These are ACCA F2 (MA/FMA) Management Accounting MCQs for Part-C of the Syllabus “Performance measurement”.

These multiple-choice questions (MCQs) are designed to help ACCA F2 (MA) students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

INFORMATION ABOUT THESE MCQs Test

Course: ACCA – Associations of Chartered Certified Accountants
Fundamental Level: Knowledge, FIA – Foundation in Accounting
Subject: Management Accounting
Paper: F2 – MA/FMA
Chapter: Financial performance measurement
Chapter Number: 16 of the Practice and Exam Kit
Syllabus Area: C – Performance measurement
Questions Type: CBE MCQs
Exam Section Type: Section A

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Number of the Questions

There are 19 Questions in this F2 MCQ Test that cover Chapter 16; Financial performance measurement of ACCA F2 (MA/FMA) Management Accounting Module.

Time

This MCQs test is not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate.

Result

Students will get their F2 CBE MCQ result after they finish the entire test. They will also be able to see the score in percentage, correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all answers that seem correct or incorrect, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)”.
Dropdown: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

Keywords

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F2 - Chapter 16 - Part A - MCQs

Course: ACCA - FIA
Subject: F2 (MA/FMA) Management Accounting
Chapter: 16 - Financial performance measurement
Syllabus Area: F - Performance measurement
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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REQUEST

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1 / 19

A company borrows $10,000 repayable in five years’ time and immediately uses the loan to repay its overdraft.

What will be the effect on the company’s capital gearing and current ratios?

Capital gearing: Decrease , Current ratio: Increase

Capital gearing: Increase , Current ratio: Increase

Capital gearing: Increase , Current ratio: Decrease

Capital gearing: Decrease , Current ratio: Decrease

2 / 19

A means of raising the production efficiency of an operating unit by the reorganisation of work is known as which of the following?

Work study

Method measurement

Method study

Work measurement

3 / 19

Value analysis considers four aspects of value.

What are they?

Cost value, exchange value, use value and esteem value

Cost value, exchange value, use value and retail value

Competitive value, exchange value, use value and esteem value

Cost value, trade value, use value and esteem value

4 / 19

Using the figures in the question above, what is the asset turnover for 20X8, to one decimal place?

______ times

5 / 19

An investment centre earns a return on investment of 18% and a residual income of $300,000. The cost of capital is 15%. A new project offers a return on capital employed of 17%.

If the new project were adopted, what would happen to the investment centre's return on investment and residual income?

Return on investment: Decrease , Residual income: Decrease

Return on investment: Increase , Residual income: Increase

Return on investment: Increase , Residual income: Decrease

Return on investment: Decrease , Residual income: Increase

6 / 19

The following information has been extracted from the statement of financial position of X Company.

EQUITY AND LIABILITIES
Capital and reserves	585,000
Long term liabilities (long-term loan)	670,000
Current liabilities (payables only)	84,000
	1,339,000

What is the capital gearing ratio, expressed as a percentage to one decimal place?

* (Use the formula (D/D+E))

7 / 19

Which of the following statements are valid criticisms of return on investment (ROI) as a performance measure?

It is misleading if used to compare departments with different levels of risk
It is misleading if used to compare departments with assets of different ages
Its use may discourage investment in new or replacement assets
The figures needed are not easily available

(i), (ii) and (iii)

(ii) and (iv) only

(i) and (iii) only

(ii) and (iii) only

8 / 19

An extract from a company's financial results for 20X6 are shown below.

	20X6
	$'000
Sales	5,400
Less cost of sales:	1,950
	3,450
Less expenses:
Wages	1,700
Repairs and maintenance	240
All other expenses	490
Net profit	1,020

What is the gross profit percentage for 20X6, to one decimal place?

9 / 19

A division currently earns a return on investment (ROI) of 20%. It is considering investing in a project which has a residual income (RI) of $1,000 at an imputed interest charge of 20%.

What is the effect on the division’s ROI if the project is undertaken?

Decrease

No possible to tell from this information

Remain the same

Increase

10 / 19

A retailer has two divisions, North and South. Both sell similar products and all prices are set centrally. All shop premises are rented. Shop rental costs in the South division are lower than in the North division due to a government subsidy given to landlords.

Which of the following measures would NOT provide a fair comparison of the performance of the management of the two divisions?

Return on capital employed

Asset turnover

Gross profit

Turnover per square metre of shop floor space

11 / 19

Value analysis can achieve which TWO of the following?

Increase sales price

Increase quantity sold

Reduce costs

Eliminate costs

12 / 19

What is the main focus of the current ratio?

Profitability

Productivity

Efficiency

Liquidity

13 / 19

The following information is available for company X.

	20X7	20X8
	$	$
Profit	7,500	9,000
Sales	500,000	450,000
Capital employed	37,500	60,000

Calculate the change in ROI from 20X7 to 20X8?

Decrease from 100% to 90%

Increase from 7.5% to 13.3%

Decrease from 20% to 15%

Increase from 1.5% to 2%

14 / 19

What is the main focus of the acid test ratio?

Productivity

Profitability

Liquidity

Efficiency

15 / 19

A company's financial results for 20X4 are shown below.

	20X4
	$'000
Sales	7,200
Less cost of sales:	2,900
	4,300
Less expenses:
Wages	1,600
Repairs and maintenance	360
Directors' salaries	150
Directors' bonuses	55
Other costs (including depreciation)	400
Net profit	1,735

What is the net profit percentage for 20X4, to one decimal place?

16 / 19

Which of the following performance indicators is a financial performance measure?

Quality rating

System (machine) down time

Cash flow

Number of customer complaints

17 / 19

Division A of Aigburth Co is considering a project which will increase annual net profit after tax by $30,000 but will require average inventory levels to increase by $200,000. The current target rate of return on investments is 13% and the imputed interest cost of capital is 12%.

Based on the ROI and/or RI criteria would the project be accepted?

ROI – no, RI – yes

ROI – yes, RI – no

ROI – no, RI – no

ROI – yes RI – yes

18 / 19

The following summarised statement of financial position is available for L Co.

	$'000	$'000
Non-current assets		31,250
Current assets
Inventory	35,000
Receivables	40,000
Cash	1,250
		107,500
EQUITY AND LIABILITIES
Capital and reserves		47,500
Current liabilities (payables only)		60,000
		107,500

What is the value of the acid test ratio?

2.000

0.6875

0.7093

1.2708

19 / 19

A company has current assets of $1.8m, including inventory of $0.5m, and current liabilities of $1.0m.

What would be the effect on the value of the current and acid test ratios if the company bought more raw material inventory on three months' credit?

Current ratio: Decrease , Acid test ratio: Increase

Current ratio: Increase , Acid test ratio: Increase

Current ratio: Increase , Acid test ratio: Decrease

Current ratio: Decrease , Acid test ratio: Decrease