Business Finance

What does the statement of comprehensive income show?

• The profit or loss made by a business over a period of time

• The liquidity position of a business at a point in time

• The value of assets bought by a business over a period point in time

• The value of a business at a point in time

The formula for calculating gross profit is:

• Net profit + sales

• Sales – expenses

• Sales – cost of goods sold

• Cost of goods sold - sales

Which of these is NOT a limitation of ratio analysis:

• They are calculated on past data and therefore may not be a true reflection of the business’s current performance

• Financial records may have been manipulated and therefore the ratios calculated could be based on potentially misleading data

• Ratios only consider qualitative factors, making them hard to calculate

• Inter-firm comparisons can be difficult as not all firms report their performance/generate accounts in the same way

Calculate the value of current assets from the following: trade receivables £120, trade payables £80, inventories £40, cash £60

• £300

• £220

• £200

• £100

Which of the following would NOT appear on the Statement of Comprehensive Income?

• Wages

• Bank interest paid

• Depreciation

• Purchases of non-current assets

Which of the following would NOT be found on a Statement of Financial Position?

• Trade payables

• Cash

• Interest paid

• Capital

The Return on Capital Employed of a sole trader can be improved by:

• Increasing Net Profit

• Decreasing payment terms to credit customers

• Increasing capital employed

• Decreasing dividends paid to shareholders

If value of opening inventories increases, what happens to the value of gross profit?

• It decreases

• It increases

• It stays the same

• It gets closer to the net profit

Which of the following best describes a variable cost?

• A cost which has a direct relationship with output or sales

• A fixed proportion of total costs

• A cost which remains constant irrespective of output or sales

• A cost which decreases proportionately with output or sales

Total revenue is calculated as:

• Selling price per unit x closing inventory

• Selling price per unit x units sold

• Selling price per unit x units purchased

• Selling price per unit x net profit margin %