Question 1

Hamish plc expects to have an overdraft at the end of the next financial year. Which one of the following courses of action would increase the bank overdraft?

Accepted Answer

A)  Reducing the level of inventory held. 
B)  Increasing the credit period allowed to customers. 
C)  Increasing the time taken to pay suppliers. 
D)  Renting, instead of purchasing, the new company vans. 
A)  Reducing the level of inventory held. 
B)  Increasing the credit period allowed to customers. 
C)  Increasing the time taken to pay suppliers. 
D)  Renting, instead of purchasing, the new company vans. B

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Working capital is the initial capital injected into a company. 
B)  Working capital is a source of long-term finance. 
C)  Working capital is the minimum amount of capital required to run a business. 
D)  Working capital is equal to the net investment in current assets and current liabilities. 
A)  Working capital is the initial capital injected into a company. 
B)  Working capital is a source of long-term finance. 
C)  Working capital is the minimum amount of capital required to run a business. 
D)  Working capital is equal to the net investment in current assets and current liabilities. D

Question 3

Jeff has recently started buying and selling commemorative mugs. He buys them for £4 per mug and sells them for £7 each. Since he started trading, he has bought 2,000 and sold 1,800 mugs, all for cash. Which of the following statements is true for the period since trading started?

Accepted Answer

A)  The business has made a profit of £6,000 and has increased its bank balance by £14,000. 
B)  The business has made a profit of £6,000 and has increased its bank balance by £4,600. 
C)  The business has made a profit of £5,400 and has increased its bank balance by £4,600. 
D)  The business has made a profit of £5,400 and has increased its bank balance by £5,400. 
A)  The business has made a profit of £6,000 and has increased its bank balance by £14,000. 
B)  The business has made a profit of £6,000 and has increased its bank balance by £4,600. 
C)  The business has made a profit of £5,400 and has increased its bank balance by £4,600. 
D)  The business has made a profit of £5,400 and has increased its bank balance by £5,400. C

Question 4

Toby plc made a profit for the year ended 30 September 2023 of £3,330,000 after charging depreciation of £730,000. During that year, inventory increased by £455,000 and trade payables increased by £312,000. Assuming no other factors affected it, the cash generated from operations for the year ended 30 September 2023 was:

Accepted Answer

A)  £3,293,000. 
B)  £2,743,000. 
C)  £3,917,000. 
D)  £4,827,000. 
A)  £3,293,000. 
B)  £2,743,000. 
C)  £3,917,000. 
D)  £4,827,000.

Question 5

Which of the following would give rise to an outflow of cash during a financial year?

Accepted Answer

A)  An issue of ordinary shares. 
B)  Taking out a loan 
C)  The purchase of non-current assets. 
D)  An increase in trade payables. 
A)  An issue of ordinary shares. 
B)  Taking out a loan 
C)  The purchase of non-current assets. 
D)  An increase in trade payables.

Question 6

Which one of the following would reduce the cash balance of a business and not reduce the profit for the year?

Accepted Answer

A)  Repayment of a loan. 
B)  The wages charge for the year. 
C)  The rent payable for the year 
D)  The electricity charge for the year. 
A)  Repayment of a loan. 
B)  The wages charge for the year. 
C)  The rent payable for the year 
D)  The electricity charge for the year.

Question 7

Extracts from Tom Ltd's Statement of financial positions are given below:
  Assuming there were no disposals within the year, which of the following statements is true?

Accepted Answer

A)  During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £150,000. 
B)  During the year, the amount spent on the purchase of non-current assets was £55,000 and the depreciation charge for the year was £150,000. 
C)  During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £45,000. 
D)  During the year, the amount spent on the purchase of non-current asset purchases was £55,000 and the depreciation charge for the year was £45,000. 
A)  During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £150,000. 
B)  During the year, the amount spent on the purchase of non-current assets was £55,000 and the depreciation charge for the year was £150,000. 
C)  During the year, the amount spent on the purchase of non-current assets was £295,000 and the depreciation charge for the year was £45,000. 
D)  During the year, the amount spent on the purchase of non-current asset purchases was £55,000 and the depreciation charge for the year was £45,000.

Question 8

Which of the following events would never be an entry on a statement of cash flows for a company that has been in existence for more than one year?

Accepted Answer

A)  Proceeds of a share issue made this year. 
B)  Increase in inventory held between the beginning and end of the year. 
C)  Decrease in amount owed by trade receivables between the beginning and end of the year. 
D)  Accumulated (total) depreciation. 
A)  Proceeds of a share issue made this year. 
B)  Increase in inventory held between the beginning and end of the year. 
C)  Decrease in amount owed by trade receivables between the beginning and end of the year. 
D)  Accumulated (total) depreciation.

Question 9

Which of the following would NOT be a cash flow from financing activities?

Accepted Answer

A)  Purchase of non-current assets. 
B)  Dividends paid. 
C)  Repayment of a loan. 
D)  Proceeds of a share issue. 
A)  Purchase of non-current assets. 
B)  Dividends paid. 
C)  Repayment of a loan. 
D)  Proceeds of a share issue.

Question 10

Which of the following would give rise to an inflow of cash during a financial year?

Accepted Answer

A)  The purchase of motor vehicles. 
B)  A decrease in trade receivables. 
C)  An increase in the value of inventory held 
D)  A decrease in trade payables. 
A)  The purchase of motor vehicles. 
B)  A decrease in trade receivables. 
C)  An increase in the value of inventory held 
D)  A decrease in trade payables.

Hamish plc expects to have an overdraft at the end of the next financial year. Which one of the following courses of action would increase the bank overdraft?

Which of the following statements is correct?

Jeff has recently started buying and selling commemorative mugs. He buys them for £4 per mug and sells them for £7 each. Since he started trading, he has bought 2,000 and sold 1,800 mugs, all for cash. Which of the following statements is true for the period since trading started?

Which of the following would give rise to an outflow of cash during a financial year?

Which one of the following would reduce the cash balance of a business and not reduce the profit for the year?

Extracts from Tom Ltd's Statement of financial positions are given below: Assuming there were no disposals within the year, which of the following statements is true?

Which of the following events would never be an entry on a statement of cash flows for a company that has been in existence for more than one year?

Which of the following would NOT be a cash flow from financing activities?

Which of the following would give rise to an inflow of cash during a financial year?

The Cash Budget

Introduction to the Statement of Profit or Loss

Balancing the Basics

Accounting for Depreciation and Bad Debts

Company Finance

Company Accounts

Interpreting Financial Statements

Capital Structure and Investment Ratios

Costs and Break-Even Analysis

Absorption and Activity-Based Costing

Budgeting

Pricing and Costs

Short-Term Decision Making

Investment Appraisal Techniques

Measuring and Reporting Performance

Double-Entry Bookkeeping I

Double-Entry Bookkeeping II

Filters

Exam 7: The Statement of Cash Flows

Hamish plc expects to have an overdraft at the end of the next financial year. Which one of the following courses of action would increase the bank overdraft?

Which of the following statements is correct?

Jeff has recently started buying and selling commemorative mugs. He buys them for £4 per mug and sells them for £7 each. Since he started trading, he has bought 2,000 and sold 1,800 mugs, all for cash. Which of the following statements is true for the period since trading started?

Which of the following would give rise to an outflow of cash during a financial year?

Which one of the following would reduce the cash balance of a business and not reduce the profit for the year?

Extracts from Tom Ltd's Statement of financial positions are given below: Assuming there were no disposals within the year, which of the following statements is true?

Which of the following events would never be an entry on a statement of cash flows for a company that has been in existence for more than one year?

Which of the following would NOT be a cash flow from financing activities?

Which of the following would give rise to an inflow of cash during a financial year?

The Cash Budget

Introduction to the Statement of Profit or Loss

Balancing the Basics

Accounting for Depreciation and Bad Debts

Company Finance

Company Accounts

Interpreting Financial Statements

Capital Structure and Investment Ratios

Costs and Break-Even Analysis

Absorption and Activity-Based Costing

Budgeting

Pricing and Costs

Short-Term Decision Making

Investment Appraisal Techniques

Measuring and Reporting Performance

Double-Entry Bookkeeping I

Double-Entry Bookkeeping II

Filters