Accounting for IGCSE & O level - Advanced Principles (Section 9)
1
A company's ability to meet its long-term financial obligations is directly related to what?
2
If a company's profit margin increases, what does that generally indicate?
Answer(C)
The company is more efficient in controlling its costs and/or increasing revenue.
3
What type of information can an aged trade receivables schedule provide?
4
If a company's inventory turnover ratio is increasing, what could this indicate?
Answer(C)
More efficient inventory management.
5
What happens to the amount of working capital if the company issues more short-term debt?
Answer(C)
Working capital stays the same
6
What is the primary goal of the materiality principle in accounting?
Answer(B)
To ensure that only material items affect the financial statements.
7
What is the purpose of doing a ratio analysis?
Answer(B)
To evaluate the financial performance of a business.
8
Which is the effect of increasing inventory on working capital?
9
Which of the following would generally be considered an advantage of using the historic cost principle?
Answer(B)
It is straightforward and easy to verify.
10
Which principle governs the timing of when revenue should be recognized?
11
What is the formula to calculate the 'Inventory Turnover' ratio?
Answer(A)
Cost of goods sold / Average inventory
12
Which accounting principle is most closely related to the concept of matching revenues and expenses?
13
Which of the following are accounting concepts or conventions?
14
Which of the following accounting principles is most closely related to the idea of caution and conservatism when preparing financial statements?
15
What is the effect of a supplier payment on working capital?
16
The use of the materiality principle depends on?
Answer(A)
The monetary value or importance of an item or event
17
What would be the consequence of a significant fall in gross profit for a business?
18
The prudence principle and matching principle both relate to…
Answer(A)
Timing of when you recognize expenses
