Page 322 - GMAT 2017b_Neatb

Accounting Practice Test

58. A group of companies must prepare consolidated (c) The preparation of the group financial statements.
accounts when which of the following situations (d) All of the above.
exists?
(A) A parent company has one or more subsidiary 63. The main purpose of a management accounting
system is to:
companies.
(A) Provide information for the financial accounting
(b) When a parent company has overseas function.
subsidiaries. (B) Protect the senior staff from criticism.
(C) When a parent company trades from the same (C) Comply with the Companies Act 1985.
(D) To supply data and information to management.
address as its subsidiaries.
(D) When a company has a participating interest 64. Which of the following is not a major function of
in another associated company. management accounting?
(A) Human resource management.
(B) Budgeting.
59. When a company's financial statements have been
(C) Cost accounting.
audited, an audit report will be prepared. If this is (D) Internal auditing
unqualified the auditors will report that the financial
statements: 65. Which of the following statements is true?
(A) Are certified correct. (A) A management accountant should instruct other
(B) Contain no material errors. staff what to do.
(C) Comply with the Companies Act.
(D) Present a true and fair view and comply with the (B) A management accountant provides a service for
Companies Act. other managers.
(C) A management accountant must remain aloof
60. Which of the following factors is not a defect of the from other staff.
traditional historical cost method of accounting
under inflationary conditions? (D) A management accountant’s job is largely to
crunch numbers.
(A) Assets which have not been revalued are
recorded at historic cost.
66. Which of the following items is not an essential
(B) Debtors and other monetary assets lose value with
ingredient of a planning and control system?
inflation.
(A) A clear statement of the entity's objectives.
(C) Asset values are objectively recorded at historic
(B) A detailed budget for each department.
cost.
(C) Disciplinary action when actual costs exceed
(D) Depreciation charges tend to be understated if
budgeted costs.
based on the historic cost of fixed assets.
(D) A formalized organizational managerial
structure.
61. FRS 10 deals with accounting for goodwill. Which of
the following is an acceptable treatment of purchased
67. Which of the following is likely to be classified as a
goodwill?
(A) Include under fixed assets, permanently, on the direct material cost of a motor car wheel?
balance sheet. (A) The metal used to manufacture it.
(B) Include under intangible assets, permanently, on (B) The metal used to manufacture one of the tools
the balance sheet.
(C) Amortize on a systematic basis over the life of an used in the car wheel factory.
asset. (C) The cost of operating the raw material stores in
(D) Write off immediately following acquisition by the factory.
deducting from share capital. (D) The cost of the quality operation on the finished
car wheels.
62. Which of the following factors is likely to be an area of
difficulty in a large multinational group of companies?
(A) Compliance with international accounting 68. The first in, first out method of pricing raw material
standards. issues, exhibits which one of the following features?
(B) Foreign currency translation.

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