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Question 01

A company has, by the end of its financial period, paid out more Value Added Tax than it has received. How would this be shown in the balance sheet?

a) As an accrual

b) As a debtor within current assets

c) As a 'creditor due within one year'

d) As a 'creditor due after more than one year'

Question 02

A company has proposed a final equity dividend. Which one of the following events must happen before it can be paid?

a) The Stock Exchange must agree to the dividend

b) The chairman of the company must personally approve it

c) The company's preference shareholders must approve it

d) The shareholders must approve it at the AGM

Question 03

If a loan is secured by a fixed charge, this means:

a) the interest rate cannot change over the life of the loan.

b) the lender can sell any of the assets of the company to repay the loan if the company defaults.

c) the lender can only sell specific assets of the company to repay the loan if the company defaults.

d) the loan cannot be repaid by instalments but must be repaid in full at a fixed date.

Question 04

Another word meaning 'debenture' is:

a) share.

b) bond.

c) equity.

d) reserve.

Question 05

Convertible loan stock can be converted to which one of the following?

a) Cash

b) Goods

c) Shares

d) Assets

Question 06

In a defined contribution pension scheme, an employer pays:

a) nothing, as all contributions are made by the employee.

b) regular contributions which vary according to predicted future obligations under the scheme.

c) infrequent contributions based on changing future obligations under the scheme.

d) regular contributions fixed as an amount or as a percentage of pay.

Question 07

Contributions paid under a defined contribution pension scheme will be recognised within the:

a) chairman's report.

b) statement of total recognised gains and losses.

c) profit and loss account.

d) balance sheet.

Question 08

Which one of the following material occurrences within the post balance sheet period would be classified as an adjusting post balance sheet event?

a) A strike which is causing losses of £100,000 per week

b) A debtor who owed £10,000 at the balance sheet date has 25% of the debt written off owing to accounting errors

c) Changes in foreign exchange rates one month after the balance sheet date have reduced the value of foreign investments by £10m

d) A new branch is opened at a cost of £2m

Question 09

Which one of the following material occurrences within the post balance sheet period would be classified as a non-adjusting post balance sheet event?

a) A property revaluation showing a permanent fall in the balance sheet value

b) The discovery that stock in the balance sheet had been undervalued

c) The insolvency of a debtor whose debt had been recorded in the balance sheet

d) An issue of shares

Question 10

A post balance sheet period ends on:

a) the date on which the board of directors approve the financial statements.

b) the date on which the auditors approve the financial statements.

c) the date on which the shareholders approve the financial statements.

d) the date of the annual general meeting of the company.

Oxford University Press, Online Resource Centre, Chapter 07.

Chapter 07

Instructions