Calculation and understanding of accounting ratios — Paper 1 · IGCSE Accounting (9-1) 0985

29 A trader provided the following information. $ for the year ended 31 March 2020 revenue 250 000 purchases: cash 125 000 credit 115 000 at March 2020 trade payables 9 765 What was the trade payables turnover? A 14 days B 15 days C 29 days D 31 days

1 marks

Answer: D

This question in 0985/11 May/June 2020

30 On 1 January 2019 current assets totalled $16 000 and the current ratio was 2 : 1. On 31 December 2019 the current liabilities had increased by 50% and the current ratio was 1.5 : 1. What was the value of the current assets on 31 December 2019? A $16 000 B $18 000 C $32 000 D $36 000

1 marks

Answer: B

This question in 0985/11 May/June 2020

30 Sabelo’s liquid (acid test) ratio was higher on 1 January 2019 than it was on 31 December 2019. What could have caused this? A bank overdraft decreased B inventory decreased C other payables decreased D trade receivables decreased

1 marks

Answer: D

This question in 0985/12 May/June 2020

27 A trader made the following forecasts for the business for the next financial year. average inventory $80 000 rate of inventory turnover 6 times mark-up 25% What are the forecast sales for the next financial year? A $360 000 B $480 000 C $576 000 D $600 000

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2020

28 A company provided the following information about its current ratio. year 1 2.3 : 1 year 2 2.4 : 1 year 3 2.5 : 1 What would explain the changes in the ratio? A Inventory is decreasing. B Other payables are increasing. C Other receivables are increasing. D Trade receivables are decreasing.

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2020

29 A trader wants to improve his gross margin. How can this be done? A Reduce administrative expenses. B Reduce depreciation of equipment. C Reduce rate of cash discount allowed. D Reduce rate of trade discount allowed.

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2020

30 Meesha provided the following information for her first year of trading. $ sales (1000 units at $10 each) 10 000 cost of sales (1000 units at $4.50 each) 4 500 gross profit 5 500 In her second year of trading, Meesha reduced the selling price and sold 1500 units. Her gross profit decreased by $250. There was no change in the cost per unit. What was the total value of sales in the second year of trading? A $9750 B $10 250 C $12 000 D $12 500

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2020

31 AB Limited and CD Limited both started business on 1 January 2019 with an ordinary share capital of $100 000. Neither company had any debentures or loans. Both companies had the same profit in 2019. Only AB Limited paid a dividend. The return on capital employed (ROCE) was calculated using closing capital employed. Which statement about AB Limited’s ROCE is correct when compared to that of CD Limited? A It is higher because the dividend reduced retained earnings. B It is lower because the dividend reduced capital employed. C It is lower because the dividend reduced the profit for the year. D It is the same as that of CD Limited.

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2020

20 What is added to owner’s capital to calculate capital employed? A current assets B current liabilities C non-current assets D non-current liabilities

1 marks

Answer: D

This question in 0985/11 May/June 2021

29 George provided the following information. $ non-current assets 15 000 inventory 12 000 trade receivables 18 000 trade payables 8 000 His liquid (acid test) ratio was 1.2 : 1. What was his bank overdraft? A $7000 B $15 000 C $17 000 D $29 500

1 marks

Answer: A

This question in 0985/11 May/June 2021

30 A trader provided the following information. $ $ revenue 3600 opening inventory 100 purchases 2600 2700 closing inventory 300 2400 gross profit 1200 It was found that the closing inventory should have been $400. What was the correct rate of inventory turnover? A 6 times B 8 times C 9.2 times D 14.4 times

1 marks

Answer: C

This question in 0985/11 May/June 2021

24 What is added to owner’s capital to calculate capital employed? A current assets B current liabilities C non-current assets D non-current liabilities

1 marks

Answer: D

This question in 0985/12 May/June 2021

30 A trader provided the following information. $ cost of sales 80 000 expenses 4 000 profit for the year 16 000 What was the profit margin? A 16% B 20% C 21.05% D 26.67%

1 marks

Answer: A

This question in 0985/12 May/June 2021

31 A trader provided the following information. $ $ revenue 3600 opening inventory 100 purchases 2600 2700 closing inventory 300 2400 gross profit 1200 It was found that the closing inventory should have been $400. What was the correct rate of inventory turnover? A 6 times B 8 times C 9.2 times D 14.4 times

1 marks

Answer: C

This question in 0985/12 May/June 2021

23 BCD Limited provided the following information. $ ordinary shares 300 000 retained earnings 200 000 debentures 170 000 How much was the equity and the capital employed? equity capital employed $ $ A 300 000 470 000 B 300 000 670 000 C 500 000 470 000 D 500 000 670 000

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2021

28 Roshan’s sales for his first year of trading were $55 000. His gross profit margin was 20%. The closing inventory was $3200. What were the purchases for the year? A $41 250 B $44 000 C $44 450 D $47 200

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2021

29 Which information is required to calculate the return on capital employed for a sole trader? A gross profit, non-current liabilities, owner’s capital B gross profit, non-current liabilities, working capital C operating profit for the year, non-current liabilities, owner’s capital D operating profit for the year, non-current liabilities, working capital

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2021

30 A business provided the following information. opening inventory $6800 closing inventory $6000 rate of inventory turnover 5 times What were the purchases for the year? A $29 200 B $31 200 C $32 000 D $32 800

1 marks

Answer: B

This question in 0985/11 May/June 2022

32 A trader provided the following information. $ profit for the year 24 000 working capital 20 000 capital 120 000 non-current liability 30 000 What was the return on capital employed? A 14.12% B 16.00% C 17.14% D 20.00%

1 marks

Answer: B

This question in 0985/11 May/June 2022

26 Tahir provided the following information for his first year of trading. $ sales 170 000 sales returns 6 000 purchases 129 000 Tahir’s gross margin was 25%. What was the value of closing inventory? A $1000 B $2200 C $6000 D $7500

1 marks

Answer: C

This question in 0985/12 May/June 2022

27 A business provided the following information. opening inventory $6800 closing inventory $6000 rate of inventory turnover 5 times What were the purchases for the year? A $29 200 B $31 200 C $32 000 D $32 800

1 marks

Answer: B

This question in 0985/12 May/June 2022

28 A trader provided the following information at the end of the financial year. $ revenue 80 000 gross profit 20 000 expenses 12 000 What was the profit margin? A 10% B 15% C 25% D 40%

1 marks

Answer: A

This question in 0985/12 May/June 2022

29 A trader provided the following information. $ profit for the year 24 000 working capital 20 000 capital 120 000 non-current liability 30 000 What was the return on capital employed? A 14.12% B 16.00% C 17.14% D 20.00%

1 marks

Answer: B

This question in 0985/12 May/June 2022

32 Maya had annual revenue of $100 000. In year 1, her gross margin was 45% and her profit margin was 5%. In year 2, her gross margin was 40% and her profit margin was 3%. What happened to Maya’s cost of sales and expenses in year 2? cost of sales expenses A decreased decreased B decreased increased C increased decreased D increased increased

1 marks

Answer: C

This question in 0985/12 May/June 2022

29 Thabo provided the following information. revenue $250 000 gross margin 20% rate of inventory turnover 5 times What was the average inventory for the year? A $10 000 B $37 500 C $40 000 D $50 000

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2022

30 Naeema provided the following information. $ revenue 28 000 gross profit 11 900 profit for the year 3 500 What was her profit margin? A 12.5% B 29.4% C 30.0% D 42.5%

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2022

31 When calculating the liquid (acid test) ratio, what is compared to the liquid assets? A current liabilities B intangible assets C non-current assets D non-current liabilities

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2022

26 A limited company provided the following information. $ issued share capital (50 000 ordinary shares of $1 each) 50 000 profit for the year ended 31 December 2022 13 000 transfer to general reserve during the year 6 000 interim ordinary share dividend paid during the year 3 000 On 31 December 2022, it was decided to use the remaining profit to pay a final ordinary share dividend. Which percentage final dividend would the ordinary shareholders receive? A 8% B 14% C 20% D 26%

1 marks

Answer: A

This question in 0985/11 May/June 2023

31 A trader provided the following information. credit sales $36 000 cash sales 10% of total sales net profit margin 30% How much is the net profit? A $9720 B $10 800 C $11 880 D $12 000

1 marks

Answer: D

This question in 0985/11 May/June 2023

33 Ramiz works as a sales manager in a car showroom. He is paid on the basis of the number of cars sold. Which accounting ratio will be relevant to Ramiz? A gross margin B profit margin C rate of inventory turnover D trade receivables turnover

1 marks

Answer: C

This question in 0985/11 May/June 2023

32 T Limited provided the following information. $ net profit before interest 29 200 profit for the year 28 000 equity at the year-end 192 000 6% debentures 20 000 What was T Limited’s return on capital employed? A 13.21% B 13.77% C 14.58% D 15.21%

1 marks

Answer: B

This question in 0985/12 May/June 2023

31 A business provided the following information. revenue $20 000 gross margin 25% profit margin 10% There was no other income. How much were expenses? A $2000 B $2250 C $3000 D $5000

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2023

32 A business has the following assets and liabilities. $ inventory 2000 trade receivables 4000 trade payables 1100 bank overdraft 3100 The owner plans to pay some of his own funds into the business bank account to increase the current ratio to 2 : 1. How much does he need to pay into the business bank account to achieve this? A $900 B $1200 C $1900 D $2200

1 marks

Answer: B

This question in 0985/12 Oct/Nov 2023

33 Lynne provided the following information about her trading business. $ for the year ended 31 August 2023 revenue: cash sales 250 000 credit sales 230 000 at 31 August 2023 trade receivables 19 530 other receivables 2 100 What was Lynne’s trade receivables turnover? A 15 days B 17 days C 31 days D 35 days

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2023

30 A business uses 20% mark up to arrive at its selling prices. During the year it made purchases of $35000 and the inventory decreased from $7000 to $2000. What was the revenue for the year? A $36000 B $40000 C $42000 D $48000

1 marks

Answer: D

This question in 0985/11 May/June 2024

32 A trader provided the following information. $ cash purchases for the year 146000 credit purchases for the year 108000 trade payables at the year end 14000 What was the trader’s trade payables turnover? A 6 days B 13 days C 21 days D 48 days

1 marks

Answer: D

This question in 0985/11 May/June 2024

33 George provided the following information. $ non-current assets 15000 inventory 12000 trade receivables 18000 trade payables 8000 His liquid (acid test) ratio was 1.2:1. What was his bank overdraft? A $7000 B $15000 C $17000 D $29500

1 marks

Answer: A

This question in 0985/11 May/June 2024

30 Roshan’s sales for his first year of trading were $55 000. His gross profit margin was 20%. The closing inventory was $3200. What were the purchases for the year? A $41 250 B $44 000 C $44 450 D $47 200

1 marks

Answer: D

This question in 0985/12 May/June 2024

32 Abhinav provided the following information. year ended year ended 31 December 2019 31 December 2020 $ $ purchases 112 500 124 000 cost of sales 115 500 120 000 inventory $ 1 January 2019 7000 31 December 2019 4000 31 December 2020 8000 What was the rate of inventory turnover for the year ended 31 December 2020? A 15 times B 20 times C 21 times D 30 times

1 marks

Answer: B

This question in 0985/12 May/June 2024

31 A jewellery retailer marks up his goods by 100%. He provided the following information. $ revenue 68200 discount received 1080 profit for the year 18395 What was the total of his expenses? A $14625 B $16785 C $48725 D $50885

1 marks

Answer: B

This question in 0985/12 Oct/Nov 2024

30 A trader provided the following information. $ revenue 120000 inventory at the start of the year 9600 inventory at the end of the year 10200 A mark-up of 25% is applied. What were the purchases for the year? A $89400 B $90600 C $95400 D $96600

1 marks

Answer: D

This question in 0985/11 May/June 2025

31 A trader provided the following information for the year ended 31 December. $ total cash and credit purchases of goods for resale 150000 cash purchases of goods for resale 17000 credit purchases of non-current assets 25000 His trade payables at that date were $8000. What was the trade payables turnover? A 17 days B 20 days C 22 days D 24 days

1 marks

Answer: C

This question in 0985/11 May/June 2025

32 The following information is taken from an income statement. $ cost of sales 15000 gross profit 10000 motor expenses 4000 general expenses 1000 What is the profit margin for the year? A 20% B 24% C 36% D 40%

1 marks

Answer: A

This question in 0985/11 May/June 2025

31 The following information is available at the end of Savid’s first year of trading. $ Amount owed by credit customers 9600 Amount owed to credit suppliers 12800 Total sales for the year are $220000, of which cash sales are $24000. What is the trade receivables turnover in days? A 16 days B 18 days C 21 days D 22 days

1 marks

Answer: B

This question in 0985/12 May/June 2025