Tag: Professional Ethics

Alex plc is waiting to start its new factory building programme.

It is likely to start within the next 120 days, but the precise start date and timing of the cash flows are still uncertain.

Alex plc has £250,000 available in cash in anticipation of the investment in the factory being made when the building programme begins.

Which of the following is the least appropriate use of the funds in the interim period?

Select ONE answer:

1. Investment in equities
2. Treasury or central government bills
3. Bank deposits
4. Local authority deposits

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 == > Short-term cash surpluses will NOT normally be invested in equities owing to the risks associated with achieving a positive return over a short period.
2. Not correct
3. Not correct
4. Not correct

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

Which of the following services is least likely to be offered by a factoring company to its client?

Select ONE answer:

1. Provision of finance by advancing 80% of invoice value immediately, and the remainder on settlement of the debt by the client’s customer
2. Taking over responsibility for administration of the client’s sales ledger
3. Deciding what credit limits the client should give customers
4. Taking over responsibility for irrecoverable debts

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 == > Deciding what credit limits the client should give customers.
4. Not correct

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

Keith is a financial consultant and has made the following statements about overdrafts to his clients in a newsletter:

Statement 1 Interest is paid on the full facility
Statement 2 Legal documentation is minimal in comparison with other types of loan
Statement 3 The facility is repayable on demand
Statement 4 Assets are not normally required as security

Which of these statements are true?

Select ONE answer:

1. Statements 1, 2 and 3 only
2. Statements 2, 3 and 4 only
3. Statements 1, 2 and 4 only
4. Statements 1, 3 and 4 only

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 2

1. Not correct
2. Correct == > Interest is only paid on the amount borrowed, not on the full facility.
3. Not correct
4. Not correct

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