These are ACCA F3 (FA/FFA) Financial Accounting MCQs for Part-H of the Syllabus “Interpretation of financial statements”.

These multiple-choice questions (MCQs) are designed to help ACCA F3 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have finished the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F3 (FA/FFA) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCA – Associations of Chartered Certified Accountants
Fundamental Level:	Knowledge, FIA – Foundation in Accounting
Subject:	Financial Accounting
Paper:	F3 – FA/FFA
Chapter:	Interpretation of financial statements
Chapter Number:	27 of the Practice and Exam Kit
Syllabus Area:	H – “Interpretation of financial statements”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part H of the Syllabus; “Interpretation of financial statements” of ACCA F3 (FA/FFA) Financial Accounting Module.

Time

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F3 - Chapter 27 - Part H - MCQs

Course: ACCA - FIA
Subject: F3 (FA/FFA) Financial Accounting
Syllabus Area: H - Interpretation of financial statements
Chapter in Kit: 27 - Interpretation of financial statements
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 23

Why is analysis of financial statements carried out?

So that the significance of financial statements can be better understood through comparisons with historical performance and with other companies

To produce a report that can replace the financial statements, so that the financial statements no longer need to be looked at

So that the analyst can determine a company's accounting policies

To get back to the 'real' underlying figures, without the numbers being skewed by the requirements of International Financial Reporting Standards

2 / 23

A company has the following details extracted from its statement of financial position:

The industry the company operates in has a current ratio norm of 1.8. Companies who manage liquidity well in this industry have a current ratio lower than the norm.

Which of the following statements accurately describes the company's liquidity position?

Liquidity appears to be poorly-controlled as shown by the company's relatively high current ratio

Liquidity appears to be poorly-controlled as shown by the large payables balance

Liquidity appears to be well managed as the bank overdraft is relatively low

Liquidity appears to be poorly-controlled as shown by the existence of a bank overdraft

3 / 23

A business operates on a gross profit margin of 331/ %. Gross profit on a sale was $800, and expenses were $680.

What is the net profit margin?

3.75%

11.25%

22.67%

4 / 23

Which of the following is a ratio which is used to measure how much a business owes in relation to its size?

Profit margin

Gearing

Asset turnover

Return on capital employed

5 / 23

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Note. The bank overdraft first occurred on 30 September 20X7.

In the analysis of the financial and liquidity position of Quality Co, its gearing, current and quick ratios are calculated.

What would be the Current Ratio of Quality Co.?

3.20

1.75

2.56

2.88

6 / 23

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Note. The bank overdraft first occurred on 30 September 20X7.

In the analysis of the financial and liquidity position of Quality Co, its gearing, current and quick ratios are calculated.

What would be the Quick Ratio of Quality Co.?

2.88

3.20

2.56

1.75

7 / 23

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Note. The bank overdraft first occurred on 30 September 20X7.

In the analysis of the financial and liquidity position of Quality Co, its gearing, current and quick ratios are calculated.

What would be the Gearing of Quality Co.?

You should calculate gearing using the capital employed (debt + equity) as the denominator.

24%

20%

13%

16%

8 / 23

From the following information regarding the year to 31 August 20X6, what is the accounts payable payment period? You should calculate the ratio using purchases as the denominator.

57 days

53 days

50 days

40 days

9 / 23

Which of the following transactions would result in an increase in capital employed?

Paying a payable in cash

Selling inventory at a profit

Writing off a bad debt

Increasing the bank overdraft to purchase a non-current asset

10 / 23

A company's gross profit as a percentage of sales increased from 24% in the year ended 31 December 20X1 to 27% in the year ended 31 December 20X2.

Which of the following events is most likely to have caused the increase?

Overstatement of the closing inventory at 31 December 20X1

A purchase in December 20X1 mistakenly being recorded as happening in January 20X2

An increase in sales volume

Understatement of the closing inventory at 31 December 20X1

11 / 23

Which one of the following would help a company with high gearing to reduce its gearing ratio?

Making a rights issue of equity shares

Paying dividends on its equity shares

Making a bonus issue of shares

Issuing further long-term loan notes

12 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Gross Profit % of Binky? (upto one decimal place 00.0%)

13 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Gross Profit % of Smokey? (upto one decimal place 00.0%)

14 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Net Profit % of Binky? (upto one decimal place 00.0%)

15 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Net Profit % of Smokey? (upto one decimal place 00.0%)

16 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Asset turnover % of Binky? (upto one decimal place 00.0%)

17 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Asset turnover % of Smokey? (upto one decimal place 00.0%)

18 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Current Ratio of Binky? (upto one decimal place 00.0%)

1.7

1.5

1.1

1.3

19 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Current Ratio of Smokey? (upto one decimal place 00.0%)

1.4

1.6

1.8

1.2

20 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Quick Ratio of Binky? (upto one decimal place 00.0%)

0.6

1.0

0.8

1.2

21 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Quick Ratio of Smokey? (upto one decimal place 00.0%)

0.9

0.3

0.7

0.5

22 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Receivables collection period of Binky?

65.2 days

45.2 days

76.5 days

59.1 days

23 / 23

Two companies Binky and Smokey trade in the same market. Their financial statements for the year ended 31 October 20X6 are summarised below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Sales revenue	284‏‏‎ ‎	305‏‏‎ ‎
Cost of sales	(155)	(151)
Gross profit	‏‏‎ ‎‏‏‎ ‎129‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎154‏‏‎ ‎
Expenses
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Administrative	(24)	(37)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Selling and distribution	(35)	(53)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Depreciation	(9)	(12)
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Loan note interest	(–)	(5)
Net Profit	‏‏‎ ‎‏‏‎ ‎61‏‏‎ ‎	‏‏‎ ‎‏‏‎ ‎47‏‏‎ ‎

STATEMENTS OF FINANCIAL POSITION AS AT 31 OCTOBER 20X6

	Binky‏‏‎ ‎	Smokey‏‏‎ ‎
	$'000‏‏‎ ‎	$'000‏‏‎ ‎
Assets
Non-current assets
At cost	320‏‏‎ ‎	515‏‏‎ ‎
Accumulated depreciation	(75)	(96)
	‏‏‎ ‎245‏‏‎ ‎	‏‏‎ ‎419‏‏‎ ‎
Current assets
Inventory	91‏‏‎ ‎	293‏‏‎ ‎
Receivables	46‏‏‎ ‎	75‏‏‎ ‎
Bank	64‏‏‎ ‎	15‏‏‎ ‎
*Total assets*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

Equity and liabilities
Equity
Share capital	150‏‏‎ ‎	250‏‏‎ ‎
Retained earnings	108‏‏‎ ‎	177‏‏‎ ‎
10% Loan note	–‏‏‎ ‎	50‏‏‎ ‎
Current liabilities	188‏‏‎ ‎	325‏‏‎ ‎
*Total equity and liabilities*	‏‏‎ ‎446‏‏‎ ‎	‏‏‎ ‎802‏‏‎ ‎

TASK

What is the Receivables collection period of Smokey?

78.9 days

89.8 days

40.5 days

75.4 days

Your score is

F3 (FA/FFA) – Chapter 27 – PART H – CBE MCQs – ACCA

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Syllabus Area

Time

Result

Types of Questions

Why is analysis of financial statements carried out?

A company has the following details extracted from its statement of financial position:

A business operates on a gross profit margin of 331/ %. Gross profit on a sale was $800, and expenses were $680.

Which of the following is a ratio which is used to measure how much a business owes in relation to its size?

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

From the following information regarding the year to 31 August 20X6, what is the accounts payable payment period? You should calculate the ratio using purchases as the denominator.

Which of the following transactions would result in an increase in capital employed?

A company's gross profit as a percentage of sales increased from 24% in the year ended 31 December 20X1 to 27% in the year ended 31 December 20X2.

Which one of the following would help a company with high gearing to reduce its gearing ratio?

More F3 (FA/FFA) MCQs

F3 (FA/FFA) – Chapter 7 and 8 – PART D – CBE MCQs – ACCA

F3 (FA/FFA) – Chapter 1 – PART A – CBE MCQs – ACCA

F3 (FA/FFA) – Chapter 26 – PART G – CBE MCQs – ACCA

F3 (FA/FFA) – Chapter 11 – PART D – CBE MCQs – ACCA

F3 (FA/FFA) – Chapter 10 – PART D – CBE MCQs – ACCA

F3 (FA/FFA) – Chapter 20 – PART F – CBE MCQs – ACCA

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INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Syllabus Area

Time

Result

Types of Questions

Why is analysis of financial statements carried out?

A company has the following details extracted from its statement of financial position:

A business operates on a gross profit margin of 331/ %. Gross profit on a sale was $800, and expenses were $680.

Which of the following is a ratio which is used to measure how much a business owes in relation to its size?

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

Quality Co is analysing its financial performance. An extract from its draft statement of financial position at 31 March 20X8 is set out below.

From the following information regarding the year to 31 August 20X6, what is the accounts payable payment period? You should calculate the ratio using purchases as the denominator.

Which of the following transactions would result in an increase in capital employed?

A company's gross profit as a percentage of sales increased from 24% in the year ended 31 December 20X1 to 27% in the year ended 31 December 20X2.

Which one of the following would help a company with high gearing to reduce its gearing ratio?

More F3 (FA/FFA) MCQs

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