The finance function

Question 1

What are the two fundamental characteristics for the usefulness of financial statements?

Answer 1

Relevance
Faithful representation

Question 2

What are the four enhancing characteristics for the usefulness of financial statements?

Answer 2

Understandability
Comparability
Verifiability
Timeliness

Question 3

How do you assess the relevance of financial information?

Answer 3

Predictive value - over future outcomes

Confirmatory value - about previous evaluations

Question 4

What three elements must financial information have in order to consider it faithfully represented?

Answer 4

Complete
Neutral
Free from error

Question 5

To be effective, information processing must meet the CATIVA criteria. What are they?

Answer 5

Completeness
Accuracy
Timeliness
Inalterability
Verifiability
Assessability

Question 6

ACIANA describes the qualities of secure information. What does it stand for?

Answer 6

Availability (to authorised people)
Confidential
Integrity
Authentic
Non-repudiation (not rejected)
Authorisation

Question 7

What is the difference between a Transaction Processing System (TPS) and an MIS (Management Information System)?

Answer 7

TPS - Till, performs and records transactions

MIS - converts internal data (from TPS) into information for management

Question 8

Not for profits use the 3 Es to measure their ativity rather than profits. What are they?

Answer 8

Effectiveness
Economy (costs)
Efficiency

Question 9

What is the difference between key performance indicators (KPIs) and Critical Success Factors (CSFs)?

Answer 9

CFSs are product features valued by customers

KPIs are performance standards, used to measure the achievement of CSFs

Question 10

What method is often used to set KPIs?

Answer 10

Benchmarking

e.g. measure our own performance against best practice

Question 11

What is the minimum trading time before a company can be listed on LSE

Answer 11

3Y