Essential Book Keeping - Qp14

10 Questions | Total Attempts: 30

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Essential Book Keeping - Qp14

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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