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Carey, Knowles, & Towers-Clark: Accounting: A Smart Approach 3e

Chapter 1: Multiple choice questions

Results
You have answered 5 out of 10 questions correctly.
Your percentage score is 50%.

Question 1

Which of the following is not true about a cash budget?

Your answer:

d) Cash budgets include personal cash receipts and expenses.

Feedback:

A cash budget should not include personal receipts and payments as the business is a separate entity.
Page reference: 5,6

Question 2

A cash budget for the six months ended 30 September 2020 shows an anticipated overdraft of approximately £9,500. Which of the following
would reduce the expected overdraft?

Your answer:

c) Assets being leased, rather than purchased for cash, in 2020.

Feedback:

Leasing an asset would reduce the expected overdraft.

Page reference: 9

Question 3

Mark sells goods at a gross profit margin of 30%. Which of the following statements is true?

Your answer:

a) Goods sold for £800 will have cost Mark £240.

Correct answer:

b) Goods sold for £800 will have cost Mark £560.

Feedback:

£800 x 0.7 = £560.

Page reference: 12

Question 4

James sells bicycles at a gross profit margin of 40%. Which one of the following statements is true?

Your answer:

b) Bicycles costing £500 will be sold for £833.33.

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Feedback:

500 / 0.6 = 833.33.

Page reference: 12

Question 5

John has made the following predictions for his business for the first six months of trading to 30 June 2019:

Sales in Jan, Feb and March= £20,000 per month

Sales in Apr, May and June= £35,000 per month
Sales will be on one month's credit

The total cash received from customers during the six months ended 30 June 2019, will be:

Your answer:

a) £165,000.

Correct answer:

d) £130,000.

Feedback:

Cash received is £20k February, £20k March, £20k April, £35k May and £35k June = £130,000.
Page reference: 13

Question 6

John has made the following predictions for his business for the first six months of trading to 30 June 2019:

Sales in Jan, Feb and March = £20,000 per month

Sales in Apr, May and June = £35,000 per month
Sales will be on one month's credit.

The cash received in April will be:

Your answer:

b) £20,000.

Feedback:

Cash received in April is March's sales of £20,000.

Page reference: 13

Question 7

John has made the following predictions for his business for the first six months of trading to 30 June 2019:

Sales in Jan, Feb and March = £20,000 per month

Sales in Apr, May and June = £35,000 per month
Sales will be on one month's credit
Purchases will be for cash.

If goods are sold at a gross profit margin of 40%, and goods are replaced as soon as they are sold, the amount payable to suppliers in March
2019, will be:

Your answer:

d) £14,000.

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Correct answer:

c) £12,000.

Feedback:

March sales of £20,000 x 0.6 =£12,000.

Page reference: 13

Question 8

An extract from Eddie's Cash Budget is given below:

What is the expected bank overdraft at the end of July?

Your answer:

c) £(1,000).

Correct answer:

a) £(3,000).

Feedback:

The balance carried forward at the end of June is £(1,000), with net payments for July of £(2,000), giving a July balance of £(3,000).
Page reference: 13

Question 9

An extract from Charlie's Cash Budget is given below:

Which of the following overdraft facilities would you advise Charlie to request for the three months ended 30th November?

You did not answer the question.

Correct answer:

d) An overdraft of a little over £20,000 is required.

Feedback:

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7/8/2019 Oxford University Press | Online Resource Centre | Multiple choice questions

An overdraft of a little over the largest overdrawn amount is required, this is £20,000.
Page reference: 13

Question 10

Which of the following statements are not true?

Your answer:

d) Credit purchases are where the goods or services have not yet been received by the business and payment has not yet been made.

Feedback:

Credit purchases are where the good or services have been received by the business but payment has not yet been made.
Page reference: 13

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