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FINANCIAL MANAGEMENT TEST

QUESTIONS(SECTION A)

1. Internal Controls:

As a Financial Manager or Controller, the responsibility of establishing and maintaining a

system of internal accounting control rests with you. Describe certain areas in which

internal control are required and type of controls that you will establish?

2. What is a Trend Analysis and what is it used for?

3. Define in your own words, what are some of the major responsibilities of a Financial

Manager or Controller?4. Define the purpose and objectives of Budgets and Types of Budgets prepared?

5. What is the difference between:a. Direct Costing Method and Absorption Method.b. Fixed Cost and Variable Cost

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FINANCIAL MANAGEMENT TEST

QUESTIONS

(SECTION B)

1. The following data is available. Determine the Break Even point in Sales:

Sales : $1,800,000/-

Fixed Expenses : $ 375,000/-

Variable Expenses : $ 1,200,000/-

2. Cash Break Even:

SIPW Company sell windows. Windows are sold for $ 25/- each. Variable cost is $ 15/-

per door and total Fixed Operating Costs are $ 50,000 /- which includes depreciation in

the amount of $ 2,000/-. How many units of windows the company has to sell for Cash

Break Even?

3. Cash Flow from Operation:

Assume a company with an Income Statement showing:

Net Income . $ 180,000/-

Depreciation . $ 80,000/-

Amortization $ 60,000/-

Deferred Income $ 40,000/-

What would be the:

a) Cash Flow from operation

b) Ratio of Cash Flow

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Q-4. Calculate the Revenue on Accrual Basis.

Warren, a Consultant, keeps his accounting records on cash basis. During 1996, Warrencollected $200,000 in fees from clients. At December 31, 1995, Warren had accounts receivableof $40,000. At December 31, 1996, Warren had accounts receivable of $60,000 and unearnedfees of $5,000. On accrual basis, what was Warrens revenue for 1996? Please provide yourcalculation.

Q-5. Calculate the Gross Profit Using the Percentage-of-Completion Method.

Jeddah Construction Co. (JCC) has consistently used the percentage-of-completion method. OnJanuary 10, 1995, JCC began work on a $3,000,000 construction contract. At the inception date,the estimated cost of construction was $2,250,000. The following data relate to the progress ofthe contract:

Gross profit recognized at 12/31/95 $300,000

Costs incurred 1/10/95 through 12/31/96 $1,800,000

Estimated cost to complete 12/31/96 $600,000

In its income statement for the year ended December 31, 1996, what amount of gross profitshould JCC report? Please provide your calculation?