1. Haque Textiles reports profit before interest and tax of Tk 360 million and profit before tax of Tk 288 million. Capital employed is equity Tk 1,600 million plus non-current borrowings Tk 800 million. What is return on capital employed?

A) 45.0%
B) 22.5%
C) 15.0%
D) 12.0%

Correct: C difficult ROCE

ROCE = profit before interest and tax / (equity + non-current debt) = 360 / 2,400 = 15.0%. If you chose 12.0% you used profit after interest (288), which mismatches a return available to both debt and equity providers. If you chose 22.5% you divided by equity only. If you chose 45.0% you divided by debt only.

2. Profit after tax is Tk 90 million, preference dividends are Tk 6 million, there are 60 million ordinary shares and the share price is Tk 21. What is the price/earnings ratio?

A) 6.7
B) 14.0
C) 15.0
D) 29.4

Correct: C difficult Price/earnings ratio

Earnings for ordinary shareholders = 90 - 6 = 84, so EPS = 84 / 60 = Tk 1.40, and P/E = 21 / 1.40 = 15.0. If you chose 14.0 you ignored the preference dividend (EPS 1.50). If you chose 6.7 you calculated the earnings yield as a percentage (1.40 / 21). If you chose 29.4 you multiplied price by EPS.

3. Profit before tax is Tk 420 million after finance costs of Tk 40 million and a Tk 25 million gain on disposal of equipment. Depreciation is Tk 90 million, inventory rose by Tk 35 million, receivables fell by Tk 18 million and payables rose by Tk 22 million. What is cash generated from operations (indirect method, before interest and tax paid)?

A) Tk 530 million
B) Tk 490 million
C) Tk 555 million
D) Tk 600 million

Correct: A complex Statement of cash flows

420 + 40 (add back finance costs) + 90 (depreciation) - 25 (non-cash gain, shown in investing) - 35 (inventory increase) + 18 + 22 = 530. If you chose 555 you did not remove the disposal gain. If you chose 490 you did not add back finance costs. If you chose 600 you added the inventory increase instead of deducting it.

4. A company earns a return on capital employed of 15%, and revenue is 2.5 times capital employed. What is its operating profit margin?

A) 17.5%
B) 6.0%
C) 37.5%
D) 16.7%

Correct: B difficult DuPont analysis

ROCE = operating margin x asset turnover, so margin = 15% / 2.5 = 6.0%. If you chose 37.5% you multiplied 15% by 2.5. If you chose 17.5% you added the two figures. If you chose 16.7% you divided turnover by ROCE.

5. Which task would normally be handled by the treasury function rather than by financial control or management accounting?

A) Calculating material usage and labour efficiency variances for the factory
B) Maintaining the non-current asset register and depreciation schedules
C) Preparing the consolidation of the group's results each month
D) Arranging a syndicated term loan and hedging the interest rate exposure on it

Correct: D difficult Role of the finance function

Treasury manages funding, liquidity and financial risk, including loans and hedging. Consolidation and asset registers belong to financial control, and variance analysis belongs to management accounting. If you chose any of the other tasks you picked a reporting or costing activity rather than a funding or risk activity.

6. A cost report reaches the board three weeks after the meeting at which the related decisions were taken, and contains 80 pages of detail unrelated to those decisions. Which TWO qualities of good information are most obviously lacking? (Select TWO.)

Multiple response
A) Timeliness
B) Accuracy
C) Completeness
D) Relevance
E) Authority
F) Cost-effectiveness

Correct: A, D complex Qualities of good information

The report is late (timeliness) and includes material unrelated to the decisions (relevance). There is no indication that it is inaccurate, incomplete or from an unreliable source. If you chose B, C or E you inferred defects the scenario does not describe.

7. Which TWO are typical features of management accounting information, as opposed to published financial statements? (Select TWO.)

Multiple response
A) It must follow IFRS formats
B) It may include forecasts and non-financial data
C) It is legally required to be filed with the regulator
D) It is produced as often as managers need it
E) It is audited every year

Correct: B, D difficult Management accounting information

Management accounting is internal, flexible in format and timing, and may be forward-looking or non-financial. IFRS formats, statutory filing and annual audit relate to financial statements. If you chose A, C or E you described statutory reporting.

8. Which TWO are limitations of ratio analysis? (Select TWO.)

Multiple response
A) Ratios eliminate the effect of inflation on historical-cost figures
B) Industry averages exist for every business
C) Different accounting policies reduce comparability between companies
D) Ratios forecast future performance
E) Year-end window dressing can distort the balance sheet figures used
F) Ratios use only non-financial data

Correct: C, E difficult Limitations of ratio analysis

Ratios use reported figures, so differing policies and year-end window dressing distort comparisons. Ratios are historical, do not remove inflation, and rely on financial statements. If you chose A, D or F you credited ratios with a property they lack, and B overstates the availability of benchmarks.

9. Consider the statement of cash flows under IAS 7. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Dividends paid may be classified as operating or financing cash flows.   Yes

2. Depreciation is a source of cash.   No

3. Cash paid to acquire property, plant and equipment is an investing cash flow.   Yes

4. Proceeds of a share issue are an investing cash flow.   No

Correct: Y, N, Y, N difficult Cash flow classification

(1) Yes: IAS 7 permits either. (2) No: depreciation is a non-cash expense added back; it does not generate cash. (3) Yes. (4) No: share issue proceeds are financing cash flows.

10. Consider budgeting methods. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Incremental budgeting requires each activity to be justified from zero.   No

2. Participation always eliminates budgetary slack.   No

3. A flexed budget restates costs for the actual level of activity.   Yes

Correct: N, N, Y difficult Budgeting

(1) No: that describes zero-based budgeting. (2) No: participation can even allow managers to build slack in. (3) Yes: flexing gives a like-for-like comparison.

11. Consider working capital management. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Stretching payables is costless because no interest is charged.   No

2. Overtrading can occur in a profitable, fast-growing business.   Yes

3. Lengthening customer credit periods improves liquidity.   No

Correct: N, Y, N difficult Working capital

(1) No: late payment can cost lost discounts, supplier goodwill or credit terms. (2) Yes: growth absorbs cash faster than profit generates it. (3) No: longer credit ties up more cash in receivables.

12. Consider accounting information. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Management accounts must follow a statutory format.   No

2. Statutory financial statements of public interest entities are audited.   Yes

3. Financial statements are prepared mainly for external users.   Yes

4. Management accounts may include non-financial information.   Yes

Correct: N, Y, Y, Y difficult Financial and management accounts

(1) No: format is set by management's needs. (2) Yes. (3) Yes. (4) Yes: for example customer satisfaction or defect rates.

13. A company has long-term borrowings of Tk 900 million and total equity of Tk 1,800 million. Gearing is measured as debt divided by debt plus equity. What is the gearing ratio?

A) 33.3%
B) 25.0%
C) 66.7%
D) 50.0%

Correct: A difficult Gearing ratio

Gearing = 900 / (900 + 1,800) = 900 / 2,700 = 33.3%. If you chose 50.0% you divided debt by equity alone (the debt/equity ratio). If you chose 66.7% you divided equity by total capital. If you chose 25.0% you divided debt by an unrelated total.

14. Inventory is Tk 500 million, receivables Tk 300 million and cash Tk 100 million. Trade payables are Tk 350 million and the bank overdraft, repayable on demand, is Tk 150 million. What is the quick (acid test) ratio?

A) 0.80
B) 0.60
C) 1.80
D) 1.14

Correct: A difficult Liquidity ratios

Quick ratio = (receivables + cash) / current liabilities = (300 + 100) / (350 + 150) = 0.80. If you chose 1.80 you included inventory (the current ratio). If you chose 0.60 you excluded cash. If you chose 1.14 you left the overdraft out of current liabilities.

15. Earnings per share are Tk 15, dividend cover is 2.5 times and the share price is Tk 120. What is the dividend yield?

A) 31.3%
B) 2.0%
C) 5.0%
D) 12.5%

Correct: C difficult Dividend yield

Dividend per share = EPS / cover = 15 / 2.5 = Tk 6, so the yield = 6 / 120 = 5.0%. If you chose 12.5% you calculated the earnings yield (15 / 120). If you chose 31.3% you multiplied EPS by the cover. If you chose 2.0% you divided the dividend by an inflated price.

16. A company recognises Tk 8 million of revenue on goods that will be shipped after the year end, because management is confident the customer will accept them and wants to reach a bonus target. Which fundamental qualitative characteristic is most directly undermined?

A) Timeliness, because the revenue is reported too late to influence the decisions of users of the financial statements
B) Comparability, because other companies recognise revenue on a different basis from this company in the same industry
C) Faithful representation, because the revenue is not a neutral and free-from-error depiction of what has occurred
D) Understandability, because users cannot follow how the revenue figure was derived from the underlying contracts

Correct: C difficult Qualitative characteristics

Recognising revenue for goods not yet delivered, to meet a target, depicts something that has not happened and is biased, so faithful representation (completeness, neutrality, freedom from error) fails. Comparability, timeliness and understandability are enhancing characteristics and are not the main issue here.

17. A ransomware attack encrypts a company's file server, so staff cannot open invoices or payroll files for three days. No data is altered or copied. Which information security objective has been breached?

A) Non-repudiation
B) Integrity
C) Availability
D) Confidentiality

Correct: C difficult Information security

The data stayed accurate (integrity) and was not disclosed (confidentiality), but authorised users could not access it when needed, which is a breach of availability. Non-repudiation concerns proof that a person performed an action and is not the issue here.

18. Which TWO controls mainly protect the confidentiality of information? (Select TWO.)

Multiple response
A) Daily off-site back-ups of the accounting database
B) Validation checks on the totals of batches of invoices
C) Encryption of files held on laptops
D) An uninterruptible power supply for the server room
E) Role-based access permissions protected by passwords

Correct: C, E difficult Information security controls

Confidentiality is about preventing unauthorised disclosure, which encryption and access permissions address. Back-ups and the power supply protect availability. Batch total checks protect integrity.

19. Which TWO activities best illustrate finance acting as a business partner? (Select TWO.)

Multiple response
A) Challenging the assumptions in an operating manager's sales forecast
B) Operating the production line during busy periods
C) Selecting the advertising agency for a new campaign
D) Approving all recruitment decisions made by the human resources department
E) Working alongside operating managers to analyse the profit impact of a pricing decision

Correct: A, E difficult Business partnering

Business partnering means the finance function working alongside other functions to support their objectives, for example by analysing, challenging and advising. Running operations, choosing agencies and approving recruitment are other functions' decisions.

20. Which THREE are components of the COSO internal control framework? (Select THREE.)

Multiple response
A) Control environment
B) Strategic positioning
C) Risk assessment
D) Capital structure
E) Monitoring activities
F) Pricing policy

Correct: A, C, E difficult COSO internal control framework

The five COSO components are control environment, risk assessment, control activities, information and communication, and monitoring activities. Strategic positioning, capital structure and pricing policy are management decisions, not components of internal control.

21. Consider the balanced scorecard. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. The learning and growth perspective considers the ability to innovate and improve.   Yes

2. The customer perspective can use measures such as satisfaction and market share.   Yes

3. The internal business process perspective asks what the organisation must excel at.   Yes

4. The scorecard aims to replace financial measures with non-financial ones.   No

Correct: Y, Y, Y, N difficult Balanced scorecard

(1)-(3) are correct descriptions of three perspectives. (4) No: the scorecard supplements financial measures with non-financial ones to give a balanced view.

22. Consider information systems. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. A transaction processing system records routine day-to-day events such as sales and payroll.   Yes

2. A management information system summarises data into reports for middle management.   Yes

3. A transaction processing system is mainly designed to support unstructured strategic decisions.   No

4. Management information reports often draw on data captured by transaction processing systems.   Yes

Correct: Y, Y, N, Y difficult Information systems

(1) Yes. (2) Yes. (3) No: strategic, unstructured decisions are supported by executive-level systems; a TPS handles routine processing. (4) Yes.

23. Consider the finance function. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Management accounting information is mainly used internally, whereas financial accounting is mainly for external users.   Yes

2. Internal audit's main role is to prepare the statutory financial statements.   No

3. Treasury's main role is to prepare the tax return.   No

4. Under business partnering, finance staff work alongside operating managers to support decisions.   Yes

Correct: Y, N, N, Y difficult The finance function

(1) Yes. (2) No: internal audit evaluates risk management, control and governance. (3) No: treasury manages cash, funding and financial risk. (4) Yes.

24. Consider the characteristics of useful financial information. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Verifiability helps assure users that information faithfully represents what it purports to represent.   Yes

2. Information must be both relevant and faithfully represented to be useful.   Yes

3. Timeliness is a fundamental qualitative characteristic.   No

4. Comparability requires all entities to present identical information.   No

Correct: Y, Y, N, N difficult Useful financial information

(1) Yes. (2) Yes. (3) No: timeliness is an enhancing characteristic. (4) No: comparability allows users to identify similarities and differences; it does not require uniformity.

25. Profit before interest and tax is Tk 450 million. Finance costs are Tk 90 million, and tax is Tk 90 million. What is interest cover?

A) 6.0 times
B) 5.0 times
C) 4.0 times
D) 3.0 times

Correct: B difficult Interest cover

Interest cover = PBIT / finance costs = 450 / 90 = 5.0 times. If you chose 4.0 you used profit before tax (360) as the numerator. If you chose 3.0 you used profit after tax. If you chose 6.0 you added back the wrong item.