Quiz
Profit and Loss accounts, balance sheets, and financing a business
Fragen in diesem Quiz (17)
1What is Gross profit?
- ASales turnover minus cost of sales
- BSales turnover
2What is Net Profit?
- AIt is gross profit margin with sales turnover added minus cost of goods sold
- BThe profit made after all costs and revenues have been accounted for. It is gross profit plus non-sales revenue minus operating costs.
3What is the difference between Profit and Loss account, and Trading account?
- AProfit and Loss account is a record of revenues and costs of a business over a period of time such as 6 months or a year. While trading account is part of a profit and loss account which shows sales turnover, cost of sales and changes in stocks.
- BProfit and Loss account is a record of revenues and costs of a business over a period of time such as 6 months or a year. While trading account a completely different account which shows sales turnover, cost of sales and changes in stocks.
4What is an appropriation account?
- AA part of the profit and loss account which shows what has happened to net profit.
- BA part of the profit and loss account which shows what the gross profit is.
- CIt is an account which tells the accountant what to buy for next years stock
5What is cost of sales?
- ACost of production such as the cost of raw materials, direct wage costs and changes in stock.
- BCost of the product sold. Such as £3.25 for a jar of nutella.
6What is depreciation?
- AThe fall in value of fixed equipment and buildings over time as they wear out.
- BThe fall in value of the product sold as it loses it's value.
7What is a balance sheet? And what does it contain.
- AA sheet which contains assets and liabilities.
- BA sheet which contains goods sold this year in relation with goods sold last year
8What is an asset and what is the difference between fixed and liquid assets?
- AAn asset is what a business owns. A fixed assets is something a business cannot sell or turn into cash easily whilst a liquid asset is something that can be turned into cash or sold easily. Cash is a liquid asset.
- BAn asset is what a business owes. A fixed assets is something a business cannot pay back whilst a liquid asset is a debt which the company can pay back.
9What is the difference between a liquid and current asset.
- AA liquid asset is easily turned to cash and a current asset is not.
- BNothing, they are the same.
10What is a liability and what is the difference between a fixed/longterm and liquid / current liability?
- AA liability is what the business owes. A current liability is a liability in which the business will have to pay within the next 12 months. The most important current liability is creditors. When a company buys a product is usually doesn't have to pay for the product until at least 30 days. These are trade creditors of the business, short term loans are current liabilities. A long-term liability is what the business has to pay in more than 12 months. This can include mortgages, long term loans.
- BWhat the business wants to buy but doesn't have enough money. Something expensive is a long term liability and something cheap is a current liability.
11Capital and reserves are liabilities. This is money given to wages and money retained to invest further in the business (retained profit) is this true?
- ARichtig
- BFalsch
12How do you work out Gross Profit Margin? It is usually in a percentage and is used to find out how much money the business will have left over.
- AGPM=(Gross profit / sales turnover) x 100
- BGPM=(Sales turnover / gross profit) x 100
13How do you work out Net Profit Margin? It is usually in a percentage and is used to find out how much money the business will have left over.
- ANPM=( net profit / sales turnover) x 100
- BNPM=( sales turnover / net profit) x 100
14in profit margins is it better to have a higher or lower percentage?
- Ahigher
- Blower
15Financing the business through capital. There are shares, venture capital and retained profit. What is venture capital?
- AVenture capital companies invest and buy shares in small but growing businesses.
- BVenture capital companies buy small but growing businesses.
16Financing the business through borrowing includes trade credit, factoring, bank loans, leasing and hire purchase, debentures and grants. What are trade credit and factoring?
- ATrade credit is when businesses don't have to pay for at least a month for its goods after the have been delivered by the suppliers. It means that the suppliers lend money for a month for 'free'. Sometimes companies may owe too much money and suppliers may stop supplying. If the business owes too much money it is in danger of going bankrupt, leaving the debt unpaid.
Factoring is when you reduce the amount of money you borrow on an overdraft. It lowers the debt the business has to pay in the longterm
Factoring - BTrade credit and factoring are the same things.
- ATrade credit is when businesses don't have to pay for at least a month for its goods after the have been delivered by the suppliers. It means that the suppliers lend money for a month for 'free'. Sometimes companies may owe too much money and suppliers may stop supplying. If the business owes too much money it is in danger of going bankrupt, leaving the debt unpaid.
17Financing the business through borrowing includes trade credit, factoring, bank loans, leasing and hire purchase, debentures and grants. What are debentures and grants?
- ALarge public limited companies can borrow money through the city of London by issuing debentures. These are long term loans for between 5 to 25 years. Interest has to be paid on the loan.
Grants is money given to a business by a large number of bodies or the government on a selective basis. It is usually small businesses that benefit from grants. Grants can be lengthy and there are lots of from to fill in . It can frustrating and overwhelming. Also businesses have to prove they are using the money wisely. - BPartnerships or sole traders can borrow money through the city of London by issuing debentures. These are long term loans for between 5 to 25 years. Interest has to be paid on the loan.
Grants is money given to a business by a large number of bodies or the government on a selective basis. It is usually small businesses that benefit from grants. Grants can be lengthy and there are lots of from to fill in . It can frustrating and overwhelming. Also businesses have to prove they are using the money wisely.
- ALarge public limited companies can borrow money through the city of London by issuing debentures. These are long term loans for between 5 to 25 years. Interest has to be paid on the loan.
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- noorgal
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