# ACCA F2 flashcards – set 4

### What is meant by the FIFO method of valuing inventory?

Click to View the Question

FIFO means first-in-first-out and means that we assume that items are issued out of inventory in the order in which they were received into inventory. Therefore, any closing inventory is assumed to be made up of the most recent items received into inventory.

### Define the labour turnover ratio.

Click to View the Question

Labour turnover ratio =

number of leavers who require replacing / average number of employees x 100%

### How is the Dividend Cover calculated?

Click to View the Question

The dividend cover = profit after tax / dividends

### What is meant by the ‘marginal cost of production’?

Click to View the Question

The marginal cost of production is the total of all variable production costs.

### If there is an over-absorption of overheads, does it mean that the actual total overheads a more or less than the total overheads absorbed?

Click to View the Question

### What is a flexed budget?

Click to View the Question

A flexed budget is a budget re-written for the actual level of activity.

### What is meant by a ‘cost unit’?

Click to View the Question

A cost unit is a unit of product or service for which the cost is calculated.

### What is the difference between data and information?

Click to View the Question

Data consists of facts that have been gathered.

Information is data that has been processed in a way that is meaningful to the person who receives it.

### What are ‘direct costs’?

Click to View the Question

Direct costs are those that can be specifically measured in each unit of production.

### What is meant by the expression ‘perfect positive linear correlation’?

Click to View the Question

Perfect positive linear correlation means when the observations are plotted on a graph they all lie exactly on a straight line pointing upwards (i.e. both variables increase together)

### In the formula on the formula sheet for the Economic Order Quantity, what does the symbol Ch represent?

Click to View the Question

Ch represents the cost of holding one unit for one year.

### What is a ‘fixed cost’?

Click to View the Question

A fixed cost is one which remains constant in total over certain levels of activity.

### What is meant by the term ‘benchmarking’?

Click to View the Question

Benchmarking is the comparison with best practice.

### What are the four perspectives covered by the Balanced Scorecard?

Click to View the Question

The four perspectives are:

• Financial
• Customer
• Internal
• Innovation and learning

### What is the Quick Ratio (or Acid-test Ratio)?

Click to View the Question

The quick ratio = (current assets – inventory) / current liabilities

### What is meant by the ‘principal budget factor’?

Click to View the Question

The principal budget factor is the factor that limits the level of activity of the organisation (usually sales).

### A Laspeyre price index number uses base year or current year quantities. Which?

Click to View the Question

A Laspeyre price index number uses base year quantities.

### In process costing, what is meant by a normal loss?

Click to View the Question

A normal loss is the loss that is expected to occur.

### What is meant by ‘systematic sampling’?

Click to View the Question

Every n’th item is selected, after a random starting item

### What is meant by a ‘cost centre’?

Click to View the Question

A cost centre is a production or service location, activity, function or item of equipment for which the total cost can be calculated.

### FIFO; LIFO; Weighted Average Cost ?

Click to View the Question

FIFO and Weighted Average Cost are allowed by IAS 2. LIFO is not allowed.

### In inventory control, what is the difference between the ‘re-order quantity’ and the ‘re-order level’?

Click to View the Question

The re-order quantity is the quantity actually ordered each time. The re-order level is the level of inventory that triggers the placing of an order.

### Define the labour efficiency ratio

Click to View the Question

Labour efficiency ratio =  expected hours to produce actual output / actual hours to produce actual output x 100%

1. says

Its helping ,i cant wait to pass f2 in june come rain come sunshine.In the name of jesus AMEN!!!!!!!!!!!!!!!!!!

2. says

I am your new student.am starting f2 with your help and support.Thank you really helpful and understandable this flash cards

• says

Hi
Just as a suggestion, download the course notes and watch all the lectures first, use flashcards as a revision tool

3. says

I am able to answer all the Ques. without seeing the answer, but don’t think this will will be enough for me to pass exam, but Thanks it was good review

• says

The flashcards can only cover ‘written’ topics (such as definitions). The nature of flashcards does not allow testing of calculations and many of the questions in the exam will involve calculations.

• says

Last time I sat for the exams most of the questions were theory type questions. Flash cards is very useful in such cases as it helps to memorise easily. I tried this for paper F1 and I have passed with quite good marks.