CHAPTER 1: INTRODUCTION TO ACCOUNTING MULTIPLE CHOICE QUESTIONS (from the Interactive Online Workbook, Scott) QUESTIONS 1.1 Question 1: The role of accounting information in business decision making. Your company is developing a new product. Which of the following factors would NOT require accounting input in deciding whether to undertake development and production of the new product? a) The selling price of each unit of new product. b) The costs incurred in making the new product. c) Potential demand for the new product. d) How many units of the new product will have to be sold to generate a profit? Question 2: The role of accounting information in business decision making. Your company is considering expanding into a larger factory. Which one of the following factors in the expansion decision would require inputs from the accounting department and the accounting function? a) Factory layout b) Factory lighting c) Factory location d) Factory output Question 3: The role of accounting information in business decision making. Your university is planning to employ new lecturers in the Business School. Which one of the following factors in the employment decision would require inputs from the accounting department and the accounting function? a) Legal obligations imposed upon the university in employing new staff. b) Salary, pension and other costs of employing new staff. c) Workload and hours of teaching for each new member of staff. d) Past teaching experience of new staff. CHAPTER 1: INTRODUCTION TO ACCOUNTING QUESTIONS 1.2 Question 1: Deciding whether a piece of information is material or not. Your Premier League football team is considering an investment in a new defender for the coming season. The team's defence has suffered some instability in recent years with several
players consistently suffering minor but disruptive injuries which have unbalanced the side and led to the defence conceding unnecessary goals. Which one of the following factors will be most material to you in assessing potential new defenders? a) Number of career goals scored. b) Sponsorships by sporting goods firms. c) Number of injuries suffered in career so far. d) Charitable and community activities undertaken outside football. Question 2: Deciding whether a piece of information is material or not. Your firm is considering taking on a new customer who will pay for goods on credit (goods will be delivered to the customer who will then pay for those goods at some point in the future). Which one of the following pieces of information would be most material to your decision on whether to take on this new credit customer or not? a) The volume of sales to the new customer. b) The value of sales to the new customer in £s. c) The new customer has asked for 60 days credit (i.e. the new customer will pay for goods received 60 days after they have been delivered). This is twice the company's usual credit terms, which are 30 days. d) Credit reports indicate that the new customer has a bad credit rating and is known to be