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Find Related Questions by Tags, levels, etc.
“The purpose of management accounting is to provide relevant and reliable information so that managers can make well-informed decisions. The value of management accounting, therefore, depends on the quality of the information provided and whether this information helps managers to make better decisions.” Therefore, before management accounting information can be useful to managers, it must possess some qualities.
Required:
Discuss the essential qualities of good management accounting information.
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Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The “generally accepted accounting practice” (GAAP) refers to:
A. Complete set of regulations from all sources together with any general accounting principles and conventions
B. Only the principles and conventions that are enshrined in companies’ legislations
C. The accounting regulations which apply to large companies
D. Financial accounting which is concerned with reporting financial results in aggregates to a variety of users
E. Legislation which generally sets out the broad rules with which companies must comply when preparing financial statements
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Fred Manufacturing Enterprise purchased equipment for N150,000. The equipment was transported at a cost of N15,000 and installed at a cost of N7,500. The employees were trained in the use of the equipment at a cost of N50,000.
At what cost will the equipment be recognised in the books of account?
A. N150,000
B. N157,500
C. N165,000
D. N172,500
E. N222,500
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The information below relates to the accounting period ended December 31, 2013.
N
Prepaid rent brought forward: 22,000
Rent paid during the period: 216,000
Accrued rent carried forward: 26,000
In line with the accrual concept, what should be the amount of rent to be charged to the statement of profit or loss in the year ended December 31, 2013?
A. N264,000
B. N242,000
C. N238,000
D. N216,000
E. N48,000
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Which of the following costs should NOT be included in the initial measurement of property, plant and equipment?
A. Purchase price
B. Site preparation cost
C. Professional fees
D. Installation cost
E. Site administration and general overhead costs
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Which of the following pair of accounts will have balances on opposite sides?
A. Sales account and capital account
B. Furniture account and cash account
C. Capital account and purchases account
D. Stationery account and salaries account
E. Rent expenses account and trade receivables account
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Which of the following correctly describes the accruals concept in accounting?
A. Expenses are recognised in the statement of profit or loss in the same period as the related sales.
B. Income is recognised in the statement of profit or loss when cash is paid.
C. Sales are recognised in the statement of profit or loss when the related expenses are paid.
D. Expenses are recognised in the statement of profit or loss as they are paid.
E. Income and expenses are recognised in the statement of profit or loss as they arise.
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Why is it important to record the substance of transactions rather than just their legal form in financial statements?
A. Legal principles are often complex and difficult to apply in accounting.
B. Financial statements must comply with tax regulations, not legal principles.
C. The legal form of transactions does not accurately represent their financial impact.
D. Recording transactions based on their legal form is easier and more straightforward.
E. Accountants prefer to use financial substance rather than legal form for simplicity.
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In the process of drawing up financial statements, adjustments are made for prepaid expenses and accrued expenses in order to comply with which fundamental accounting concept?
A. Matching
B. Prudency
C. Aggregation
D. Accrual
E. Consistency
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You recently qualified as a professional accountant and received promotion in your company. One of your key responsibilities is to prepare management accounts to facilitate management decision making. You require important sales information from the sales department to incorporate into the final figures. Unfortunately, due to staff sickness and other inefficiencies, the sales report for the month has been delayed. Thus, you will not receive the information until few hours before the accounts are due for presentation to the Chief Finance Officer.
In a related situation, while on lunch break, you overhead the marketing manager asking another employee in the finance department to advise her on some investment decisions she has to make. She has recently inherited a considerable sum of money and would like your colleague to calculate her inheritance tax as well as capital gains tax liabilities.
Required: Identify the fundamental ethical principle(s) that could be in breach and justify why they may constitute a breach. (6 marks)
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