3.4 final accounts

One of these statements about the profit and loss account is correct - which one?

• It helps measure the success of a business
• It shows the assets and liabilities at a point in time.
• It measures the net cash flow of a business
• It provides evidence about a firm's liquidity.

The formula of sales revenue less cost of goods sold enables you to calculate

• Net profit
• Operating profit
• Retained profit
• Gross profit

Which of these actions might improve gross profit but increase overheads?

• Increase the shareholder dividend by 10%
• Increase advertising for a new product
• Negotiate better prices from a supplier
• Increase selling prices by 5%

The trading account on a P&L shows

• How net profit is distributed
• The difference between a firm's sales revenue and direct costs of trading
• The amount of profit or loss made
• The expenses, interest and tax

Which of these statements about retained profits is incorrect?

• Are very flexible in how they can be used
• Are free - they have no cost
• Do not dilute the ownership of a firm
• Are a key source of finance for a profitable firm

Which of these might be a strategy to minimise cost?

• Adding more options to a product range
• Adding layers to the organisational heirarchy
• Increasing prices with suppliers
• Outsourcing non-core activities

Which of these would normally lead to an imrprovement in a firm's liquidity position?

• Higher dividends
• Lower profitability
• Higher capital spending
• Improved working capital

The process of a firm offering its shares for sale on the Stock Exchange for the fist time is known as a:

• Flotation
• Initial Public Offering
• Placing
• Rights issue

A decision to cut shareholder dividends would lead to hgher …

• Share price
• Retained profit
• Operating proit
• Gearing

Hooper Toys Ltd. Purchases goods at $10,000 and manages to sell thses for $18,000. State the Cost of Goods Sold (COGS)

• $8,000
• $10,000
• $18,000
• $28,000