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1. What are minority interests?

a.

Small shareholders in the company.

b.

The share capital of a subsidiary company that is held by the parent


company.

c.

The share capital of a subsidiary company that is not held by the parent
company.

d.

Banks that temporarily hold shares as surety for loans.

2. What does the cost of sales cover?


a.

The cost of selling effort and transportation to the customer for sold
products.

b.

The cost of advertising and selling effort for sold products.

c.

The full overhead cost of the company.

d.

The cost of making the products that have been sold in the period.

3. Using the attached information from BOCs Report and Accounts for 2004, what is
the quick ratio (acid test)?
a.

0.67.

b.

0.52.

c.

0.86.

d.

1.1.

4. Using the attached information from BOCs Report and Accounts for 2004, what is
the return on equity (ROE)? (use after exceptional items)
a.

16.4%.

b.

24.6%.

c.

25%.

d.

21.8%.

5. Using the attached information from BOCs Report and Accounts for 2004, what is
the return on capital employed (ROCE)?
a.

16.19%.

b.

14.15%.

c.

16.66%.

d.

14.57%.

6. What is the purpose of the balance sheet?


a.

Reports the position of a company at the close of business on each


working day.

b.

Reports the position of a company at the close of business on a given


working day.

c.

Reports the position of a company at the close of business at the end of


each working month.

d.

It is a working document that remains balanced at all times.

7. Return on equity (ROE) is used to measure?


a.

Profitability and performance of the company.

b.

The efficiency and effectiveness of the company.

c.

Liquidity and stability of the company.

d.

The ability of the company to meet its long-term liabilities.

8. Who agrees the Report and Accounts following an annual audit?


a.

The external auditor.

b.

The directors of the company on behalf of all shareholders.

c.

The Revenue and Customs.

d.

The shareholders.

9. What is meant by off-balance sheet financing?


a.

Financing of a project by a company where shareholder capital is not


employed.

b.

Financing of a project using retained profit and recorded on the profit and
loss account.

c.

A project that is financed from its profits through a special purpose


company.

d.

Since the ENRON problems this form of financing is now considered


fraudulent.

10. What does the return on total assets (ROTA) measure?


a.

Measures the efficiency of the overall trading return on the business as a


whole.

b.

Measures the efficiency of the trading return on the net assets of the
business.

c.

Measures the efficiency of the investment in the fixed assets of the


business.

d.

Measures the efficiency of the overall trading return for capital


employed.

11. How is capital expenditure defined?


a.

Expenditure on fixed assets

b.

Expenditure on research and development.

c.

Any expenditure approved by the company.

d.

Expenditure required to obtain capital.

12. Which of the following best describes preference shares?


a.

Shares held by company directors.

b.

Shares held by insurance companies that invest pension funds.

c.

Shares that have higher priority if the company is wound up.

d.

Government holdings in a company.

13. What is meant by retained profit?


a.

Profits that have been retained in order to pay creditors.

b.

Profits that have been retained to pay dividends to shareholders.

c.

Profits that do not belong to shareholders but to the company.

d.

Profits that have not been paid out as dividends but retained for further
investment.

14. Are management accounts audited at the same time as financial accounts by the
same external group?
a.

No, these are for use by company managers only.

b.

Management Accounts must be kept separate from financial accounts in


order to avoid fraud.

c.

Auditors will use information from management and cost accounts to


help formulate the Annual Report and Accounts.

d.

Management accounts are audited separately by external auditors in order


to check for fraud.

15. Using attached information from BOCs Report and Accounts for 2004, what is the
average debt turnover period?
a.

56 days.

b.

66.3 days.

c.

52.7 days

d.

44.6 days.

16. Besides being a legal requirement for UK companies of a certain size to

publish an Annual Report and Accounts it also an opportunity to:


a. Ensure that at least once a year the company accounts are balanced.
b. For the company to calculate pay rises for employees for the next year.
c. Provide important reports, statements and background information to
shareholders.
d. Ensure that the company is viable and able to trade legally.
17. What is the format of the Annual Report and Accounts?

a. The format is normally prescribed by the Finance Director.


b. Schedule 4 of the 1985 Finance Act sets out permitted formats.
c. Schedule 4 of the 1992 Finance Act sets out the permitted formats.
d. The European Community prescribes a strict format for all European
Companies.

18. Which of the following best defines capital employed?

a. Total assets of the company.


b. The total amount of capital lent by banks to the company.
c. The capital that is readily available for the company to use on a day by
day basis.
d. The total amount of shareholder capital.
19. In the company report and accounts where are bank loans recorded?

a. Under current and long-term liabilities.


b. Under long-term liabilities only.
c. Under capital and reserves.
d. Under current assets.