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Question 01

Which one of the following words can be used to indicate that a profit and loss account is being prepared for a group of companies?

a) Consolidated

b) Connected

c) Coupled

d) Co-joined

Question 02

A manufacturer is considering the point at which a transaction can be recognized for inclusion within its profit and loss account. At which of the following stages is this permitted?

a) Order placed for the goods

b) Products accepted by customer

c) Product manufactured

d) Sample products requested by customer

Question 03

In the UK, a company can be exempted from segmental reporting disclosures if:

a) the disclosure would be seriously prejudicial to the company's interests.

b) the company's auditors agree to the non-disclosure.

c) the company trades in no more than two geographical areas.

d) the disclosure would lead to financial embarrassment for the company.

Question 04

If a business's activities are described as continuing, they are:

a) continuing to be profitable.

b) continuing beyond the end of the financial period.

c) continuing to cause the business anxiety.

d) continuing until the end of the financial year, but then closing.

Question 05

PBIT stands for:

a) profit before interest and taxation.

b) profit before income and taxation.

c) profit before income and turnover.

d) profit before interest and turnover.

Question 06

'Significant influence' (in the definition of an associate) is presumed to exist if one entity owns at least the following percentage of another entity's shares:

a) 10

b) 30

c) 20

d) 50

Question 07

What proportion of an associate's turnover is included within a group's turnover total in its group profit and loss account?

a) 20%

b) 50%

c) 100%

d) None

Question 08

Which one of the following most closely defines 'Amortization'?

a) The depreciation of tangible fixed assets

b) The depreciation of intangible fixed assets

c) The depreciation of current assets

d) The revaluation of land and buildings

Question 09

Which one of the following most closely defines 'Goodwill'?

a) The difference between the cost of an investment in a business and the value of the net assets acquired in that business

b) The payment made to purchase a business from its existing owner

c) The amount received by a busThe difference between what the owner thinks the business is worth and the actual value of the business's fixed assetsiness owner when selling that business

Question 10

A company pays £100m to buy a 40% stake in a company whose net assets have a fair value of £200m. What is the value of 'goodwill' arising on this transaction?

a) £20m

b) £80m

c) £40m

d) Nil

Oxford University Press, Online Resource Centre, Chapter 04.

Chapter 04

Instructions