Grade 10 term 3 test Accounting

How do we calculate gross profit on turnover?

• Sales x 100

  Gross profit

• Gross profit x 100

  Sales

• Gross profit x 100

  Cost of sales

• Net profit x 100

  Sales

What is Profitability ?

• do the partners earn a good return on the capital they invested.

• the business paying off all it's debts

• how well do we control our expenses and how profitable is the business.

• can the business pay off it's short term debts.

Can the business pay off its short-term debts (current liabilities) without any problems in the short term?

• Liquidity

• Solvency

• Return

• Expenses

It shows what percentage of the selling price is available to cover operating expenses.

• Profitability

• Return

• Cost of sales

• Acid test

If percentage is lower than mark-up used we need to check pricing and avoid too much discount .

• percentage gross profit on pricing

• percentage gross profit on sales

• percentage operating expenses on sales

• percentage net profit on sales

Operating profit x 100

Turnover 1

• percentage operating profit on assets

• percentage operating profit on sales

• percentage operating profit on cost of sales

• percentage operating profit on return

If sales have increased, operating profit should have increased

• Somewhat true

• True

• False

• Somewhat false

If it increased,

•there should be better control over costs.

•advertising expenses should be in relation to sales

• percentage operating expenses on sales

• percentage operating profit on sales

• percentage operating cost of sales on profit

• percentage gross profit

This ratio refers to the business’s degree of solvency – in other words whether the business will be able to pay its long-term debts

• acid test

• current ratio

• solvency ratio

• proper ratio

Total assets : Total liabilities

= x : 1

• Solvency ratio

• current ratio

• Acid test ratio

• Return