*Answer option ONLY*

Question 7

Amir sells fish and Abid sells Both operate on a 50% mark-up on cost. However, their gross profit ratios are as follows.

Amir 25%

Abid 33%

The highest gross profit ratio of the bookseller may be because?

Group of answer choices

(a) There is more wastage with fish stocks than with book stocks

Amir has a substantial bank loan whereas the Abids business is entirely financed by his family

Amir has expensive high street premises whereas Abid has cheaper back street premises

Amirs sales are declining whereas that of Abid is increasing

Question 8

Maira Limited has a current ratio of 2:1.

This ratio will decrease if Maira Limited

Group of answer choices

will receive cash in respect of a short-term loan

will receive cash in respect of a long-term loan

pays an existing trade payable

writes off an existing receivable against the provision for doubtful debts

Question 9

The draft accounts of Super Star Limited for the year ended 31 December 2018 include the following:

Revenue CAD 360 million

Gross profit CAD 90 million

It was subsequently discovered that the revenue was overstated by CAD 45 million and the closing inventory understated by CAD 15 million.

After correction of these errors the gross profit percentage will be?

Group of answer choices

19.0%

9.5%

23.8%

33.3%

Question 10

The following has been extracted from the financial statements of a business.

SOCI CAD SOFP CAD

Profit from operations 86,400 7% debenture 117,000

Debenture interest (8,190) Ordinary share capital 171,000

Profit for the year 72,360 Share premium 13,500

Retained earnings 63,000

What was the return on capital employed (ROCE)?

Group of answer choices

23.7%

19.9%

29.2%

34.9%

Question 11

Waris Limited buys and sells a single product. The following is an extract from its statement of financial position at 31 December 2018. 2018 2017 CAD 000 CAD 000 Inventory 75 60 Receivables 24 36 Sales and purchases during 2018 were CAD 300,000 and CAD 180,000 respectively. 20% of sales were for cash. Which TWO of the following are correct?
a - Average receivables collection period is 37 days
b - Average receivables collection period is 46 days
c - Gross profit % is 35%
d - Gross profit % is 45%

Group of answer choices

b & d

a & d

b & c

c & d