Financial management/accountancy (B category)

• Question 1. Which of the following items appears only in the balance sheet and not in the profit and loss account?

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  A. capital

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  B. depreciation

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  C. stocks

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  D. wages and salaries

• Question 2. What is the value of a firm's stock at 31/12/2000 after the following operations (LIFO - last in, first out):

-Stock at 1/1/2000 - 400 units @ € 100

-Purchase 5/2/2000 - 30 units @ € 80

-Purchase 8/9/2000 - 20 units @ € 60

-Sale 7/10/2000 - 60 units @ € 130

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  A. € 39 000

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  B. € 37 600

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  C. € 35 800

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  D. € 40 000

• Question 3. Which of these statements is not correct?

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  A. Any loss is shown in the profit and loss account

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  B. The purchase value of fixed assets is shown in the balance sheet

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  C. Bank interest owed is shown as a liability in the balance sheet

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  D. Accumulated depreciation is shown in the profit and loss account

• Question 4. Which stock valuation method gives the highest value during a strongly inflationary economic cycle?

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  A. FIFO (first in, first out)

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  B. LIFO (last in, first out)

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  C. weighted average cost

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  D. NIFO (next in, first out)

• Question 5. Which of the following is not one of the basic principles governing the general budget of the European Communities?

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  A. the principle of unity

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  B. the principle of equilibrium

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  C. the principle of annuality

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  D. the principle of subsidiarity

• Question 6. The Community directive on the annual financial statements of certain types of companies adopted by the Council in 1978 is known as:

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  A. the Tenth Directive

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  B. the Fourth Directive

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  C. the Fifth Directive

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  D. the Ninth Directive

• Question 7. In December of year N your company made some purchases that were paid in January N+1. This means that:

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  A. your profit for year N ending at 31 December is overstated

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  B. your profit for year N+1 is understated

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  C. (a) and (b) are both correct

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  D. neither (a) nor (b) is correct

• Question 8. Which of the following statements is correct?

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  A. Durable goods purchased by a firm to enable it to pursue its activities are fixed assets

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  B. Goods bought for resale "as is" amount to intangible fixed assets for the firm

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  C. Commitments to third parties constitute capital

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  D. Commitments to third parties are entered under capital as reserves

• Question 9. Company Y buys software costing € 8 000, with an estimated lifespan of three years, which it pays by cheque. Before the transaction, the fixed-asset "software" account showed a debit of € 5 000, while the "bank" account showed a positive balance of € 20 000. After this operation, the two accounts will look as follows:

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  A.
  
  

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  B.
  
  

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  C.
  
  

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  D.
  
  

• Question 10. Which of the following statements is correct?

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  A. Depreciation is a way of spreading the cost of a fixed asset over its expected lifetime

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  B. When a fixed asset is sold for less than its net book value, the firm realises a gain

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  C. Depreciation is considered as a profit that is booked to the following year

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  D. Depreciation is deducted from the value of stocks

• Question 11. The effect of a payment to creditors is normally:

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  A. assets decrease: owner's equity decreases

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  B. assets decrease: owner's equity increases

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  C. assets increase: liabilities decrease

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  D. assets decrease: liabilities decrease

• Question 12. A hotel's payroll expenses for the year totalled € 700 000, representing 35% of its total income. The hotel's total income and net income were ________ and ______, respectively.

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  A. € 245 000 ; € 70 000

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  B. € 2 000 000 ; € 70 000

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  C. € 2 000 000 ; unknown

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  D. € 245 000 ; unknown

• Question 13. The Publications Office is expanding. The estimated cost of required new equipment is € 30 000. As a result, annual sales are forecast to increase by € 40 000 and related expenses by  €  30 000. The payback period is:

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  A. 1 ½ years

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  B. 2 years

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  C. 3 years

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  D. None of the above

• Question 14. On 1^st January 2000 a company buys a machine for € 10 000. It depreciates the machine at 20% per annum on a linear scale, with a residual value of € 500. On 1^st January 2002 it sells the machine for € 4 800. What is the profit or loss?

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  A. € 2 000 loss

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  B. € 1 400 loss

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  C. € 1 000 profit

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  D. € 800 profit

• Question 15. The objective of consistency is to provide assurance that:

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  A. There are no variations in the format and presentation of financial statements

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  B. Substantially different transactions and events are not accounted for on an identical basis

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  C. The auditor is consulted before material changes are made in the application of accounting principles

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  D. The comparability of financial statements between periods is not materially affected by changes in accounting principles without disclosure

• Question 16. In order to prepare correct financial statements of a company, an accountant must:

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  A. review agreements with financial institutions for restrictions on cash balances

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  B. understand the accounting principles and practices of the company's industry

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  C. interview key personnel concerning related parties and subsequent events

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  D. perform ratio analysis of the financial data of comparable prior periods

• Question 17. Which of the following statements is not correct

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  A. VAT is a form of sales tax

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  B. VAT is a form of income tax

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  C. VAT is used in part to fund the European Union

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  D. VAT exists in all Member States

• Question 18. An agreement between two EU companies to compensate each other with reciprocal goods and services and no invoices is:

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  A. tax evasion

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  B. used in historical cost accounting

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  C. used to save administrative costs

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  D. considered a normal accounting practice

• Question 19. Fraud in a computer environment is increased most when:

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  A. employees are not trained

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  B. program documentation is not available

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  C. transaction history is not available

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  D. employee performance appraisals are not given

• Question 20. At the end of year N, you have the following figures for a given product:

Initial stock € 15 000

Sales € 55 000

Final stock € 25 000

Purchases € 30 000

What is the purchase cost of the goods sold?

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  A. € 15 000

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  B. € 20 000

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  C. € 25 000

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  D. €30 000

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