Derive the stock turnover period.(Average stock = 23,000. Cost of sales = 300,000 year = 365 days).
28 days
42 days
27 days
23 days
Correct answer is A
Average stock / cost of sales x 365days.
23,000 ÷ 300,000 x 365 = 27.9 (Approximately 28 days)
What does liquidity ratio measure?
Measures operating efficiency of a company
Measures the ability of a company to meet its current obligations
Measures the value of investments of a company
Measures the financial leverage of a company
Correct answer is B
Liquidity ratio attempt to measure the ability to meet up with current obligations e.g. current ratio which measures the current asset to current liabilities.
Marching
Consistency
Realization
Prudence
Correct answer is D
Prudence Concept or Conservatism principle is a key accounting principle which makes sure that assets and income are not overstated and provision is made for all known expenses and losses whether the amount is known for certain or just an estimation i.e expenses and liabilities are not understated in the books of account
Which of the following is not a proper form of the accounting equation?
Fixed assets + current assets - liabilities = capital
Fixed assests + current assests + liabilities = capital
Fixed assets – liabilities + current assets = capital
Fixed asset + current asset – capital = liabilities
Correct answer is B
The simplest presentation of capital employed is total assets minus current liabilities. Sometimes, it is equal to all current equity plus interest-generating loans (non-current liabilities).
In a bank reconciliation statement, Dishonoured cheques is added to
Unpresented cheques
Uncredited cheques
Statement of account
Aggregate balanace as per cash book
Correct answer is B
Dishonoured cheques are those which are refused payment by the bank because they are not in order or there is insufficient fund in the drawer's account. They are added to uncredited cheques just like standing order and bank charges.