F2 (MA/FMA) โ€“ Chapter 12 โ€“ PART D โ€“ CBE MCQs โ€“ ACCA

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

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: Capital expenditure budgeting, and Methods of project appraisal
Chapter Number: 12 of the Practice and Exam Kit
Syllabus Area: D – Budgeting
Questions Type: CBE MCQs
Exam Section Type: Section A

Benefits of Practicing Online on AGlobalBox.com

  1. Authentic Exam Experience:
    Practicing online allows ACCA students to experience an environment closely resembling the actual exam. The MCQs on our platform are designed to mirror the format, difficulty level, and question types found in ACCA exams. This familiarity helps students become more comfortable and confident when facing the real exam.
  2. Comprehensive Question Bank:
    We provided comprehensive question banks covering various topics across the syllabus. By practicing online, students gain access to a wide range of MCQs that thoroughly test their knowledge and understanding in each area.
  3. Enhanced Learning and Retention:
    The interactive nature of online practice enhances learning and improves information retention. Students can actively engage with the MCQs, select answers, and receive immediate results. This approach aids in reinforcing concepts and identifying areas that require further study, thereby maximizing learning outcomes.
  4. Time Management Skills:
    Practicing online helps students develop essential time management skills required for ACCA exams. By adhering to time limits while answering MCQs, students learn to allocate their time effectively and improve their speed and accuracy. This skill is invaluable for completing the actual exam within the given time constraints.
  5. Performance Tracking and Progress Evaluation:
    Students can monitor their results, track their strengths and weaknesses, and identify areas that need improvement.

Number of the Questions

There are 4 Questions in this F2 MCQ Test that cover Chapter 12a; Capital expenditure budgeting 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.


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F2 - Chapter 12 - Part A - MCQs

Course: ACCA - FIA
Subject:
F2 (MA/FMA) Management Accounting
Chapter: 12 - Capital expenditure budgeting, and Methods of project appraisal
Syllabus Area: D - Budgeting
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

  1. If you are using mobile, turn on the mobile rotation and solve the MCQs on wide screen for better experience.

REQUEST

  1. Please rate the quiz and give us feedback once you completed the quiz.
  2. Share with ACCA students on social media such as, Facebook Groups, Whatsapp, Telegram, etc.

1 / 27

How much should be invested now (to the nearest $) to receive $24,000 per year in perpetuity if the annual rate of interest is 5%?

2 / 27

Diamond Co has a payback period limit of three years and is considering investing in one of the following projects. Both projects require an initial investment of $800,000. Cash inflows accrue evenly throughout the year.

Project Alpha Project Beta
Year Cash inflow Year Cash inflow
$ $
1 250,000 1 250,000
2 250,000 2 350,000
3 400,000 3 400,000
4 300,000 4 200,000
5 200,000 5 150,000
6 ย  50,000 6 150,000

The company's cost of capital is 10%.

What is the discounted payback period of Project Alpha?

3 / 27

A bank offers depositors a nominal 4% pa, with interest payable quarterly.

What is the effective annual rate of interest?

4 / 27

Diamond Co has a payback period limit of three years and is considering investing in one of the following projects. Both projects require an initial investment of $800,000. Cash inflows accrue evenly throughout the year.

Project Alpha Project Beta
Year Cash inflow Year Cash inflow
$ $
1 250,000 1 250,000
2 250,000 2 350,000
3 400,000 3 400,000
4 300,000 4 200,000
5 200,000 5 150,000
6 ย  50,000 6 150,000

The company's cost of capital is 10%.

What is the non-discounted payback period of Project Beta?

5 / 27

An investor has the choice between two investments. Investment Exe offers interest of 4% per year compounded semi-annually for a period of three years. Investment Wye offers one interest payment of 20% at the end of its four-year life.

What is the annual effective interest rate offered by the two investments?

6 / 27

You are currently employed as a Management Accountant in an insurance company. You are contemplating starting your own business. In considering whether or not to start your own business, what would your current salary level be?

7 / 27

Which is worth most, at present values, assuming an annual rate of interest of 8%?

8 / 27

An investment project has a positive net present value (NPV) of $7,222 when its cash flows are discounted at the cost of capital of 10% per year. Net cash inflows from the project are expected to be $18,000 per year for five years. The cumulative discount (annuity) factor for five years at 10% is 3.791.

What is the investment at the start of the project?

9 / 27

A machine owned by a company has been idle for some months but could now be used on a one year contract which is under consideration. The net book value of the machine is $1,000. If not used on this contract, the machine could be sold now for a net amount of $1,200. After use on the contract, the machine would have no saleable value and the cost of disposing of it in one year's time would be $800.

What is the total relevant cost of the machine to the contract?

$_______

10 / 27

A sum of money was invested for 10 years at 7% per year and is now worth $2,000.

What was the original amount invested (to the nearest $)?

11 / 27

A building society adds interest monthly to investors' accounts even though interest rates are expressed in annual terms. The current rate of interest is 6% per year. An investor deposits $1,000 on 1 January.

How much interest will have been earned by 30 June? (to two decimal places)

$_______

12 / 27

A capital investment project has an initial investment followed by constant annual returns.

How is the payback period calculated?

13 / 27

A project requiring an investment of $1,200 is expected to generate returns of $400 in years 1 and 2 and $350 in years 3 and 4. If the NPV = $22 at 9% and the NPV = โ€“$4 at 10%, what is the IRR for the project?

14 / 27

If the interest rate is 8%, what would you pay for a perpetuity of $1,500 starting in one year's time? (to the nearest $)

$_______

15 / 27

A machine has an investment cost of $60,000 at time 0. The present values (at time 0) of the expected net cash inflows from the machine over its useful life are:

Discount rate Present value of cash inflows
10% $64,600
15% $58,200
20% $52,100

What is the internal rate of return (IRR) of the machine investment?

16 / 27

A one-year investment yields a return of 15%. The cash returned from the investment, including principal and interest, is $2,070.

What is the interest?

17 / 27

Which of the following would be part of the capital expenditure budget?

  1. Purchase of a new factory premises
  2. Replacement of existing machinery
  3. Refurbishment of existing factory premises
  4. Purchases of raw materials

18 / 27

A project has an initial outflow of $12,000 followed by six equal annual cash inflows, commencing in one year's time. The payback period is exactly four years. The cost of capital is 12% per year.

What is the project's net present value (to the nearest $)?

19 / 27

If a single sum of $12,000 is invested at 8% per year with interest compounded quarterly, what is the amount to which the principal will have grown by the end of year three? (approximately)

20 / 27

An investor is to receive an annuity of $19,260 for six years commencing at the end of year 1. It has a present value of $86,400.

What is the rate of interest (to the nearest whole percent)?

21 / 27

The net present value of an investment at 12% is $24,000, and at 20% is โ€“$8,000.

What is the internal rate of return of this investment?

_____ %

(State your answer to the nearest whole percent.)

22 / 27

An investment project has the following discounted cash flows ($'000):

Year Discount rate
0% 10% 20%
0 (90) (90) (90)
1 30 27.3 25.0
2 30 24.8 29.8
3 30 22.5 17.4
4 30 20.5 14.5
30 5.1 (12.3)

The required rate of return on investment is 10% per year.

What is the discounted payback period of the investment project?

23 / 27

What is the effective annual rate of interest of 2.1% compounded every three months?

24 / 27

House prices rise at 2% per calendar month.

What is the annual rate of increase correct to one decimal place?

25 / 27

Which of the following accurately defines the internal rate of return (IRR)?

26 / 27

In decision making, costs which need to be considered are said to be relevant costs. Which of the following are characteristics associated with relevant costs?

  1. Future costs
  2. Unavoidable costs
  3. Incremental costs
  4. Differential costs

27 / 27

What is the present value of ten annual payments of $700, the first paid immediately and discounted at 8%, giving your answer to the nearest $?

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