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Unit 21 + 22 + 23

Total questions: 45

Worksheet time: 27mins

Name
Class
Date
1.

Which of the following is not a current asset?

a)

Inventory

b)

Prepaid Insurance

c)

Land and buildings

2.

Current assets MINUS Current liabilities is the

a)

Current Ratio

b)

Net Worth

c)

Working Capital

3.

Current assets DIVIDED BY current liabilities is the

a)

Current Ratio

b)

Net Worth Ratio

c)

Working Capital

4.

The company's working capital is

a)

60,000

b)

66,000

c)

196,000

5.

The company's current ratio is

a)

1.0:1

b)

2.0:1

c)

2.1:1

6.

Comparisons of financial statements highlights the trend of the ________________ of the business.

a)

Financial position

b)

Performance

c)

Profitability

d)

All of the above

7.

Current ratio is also known as the acid test ratio

a)

True

b)

False

8.

Liquidity ratios indicate the company's ability to pay its current liability

a)

True

b)

False

9.

Current ratio indicates ……………..

a)

Long term solvency

b)

Profitability

c)

Ability to meet short term obligations

d)

Efficiency of management

10.

Current assets of a business concern is R60,000 and current liabilities are R30,000.

The current ratio will be?

a)

1:2

b)

1:1

c)

2:1

d)

3:2

11.
Gross Profit Refers to
a)
money remaining after all expenses are paid
b)
money remaining after taxes have been paid
c)
Sales less cost of goods sold
d)
None of the above
12.
Net Profit or Net Loss refers to
a)
Gross Profit + Sales Revenue
b)
The sum of assets and liabilities
c)
Gross Profit - expenses
d)
None of the above
13.
What is the Gross Profit Margin for this business?
a)
20%
b)
30%
c)
25%
d)
40%
14.

What is the Net Profit margin for this business?

a)

17%

b)

30%

c)

22%

d)

18%

15.
What is the Return on Capital Employed for this business?
a)
10%
b)
10.5%
c)
11%
d)
18%
16.
How can a business improve the Gross Profit Margin?
a)
Finding a cheaper supplier
b)
Lowering wages
c)
Lowering the cost of electricity
d)
All of the above are correct
17.
How can a business improve the Net Profit Margin?
a)
Finding a more expensive supplier with better quality
b)
Reducing the wage bill
c)
Raising electricity usage
d)
None of the above
18.
The Return on Capital Employed is considered to be good if...
a)
the return is greater than the sum total of Net Assets
b)
the return is less than the bank interest rate
c)
the return is equal to the bank interest rate
d)
the return is greater than the bank interest rate
19.
What is a current liability?
a)
Something a firm owns that can be turned into cash <1 year.
b)
Something a firm owns that can be turned into cash >1 year.
c)
Something a firm owes that must be paid <1 year.
d)
Something a firm owes that must be paid >1 year.
20.
What is a current asset?
a)
Something a firm owes that must be paid in > 1 year.
b)
Something a firm owns that can turn into cash in > 1 year.
c)
Something a firm owns that you can turn into cash <1 year.
d)
None of the above
21.
What is removed from the current ratio to make it an acid test ratio?
a)
Stock
b)
Debtors
c)
Creditors
d)
Bank
22.

Current assets of R8m (R4m is stock) & Current Liabilities of R2m. What is their current ratio?

a)
1:2
b)
4:1
c)
2:1
d)
1:4
23.

Current assets of R8m (R4m is stock) & Current Liabilities of R2m. What is the Acid Test ratio?

a)

1:2

b)

4:1

c)

2:1

d)

1:4

24.
What is the ideal value for current ratio?
a)
1:2
b)
1:1
c)
1.5:1
d)
0.5:1
25.
What is the ideal value for the acid test ratio?
a)
1:2
b)
1:1
c)
2:1
d)
0.5:1
26.
How can you improve the current ratio?
a)
Manage debts
b)
Seek long term finance
c)
Reduce investments
d)
All of the above
27.

All of the following are external people who would be interested in knowing the financial position of a business except..

a)

creditors

b)

banks

c)

employees

d)

competitors

28.

True or false?

Individuals are not interested in knowing the financial position of a business.

a)

true

b)

false

29.

True or false?

Financial statements are a report that will help us determine the financial position of a business.

a)

True

b)

False

30.

How much a business is worth can be referred to as....

a)

financial statement

b)

financial position

31.
The Income Statement lists a businesses:
a)
Assets and Expenses
b)
Owner's Equity and Revenue
c)
Revenue, cost of goods and Expenses
d)
Expenses and Net Assets
32.

What is the purpose of an income statement?

a)

calculate the bank balance

b)

calculate net assets

c)

calculate sales

d)

calculate net profit

33.
Examples may include salaries, utilities, rent, insurance, and office supplies.
a)
Revenue
b)
Expense
c)
Net Income
d)
Net Loss
34.
Which one is not an expense?
a)
raw materials
b)
production costs
c)
commission received
d)
insurance
35.

Gross profit is calculated by...

a)

Revenue - Total Costs

b)

Revenue + Variable Costs

c)

Revenue - Cost of Sales

d)

Revenue - Fixed Costs

36.

When expenses are greater than income?

a)

expense

b)

net loss

c)

net income

d)

net gain

37.
A Net Profit occurs if:
a)
Gross Profit is greater than expenses
b)
Expenses greater than Gross Profit
c)
None of the listed choices
38.

Income = 1000

Cost of Goods Sold = 200

Expenses = 300

Gross Profit = ?

a)

800

b)

500

c)

700

d)

300

39.

Income = 1000

Cost of Goods Sold = 200

Expenses = 300

Net Profit = ?

a)

800

b)

500

c)

700

d)

300

40.

Net Profit = 500

Income = 2000

Expenses = 1000

Cost of Goods Sold = ?

a)

1500

b)

1000

c)

3000

d)

500

41.

What are the examples of an asset?

a)

A. Internet Bill, Water Bill, Salary

b)

B. Mortgage, Promissory Notes, Payables

c)

C. Trucks, Building, Cash

d)

D. XZY, Capital, Star, Capital, Bloom, Capital

42.

Money that the company owes to others

a)

A. Capital

b)

B Expenses

c)

C. Income

d)

D. Liabilities

43.

These are assets that are convertible to cash within a short period of time.

a)

A. Capital

b)

B. Current Assets

c)

C. Income

d)

D. Expenses

44.

These are assets that are permanent in nature. They are acquired for long term use and for physical use in the business.

a)

A. Capital

b)

B. Expenses

c)

C. Fixed Assets

d)

D. Liability

45.

The money the company earns from its sales of products or services, and interest and dividends earned from marketable securities

a)

A. Assets

b)

B. capital

c)

C. Expenses

d)

D. Income

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