This is BBM206/05 Business Accounting II subject

Question 1 a. Both current ratio and quick ratio are designed to estimate the ability of a business to pay for its current liabilities. Explain the difference between these two measurements, by giving examples. [6 marks] b. Below is the Statement of Profit or Loss for the Year Ended 31 December 2018 for Kopi Sdn Bhd. (300) STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2018 RM'000 Revenue 720 Cost of Sales Gross Profit 420 Administration expenses (180) Distribution expenses (120) Profit before tax 120 Taxation (10) Profit for the year 110 Required: . Calculate gross profit percentage and net profit percentage for Kopi Sdn Bhd. [2 marks] Mr Lim, accountant of Kopi Sdn Bhd noticed there was understatement of the closing inventory at 31 December 2017. Explain the impact that this error will cause to gross profit percentage / net profit percentage. [2 marks]