Financial management/accountancy (B category)
· Question 1. Which of the following items appears only in the balance sheet and not in the profit and loss account?
o A. capital
o B. depreciation
o C. stocks
o D. wages and salaries
· Question 2. What is the value of a firm’s stock at 31/12/2000 after the following operations (LIFO - last in, first out):
-Stock at 1/1/2000 – 400 units @ € 100
-Purchase 5/2/2000 – 30 units @ € 80
-Purchase 8/9/2000 – 20 units @ € 60
-Sale 7/10/2000 – 60 units @ € 130
o A. € 39 000
o B. € 37 600
o C. € 35 800
o D. € 40 000
· Question 3. Which of these statements is not correct?
o A. Any loss is shown in the profit and loss account
o B. The purchase value of fixed assets is shown in the balance sheet
o C. Bank interest owed is shown as a liability in the balance sheet
o D. Accumulated depreciation is shown in the profit and loss account
· Question 4. Which stock valuation method gives the highest value during a strongly inflationary economic cycle?
o A. FIFO (first in, first out)
o B. LIFO (last in, first out)
o C. weighted average cost
o D. NIFO (next in, first out)
· Question 5. Which of the following is not one of the basic principles governing the general budget of the European Communities?
o A. the principle of unity
o B. the principle of equilibrium
o C. the principle of annuality
o D. the principle of subsidiarity
· Question 6. The Community directive on the annual financial statements of certain types of companies adopted by the Council in 1978 is known as:
o A. the Tenth Directive
o B. the Fourth Directive
o C. the Fifth Directive
o D. the Ninth Directive
· Question 7. In December of year N your company made some purchases that were paid in January N+1. This means that:
o A. your profit for year N ending at 31 December is overstated
o B. your profit for year N+1 is understated
o C. (a) and (b) are both correct
o D. neither (a) nor (b) is correct
· Question 8. Which of the following statements is correct?
o A. Durable goods purchased by a firm to enable it to pursue its activities are fixed assets
o B. Goods bought for resale "as is" amount to intangible fixed assets for the firm
o C. Commitments to third parties constitute capital
o D. Commitments to third parties are entered under capital as reserves
· Question 9. Company Y buys software costing € 8 000, with an estimated lifespan of three years, which it pays by cheque. Before the transaction, the fixed-asset "software" account showed a debit of € 5 000, while the "bank" account showed a positive balance of € 20 000. After this operation, the two accounts will look as follows:
o A.
o B.
o C.
o D.
· Question 10. Which of the following statements is correct?
o A. Depreciation is a way of spreading the cost of a fixed asset over its expected lifetime
o B. When a fixed asset is sold for less than its net book value, the firm realises a gain
o C. Depreciation is considered as a profit that is booked to the following year
o D. Depreciation is deducted from the value of stocks
· Question 11. The effect of a payment to creditors is normally:
o A. assets decrease: owner’s equity decreases
o B. assets decrease: owner’s equity increases
o C. assets increase: liabilities decrease
o D. assets decrease: liabilities decrease
· Question 12. A hotel’s payroll expenses for the year totalled € 700 000, representing 35% of its total income. The hotel’s total income and net income were ________ and ______, respectively.
o A. € 245 000 ; € 70 000
o B. € 2 000 000 ; € 70 000
o C. € 2 000 000 ; unknown
o D. € 245 000 ; unknown
· Question 13. The Publications Office is expanding. The estimated cost of required new equipment is € 30 000. As a result, annual sales are forecast to increase by € 40 000 and related expenses by € 30 000. The payback period is:
o A. 1 ½ years
o B. 2 years
o C. 3 years
o D. None of the above
· Question 14. On 1st January 2000 a company buys a machine for € 10 000. It depreciates the machine at 20% per annum on a linear scale, with a residual value of € 500. On 1st January 2002 it sells the machine for € 4 800. What is the profit or loss?
o A. € 2 000 loss
o B. € 1 400 loss
o C. € 1 000 profit
o D. € 800 profit
· Question 15. The objective of consistency is to provide assurance that:
o A. There are no variations in the format and presentation of financial statements
o B. Substantially different transactions and events are not accounted for on an identical basis
o C. The auditor is consulted before material changes are made in the application of accounting principles
o D. The comparability of financial statements between periods is not materially affected by changes in accounting principles without disclosure
· Question 16. In order to prepare correct financial statements of a company, an accountant must:
o A. review agreements with financial institutions for restrictions on cash balances
o B. understand the accounting principles and practices of the company's industry
o C. interview key personnel concerning related parties and subsequent events
o D. perform ratio analysis of the financial data of comparable prior periods
· Question 17. Which of the following statements is not correct
o A. VAT is a form of sales tax
o B. VAT is a form of income tax
o C. VAT is used in part to fund the European Union
o D. VAT exists in all Member States
· Question 18. An agreement between two EU companies to compensate each other with reciprocal goods and services and no invoices is:
o A. tax evasion
o B. used in historical cost accounting
o C. used to save administrative costs
o D. considered a normal accounting practice
· Question 19. Fraud in a computer environment is increased most when:
o A. employees are not trained
o B. program documentation is not availabl...
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