Question 1

Which one of the following statements does not describe management accounting?
A) Management accounting information is concerned with reporting outcomes of past events to users external to the organisation.
B) Management accounting is concerned with reporting accounting and cost information to users within an organisation.
C) Management accounting information is used to plan levels of production and activity in the future.
D) Management accounting information is mostly concerned with the present and the future.

Accepted Answer

Management accounting primarily focuses on providing information for internal users such as managers, rather than reporting on past events to external users. This distinguishes it from financial accounting, which is aimed at providing information to external users like shareholders, creditors, and regulatory agencies.

Question 2

Details of the length of time it takes an organisation to pay for goods received would be of most interest to which financial statements user group?
A) Customers
B) Employees
C) Shareholders
D) Suppliers

Accepted Answer

Suppliers are most interested in the length of time it takes an organisation to pay for goods received because it directly affects their cash flow and financial planning.

Question 3

Which one of the following statements is not correct?
A) The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to providing resources to the entity.
B) While financial accounting presents information about what has happened in the past, management accounting is very much concerned with both the present and the future and how accounting information can be used for short-term decision making and longer-term planning.
C) Understandability assumes that readers of financial reports have a reasonable knowledge of business and economic events in order to make sense of what they are presented with.
D) Accounting summarises narrative data relating to past events and presents this data as information to managers and other interested parties as a basis for both decision making and control purposes.

Accepted Answer

The incorrect statement is D because accounting does not merely summarize narrative data; it involves recording, classifying, summarizing, and interpreting financial transactions to provide useful information for decision-making.

Question 4

Debit cash, Credit sales is the correct double entry to record cash received from trade receivables.

Accepted Answer

The correct double entry to record cash received from trade receivables is Debit Cash, Credit Trade Receivables.

Quiz 1: Introduction

Which one of the following statements does not describe management accounting?

Details of the length of time it takes an organisation to pay for goods received would be of most interest to which financial statements user group?

Which one of the following statements is not correct?

Debit cash, Credit sales is the correct double entry to record cash received from trade receivables.