Management Accounting Revision Questions

Management Accounting Revision Questions

1)  Which one of the following is not shown on the Balance Sheet?

1. Current Assets
2. Long Term Liabilities
3. Source of Funds
4. Expenses

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2)  Which one of the following is not shown on the Profit and Loss report?

1. Sales
2. Assets
3. Overheads
4. Expenses

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3)  Which one of the following statements is correct?

1. The Balance Sheet shows how much profit the company has made
2. The Balance Sheet includes expenses paid
3. The Balance Sheet indicates what the company is worth
4. The Balance Sheet indicates the cost of sales

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4)  The Profit and Loss report shows how much the business owes.

1. True
2. False

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5)  Which one of the following statements is correct?

1. Gross Profit plus Overheads equals Net Profit
2. Gross Profit minus Overheads equals Net Profit
3. Gross Profit and Net Profit are the same
4. Sales minus Indirect Expenses equals Gross Profit

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6)  Which one of the following statements is correct?

1. Assets equals Source of Funds minus Liabilities
2. Assets plus liabilities equals source of funds
3. Assets equals Liabilities plus Source of Funds
4. Liabilities equals Capital plus Assets

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7)  Which one of the following statements is correct?

1. The Balance Sheet represents the Accounting Equation
2. The Profit and Loss report represents the Accounting Equation
3. The Balance Sheet shows the turnover of the business
4. The Profit and Loss report shows the investment in the business

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8)  Which one of the following documents shows the values necessary to construct the Balance Sheet and the Profit and Loss report?

1. The Sales Ledger
2. The Purchase Ledger
3. The Trial Balance
4. None of the above

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9)  If you want to find out what the business owns, you should look at the Profit and Loss report.

1. True
2. False

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10)  Which of the following should you check, in order to see how much cash, the business has available?

1. The Liabilities section of the Balance Sheet
2. The Sales section of the Profit and Loss report
3. The Current Assets section of the Balance Sheet
4. Net Profit section of the Profit and Loss report

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Management Accounting Revision Answers

1)  Option (d) is correct.  Expenses are shown on the Profit and Loss report.

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2)  Option (b) is correct.  Assets are shown in the Balance Sheet.

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3)  Option (c) is correct.  The Balance Sheet lists the assets and liabilities of the firm and indicates what the business is worth.

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4)  Option (b) is correct.  This is false.  The Profit and Loss report shows the expenses and gains of the business.  The Balance Sheet shows what the business owes, and what it owns.

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5)  Option (b) is correct.  Overheads reduce the Gross Profit and this gives the Net Profit.

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6)  Option (a) is correct.  This is most commonly referred to as the accounting equation.

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7)  Option (a) is correct.  The Accounting Equation is Assets equals Source of Funds minus Laibilities.  All of these elements are in the Balance Sheet.

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8)  Option (c) is correct.  The Trial Balance lists the assets, liabilities, expences and gains of a business.  This are needed to construct the Profit and Loss and Balance Sheet reports.

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9)  Option (b) is correct.  This is false.  To find out what the business owns you should look at the Balance Sheet.

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10)  Option (c) is correct.  Cash is a Current Asset.

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