Essential Book Keeping - Qp14
10 Questions
| Attempts: 88
Questions and Answers
- 1.The basic aim of any business is to make a profit, on the basis that profits increase the value of the firm.
- A.
True
- B.
False
- 2.Profit = Cash Received - Cash Spent.
- A.
True
- B.
False
- 3.Credit given adjustments are particularly important if you rely on manual accounting via an analysed cashbook.
- A.
True
- B.
False
- 4.If credit is taken an adjustment to the ‘cash out’ figure in the analysed cashbook has to be made to reflect the effects of credit.
- A.
True
- B.
False
- 5.To eliminate profit fluctuations caused by changing stock levels, we need to know three things.
- A.
True
- B.
False
- 6.Accountants often use a wide range of ratios as a means of comparing businesses against each other, as well as comparing one business across a range of time periods.
- A.
True
- B.
False
- 7.Ratios are used for the following reasons: (Select three)
- A.
Ratios are much harder to understand than a full set of accounts and therefore help non-specialists to examine and compare a company’s performance.
- B.
Ratios add perspective to the accounts as figures are expressed on a relative basis, whereas simple quoting the absolute figure may be misleading.
- C.
Ratios allow comparison across industries as well as over time.
- D.
Ratios can quickly be used to spot trends.
- 8.Sales - Cost Of Sales = Gross Profit Gross Profit + Overheads = Net Profit
- A.
True
- B.
False
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