1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
N Limited provided the following information for the year ended 31 August 2022. $ 6% debentures (2022) 20 000 Bank overdraft 9 430 Cash in hand Closing inventory 64 800 Finance costs 1 400 Opening inventory 45 600 Operating expenses 96 000 Other payables 4 340 Other receivables 6 080 Purchases 172 000 Revenue 292 000 Trade payables 10 100 Trade receivables 19 800 Cash sales accounted for 20% of revenue. Cash purchases accounted for 25% of purchases. REQUIRED Calculate the following efficiency ratios, showing the formula used. Ratio Formula Workings Trade receivables turnover Answer: Trade payables turnover Answer: Calculate the following liquidity ratios to two decimal places, showing the formula used. Ratio Formula Workings Current ratio Answer: Liquid (acid test) ratio Answer: Additional information The directors have reported a 5% increase in profit for the year ended 31 August 2022 and are satisfied with the results. REQUIRED Advise the directors whether or not they are correct to be satisfied. Justify your answer and support it by considering the efficiency ratios and liquidity ratios in and . State two limitations of using accounting ratios to compare the results of two businesses.
9706_w22_qp_22
THEORY
2022
Paper 2, Variant 2
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Alex owns a business selling computer equipment. He provided the following information for the year ended 31 July 2023. Opening inventory at 1 August 2022 was $19 100. Gross profit for the year ended 31 July 2023 was $56 380. Cash sales were $36 870. All other sales were made on credit. All sales were made to achieve a gross margin of 25%. All purchases were made on credit. Inventory turnover was 8 times per annum. Trade receivables at 31 July 2023 were $23 150. Trade payables at 31 July 2023 were $17 370. Calculate the trade receivables turnover for the year ended 31 July 2023. State the formula used. Formula Calculation State the formula used to calculate the rate of inventory turnover . Calculate the closing inventory at 31 July 2023. Calculate the trade payables turnover for the year ended 31 July 2023. State the formula used. Formula Calculation Additional information Alex understands that by comparing his business’s financial results with those of various other businesses he will learn how successful his own business is. Advise Alex whether his understanding is correct. Justify your answer.
9706_w23_qp_23
THEORY
2023
Paper 2, Variant 3
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W Limited provided the following extracts from the financial statements at 31 August 2024. Statement of profit or loss for the year ended 31 August 2024 $ Sales revenue 720 000 Opening inventory 76 000 Operating expenses 165 000 Finance costs 20 000 Taxation 16 000 Statement of financial position at 31 August 2024 $ Trade receivables 66 000 Share capital 550 000 Retained earnings 95 000 8% debentures (2026) 45 000 Current liabilities 37 000 The following information is also available: • cash sales were 15% of total sales • the gross profit margin was 35% • the rate of inventory turnover was 6.4 times. Calculate the trade receivables turnover for the year ended 31 August 2024 showing the formula used. Formula Calculation Explain the difference between gross profit margin and mark-up. State the formula for the rate of inventory turnover . Calculate the value of the closing inventory at 31 August 2024. Calculate, to two decimal places, the return on capital employed for the year ended 31 August 2024 showing the formula used. Formula Calculation Additional information The directors of W Limited use accounting ratios to compare the company’s progress with other businesses. They are aware that such comparison should only be made with companies in similar business sectors but are also aware that such comparison has limitations. State three other limitations of accounting ratios.
9706_w24_qp_22
THEORY
2024
Paper 2, Variant 2
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Questions Discovered
1775