AAT Level 4 - Professional Diploma in Accounting Internal Accounting Systems Questions and Answers

Question 1

A UK-based company's internal audit department discovers that a single employee in the purchasing department is responsible for raising purchase orders, authorising them, and then processing the related supplier invoices for payment.
Which fundamental internal control principle is most seriously violated in this scenario?

Accepted Answer

Segregation of duties

Answer

Management review and oversight

Answer

Physical controls over assets

Answer

Authorisation and approval limits

Question 2

A division within a UK company has controllable net assets valued at £850,000. For the recent financial period, the division generated a controllable profit of £140,000. The company has a centrally determined imputed interest charge (cost of capital) of 12% per annum. What is the division's Residual Income (RI) for the period?

Accepted Answer

£38,000

Answer

£102,000

Answer

£140,000

Answer

£242,000

Question 3

Which of the following statements provides the most accurate description of a key principle of Zero-Based Budgeting (ZBB)?

Accepted Answer

All activities and expenditures must be justified from a 'zero base' for each new budget period.

Answer

The previous year's budget is adjusted by an agreed percentage to create the new budget.

Answer

Budgets are prepared for key activities, and the costs are then driven by the volume of those activities.

Answer

A new budget period is added as the most recent period expires, maintaining a continuous planning horizon.

Question 4

Division P manufactures a component at a variable cost of £45 per unit. It can sell this component on the external market for £70 per unit. Division P is currently operating at full capacity, selling everything it produces to external customers. Division Q, within the same company, wishes to purchase 1,000 components from Division P. What is the minimum transfer price per unit that Division P should accept to avoid a reduction in its own profit?

Accepted Answer

£70

Answer

£45

Answer

£25

Answer

£115

Question 5

A company sells two products, Sigma and Omega. The budgeted sales for a period were 500 units of Sigma and 300 units of Omega. The standard contribution is £20 per unit for Sigma and £30 per unit for Omega. Actual sales for the period were 600 units of Sigma and 200 units of Omega. What is the sales mix contribution variance for the period?

Accepted Answer

£4,000 Adverse

Answer

£2,000 Favourable

Answer

£4,000 Favourable

Answer

£2,000 Adverse

Question 6

When applying the principle of Life Cycle Costing to a new product, which of the following costs would be included in the analysis that is typically excluded from traditional product costing methods?

Accepted Answer

Decommissioning and disposal costs at the end of the product's life.

Answer

Direct labour wages during manufacturing.

Answer

Factory electricity costs allocated to the product line.

Answer

Variable production overheads.