Take this Exam: BTEC Business: Financial Statements | Zestly

Question 1

Marchwood Sports has revenue of 480 000 pounds, cost of sales of 300 000 pounds and expenses of 120 000 pounds. What are its gross profit and net profit?

Accepted Answer

Gross profit 180 000 pounds and net profit 60 000 pounds.

Answer

Gross profit 360 000 pounds and net profit 180 000 pounds.

Answer

Gross profit 180 000 pounds and net profit 180 000 pounds.

Answer

Gross profit 60 000 pounds and net profit 180 000 pounds.

Question 2

Marchwood Sports has total assets of 250 000 pounds and total liabilities of 90 000 pounds. What is the capital, or equity, of the business?

Accepted Answer

160 000 pounds.

Answer

340 000 pounds.

Answer

90 000 pounds.

Answer

250 000 pounds.

Question 3

How can Marchwood Sports report a healthy profit for the year and still be unable to pay a bill that falls due?

Accepted Answer

Because profit counts sales when they are made, while paying a bill needs money actually in the bank, and customers may not yet have paid.

Answer

Because the profit figure must have been calculated incorrectly.

Answer

Because profit and cash are the same thing, so this cannot happen.

Answer

Because the firm has not yet published its accounts.

Question 4

What happens to the reported profit of Marchwood Sports if a bill for electricity already used, but not yet invoiced, is recorded at the year end?

Answer

Profit is unchanged, because no money has left the bank.

Answer

Profit is unchanged, because the invoice has not arrived.

Answer

Profit falls, because the cost belongs to the year in which the electricity was used.

Answer

Profit rises, because a liability has been created.

Question 5

Why would a supplier look at the financial statements of Netherby Tiles before offering them thirty days to pay?

Answer

To check whether the firm's products are of good quality.

Answer

To judge whether the firm is likely to be able to pay what it owes when the time comes.

Answer

To decide what price to charge, since the statements set prices.

Answer

To find out how many people the firm employs.