Unit 3 LA F Quiz

What does the Statement of Comprehensive Income show?

• Trading position of the business

• Net worth of the business

• Cash flow of the business

• Assets and liabilities

What is the formula to calculate Gross Profit?

• Cost of Goods Sold - Sales Revenue

• Expenses - Net Profit

• Net Profit - Sales Revenue

• Sales Revenue - Cost of Goods Sold

What is the purpose of Depreciation in accounting?

• To calculate net profit

• To reduce the value of liabilities

• To spread the cost of an asset over its useful life

• To increase the value of assets

What does the Current Ratio measure?

• Ability to pay short-term and long-term liabilities

• Number of times a business sells and replaces its inventory

• Current liquidity position without stock

• Efficiency in controlling expenses

What does the Net Profit Margin % measure?

• Number of days to recover payment from customers

• Profit as a percentage of sales turnover

• Ability to meet short-term debts

• Efficiency with which capital is employed

What is the formula to calculate Depreciation using the Straight Line method?

• (Historic value – residual value) / Expected life)

• Year 1 = Net book value X 0.2

• Net profit/Revenue X 100

• Current assets/current liabilities

What is the purpose of the Statement of Financial Position?

• To highlight a business's assets and liabilities

• To calculate gross profit

• To show the trading position of the business

• To measure the number of times a business sells and replaces its inventory

What does the Acid Test measure?

• Number of times a business sells and replaces its inventory

• Current liquidity position without stock

• Ability to pay short-term and long-term liabilities

• Efficiency in controlling expenses

What is the formula to calculate Inventory Turnover?

• (Cost of goods sold/stock) X 365

• (Trade receivables/credit sales) X 365

• (Trade payables / credit purchases) X 365

• Net profit/Revenue X 100

What is the formula for Mark Up?

• Net profit/Revenue X 100

• (Gross profit/ Cost of sales) X 100

• Sales revenue - cost of goods sold

• Price x quantity sold