Which of the following statements about accounting concepts and policies is/are correct?1 Companies should never change
the presentation or classification of items in their financial statements, even if there is a significant change in the nature of
operations.2 Companies should create provisions in times of company growth to be utilised in more difficulttimes, to smooth
profits
(1) is incorrect, the presentation or classification can be changed if there is a significant changein the nature of operations, if an IFRS requires it or if a review of the accounts indicates a more appropriate presentation.
(2) is incorrect, companies should not make provisions in order to smooth profits, provisions should only be made in
accordance with IAS 37
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Which of the following is a ratio which is used to measure how much a business owes in relation to its size?
A business operates on a gross profit margin of 331/3%. were $680. Gross profit on a sale was $800, and expenses
What is the net profit margin?
A company has the following details extracted from its statement of financial position：
$'000
Inventories 1,900
Receivables 1,000
Bank overdraft 100
Payables 1,000
The industry the company operates in has a current ratio norm of 1.8. Companies who manage liquidity well in this industry
have a current ratio lower than the norm.
Which of the following statements accurately describes the company’s liquidity position?
Why is analysis of financial statements carried out?
Which of the following transactions would result in an increase in capital employed?
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