Yr 11 Unit 1 Accounting Revision

The Working Capital Ratio is a financial indicator that measures

• Stability

• Liquidity

• If the business can pay all of its accounts

• All of the above

The Debt Ratio is a

• Liquidity Indicator

• Stability Indicator

• Both a LIquidity and Stability Indicator

• None of the above

The owner pays for a family holiday using the business' funds. The effect of this transaction would be to

• Increase Bank and Increase Inventory

• Decrease Bank and Increase Drawings

• Decrease Capital and Decrease Drawings

• Decrease Inventory and Increase Drawings

A Vehicle purchased by the business is reported as a

• Asset

• Current Asset

• Non Current Asset

• None of the above

Which of the following does not represent the Accounting Equation

• A-L=OE

• A+L=OE

• L+OE=A

• OE=A-L

The busines shas a 10 000 loan that is repayable $250 per month. This would be classified as

• Liability for $10 000

• A current liability of $250 and a non current liability of $9 750

• A current liability of $7 000 and a non current liability of $3 000

• A current Liability of $3 000 and a non current liability of $7 000

The rule of double entry means that

• every transaction effects at least 2 items

• after recording transactions the accounting equation should balance

• All of the above

• none of the above

A debt ratio of 65% means that

• the business is in a good financial position

• the business is in a bad financial position

• 65% of the business is financed through external equities

• 65% of the business is financed through internal equities

A working capital ratio of 1.5:1 is

• Good

• Bad

• Neither good or bad

• Depends on the composition of the current assets

The owner pays for his gold membership using the business' funds. The effect of this transaction would be to

• Increase Bank and Increase Inventory

• Decrease Bank and Increase Drawings

• Decrease Capital and Decrease Drawings

• Decrease Inventory and Increase Drawings