Accounting Principles and Analysis Quiz

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Questions and Answers

What is the formula for Net Cash Flow?

Fixed Costs ÷ Contribution per Unit

Total Cash Inflow – Total Cash Outflow (correct)

Selling Price × Quantity Sold

Opening Balance + Total Cash Outflow

Which formula correctly calculates Total Costs?

Fixed Costs + Total Variable Costs (correct)

Total Revenue ÷ Total Contribution

Revenue × Cost of Goods Sold

Selling Price – Variable Costs

How do you calculate Profit using Contribution?

Total Costs × Net Contribution

Contribution per Unit × Margin of Safety

Fixed Costs ÷ Total Revenue

Total Revenue – Total Fixed Costs (correct)

What is the formula for Contribution per Unit?

Selling Price – Variable Costs Signup and view all the answers

How is Closing Balance calculated?

Opening Balance + Net Cash Flow Signup and view all the answers

Which formula calculates Break-even Output?

Total Fixed Costs ÷ Contribution per Unit Signup and view all the answers

Which formula represents Total Revenue?

Selling Price × Quantity Sold Signup and view all the answers

What is the formula for Margin of Safety?

Actual Sales – Break-even Sales Signup and view all the answers

What is the formula for calculating the Gross Profit Margin?

(Gross Profit ÷ Revenue) × 100 Signup and view all the answers

How is the formula for calculating the Current Ratio expressed?

Current Assets ÷ Current Liabilities Signup and view all the answers

What does Net Book Value represent and how is it calculated?

Cost – Depreciation Signup and view all the answers

Which formula correctly finds the Profit/Loss for the Year?

Gross Profit + Other Income – Expenses Signup and view all the answers

How is the formula for Return on Capital Employed (ROCE) structured?

(Profit ÷ Capital Employed) × 100 Signup and view all the answers

Which formula correctly calculates the Capital Employed?

Opening Capital + Profit for the Year – Drawings Signup and view all the answers

In calculating Trade Payable Days, which formula should be used?

(Trade Payables ÷ Credit Purchases) × 365 Signup and view all the answers

What is the correct formula to determine the Mark-up percentage?

(Gross Profit ÷ Cost of Sales) × 100 Signup and view all the answers

How is Net Current Assets calculated?

Current Assets – Current Liabilities Signup and view all the answers

How is Inventory Turnover calculated?

(Cost of Sales ÷ Average Inventory) × 365 Signup and view all the answers

Study Notes

Cash Flow Forecasts

Net Cash Flow: Total Cash Inflow – Total Cash Outflow
Closing Balance: Opening Balance + Net Cash Flow

Break-Even Analysis

Total Revenue: Selling Price × Quantity Sold
Total Costs: Fixed Costs + Total Variable Costs
Profit: Total Revenue – Total Costs
Total Contribution: Total Revenue – Total Variable Costs
Contribution per Unit: Selling Price – Variable Costs
Profit using Contribution: Total Revenue – Total Fixed Costs
Break-even Output: Total Fixed Costs ÷ Contribution per Unit
Margin of Safety: Actual Sales – Break-even Sales

Statement of Comprehensive Income

Revenue: Selling Price × Quantity Sold
Gross Profit: Sales Revenue – Cost of Goods Sold
Cost of Goods Sold (COGS): Opening Inventory + Purchases – Closing Inventory
Profit/Loss for the Year: Total Revenue – Expenses
Net Book Value: Cost – Depreciation

Statement of Financial Position

Net Current Assets: Current Assets – Current Liabilities
Net Assets: Non-current Assets + Net Current Assets – Long-term Liabilities
Capital Employed: Opening Capital + Profit for the Year – Drawings
Balance Sheet Equation: Net Assets = Capital Employed

Measuring Profitability

Gross Profit Margin: (Gross Profit ÷ Revenue) × 100
Mark-up: (Gross Profit ÷ Cost of Sales) × 100
Profit Margin: (Profit ÷ Revenue) × 100
Return on Capital Employed (ROCE): (Profit ÷ Capital Employed) × 100

Measuring Liquidity

Current Ratio: Current Assets ÷ Current Liabilities
Liquid Capital Ratio: (Current Assets – Inventory) ÷ Current Liabilities
Trade Receivable Days: (Trade Receivables ÷ Credit Sales) × 365
Trade Payable Days: (Trade Payables ÷ Credit Purchases) × 365

Measuring Efficiency

Inventory Turnover: (Average Inventory ÷ Cost of Sales) × 365

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Description

Test your knowledge on key accounting principles including cash flow forecasts, break-even analysis, and financial statements like the statement of comprehensive income and financial position. This quiz covers essential calculations and concepts every accountant should know.