Mixed Deck — All ACCA AK Topics Flashcards

The Data Protection Act / UK GDPR requires organisations to:

Answer: Process personal data lawfully, fairly and transparently

UK GDPR requires that personal data is processed lawfully, fairly and in a transparent manner, respecting individuals' rights over their information.

A SWOT analysis examines:

Answer: Strengths, Weaknesses, Opportunities and Threats

SWOT analysis is a strategic planning tool assessing internal Strengths and Weaknesses, and external Opportunities and Threats facing an organisation.

Which of the following is a direct cost?

Answer: Raw materials used in a product

A direct cost can be directly traced to a specific cost unit. Raw materials used are directly attributable to a product, unlike overheads which are indirect.

What is the purpose of a trial balance?

Answer: To verify that total debits equal total credits in the ledger

A trial balance lists all ledger account balances to check that total debits equal total credits. It is an arithmetic check on the double entry system, though it will not detect all types of errors (e.g., errors of commission, compensating errors).

Which of the following adjustments is made at the year-end for an 'accrued expense'?

Answer: Debit expenses, Credit accruals (liability)

An accrued expense is a cost incurred but not yet paid. The year-end adjustment is: Debit expenses (to recognise the cost) and Credit accruals (a current liability).

When there is a single limiting factor, the optimal production plan ranks products by:

Answer: Highest contribution per unit of the limiting factor

With one limiting factor, products are ranked by contribution per unit of the limiting factor (e.g., contribution per machine hour) to maximise total contribution.

The difference between budgeted profit and actual profit explained by volume sold is the:

Answer: Volume variance

The sales volume variance measures the impact on profit of selling more or fewer units than budgeted. It uses the standard profit margin per unit.

Which of the following best describes a 'virtual organisation'?

Answer: An organisation that primarily uses technology and outsourcing, having minimal physical infrastructure

A virtual organisation uses technology and networks of external providers to deliver products or services with little physical presence, enabling flexibility and low overhead.

Under IAS 10 Events After the Reporting Period, which of the following is an adjusting event?

Answer: The settlement after the reporting date of a court case that confirms an obligation existed at the reporting date

An adjusting event provides evidence of conditions that existed at the reporting date. Settlement of a court case confirms a liability that existed at year end, so the financial statements should be adjusted. The other events are non-adjusting — they relate to conditions arising after the reporting date.

A company has trade receivables of £60,000 and estimates that 5% will be irrecoverable. The existing allowance for receivables is £2,000. What adjustment is needed?

Answer: Increase the allowance by £1,000

Required allowance = £60,000 × 5% = £3,000. Existing allowance = £2,000. Increase needed = £3,000 − £2,000 = £1,000. The irrecoverable debts expense in the income statement increases by £1,000.

Under IAS 16 Property, Plant and Equipment, which of the following costs should be included in the initial measurement of a purchased machine?

Answer: Import duties and non-refundable purchase taxes

IAS 16 requires that the cost of an item of PPE includes its purchase price plus import duties and non-refundable taxes, plus any directly attributable costs of bringing the asset to working condition. Training, relocation after use, and advertising are not directly attributable.

The straight-line method of depreciation allocates:

Answer: An equal amount of depreciation each year

Straight-line depreciation = (Cost − Residual value) ÷ Useful life. The same charge is allocated each year over the asset's useful life.

Which of the following is an intangible non-current asset?

Answer: Goodwill

Goodwill is an intangible non-current asset arising from business combinations. Intangible assets lack physical substance but have future economic benefits.

What is the principal budget factor?

Answer: The factor that limits the overall level of activity for the budget period

The principal budget factor (also called the limiting factor or key budget factor) is the factor that constrains the organisation's activities. It is identified first because all other budgets are built around this constraint — commonly sales demand, but could be labour, materials, or machine capacity.

A company budgets to sell 10,000 units. Opening inventory of finished goods is 800 units and the desired closing inventory is 1,200 units. How many units must be produced?

Answer: 10,400 units

Production budget = Budgeted sales + Desired closing inventory − Opening inventory = 10,000 + 1,200 − 800 = 10,400 units. More units must be produced than sold because the company wants to increase its inventory.

A 'rolling budget' is one that:

Answer: Is continuously updated by adding a new period as the most recent period passes

A rolling (or continuous) budget is updated regularly — typically monthly or quarterly — so there is always a budget for the same number of periods ahead.

Under the conceptual framework for financial reporting, what does 'faithful representation' require?

Answer: Information must be complete, neutral, and free from error

Faithful representation, one of the two fundamental qualitative characteristics in the Conceptual Framework, requires that financial information is complete (includes all necessary information), neutral (free from bias), and free from error (no errors or omissions in description or process).

Which cost behaviour pattern describes a cost that remains fixed up to a certain activity level and then increases in steps?

Answer: Stepped fixed cost

A stepped fixed cost is fixed within a range of activity but increases by a fixed amount when activity exceeds a threshold (e.g., hiring an additional supervisor).

Which of the following statements about marginal costing is correct?

Answer: Only variable costs are included in the cost of a unit of product

Under marginal costing, only variable costs are charged to units; fixed overheads are treated as period costs and written off in full in the period incurred.

Which of the following best describes a rolling (continuous) budget?

Answer: A budget that is continuously updated by adding a new period as the most recent period expires

A rolling budget is continuously updated so that it always covers a fixed future period (e.g., 12 months). As one month or quarter passes, a new month or quarter is added at the end, keeping the budget current and forward-looking.