Tag: AQA

In 2021, Electromac Group plc (EMS) increased the time it took to pay 1,000 of its larger suppliers from 60 days to 90 days.

This is most likely to result in an ……?

Select ONE answer:

1. improvement in cash flow for EMS
2. improvement in EMS’s brand image
3. increase in the number of suppliers for EMS
4. increase in EMS’s overdraft facility

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Cash-flow is the money that is moving in and out of a business. Paying suppliers 30 days later will allow EMS to keep cash longer in its own bank account as suppliers will have to wait longer to be paid. This will result in an improvement in cash flow as EMS will have longer to sell the goods it makes before having to pay their suppliers for them.
2. Not correct – this may lead to EMS receiving a poor brand image as EMS is seen as being unethical by taking longer to pay suppliers OR brand image only applies to customers who may not know or care about the change in supplier terms.
3. Not correct – this may lead to a decrease in the number of suppliers who want to trade with EMS as it will impact on their cash flow if they are paid 30 days later.
4. Not correct – EMS should see a decrease in the amount of overdraft they will need if they are taking longer to pay its suppliers.

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Stafford Jewels is an UK jewellery exporter specialising in Blue John jewels.

Its budgeted sales for one month were 200 units at £s 100.

Actual sales were 190 units at £s 110.

Paul the Chief Accountant calculated the sales variance to be ….?

Select ONE answer:

1. £20 000 favourable
2. £20 000 adverse
3. £900 favourable
4. £900 adverse

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Definition of sales variance e.g. the difference between a budgeted figure and the actual figure. The budgeted figure was 200 units x £100 = £20 000. The actual sales were 190 units x £110 = £20 900 ==> £20 900 – £20 000 = £900 favourable
4. Not correct

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After a very successful year in 2021, the Staffordshire Mining Company gave all of its mining employees an extra £6,000, and equivalent of two month’s wages.

This payment can be BEST described as ……?

Select ONE answer:

1. performance related pay
2. job enrichment
3. piecework
4. a bonus

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct – performance related pay is linked to whether an employee has met their individual targets whereas every employee receives this bonus no matter if they have met their own targets.
2. Not correct – job enrichment is when employees are given more responsibility and more meaningful tasks and has no connection to any form of financial remuneration.
3. Not correct – piecework is when employees are rewarded individually according to how much they produce whereas a bonus is paid collectively.
4. Correct – Definition of a bonus e.g. an extra payment made in recognition of the contribution of employees, often linked to profits and sales. This is in addition to their normal salaries/wages and is a one off payment. The bonus is paid to all employees as a recognition of the good performance of the business.

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Corporation tax is paid by businesses on their earnings at a level set by the government.

An increase in corporation tax will initially result in a reduction in ….?

Select ONE answer:

1. price
2. variable costs
3. fixed costs
4. retained profit

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct – firms will be more likely to increase their prices to compensate for the increased tax rate.
2. Not correct – costs are likely to increase as a consequence of suppliers having to pay higher taxes.
3. Not correct – fixed costs are not affected by increases or decreases in corporation tax in the short term.
4. Correct – Retained Profit is the amount of profit kept in the business rather than paid out to the owners or shareholders and held as cash for reinvestment. Paying the increased rate of tax is a legal requirement. It will have to be paid by businesses resulting in less profit to be retained in the organisation.

This work is licensed under a Creative Commons Attribution 4.0 International License.