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1. There are two main cost bookkeeping systems used in business, integrated and interlocking systems.
For each system, identify a correct feature of the system.(i) Keeps one set of ledger account – Answer: Interlocking
(ii) Inventory may be valued differently in the financial accounts – Answer: Intergrated
Why is the answer for (i) interlocking and why (ii) is integrated?
2. Under which circumstances would a multiplicative model be preferred to an additive model in time series analysis?
A. When a model is easily understood by non-accountants is required
B. When the trend is increasing or decreasing
C. When the trend is steady
D. When accurate forecasts is requiredAnswer: B. Why?
3. In each of the following relating to process costing state true or false.
(i) Normal loss from a process is not given a cost – True
(ii) Any revenue from scrap is treated as a reduction in costs – TrueWhy is the answer for both (i) and (ii) True?
Thank you so much 🙂
Sorry again for the delay in replying to this – I really don’t know how I came to miss the question.
1. Interlocking and integrated are not really relevant for the exams these days. However management accounting and financial accounting are to different things, and do not have to follow the same rules (especially in relation to the valuation of inventory).
Either you have copied the answers to this question wrongly, or your book is wrong!
Interlocking is where two sets of books are kept – one for management accounts and one for financial accounts. Here, the inventory may be valued differently in the two sets of records.
Integrated is where just one set of books is kept for both he financial and the management accounts.2. If the trend is increasing, then we would expect the seasonal variations to increase as well. This happens with the multiplicative model, but does not happen with the additive model. I do explain this in my free lectures on time series analysis.
3. You will have to watch my free lectures for an explanation of this – I cannot type it all out here 🙂
Please do watch my lectures – they are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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