Just because the kids are out enjoying the summer holidays, it doesn’t mean you can too! To help get your brain in gear we’ve put a little quiz together to demonstrate how well you know your accounts. Fingers on buzzers…

  1. If Assets = £100,000 and Liabilities = £75,000 then owners equity (capital) is…?
    1. 75,000
    2. 175,000
    3. 25,000
    4. None of the above.
  2. Venture capital companies can invest in any form of business, e.g. sole trader, limited company and partnership.
    1. True
    2. False
  3. A purchase order will be invalid if it lacks…?
    1. The date.
    2. The signature of the person authorised to issue the order.
    3. The price of the goods ordered.
    4. The purchase order number.
  4. In a cash flow statement depreciation is deducted from profit because it is a non-cash expense.
    1. True
    2. False
  5. Budgetary control is the process of using budgets to monitor actual results against budgeted figures.
    1. True
    2. False
  6. Which one of the following best describes a balance sheet?
    1. A statement which shows the expenses of the business during the accounting period.
    2. A statement which shows the profit of the business during the accounting period.
    3. A statement which shows the net worth of the business for any point in time.
  7. A gross profit of £80 on a cost price of £200 is a mark-up of 40%.
    1. True
    2. False
  8. Where a profitable business has spare capacity it can increase its profits by making additional sales at a selling price below marginal cost.
    1. True
    2. False
  9. Labour productivity as a performance indicator is calculated as:
    1. Output (in units) ÷ number of employees.
    2. Cost per unit ÷ number of employees.
    3. Output (in units) ÷ total hours worked per employee.
    4. Total hours worked ÷ number of employees.
  10. On retirement of a partner assets are often re-valued.
    1. True
    2. False
  11. Stocks (inventories) may include raw materials, work-in-progress, and finished goods.
    1. True
    2. False
  12. The benefits of budgetary control include motivation of staff and evaluation of performance.
    1. True
    2. False

Answers

  1. 3
  2. False – Venture capital companies only invest in limited companies.
  3. 2
  4. False – In a cash flow statement depreciation is added to profit.
  5. True – Budgetary control enables managers of a business to plan for the future and to identify financial problems.)
  6. 3
  7. True – The statement is true because mark-up is a profit percentage added to the cost price.
  8. False – In order to increase profits, additional sales must be made at a selling price above marginal cost.
  9. 3
  10. True – The statement is true as assets may have changed in value since the partnership was formed.
  11. True – companies often have stocks (inventories) in various forms.
  12. True

 

How did you do? Well, if you got more than 50% right you’ve got an excellent understanding of basic accounting – A+!  If you got less than 50% don’t worry -we take care of all of this for you anyway. Happy holidays!