Accounting

QUESTION 1 1. Aspect Ltd has the following balance sheet figures. The current ratio is Total current assets $450 000 Total current liabilities 150 000 Inventory 200 000 Bank overdraft 30 000 a. 2:1 b. 1.67:1 C. Unable to be determined from the information given d. 3.75:1 e. 3:1 1 points QUESTION 2 1. Which of the following statements is NOT correct a. A lower liquidity ratio generally means lower ability to pay current obligations b. Low liquidity ratios are undesirable C. Management should aim for the highest possible liquidity ratios d. All of the options are correct e. The higher the liquidity ratios the lower the risk for both creditors and owners 1 points QUESTION 3 1. A favourable variance occurs when a. Actual sales are lower than budgeted sales b. Actual expenses are lower than actual sales c. Budgeted sales are lower than actual sales d. Actual expenses are higher than budgeted expenses e. Budgeted profit is higher than actual profit 1 points QUESTION 4 1. Which of the following statements concerned with the ARR and payback period methods is correct? a. All of these statements are correct b. If two projects have the same ARR the one with the lowest payback period would be preferred C. Both methods are quite easy for managers to understand d. Both methods are simplistic and may be useful for a quick analysis to sort out projects for further analysis e. Both methods ignore the time value of money