AAT Level 4 SYNOPTIC Questions and Answers
What are the 3 main things that are helped by being provided management information?
-Answ- Planning, Control & Decision-making
What is the main way that the accounting department use management information to
plan? -Answ- Prepare budgets
What sort of information will help to develop an organisation's budgets? -Answ- - last
years info
- demand of products
- standard cost of making one unit
- price of raw materials
- pay rises (legislation)
What is a good way to use a budget to be able to make comparisons from the original
budget to the actual achievements? -Answ- Flex the budget & then do variance
analysis
What are the two types of decisions? -Answ- Strategic (long-term)
Operational (short-term)
Give examples of some strategic decisions that a large manufacturing organisation
might have to make. -Answ- - Capital purchases (whether to buy or lease)
- Hiring management
- Product portfolio
- Selling price
- Location of operation
- Outsourcing labour
Give examples of some operational decisions that a large manufacturing organisation
might have to make. -Answ- - Stock ordering policy
- Special offers (cash management)
- Production (short term schedule)
- What overtime to authorise
Management information needs to be ACCURATE. What do these letters stand for? -
Answ- Accurate
Complete
Cost Effective
Understandable
,Reliable
Accessible
Timely
Easy to use
What role does the human resources department play in relation to the finance
department? -Answ- Notifies about new employees: salary, benefits, working hours
What role does the sales department play in relation to the finance department? -Answ-
Notifies that a sale has been made so the invoice can be raised (and can chase
payment etc)
What role does the production department play in relation to the finance department? -
Answ- Provides with information about the amount of raw materials used, number of
labour hours worked and the volume of units produced
What sort of decisions does a cost centre make? and what does it monitor? -Answ-
Decisions:
- suppliers
- staff (hours, training & recruitment)
Monitor:
- actual vs budget
- cost per unit against standard cost
What sort of decisions does a revenue centre make? and what does it monitor? -Answ-
Decisions:
- Selling price (premium vs cost leader?)
- Product mix
- Credit terms
Monitor:
- Sales volume
- Average value
- Collection of cash
What sort of decisions does a profit centre make? and what does it monitor? -Answ-
Decisions:
- Sales price
- Lower cost base
- Change sales mix
Monitor:
- Margins
, What sort of decisions does an investment centre make? and what does it monitor? -
Answ- Decisions:
- Buy new machines
- Buildings
- Lease vs buy
Monitor:
- ROCE
- ROI
How does an accounting department contribute to the business? -Answ- - Smooth
running
- Management of cash
- Meeting of legal & regulatory requirements
What does working capital include? -Answ- - Inventory/stock
- Receivables/debtors
- Payables/creditors
- Bank & cash
Name some ways that working capital can be managed -Answ- - Credit period offered
to customers
- Credit control - chasing customers (early settlement discounts)
- Level of inventory held (JIT, outsourcing production etc)
- Payment to suppliers and credit period taken
- Overdrafts/investments
What are voluntary deductions from payroll? -Answ- - Pension contributions
- Saving schemes (SAYE)
What are the risks associated with the payroll department/function? -Answ- - Fraud
(bogus employees, bonuses, pay rates being changed)
- Confidentiality & data protection
- Legal (min. wage, working hours, contracts & sick pay)
- Calculations being wrong (hours & deductions)
What are the 4 organisational culture styles? -Answ- - Power
- Role
- Task
- Person
Explain the power culture -Answ- Concentrates power among a small group or a
central figure and its control radiates from the centre like a web. Few rules exist & little
bureaucracy
What are the 3 main things that are helped by being provided management information?
-Answ- Planning, Control & Decision-making
What is the main way that the accounting department use management information to
plan? -Answ- Prepare budgets
What sort of information will help to develop an organisation's budgets? -Answ- - last
years info
- demand of products
- standard cost of making one unit
- price of raw materials
- pay rises (legislation)
What is a good way to use a budget to be able to make comparisons from the original
budget to the actual achievements? -Answ- Flex the budget & then do variance
analysis
What are the two types of decisions? -Answ- Strategic (long-term)
Operational (short-term)
Give examples of some strategic decisions that a large manufacturing organisation
might have to make. -Answ- - Capital purchases (whether to buy or lease)
- Hiring management
- Product portfolio
- Selling price
- Location of operation
- Outsourcing labour
Give examples of some operational decisions that a large manufacturing organisation
might have to make. -Answ- - Stock ordering policy
- Special offers (cash management)
- Production (short term schedule)
- What overtime to authorise
Management information needs to be ACCURATE. What do these letters stand for? -
Answ- Accurate
Complete
Cost Effective
Understandable
,Reliable
Accessible
Timely
Easy to use
What role does the human resources department play in relation to the finance
department? -Answ- Notifies about new employees: salary, benefits, working hours
What role does the sales department play in relation to the finance department? -Answ-
Notifies that a sale has been made so the invoice can be raised (and can chase
payment etc)
What role does the production department play in relation to the finance department? -
Answ- Provides with information about the amount of raw materials used, number of
labour hours worked and the volume of units produced
What sort of decisions does a cost centre make? and what does it monitor? -Answ-
Decisions:
- suppliers
- staff (hours, training & recruitment)
Monitor:
- actual vs budget
- cost per unit against standard cost
What sort of decisions does a revenue centre make? and what does it monitor? -Answ-
Decisions:
- Selling price (premium vs cost leader?)
- Product mix
- Credit terms
Monitor:
- Sales volume
- Average value
- Collection of cash
What sort of decisions does a profit centre make? and what does it monitor? -Answ-
Decisions:
- Sales price
- Lower cost base
- Change sales mix
Monitor:
- Margins
, What sort of decisions does an investment centre make? and what does it monitor? -
Answ- Decisions:
- Buy new machines
- Buildings
- Lease vs buy
Monitor:
- ROCE
- ROI
How does an accounting department contribute to the business? -Answ- - Smooth
running
- Management of cash
- Meeting of legal & regulatory requirements
What does working capital include? -Answ- - Inventory/stock
- Receivables/debtors
- Payables/creditors
- Bank & cash
Name some ways that working capital can be managed -Answ- - Credit period offered
to customers
- Credit control - chasing customers (early settlement discounts)
- Level of inventory held (JIT, outsourcing production etc)
- Payment to suppliers and credit period taken
- Overdrafts/investments
What are voluntary deductions from payroll? -Answ- - Pension contributions
- Saving schemes (SAYE)
What are the risks associated with the payroll department/function? -Answ- - Fraud
(bogus employees, bonuses, pay rates being changed)
- Confidentiality & data protection
- Legal (min. wage, working hours, contracts & sick pay)
- Calculations being wrong (hours & deductions)
What are the 4 organisational culture styles? -Answ- - Power
- Role
- Task
- Person
Explain the power culture -Answ- Concentrates power among a small group or a
central figure and its control radiates from the centre like a web. Few rules exist & little
bureaucracy
