Page 321 - GMAT 2017b_Neatb

Accounting Practice Test

(C) 50. (C) The Stock Exchange conditions of listing prohibit
(D) 58. the practice.
(D) The regulatory system has been altered and
48. The rate of stock turnover was? accounting standards have been changed to
(A) 3.5 times. discourage the practice.
(B) 3.7 times
(C) 6.3 times 53. Directors of a limited company are under an
(D) 7.7 times obligation to?
(A) Send financial statements to employees.
49. For a limited company, return on capital employed is (B) Send summary financial statements to all
most likely to be calculated by using which of the shareholders.
following methods? (C) File copies of the financial statements with
(a) Net profit as a percentage of the average of the the registrar of companies.
(D) Produce financial statements which are
opening and closing borrowings.
corrects in all respects.
(B) Net profit as a percentage of the average of
the opening and closing capital. 54. Which of the following statements regarding the
(C) Net profit as a percentage of the average of the Chairman's report in an annual report is correct?
opening and closing total assets. (A) The report is required by the Companies Act.
(d) Net profit as a percentage of the average of the (B) The report is subject to an audit by the external
opening and closing fixed assets. auditors of the company.
(C) Accounting standards define the format of the
Chairman’s report.
50. The following balances were extracted from the
(D) There are no controls over the format or content of
records of XYZ Ltd
the Chairman’s report and it is not subject to
2001 2002
statutory audit.
£ 000 £ 000
Sales 3000 4000 55. Which of the following items is unlikely to be found in
Gross profit 600 720 the directors' report for a limited company?
Gross profit percentage 20% 18% (A) A description of the accounting policies of the
Which of the following is the most likely reason for the company.
fall in the gross profit percentage despite the increase in (B) Details of corporate donations to charities.
sales in 2002? (C) Details of corporate donations to political parties.
(A) An increase in selling prices. (D) Details of the company’s health and safety policy.
(B) A decrease in the costs of purchasing raw materials
for the business. 56. An audit of most limited company financial
(C) Offering higher discounts to customers to secure statements is required because:
extra sales. (A) The Cadbury Report into corporate
(D) An increase in wages and salaries. governance recommended that one should
be undertaken.
51. A limited company is under a legal duty to disclose (B) The shareholders of a company usually
information to parties external to the company. request one.
To which of the following groups does this requirement (C) It is required by the Companies Act.
mainly apply?
(D) Banks or other lenders usually request one to be
(A) Banks. carried out.
(B) Customers.
57. B Ltd is a subsidiary of A plc if ?
(C) Shareholders
(A) A owns all of the shares in B.
(D) Suppliers.
(B) A is in a position to exercise dominant influence
over the financial and operating policies of B.
52. Which of the following best describes the measures (C) A owns the assets of B.
which have been taken to stop the practice known as (D) A has given a substantial loan to B secured on B’s
' creative accounting'? assets by a debenture.
(A) Creative accounting has been made a criminal
offence.
(B) The Companies Act forbids directors from
engaging in creative activities.

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