accounting
MM0415
1_1.docx1. Which of the following would definitely improve both gross profit as reported in the Income Statement and gross profit margin (assuming cost price per unit stays the same)?
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A. Selling more units at a higher selling price per unit. |
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B. Selling more units at a lower selling price per unit. |
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C. Selling fewer units at a higher selling price. |
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D. Selling fewer units at a lower selling price. |
2. Using the following data, calculate Return on total Capital Employed (ROCE):
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Shareholders' funds |
£100,000 |
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10% Loan |
£200,000 |
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Current Liabilities |
£100,000 |
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Net Profit before Interest and Taxes |
£50,000 |
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Taxation Rate |
30% |
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A. |
30% |
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B. |
16.7% |
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C. |
25% |
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D. |
21% |
3. Which of the following would reduce net profit but have no effect on gross profit?
4. If current assets are £40,000, the current ratio is 2:1 and the acid test is 1.5:1, then the value of inventory is:
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A. £80,000 |
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B. £40,000 |
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C. £10,000 |
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D. £20,000 |
5. How would an increase in administration costs affect reported profits?
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A. Decrease Operating Profit, but has no effect on Gross Profit. |
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B. No impact on Operating Profit but will decrease Gross Profit. |
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C. No impact on Operating Profit, but will increase Gross Profit. |
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D. Increase Operating Profit, but decreases Gross Profit. |
6.Which of the following statements about the Statement of Financial Position is not true?
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A. total assets = total liabilities + equity |
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B. total assets - total liabilities = shareholders' funds |
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C. total equity + total assets + total liabilities = shareholders' funds |
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D. non current assets + current assets - total liabilities = equity |
7. Which of the following is not a cost associated with holding inventory?
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A. obsolesence |
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B. insurance |
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C. deterioration |
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D. depreciation |
8. If current assets are £30,000, and the current ratio is 1.5, then the value of current liabilities is:
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A. £30,000 |
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B. £45,000 |
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C. £10,000 |
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D. £20,000 |
9. Using the following data, calculate Return on Shareholder’s Funds (ROSF):
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Shareholders' funds |
£200,000 |
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Long term loan at 10% interest |
£100,000 |
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Net Profit before Interest and Taxes |
£50,000 |
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Taxation Rate |
30% |
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A. 14% |
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B. 16.7% |
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C. 21% |
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D. 30% |
10．In the context of financial structure, which of the following statements is not true?
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A. high levels of gearing may be perceived as risky, because of the company's commitment to pay a given sum of interest, regardless of how much profit is generated |
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B. the gearing ratio considers the significance of a company's debt relative to equity |
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C. the interest cover ratio equals the rate of interest payable on a loan |
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D. as long as the return generated from borrowed funds exceeds the rate of interest payable, the ordinary shareholders will benefit. |
