Accounting Chapter 22 - Past Year MCQ

A business has the following assets and liabilities. inventory 2000 trade receivables 4000 trade payables 1100 bank overdraft 3100 The owner plans to pay some of his own funds into the business bank account to increase the current ratio to 2 : 1. How much does he need to pay into the business bank account to achieve this?

• $900
• $1200
• $1900
• $2200

Lynne provided the following information about her trading business. for the year ended 31 August 2023 revenue: cash sales 250 000 credit sales 230 000 at 31 August 2023 trade receivables 19 530 other receivables 2 100 What was Lynne’s trade receivables turnover?

• 15 days
• 17 days
• 31 days
• 35 days

CD Limited took out a long-term bank loan and used part of the funds to pay some of its credit suppliers early. How did this affect the trade payables turnover (days) and the return on capital employed (ROCE)?

• Trade Payables Turnover - decrease | ROCE - decrease
• Trade Payables Turnover - decrease | ROCE - increase
• Trade Payables Turnover - increase | ROCE - decrease
• Trade Payables Turnover - increase | ROCE - increase

Jimmy made credit sales of $98 550 in each of the years 2021 and 2022. In 2022, his trade receivables turnover was exactly two days shorter than it had been in 2021. What was the change in his total trade receivables in 2022?

• $135 decrease
• $135 increase
• $540 decrease
• $540 increase

T Limited provided the following information. net profit before interest 29 200 profit for the year 28 000 equity at the year-end 192 000 6% debentures 20 000 What was T Limited’s return on capital employed?

• 13.21%
• 13.77%
• 14.58%
• 15.21%

Sabelo’s liquid (acid test) ratio was higher on 1 January 2022 than it was on 31 December 2022. What could have caused this?

• bank overdraft decreased
• inventory decreased
• other payables decreased
• trade receivables decreased

The following ratios relate to the businesses of Ewa and Max. An accounting student made the following statements. 1 Ewa can meet her current liabilities from her current assets more easily than Max. 2 Ewa can meet her current liabilities from her liquid assets more easily than Max. 3 Max has insufficient current assets to meet his current liabilities. 4 Max has sufficient liquid assets to meet his current liabilities. Which statements are correct?

• 1 and 3
• 1 and 4
• 2 and 3
• 2 and 4

The table shows the gross margin and profit margin for four businesses. Which business controls its overheads most efficiently?

• Gross Margin - 40% | Profit Margin - 17%
• Gross Margin - 37% | Profit Margin - 15%
• Gross Margin - 35% | Profit Margin - 14%
• Gross Margin - 30% | Profit Margin - 12%

Ramiz works as a sales manager in a car showroom. He is paid on the basis of the number of cars sold. Which accounting ratio will be relevant to Ramiz?

• gross margin
• profit margin
• rate of inventory turnover
• trade receivables turnover

A company provided the following list of balances at 30 September 2022. What was the current ratio?

• 1 : 1
• 2.83 : 1
• 3.82 : 1
• 4.06 : 1