Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AAT INAC > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Different businesses will need to know different information to function correctly, what 3 requirements will be informed by the organisations?

A
  • The size of the organisation
  • Their strategic goals
    -Legislation and regulations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Management information is provided to assist management in fulfilling what 3 main roles

A

Planning, Control and decision making

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What detailed information will be needed to help management plan the operations of the organisation

A

Past, present and forecasted information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What kind of information will help to develop and organisation

A

Sales revenue, targets, Labour time - cost, material usage and cost, expenses and overheads

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How will management make sure that targets are being met and achieved

A

Make comparisons periodically between the budget and actual achievements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What information could the accounting department provide to management to help them appraise if an organisation is meeting its plans?

A

Volume of sales made
Volume of inventory
Number of Units sold
Labour costs
Cost of materials

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a long term decision

A

Decisions made by management that will assist with the strategic goals of the organisation, they are decisions about the whole company and consider reaching goals in 5-10 years time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are short term decisions

A

They are decisions that help with the day to day running of the business, they will help towards reaching goals in the long term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What might some be of the long term decisions in a large manufacturing organisation

A

Which products to make/sell
What new machinery to invest in or new processes/facilities
Which markets to sell in
How to raise the finance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What short term decisions may be made within a manufacturing organisation

A

Staff levels
Pricing
Overtime arrangements
Suppliers
Working hours
Supervisor responsibilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the equation for Gross profit percentage

A

( Gross profit / Revenue ) x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the equation for Gross Profit

A

Sales / cost of sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the equation for operating profit percentage

A

( Operating profit / revenue ) x 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Falling margin might be due to …

A

Increased costs or reduced selling prices to increase market share

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Increased gross profit margin will be due to

A

Increased selling prices relative to direct costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the Return on Captial Employed equation

A

( Operating profit / Capital employed or TALCL) x 100

TALCL - Total Assets Less Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What information does the return on Capital Employed give you

A

Measures how much profit is generated for every £1 of assets employed.
Indicated how efficiently the company uses its assets

It is the other ratio that compares profit to the overall size of the business and is sometimes called the primary ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the current ratio and what’s it for

A

Current assets / Current Liabilities

Usually show as a ratio
Gives an indication to liquidity by showing how many times the current liabilities are covered by current assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is quick ratio

A

( Current assets - inventory ) / current liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is inventory holding period and turnover

A

( Inventories / Cost of sales ) / 365 days

It shows the average number of days inventory is held before it is sold
The holding period will vary greatly depending on the industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is receivables collection period

A

Trade receivables / revenue. x 365

It shows the average number of days the customers take to pay

22
Q

What is the payables payment period

A

(Trade payables / Cost of Sales ) x365

Shows the average number of days the business takes to pay their suppliers

23
Q

What is gearing

A

It measures the percentage of debt to the total financing.
High gearing - less profit available

(Non-current liabilities / equity + non current liabilities ) x 100

24
Q

What does ACCURATE stand for

A

Accurate - information provided needs to be as accurate as possible
Complete - the full picture of information is needed to make good decisions
Cost effective - sometimes more accurate info can be obtained but it can be more expensive to do so
Understandable - the format, detail and presentation of information must be in a style which is understandable to the user
Reliable - the source of the info may determine how reliable it is
Accessible - user should be able to access the info that is required
Timely - up to date info is needed in a timely manner so accurate decision can be made
Easy to use - presentation and format can influence the ease of use.

25
Q

What is the difference between data and information

A

Data is raw facts, unprocessed
Information is data which has gone through some form of process and is meaningful

26
Q

What is primary data

A

Information collected specifically for your own purpose, ie market research

27
Q

What is secondary data

A

Information is not collected specifically for your purpose but for someone else or for another reason, ie government statistics on births

28
Q

What is an internal source information

A

Information gathered within an organisation such as accounting information about customer purchases or product information

29
Q

What is external sources of information

A

Information gathered from outside the organisation, IE information about tax rates and market demand info

30
Q

What is financial accounting

A

The recording, summarising and presentation of financial information

31
Q

What is cost accounting

A

Recording and preparing information on the costs incurred within an organisation, can be used to assist with cost control decisions

32
Q

What is management accounting

A

This is concerned with the production of financial reports to assist managers with their planning, control and decision making roles

33
Q

Give an example of tasks typically associated with management accounting

A

Budgets
Forecasting
Variance analysis
Material price/ usage

34
Q

Give examples of task’s typically associated with financial accounting

A

Statement of P&L
VAT return
Producing reports
Bank Reca
Cash flow

35
Q

What is a responsibility centre

A

Parts of the organisation which information can be obtained and performance can be measured and a manager is responsible for planning, control and decision making

36
Q

What is a cost centre

A

A production or service department or location for which costs can be ascertained

37
Q

What is a revenue centre

A

A production or service department or location for which revenues can be ascertained

38
Q

What is a profit centre

A

A production or service department or location for which costs and revenues can be ascertained, so it is possible to establish the profit they have made

39
Q

What is an investment centre

A

A production or service department or location for which costs, revenues and investments can be ascertained. They will receive money from the central head office and will operate the centre as a business on its own

40
Q

Why is legislation important

A

It’s a fincance function to ensure compliance with the regulatory and legal framework. And helps to minimise penalties and protect an organisations reputation

41
Q

What is working capital and what does it comprise of

A

The day to day financing of an organisation which is used to keep the business running smoothly, it comprises of
Inventory/Stock
Receivables/debtors
Payables/creditors
Bank and cash

42
Q

How can you manage working capital

A

By working within our policies on
Credit periods offered to customers
Credit control - chasing for payments
Level of inventory held
Payment to suppliers and credit period taken
Overdrafts/ investments

43
Q

Why is inventory an important function in the smooth running of a business

A

Making sure it is effectively managed will ensure the business does not run out of finished goods, and also raw materials

44
Q

Why is planning an important function in the smooth running of a business

A

Planning the numbers of products to be made and ensuring the business makes the best use of its resources.

45
Q

Which is costing and important function in the smooth running of the business

A

It enables the business to make the products which make a profit and to set selling prices to cover all costs

46
Q

Why are procedures important for the smooth running of a business

A

By establishing procedures for authorisation and ordering with responsibility assigned

47
Q

What is gross pay (payroll )

A

The initial calculation made for each employee

48
Q

What deductions are compulsory in the payroll

A

Income tax - PAYE
National insurance contributions

49
Q

Give 2 examples of voluntary deductions in payroll

A

Pension contributions
Saving schemes - SAYE

50
Q

What is net pay

A

The net sum after all deductions that will be paid to each employee

AAT INAC (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions