24 Businesses prepare their statement of cash flows on a cash basis whereas the income statement and the balance sheet are prepared on an accrual basis. out of Select one: O a. True question O b. False Identify which of the following are at least three of the accounting functions for businesses Select one: O a. Planning, buying and selling O b. Planning, controlling and decision support. O c. Saving, controlling and decision support. O d. Planning, communicating and decision support. What is the name of the expense in the Income Statement, which represents the purchase price of the goods which were sold during the period? Select one: O a. Stocks O b. Cost of sales O c. Stock loss O d. Gross profit 33 If the gross profit ratio for a company is unchanged, but the net profit ratio declined over the same period, the most likely reason for this is: d out of Select one: a. Operating expenses decreased relative to sales question O b. Sales increased relative to expenses O c. The Australian Government increased the rate at which companies are being taxed O d. Liabilities increased relative to assets 34 Redriver Company has a 2.5% return on average assets of $500,000 and a net profit ratio of 10%. Redrivers's sales are closest to? d Select one: out of O a. $25,000 question O b. $100,000 O c. $125,000 O d. $75,000 Elvis Enterprises has achieved a return on assets (ROA) of 8%. It pays an average of 6% interest on its debt. It has increased its debt ratio from 30% to 38% over the past year, this increase would have the following effect on the return on equity (ROE) Select one: O a. An improvement in the ROE O b. A worsening of the ROE C. Neither a favourable or unfavourable effect O d. Cannot be determined