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- Multiple ChoicePlease save your changes before editing any questions.
Sufficient working capital is needed to prevent a business from becoming illiquid.
True
False
- Multiple ChoicePlease save your changes before editing any questions.
The _________ is a measure of liquidity which excludes _______.
Current ratio, trade receivable
acid test ratio, trade receivable
Current ratio, inventory
acid test ratio, inventory
- Multiple ChoicePlease save your changes before editing any questions.
These are the examples of long term finances, except ______
bank overdraft
bank loan
leasing
debentures
- Multiple ChoicePlease save your changes before editing any questions.
sale and leaseback of non-current assets is an example of external sources of finance
True
False
- Multiple ChoicePlease save your changes before editing any questions.
Issuing share capital is an appropriate way to raise finance for a sole trader
True
False
- Multiple ChoicePlease save your changes before editing any questions.
Which one of these ratios is used to measure profitability?
Gross profit margin
Current ratio
Working capital
Acid test
- Fill in the BlankPlease save your changes before editing any questions.
State the accounting equation
- Multiple ChoicePlease save your changes before editing any questions.
Example of non-current asset is _______
Cash at bank
Inventory
Bank overdraft
Machineries
- Multiple ChoicePlease save your changes before editing any questions.
The formula of BEP is _____
Fixed cost / contribution per unit
Fixed cost / variable cost
Fixed cost / selling price
Fixed cost / total contribution
- Multiple ChoicePlease save your changes before editing any questions.
These are the ways to improve current ratio, except _____
Obtain long term loan
Sell of fixed assets for cash
Sell off inventories for cash
Owner invests more money into the business
- Multiple ChoicePlease save your changes before editing any questions.
Cash is not equal to profit
True
False
- Multiple ChoicePlease save your changes before editing any questions.
What is the characteristic of variable cost?
cannot be identified with a unit of production
do not change when the level of output changes
vary as output changes
do not change when the level of output changes until it reach certain level
- Multiple ChoicePlease save your changes before editing any questions.What does break even point show?where a business is neither making a profit or losshow many items to makehow much profit they're makingwhere a business has more fixed costs than variable
- Multiple ChoicePlease save your changes before editing any questions.
What is the formula for contribution?
cost price - selling price
fixed costs - variable costs
selling price - variable cost
selling price - cost price
- Multiple ChoicePlease save your changes before editing any questions.What is one limitation to calculating break even?helps projected salesbased on estimatesbased on multiple productsconsiders stock wastage
- Multiple ChoicePlease save your changes before editing any questions.What is the margin of safety?the margin between projected units and break even point unitsthe margin between profit and loss
the margin between selling price and variable costs
the margin between each break even point