EPSO/AST 7/05 Financial Management/Accounting Past Paper PDF

# OPEN COMPETITION EPSO/AST/7/05 ## Assistants (AST3) in the field of financial management/accounting ### Test a) - A test comprising a series of multiple-choice questions to assess your specialist knowledge in the field. - Questions numbered from 1 to 45 - This test will be marked out of 60 (pas...

# OPEN COMPETITION EPSO/AST/7/05 ## Assistants (AST3) in the field of financial management/accounting ### Test a) - A test comprising a series of multiple-choice questions to assess your specialist knowledge in the field. - Questions numbered from 1 to 45 - This test will be marked out of 60 (pass mark: 30) ## 1. Which of the following does not appear under liabilities on the balance sheet? a) tax b) profit brought forward c) provisions for liabilities and charges d) doubtful debts ## 2. Which of the following forms part of shareholders' equity? a) subscribed capital called but not paid b) share premiums c) profit after tax d) dividends payable ## 3. Which of the following best describes the purpose of a company’s balance sheet? a) to show the company’s financial situation at a particular moment in time b) to show the net profit for a given period c) to present a true and fair view of a company’s total assets and liabilities at a particular moment in time d) to present a summary of all the year’s accounting operations ## 4. A service company takes out a bank loan with a view to making an initial payment towards the purchase of a building. How should the loan appear in the borrowing firm’s financial statements? a) under assets b) under liabilities c) under assets and liabilities d) none of the above ## 5. A company’s gross profit or loss is: a) the difference between assets and liabilities b) the difference between the company’s liabilities and capital c) the sum of operating revenue and operating charges d) the difference between operating revenue and operating charges ## 6. An error in measuring stocks at the end of the year will result in inaccurate figures for: a) cost of goods sold b) gross profit margin c) net profit d) answers a), b) and c) are correct ## 7. The after-sales service of a household electrical goods dealer repaired a customer’s dishwasher on 27 June at a cost of 250 euros. The invoice and payment are dated 8 July. At 30 June, the 250 euros are treated by the vendor as: a) a prepaid expense b) accrued revenue c) deferred revenue d) a debt due ## 8. A firm has sold a front-loading truck with a book value of 100 000 euros and accumulated depreciation of 70 000 euros for 75 000 euros. What is the book gain or loss on the sale of the truck? a) - 25 000 euros b) 30 000 euros c) 75 000 euros d) 45 000 euros ## 9. The next financial perspective of the European Union is due to come into force from 2007. It will run for: a) 4 years b) 5 years c) 6 years d) 7 years ## 10. The “Commission” section of the budget of the European Union may include a negative reserve of up to: a) 10 million euros b) 200 million euros c) 500 million euros d) 1 billion euros ## 11. The four fundamental principles for execution of the budget of the European Union are: a) unity, equilibrium, universality, annuality b) unity, equilibrium, budget accuracy, universality c) unity, specification, annuality, universality d) unity, annuality, budget accuracy, universality ## 12. Which Community institution(s) is/are responsible for executing the budget? a) the Parliament b) the Commission c) the Parliament and the Commission d) the Council ## 13. In which series of the Official Journal is the budget of the European Union published? a) C series b) L series c) S series d) D series ## 14. The person responsible for all budgetary operations relating to revenue and expenditure is: a) the initiating officer b) the financial manager c) the authorising officer d) the verifying official ## 15. The fourth Directive of the Council of the European Communities relates to: a) consolidated accounts b) certification of those responsible for statutory auditing of accounting documents c) the annual accounts of certain types of companies (balance sheet, profit and loss account, notes to the accounts) d) the establishment of companies' profit and loss accounts ## 16. The presentation of the annual accounts and the valuation methods used: a) may be changed from one year to the next by a simple management decision so as to alter the profit reported b) must never change from one year to the next c) may be changed if there is a change in a company’s circumstances and if the methods previously used no longer provide a true and fair view d) none of the above ## 17. Which of the following will affect operating profit or loss? a) purchase of a vehicle b) loan to an employee c) cash deposit d) sale of services ## 18. Current assets comprise a) durable assets and receivables b) assets and receivables relating to a firm’s business cycle c) assets and receivables relating to a firm’s investment cycle d) answers b) and c) are correct ## 19. Financial expenses a) represent interest earned b) represent the cost of financing a company c) include exchange losses d) answers b) and c) are correct ## 20. Which of the following statements is true? As a general rule, a) the asset accounts show a debit balance b) the expense accounts show a debit balance c) the income accounts show a credit balance d) all of the above ## 21. Supporting documents relating to invitations to tender issued by the Commission must be kept for: a) 3 years b) 5 years c) 10 years d) 20 years ## 22. The first Directive relating to VAT in the Member States dates from: a) 1980 b) 1967 c) 1975 d) 1970 ## 23. What does IAS 36 deal with? a) the treatment of impairment of assets b) the accounting treatment for tangible fixed assets c) the accounting treatment for stocks d) the principles for determining and presenting profit or loss ## 24. Starting from the systems of national accounts, the Statistical Office of the European Union (Eurostat), in collaboration with the Member States, has produced a European system of national accounts called: a) “European System of Accounts 1977” (ESA77) b) “European System of Accounts 1986” (ESA86) c) “European System of Accounts 1995” (ESA95) d) none of the above ## 25. The depreciable amount of an asset is: a) purchase price, including all taxes b) purchase price excluding tax c) purchase price excluding, plus installation and assembly costs d) purchase price excluding tax, plus installation, assembly, and transport costs, customs duty and non-recoverable VAT ## 26. A negative variation in stock means that: a) final stock is lower than initial stock b) the company is overstocked c) the “variation in stock” account shows a credit balance d) initial stock is lower than final stock ## 27. If purchase prices go up, which stock valuation method will give the most advantageous result for the current year from the point of view of tax? a) LIFO b) FIFO c) weighted average cost d) all these methods produce the same result ## 28. Company XYZ specialises in fresh goods. Given the short shelf life of these products, which stock valuation method should it use? a) FIFO b) LIFO c) average weighted cost d) very rapid stock turnover should not affect the choice of method ## 29. Which of these transactions is not recorded under accruals/prepayments etc.? a) credit note receivable in year N + 1 for an invoicing error in year N b) payment, in December of year N, of rent for the 1st quarter of year N + 1 c) portion of interest on borrowing relating to year N that will be booked in N + 1 d) an invoice issued on, for a maintenance contract covering the first half of N + 1 ## 30. The “current ratio” is calculated as follows: a) net profit / turnover b) value added / turnover c) current assets / current liabilities d) current assets / shareholders’ equity ## 31. Which of the following is not one of the principles governing the award of grants from the budget of the European Union? a) they may not be retrospective b) they must be specific c) they must be transparent d) they may not be cumulative ## 32. By what kind of majority is the budget adopted in the Council? a) by a qualified majority b) by a simple majority c) by unanimity d) by an absolute majority ## 33. "Consolidated accounts" means: a) the sum of the various items on the balance sheet of the different entities b) the financial statements of a single economic entity, representing all the consolidated entities c) making allowance for trading between the different entities d) consolidating the assets of the different entities ## 34. Since when have the IAS/IFRS standards applied to listed companies in Europe? a) 1 January 2003 b) 1 January 2004 c) 1 January 2005 d) 1 January 2006 ## 35. How must stocks be valued under the new IAS standards? a) at average weighted cost b) NINO (next in – next out) c) LIFO (last in – first out) d) stocks must be valued at the lower of cost and net realisable value ## 36. With regard to the management of a business, what does the notion of "significant influence" involve? a) knowing the Chairman of the Board of Directors personally b) holding a majority of the shares and controlling the business c) participation in the financial and operating policy decisions of an enterprise, but not control of them d) being a minority shareholder by derogation ## 37. What is a "joint venture”? a) the merger of two or more enterprises b) the transfer of the assets and liabilities of enterprise X to enterprise Y c) an enterprise set up jointly by two or more businesses and owed in equal parts by them d) a joint contribution by two enterprises to a third, which exercises control ## 38. What is "operating cash flow”? a) a company’s net income b) the valuation of the customer base c) net profit + expenses not giving rise to outflows – income not giving rise to inflows d) a company’s profit before tax ## 39. What internal control measure can be applied for keeping a permanent inventory? a) not moving any piece of furniture weighing more than 10 kilos b) affixing a non-detachable label on all assets c) keeping an inventory of invoices for assets as soon as they enter the business d) there is no internal control measure that would allow this to be done ## 40. What is the “net working capital requirement” (WCR)? a) WCR = accounts receivable + stocks - accounts payable - tax and social security owing b) WCR = accounts receivable - stocks - accounts payable + tax and social security owing c) WCR = accounts receivable + stocks + accounts payable + tax and social security owing d) WCR = accounts receivable - stocks + accounts payable - tax and social security owing ## 41. Which of the following statements about EEIGs (European Economic Interest Groupings) is false? a) the aim of an EEIG is to facilitate or develop its members’ economic activities by pooling resources b) the aim of an EEIG is not to make a profit for itself c) an EEIG is neither a company nor an association d) an EEIG may not employ more than 1000 people ## 42. Which of the accounts below is not a balance sheet account? a) profit or loss brought forward b) trade debtors c) provisions d) variation in stocks ## 43. Which of the following is not taken into account in calculating of the acid test ratio? a) amounts falling due within 1 year b) disposable assets c) stocks d) current liabilities ## 44. The Financial Regulation of the European Communities applies to: a) the Member States and candidate countries b) the European institutions, the European Investment Bank, and the European Central Bank c) the Member States and the European Institutions d) the public and financial services of the European Union ## 45. Under the Financial Regulation of the European Communities, the European institutions must pay sums owed within: a) 15 calendar days from the date when the payment request is registered b) 30 calendar days from the date when the payment request is registered c) 45 calendar days from the date when the payment request is registered d) 60 calendar days from the date when the payment request is registered