HBM - Finance PC Revision

HBM - Finance PC Revision

Multiple Choice

I would use a financial statement to ensure my job is secure.

• employee

• HMRC

• trade union

• lender

• trade payable

Multiple Choice

I would use a financial statement to ensure the company is paying the right amount of tax.

• government

• HMRC

• trade union

• lender

• trade payable

Multiple Choice

I would use a financial statement to see if current performance is worthy of more investment

• shareholder

• HMRC

• trade union

• lender

• trade payable

Multiple Select

What is the purpose of an Income Statement?

(Choose all that apply)

• shows profit/loss made

• shows all the items a business owes and owns

• shows the cash inflows and outflows

• can be used for decision making

Multiple Choice

Amount of money spent on selling goods

• sales revenue

• cost of sales

• gross profit

• expenses

• profit for the year

Multiple Choice

Gross profit - expenses = ??

• sales revenue

• cost of sales

• gross profit

• expenses

• profit for the year

Multiple Choice

Amount made from selling goods/services.

• sales revenue

• cost of sales

• gross profit

• expenses

• profit for the year

Multiple Choice

Examples include: wages, advertising, rents & rates, heating & lighting.

• sales revenue

• cost of sales

• gross profit

• expenses

• profit for the year

Multiple Choice

The profit made from buying and selling.

• sales revenue

• cost of sales

• gross profit

• expenses

• profit for the year

Multiple Choice

Compare assets and liabilities:

• Assets are owned by the company whereas liabilities are items owed.

• Assets are owned by the company. Liabilities are items owed.

• Assets are items owed by the company whereas liabilities are items owned.

• Assets are items owed by the company. Liabilities are items owned.

Multiple Choice

Compare net assets and equity & reserves:

• Net assets show the overall value of the business whereas E&R shows how the business has been financed.

• Net assets shows how the business has been financed whereas E&R shows the overall value of the business.

• Net assets show the overall value of the business. E&R shows how the business has been financed.

• Net assets shows the assets whereas E&R shows the equity and reserves.

Multiple Choice

Distinguish between GP % (Gross Profit) and PFY (Profit for the Year) %.

• both GP% and PFY% can be improved by increasing the sales figure

• GP% shows the ability to pay back short-term debts whereas PFY% shows the ability to pay back in a crisis situation.

• GP% measures % profit made from buying and selling whereas PFY% shows % profit once expenses are deducted.

Multiple Select

What is the best way to improve your Gross Profit Percentage?

(Choose all the correct answers)

• Increase prices

• Cheaper supplier

• Reduce expenses

• Reduce current liabilities

Multiple Choice

Distinguish between current ratio (CR) and acid test ratio (ATR).

• Both CR and ATR show the ability of the firm to pay back debts as it shows liquidity.

• CR shows the ability to pay back short-term debts whereas ATR shows the ability to pay back in a crisis situation.

• CR shows current assets whereas ATR does not.

Multiple Select

What is the best way to improve your Acid Test Ratio?

(Choose all the correct answers)

• use JIT

• increase current assets

• reduce expenses

• increase profit for the year

Multiple Select

What are the best ways to improve your rate of inventory turnover ratio?

(choose all the correct answers)

• Use JIT

• Sell excess stock

• Negotiate sale or return with supplier

• Increase sales

• Decrease current liabilities