan, in financial terms, of a company’s expenditure for a period of time in the future c. A plan, in financial terms, of a company’s revenues and expenditures for a period of time ahead d. a statement, in financial terms, showing how much was received and spent last year 133.All of the following are fixed assets except a. buildings b. stock c. production plant d. vehicles 134.The following are examples of variable costs except a. raw materials b. directors salaries c. packing materials d. commission payments 135.One difference between an ordinary share and a preference share is that a. dividends on ordinary shares have to be paid b. ordinary shares are a loan and have to be repaid on demand c. The ordinary share gives the owner the right to one vote at an AGM d. In the event of a firm going into liquidation, ordinary shares are paid back first

136.The following are all examples of possible causes of cash flow problems, except a. over-investment b. overtrading c. selling on credit d. buying on credit 137.In the context of break-even analysis, the Margin of Safety for a firm is a. The difference between the sales revenue achieved and the breakeven revenue b. The difference between planned (or actual) output and the break-even quantity in a particular time period c. The percentage difference between planned (or actual) output and the break-even quantity d. The difference between planned (or actual) output and the break-even quantity 138.In the business sense, and for a particular business, a debtor is

a. Someone, firm or individual, that the business owes money to b. A current asset of a business c. A current liability of a business d. the Inland Revenue 139.Variances in costs can be caused by changes in all of the following, except a. storage and waste of materials b. efficiency c. wages of staff d. price of the product 140.The liquidity of a firm is a measure of a. its ability to pay bills as they come due b. its ability to respond to changes in demand c. how flexible it is in its production planning d. how quickly and easily a firm could relocate to another site 141.Profit can be defined as a. A firm's revenue less its costs for an accounting period b. An accounting concept, the difference between the revenue obtained from the sale of something less all the costs incurred in its manufacture and sale c. An accounting concept, the difference between the revenue obtained from the sale of something less all the costs incurred in its manufacture and sale, irrespective of any credits given or taken d. The difference between the money in the bank at the start and end of a trading period 142.In the context of accounting, the margin is a. the value of materials wasted during production b. the percentage added to costs to determine the price c. the difference between the price of something and all the costs involved in its production and sale d. the edge of the balance sheet

143.All of the following are examples of current assets except a. stocks of raw materials b. unpaid bills c. customers who have not paid their bills yet d. money in a current account 144.The main disadvantage of an overdraft is that it a. can only be repaid at the end of the agreed period b. the bank can demand repayment at a moment’s notice c. is very inflexible d. must be supported by some security

145.In the context of accounting, liabilities are a. things that you have to put up with b. items of money owed to a business c. a firms debts d. people who do not work efficiently 146.All of the following are examples of fixed assets except a. a firms buildings b. a firms stock of fuel oil and lubricants c. a firms motor vehicles d. a firms computer equipment 147.A firm may raise money internally or externally. All of the following are internal sources, except a. retaining profits within a business rather than paying them out as dividends b. selling assets that are not needed any more c. reducing the working capital requirements d. organizing and using an overdraft 148.All of the following are aims of budgeting, except a. to establish priorities b. to assign responsibilities c. to be able to assign blame d. to encourage forward planning 149.What is meant by the term cost-plus pricing? a. Charging a higher price to those customers who will pay it b. Setting the price at the average cost plus the agreed sum of profit needed to make the investment viable for the company c. Setting a price that covers variable costs and makes a contribution to fixed costs d. Looking at ones rivals and copying their prices

150.All of the following are examples of short-term liabilities except a. debentures with a repayment date in 2 years time b. unpaid VAT c. declared but unpaid dividends d. overdrafts 151.In following the procedure known as 'zero budgeting' a. managers are not allowed to spend any money on capital items for the period of the budget b. managers have to justify any expenditure in order to ensure that allocations to departments are not excessive

c. managers may apply for their budgets to be changed within the budgeting period d. managers are not allowed to use money saved against one periods to budget in the next period 152.All the following are fixed costs, except a. a salary b. a wage c. a commission payment d. a weekly retainer 153.All the following are examples of fixed costs, except a. insurance fees b. rent payments c. directors fees d. license fee on a product sold 154.The value of break-even analysis to a firm is limited by all of the following factors except a. the assumption that all items made are sold b. the assumption that all fixed costs do not change with output c. all costs vary with time d. that all costs and price can change independently of each other 155.All of the following are examples of profit centers within an airline, except a. in-flight magazine b. merchandising c. aircraft maintenance d. ticketing 156.A Cash Cow is a. a product which generates a significant amount of profit for a company b. a product with a high market share, and a high rate of growth c. a product with a low market share and a low rate of growth d. a product which generates a significant amount of money for a company

157.A product life cycle a. shows how a products sales or profits, depending on the units used, may rise and fall over its life b. tells you how long a product will sell for and make a profit c. is divided into three stages d. shows how profitable a product will be 158.When performing primary research a. you spend a lot of time sitting at a desk, using a computer, and researching through old data

b. you are obtaining first hand data, specifically targeted at a particular marketing problem c. you are spending little money d. you are researching into the farming, fishing and mining industries 159.All of the following are examples of extension strategies, except a. selling overseas b. developing a new market for the product c. finding new uses for the product d. stretching the quantity available over a wider geographical region 160.The demand for a product varies with all of the following except a. the income of prospective customers b. its price c. the costs of production d. The amount of successful advertising expenditure 161.What is meant by the term psychological pricing? a. The process of raising the customer awareness of the supposed values/qualities of your product, so building its brand image b. The cutting out of wholesalers from the distribution chain c. Setting prices that reinforce the concept of value. e.g. £99 and not £100 d. The forces of supply and demand and how they determine price 162.All of the following are roles of wholesalers , except a. breaking bulk b. sharing the risk of new products with the manufacturer c. servicing the needs of small customers d. selling directly to consumers 163.The price elasticity of demand for a product tells you a. how sensitive price is to changes in demand b. how sensitive the demand for a product is to changes in the products price c. How demand changes with changes in the prices of competitors goods d. how sensitive demand is to changes in the costs of production

164.Market share tells you a. how well a firm is doing b. how much power a firm has in a market c. how many firms there are in a particular market d. how big a market is 165.Market segmentation is done by firms for all of the following reasons, except a. to increase market share b. to assist new product development

c. so that they can develop multi-purpose advertising campaigns d. to extend products into new markets 166.The income elasticity of demand for a product is negative. Such products are known as a. normal goods b. inferior goods c. luxury goods d. necessities 167.In the marketing mix what is meant by the term 'place'? a. The process of getting products to the places where customers can buy them b. Recognizing that consumers change their tastes over a period of time c. The building-in of reliability to a product d. Launching a new product that extends the product range 168.The Boston Matrix is a visual presentation, or model, which a. shows if a product is likely to be a success or not b. allows firms to classify their products according to their market share and the growth of the c. The building-in of reliability to a product d. Launching a new product that extends the product range 169.A 'Star' is a. A product with a high market share and a high rate of growth b. A product with a low market share and a low rate of growth c. A product with a high market share but a low rate of growth d. A product with a low market share but a high rate of growth 170.The price elasticity of a product is influenced by all of the following factors, except a. necessity b. habit c. brand loyalty d. the level of VAT in operation at the time

171.Market share can be measured by a. counting the number of customers there are in a market, and for a particular firm within it b. comparing the sales value for a company with the total unit sales for the whole market c. comparing the sales value for a company with the total sales value for the whole market

d. comparing the number of outlets a firm has with the total number of outlets within the market 172.All of the following are extension strategies for a product, except a. finding new uses for the product b. encouraging more frequent use and purchase of the product c. developing new markets for the product d. repackaging the product 173.Explain what is meant by the term advertising elasticity a. The responsiveness of demand to price changes b. How much advertising influences sales c. It measures the responsiveness of the demand for a product to changes in the amount of advertising spent on it d. The change in demand caused by a change in income 174.When looking at firms marketing strategy you notice the term 'asset-led' marketing. What does this mean? a. The selling of those fixed assets which are no longer needed to maintain current capacity needs b. The use of names to sell products c. The use by a company of its assets as a major part of its marketing strategy d. The process of buying a company and then selling some of its most valued assets 175.Our 'below the line operations' continue to be disappointing. What does the Chief Executive mean by this? a. That the profit after tax deduction is less than forecast b. A range of promotional activities over which the company has little direct control c. The feedback that comes from a survey d. Research conducted by using publications that are available on a subject 176.'We should have referred to the Boston matrix exercise we carried out.' Who or what is the Boston Matrix? a. A mathematical exercise that puts data into a series of boxes b. A management tool that allows firms to classify their products according to their market share and the growth of the c. The feedback that comes from a survey d. Research conducted by using publications that are available on a subject

177.Explain, using examples what is meant by the term 'above the line' marketing

a. The use of point of sale materials such as cut outs of artists in record stores b. A marketing term referring to promotional expenditure using independent media channels, such as television and radio c. The accounting profit before profit and tax are deducted d. Using various ways to promote fast moving consumer goods by changing their appearance or contents 178.Which of the following is an example of a loss leader? a. The use of advertising via newspapers and television b. Engaging a public relations firm to promote your company c. Using very low prices to encourage customers to buy d. An advertising campaign that aims to increase public awareness of your product 179.What does a business mean by the term 'advertising'? a. various ways of communicating the qualities of products to potential consumers b. The placing of advertisements in newspapers and magazines c. Through the use of various media channels the firm tries to inform potential customers of its products d. Selling products to people 180.One advantage of Just-In-Time (JIT) management of stocks is a. it reduces the need to plan and organize b. it removes the need for delivery Quality Control c. it reduces the costs of holding stock within the factory d. it works very well with competitive tendering 181.A firm is capital intensive if a. it is based in the capital cities of the countries it operates in b. it has borrowed a lot of capital from the bank c. it has a high proportion of fixed costs in its cost structure, rather than variable costs d. has a very steep total cost line on its break-even chart 182.A firm is productively efficient when a. it is producing its product or service at the lowest unit cost that it can b. it is selling at the lowest price possible c. it has the highest labor productivity that it can d. it is making what its customers want 183.'Kaisen' is a. a word meaning 'continuous improvement' b. a method of stock control c. a modern way of operating a production line d. another word for Quality Circles 184.All of the following are examples of economies of scale, except a. being able to employ specialist staff efficiently

b. the effective division of labor c. having better communications d. bulk buying 185.Which of the following is NOT a sign that labor shortages are hitting a company a. The need to outsource part of its production b. A lack of accurate records as to staff training c. The introduction of university place sponsorship d. An increase in basic rates of pay for current employees 186.External economies of scale are a. savings that are made possible by outside agencies b. savings that can be made in distribution and selling c. savings that are available to a firm as a result of the concentration of an industry in a region d. savings that can be made in export markets only 187.All of the following are justifications for holding large stocks of raw materials, except a. the seasonal supply of materials such as coffee beans or even garden peas b. in anticipation of a future shortage and rapid rise in price c. large quantities are available on the market d. to take advantage of significant bulk buying reductions 188.Which of the following are NOT a benefit thought to accompany the introduction of technology a. Improved efficiency and reductions in waste b. Increased strains in industrial relations c. The introduction of new and better products d. Advances in communication 189.The opportunity cost to a business of an investment is a. the amount of capital that has to be borrowed to be able to make the investment b. the cost of all the fixed assets that are to be purchased c. the next best investment now foregone d. the amount by which the project will have risen due to inflation, on a monthly basis 190.When a firm in the secondary sector of the economy takes over a related business in the tertiary sector, this is an example of a. horizontal integration b. backward integration c. Forward vertical integration d. Forward horizontal integration 191.A bank takes over a fishing company, a steel works, a vegetable processing firm and an airline. This is an example of a. forward integration

b. a firm becoming a conglomerate c. horizontal integration d. company mergers

192.Cell production is the modern production method where a. buildings are made from prefabricated units, or cells b. production is done in small rooms c. the output from the Prison Service factories d. production on assembly lines is managed and run by groups of workers who are responsible for the quality of their work 193.The long-run for a company is when a. the scale of production itself, and thus capacity can be increased b. 5 years c. the time it takes to buy and install new plant d. the time interval between the payment of a firms fixed costs 194.In the interests of efficiency and obtaining more economies of scale, two firms agree to join together and become one. This is an example of a a. hostile take-over b. hostile merger c. friendly merger d. friendly take-over 195.A firm can be considered to be efficient when it a. is producing its product or service at the lowest possible average cost b. is fully utilizing its capacity c. has minimized the amount of waste that it produces d. employs the maximum number of workers 196.The short-run for a company is a. one month, being the payment base for salaries b. the period where output can only be changed by altering the utilization of existing plant and equipment c. the time it takes to terminate staff d. when it is working on a short-time basis 197.What is meant by the term 'management by objectives'? a. A system of giving the authority to carry out certain jobs by those lower down the management hierarchy b. The system of management that is based on bringing together experts into a team c. The setting of objectives to bring about the achievement of the corporate goals

d. The control of the organization by those in the 'head office' 198.A manager may delegate any of the following except a. authority b. workload c. responsibility d. attendance at meetings to represent the department

199.Workforce planning involves all of the following except a. organizing the training of staff b. forecasting future personnel requirements c. examining production plans in a factory d. preparing and maintaining personnel records 200.Maslow, in his triangle of human needs, showed that a. having challenging new tasks is a basic human need b. money always motivates workers c. safety and security is a low order human need d. workers will not give of their best unless they have good social events provided by the firm 201.Piecework is a payment system where the worker is a. paid overtime for any hours worked beyond 25 per week b. rewarded for good conduct c. is paid a minimum of £4.20 per hour d. is paid for what he or she achieves 202.Which of the following will NOT result following the introduction of a more decentralized system of management? a. Increased motivation amongst those empowered to make decisions b. Greater consistency in the decisions made c. The development of skills amongst the junior members of the management team d. An increase in the speed at which essential decisions are made 203.An advantage of recruitment from outside the company is a. that it is cheaper than internal recruitment b. that there is no need to advertise the vacancy c. that it brings in new experience and skills to the firm d. that it avoids jealousy within the firm 204.When designing his hierarchy of needs triangle Maslow did NOT include one of these. Was it? a. Good wages and salaries and working conditions b. The need to feel secure at work with adequate financial rewards such as pensions to assist one later in life c. The need to build a career path

d. Opportunities for team working and social events that allow a sense of belonging to emerge 205.When deciding on objectives for management it is advised that companies should aim to achieve 'SMART' within these. Which of the following is NOT part of the SMART scheme? a. The need to be Specific in the choice of objectives b. The need to make objectives Tangible c. All objectives must be Measurable d. For personnel to feel capable of reaching objectives they must be Achievable

206.Which of the following is a reason for introducing a matrix management system? a. Because it allows for an easily understood functional responsibility chart to designed b. The management can increase the use of delegation within the organization c. The senior management wants to develop a clearly defined set of responsibilities d. A more centralized system of control is required 207.What is meant by the term functional management? a. A system of business organization that is based on an individual having a wide range of skills needed to administer a business b. A type of management that is based more on personality c. A system that groups together various jobs and is organized by departments, sections or functions d. A system that supports a flat form of command chain 208.What is meant by the term delegation? a. A system of management that relies on consulting employees before making decisions b. The process of using goals as the best way of motivating managers to achieve corporate targets/objectives c. The giving of tasks by a manager to a subordinate d. A style of management supported by FW Taylor 209.Which of the following is a reason for supporting a wider span of control within an organization? a. The management wants to reduce the opportunities for delegation b. There is a need for tighter control within the business c. The business accepts that within its management there will be increased contact between managers and employees d. Management wishes to introduce a process of de-layering 210.Which of the following is NOT a characteristic of a narrow span of control?

a. There is less opportunity to delegate b. This form of span of control creates a smaller hierarchy within the business c. Supervision and control are tighter d. The distance between the top and bottom of the organization is greater 211.The effectiveness of wide spans of control will depend on a. The ability of the chosen manager to control effectively those under their control b. Designing a complex set of tasks for less senior personnel to perform c. Employees being treated in a more Theory X way (McGregor) and not left to supervise their own working environment d. The senior management wishing to encourage promotion from within its current staff 212.Which of the following is the best definition of a centralized management system? a. A system that encourages empowerment of workers b. A management structure that concentrates on developing the skills of junior personnel c. A system that involves authority and responsibility for decision-making being in the hands of senior managers d. A system that encourages faster decision-making 213.Most management teams use 'appraisal' but what is meant by this term? a. A system used to improve the performance of personnel b. The main way in which an employee’s wages are determined c. A system of reward points offered by retailers to attract customer loyalty d. The evaluation of an individual employee's performance over a given period of time 214.In recent years autonomous working groups have come to play an important part in many businesses. What are their essential features? a. The group reports directly to the senior management above them in the hierarchy of the firm b. The creation of teams which have a high level of autonomy and control over their immediate working environment c. The bringing together of various individuals who have a common interest in solving certain problems d. A group of experts brought into research new ways of producing a product 215.Authoritarian leadership is a term often seen in textbooks. What does it mean a. A style of leadership where the leader keeps a very tight control on all information and decision-making processes

b. A system of leadership that allows maximum participation by all employees c. A chain of command that is flat and allows considerable personal freedom to make decisions d. The selling of debts to an agency, who take responsibility for their collection 216.Ineffective planning of workforce would be highlighted by a. Recruitment and selection problems b. The need to outsource some of the production c. A need to offer retraining to current employees d. An opportunity to increase the use of mechanization 217.Which of the following is one of the factors that might influence the style of leadership used by a firm? a. Accepting that employees who agree are favored b. Workers should be left to be more in control of their own working environment c. Offering profit sharing as part of employees remuneration package d. The skills expected from each employee 218.Which of the following will influence the style of management used by a company? a. The desire by the owner to have the workforce treat him in a fatherly way b. The need to focus discussions on policy as a joint process between employees and employer / manager c. The culture of the company, the nature of its work and the preferences of the individual managers d. The use of distinct penalties for poor performance

219.What is meant by the term empowerment? a. A process of giving employees greater autonomy and decisionmaking powers b. A system that encourages workers to move more freely within the workforce c. The opportunity to share in the company's profits d. A formal system of leadership that relies greatly on control 220.Which of the following will influence the method of recruitment and selection used by a company? a. The state of the economy b. The size of the organization c. The type of training programs used by the company d. The possible expansion of UK business in Europe 221.Which of the following is an accurate definition of recruitment?

a. The process of attempting to fill gaps that exist in the skills of the current labor force b. The system of following someone around and noting how they perform their duties c. The process by which companies fill the need to find new employees d. A statement that enshrines the fundamental objectives of the company 222.Which of the following is NOT normally a sign of poor morale amongst a workforce? a. High levels of absenteeism b. High levels of turnover c. Increased levels of personal productivity d. A poor external image and difficulties attracting good recruits 223.Which of the following IS one of Herzberg's 'motivational factors'? a. Opportunities to achieve some personal advancement within the organization b. The application of respected supervision of employees by those responsible for this role within the organization c. Within organizations it is the workings of groups that influence codes of behavior d. People are primarily motivated by money and little else 224.Which of the following is one of Herzberg's 'hygiene factors'? a. Recognition in the workplace b. A reasonable salary c. An opportunity to take some responsibility in ones place of work d. Developing a sense of achievement in the working environment 225.An increase in the rate of interest may reduce the profits of a company because a. the customers will have more money to spend b. exports will become easier and cheaper c. costs will increase since overdrafts and loans will be more expensive d. it will become more rewarding to invest in new products and projects 226.All of the following are examples of external stakeholders of a company except a. shareholders b. suppliers c. customers d. local government 227.Structural unemployment can be caused by all of the following, except a. a collapse in the demand for coal, leading to pit closures in South Wales b. a slowing of the economy

c. growth of the textile industry in India, leading to the failure of the industry in Lancashire d. collapse of the market for valves after the invention of transistors 228.A market is said to be oligopolistic when a. it is dominated by a single supplier of a product b. a few significant suppliers dominate the market for a product c. there are many small firms supplying the same product d. there are many branded varieties of the product on the market 229.All of the following are examples of unfair competition, except a. two firms agreeing to fix their prices b. three companies agreeing to share a market between them c. a monopolist charging excess prices for its product d. exploiting a patent that the firm has on a product it has developed itself 230.A firm will have monopoly power if a. it is the sole producer of its product b. it has a market share of at least 25% c. it can set its price d. it is making high profits 231.All of the following are examples of unfair competition, except a. restricting supply to retailers who agree to take a complete range of items b. a monopoly charging excessive prices because of lack of competition c. market sharing; where a group of firms agree to share a market and fix prices in their favor d. a firm taking out a patent for a drug it has invented 232.The dominant firm in a market is operating at near full capacity, and the other firms can do little to significantly increase their supply to the market. This will lead to all of the following, except a. rising prices as demand begins to outstrip supply b. high and rising profit margins c. increased levels of marketing, especially advertising d. new firms considering entering the market 233.A rise in interest rates, followed by a rise in the exchange rate, will result in all of the following effects, except a. The price of imported raw materials will rise b. The price of imported raw materials will fall c. The price of exported goods will rise d. Domestic producers will find it harder to compete against imported goods

234.The business cycle is the regular pattern of upturns and relative downturns in output and demand within an economy. All of the following can cause this, except a. Government policies which effectively achieve steady, sustainable growth b. changes in business confidence, leading to more of less capital investment c. stock building, followed by destocking d. Irregular buying of consumer durables such as cars and household appliances 235.Which of the following might cause a downturn in the economy? a. The demand for a product is exceeding its supply b. A total fall in output and expenditure c. Distinct signs of growing business confidence d. Stocks are starting to exceed demand 236.If the pound increased in value against the dollar what would happen to the price of exports? a. Imports will become more expensive and exports will be less expensive b. An increase in the exchange rate means dearer exports but cheaper imports c. The exchange is influenced by government action in order to prevent it changing to an undesirable level d. The government will buy the currency in order to support its value 237.Rising interest rates can have all but one of the following implications for an economy. Which one is it? a. Credit sales will fall b. Investment may start to fall as business loses confidence c. Potential exporters will see the UK market as one worth selling to d. As the cost of maintaining working capital rises so stocks will need to be reduced 238.Which of the following is an accurate definition of interest rates? a. The cost of borrowing money b. The price of one currency expressed in terms of another c. The level of unemployment that is normally apparent in an economy as some people are in between jobs or searching for a new one d. The setting of the exchange rate by the forces of the market for currency 239.Which of the following would probably NOT be the result of a period of relatively high inflation? a. Lower sales within the economy b. A loss in international competitiveness c. An increase in the trade surplus of the country d. Workers demand higher wages

240.Which of the following is NOT a primary cause of inflation in an economy? a. Large increases in consumer demand that cannot be adequately meet by current supply b. Increases in costs, wages, imported goods / components/ raw materials and other expenses c. A belief amongst many in the population that prices will be rising in the future d. Falls in the amount of money in circulation beneath the growth rates being recorded by the economy 241.Which of the following is an accurate definition of price inflation a. An increase in prices b. A persistent increase in the general level of prices c. Decreases in the general level of prices d. The index that measures monthly movements in prices 242.Which of the following is a clear sign that an economy is heading for recession? a. A rise in the demand for consumer goods b. Companies start to post growing amounts of bad debts c. The capacity within the economy is being fully used d. Potential bottlenecks start to appear within the economy 243.Which of the following might cause cyclical unemployment? a. A downturn in world export trade b. The replacement of coal by gas in many of the UK power stations c. A fall in the competitiveness of UK clothing products d. Some workers in the hotel trade being laid off in late October 244. Financial statements are prepared a. Only for publicly owned business organizations b. For corporations, but not for sole proprietorships or partnerships c. Primarily for the benefit of persons outside of the business organization In either monetary or nonmonetary terms, depending upon the need of the decision maker 245.The basic purpose of an accounting system is to a. Develop financial statements in conformity with generally accepted accounting principles b. Provide as much useful information to decision makers as possible, regardless of cost c. Record changes in the financial position of an organization by applying the concepts of double-entry accounting d. Meet an organization's need for accounting information as efficiently as possible 246.Information is cost effective when d.

a. The information aids management in controlling costs b. The information is based upon historical costs, rather than upon estimated market values c. The value of the information exceeds the cost of producing it d. The information is generated by a computer-based accounting system 247.Although accounting information is used by a wide variety of external parties, financial reporting is primarily directed toward the information needs of a. Investors and creditors b. Government agencies such as the Internal Revenue Service c. Customers d. Trade associations and labor unions

248.A complete set of financial statements for Hartman Company, at December 31, 1999, would include each of the following, except a. Balance sheet as of December 31, 1999 b. Income statement for the year ended December 31, 1999 c. Statement of projected cash flows for 2000 d. Notes containing additional information that is useful in interpreting the financial statements 249.All of the following are characteristics of managerial accounting, except a. Reports are used primarily by insiders rather than by persons outside of the business entity b. Its purpose is to assist managers in planning and controlling business operations c. Information must be developed in conformity with generally accepted accounting principles or with income tax regulations d. Information may be tailored to assist in specific managerial decisions 250.In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is more likely to a. Be used by decision makers outside of the business organization b. Focus upon the operation results of the most recently completed accounting period c. View the entire organization as the reporting entity d. Be tailored to the specific needs of an individual decision maker 251.The nature of an asset is best described as a. Something with physical form that is valued at cost in the accounting records b. An economic resource owned by a business and expected to benefit future operations

c. An economic resource representing cash or the right to receive cash in the near future d. Something owned by a business that has a ready market value 252.The balance sheet item that represents the resources invested by the owner is a. Accounts receivable b. Cash c. Note payable d. Owner's equity 253.Arguments that the cost principle is not a satisfactory basis for the valuation of assets in financial statements are usually based on a. The lack of objective evidence to permit verification of cost data b. Increased availability and capacity of computers c. Stronger internal control structures d. Continued inflation

254.The amount of owner's equity in a business is not affected by a. The percentage of total assets held in cash b. Investments made in the business by the owner c. The profitability of the business d. The amount of dividends paid to stockholders 255.An income statement communicates information regarding revenues and expenses a. For a period of time b. At a given point in time c. For some point of time in the future d. At the beginning of the fiscal year 256. The realization principle indicates that revenue usually should be recognized and recorded in the accounting records a. When goods are sold or services are rendered to customers b. When cash is collected from customers c. At the end of the accounting period d. Only when the revenue can be matched by an equal dollar amount of expenses 257.The matching principle is best demonstrated by a. Using debits to record decreases in owner's equity and credits to record increases b. The equation A = L + OE c. Allocating the cost of an asset to expense over the periods during which benefits are derived from ownership of the asset

d. Offsetting the cash receipts of the period with the cash payments made during the period 258.The matching principle a. Applies only to situations in which a cash payment occurs before an expense is recognized b. Applies only to situations in which a cash receipt occurs before revenue is recognized c. Is used in accrual accounting to determine the proper period in which to recognize revenue d. Is used in accrual accounting to determine the proper period for recognition of expenses 259.The reason that both expenses and dividends are recorded by debit entries is that a. All dividend and expense transactions involve offsetting credit entries to the Cash account b. Both expenses and dividends are offset against revenue in the income statement c. Both expenses and dividends reduce owner's equity d. The statement is untrue-expenses are recorded by debits, but withdrawals are recorded by credits to the owner's drawing account

260.The concept of adequate disclosure a. Does not apply to information which is immaterial b. Grants users of the financial statements access to a company's accounting records c. Does not apply to events occurring after the balance sheet date d. Specifies which accounting methods must be used in a company's financial statements 261.The concept of adequate disclosure requires a company to inform financial statement users of each of the following, except a. The accounting methods in use b. The due dates of major liabilities c. Destruction of a large portion of the company's inventory on January 20, three weeks after the balance sheet date, but prior to issuance of the financial statements d. Income projections for the next five years based upon anticipated market share of a new product; the new product was introduced a few days before the balance sheet date 262.When a business closes its accounts only at year-end a. Financial statements are prepared only at year-end b. Adjusting entries are made only at year-end

c. Revenue and expense accounts reflect year-to-date amounts throughout the year d. Monthly and quarterly financial statements cannot be prepared 263.When a business adjusts its records monthly, but closes its accounts only at year-end a. Interim financial statements are prepared using the amounts shown in an adjusted trial balance at the end of the interim period desired b. Only annual financial statements can be prepared c. Interim financial statements are prepared by subtracting prior balances from current balances for all accounts d. The revenue and expense accounts in an adjusted trial balance reflect year-to-date amounts 264.Which of the following amounts appears in both the Income Statement debit column and the Balance Sheet credit column of a worksheet? a. Net income b. Net loss c. Dividends d. Retained earnings 265.Which of the following is not included in an end-of-period worksheet? a. Information for adjusting entries b. Financial statement information c. Trial balance d. Closing entries

266.Preparation of interim financial statements a. Makes the preparation of year-end financial statements unnecessary b. Requires the journalizing and posting of adjusting entries c. Requires the journalizing and posting of closing entries d. Is done monthly or quarterly-in between the year-end financial statements 267.If monthly financial statements are desired by management a. Journalizing and posting adjusting entries must be done each month b. Journalizing and posting closing entries must be done each month c. Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records d. Adjusting and closing entries must be entered in the accounting records before preparation of interim financial statements

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