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Year 11 Exam  >  Year 11 Tests  >  Accounting for GCSE/IGCSE  >  Test: Analysis and Interpretation - Year 11 MCQ

Test: Analysis and Interpretation - Year 11 MCQ


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10 Questions MCQ Test Accounting for GCSE/IGCSE - Test: Analysis and Interpretation

Test: Analysis and Interpretation for Year 11 2024 is part of Accounting for GCSE/IGCSE preparation. The Test: Analysis and Interpretation questions and answers have been prepared according to the Year 11 exam syllabus.The Test: Analysis and Interpretation MCQs are made for Year 11 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Analysis and Interpretation below.
Solutions of Test: Analysis and Interpretation questions in English are available as part of our Accounting for GCSE/IGCSE for Year 11 & Test: Analysis and Interpretation solutions in Hindi for Accounting for GCSE/IGCSE course. Download more important topics, notes, lectures and mock test series for Year 11 Exam by signing up for free. Attempt Test: Analysis and Interpretation | 10 questions in 20 minutes | Mock test for Year 11 preparation | Free important questions MCQ to study Accounting for GCSE/IGCSE for Year 11 Exam | Download free PDF with solutions
Test: Analysis and Interpretation - Question 1
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What does the Current Ratio assess in a business?

Detailed Solution for Test: Analysis and Interpretation - Question 1
The Current Ratio, or Working Capital Ratio, evaluates the liquidity of a business by comparing its current assets to its current liabilities. It indicates the ability to meet short-term debts.
Test: Analysis and Interpretation - Question 2
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Which formula correctly calculates the Quick Ratio?

Detailed Solution for Test: Analysis and Interpretation - Question 2
The Quick Ratio, also known as the Acid-Test Ratio, excludes inventory from current assets to assess immediate liquidity. It is calculated as Quick Ratio = (Current Assets - Inventory) / Current Liabilities.
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Test: Analysis and Interpretation - Question 3
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What does the Return on $100 of Sales measure?

Detailed Solution for Test: Analysis and Interpretation - Question 3
Return on $100 of Sales reflects how efficiently expenses are managed to generate returns, indicating profitability through expense control.
Test: Analysis and Interpretation - Question 4
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How is the Rate of Inventory Turnover calculated?
Detailed Solution for Test: Analysis and Interpretation - Question 4
The Rate of Inventory Turnover measures how quickly inventory is sold and replaced, calculated as Cost of Sales / Average Inventory.
Test: Analysis and Interpretation - Question 5
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What does the Trade Receivables to Sales Ratio indicate?
Detailed Solution for Test: Analysis and Interpretation - Question 5
The Trade Receivables to Sales Ratio measures the efficiency of credit sales by indicating how much of sales remain as receivables.
Test: Analysis and Interpretation - Question 6
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What is the purpose of the Capital Employed ratio?
Detailed Solution for Test: Analysis and Interpretation - Question 6
The Capital Employed ratio evaluates the efficiency of capital utilization by expressing net profit as a percentage of capital employed.
Test: Analysis and Interpretation - Question 7
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Why is a Current Ratio of 1.5:1 to 2:1 considered satisfactory?
Detailed Solution for Test: Analysis and Interpretation - Question 7
A Current Ratio between 1.5:1 to 2:1 is considered satisfactory as it shows the business can meet its short-term debts promptly.
Test: Analysis and Interpretation - Question 8
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Which action can worsen the Quick Ratio?
Detailed Solution for Test: Analysis and Interpretation - Question 8
Acquiring additional non-current assets can worsen the Quick Ratio by tying up funds that could otherwise be used for liquidity.
Test: Analysis and Interpretation - Question 9
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What does the Rate of Inventory Turnover indicate with a faster rate?
Detailed Solution for Test: Analysis and Interpretation - Question 9
A faster Rate of Inventory Turnover indicates reduced funds tied up in inventory, suggesting efficient management of inventory.
Test: Analysis and Interpretation - Question 10
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How does the Average Collection Period impact a business?
Detailed Solution for Test: Analysis and Interpretation - Question 10
The Average Collection Period impacts cash flow management by indicating how efficiently debtors settle their accounts, affecting liquidity.
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Important Questions for Analysis and Interpretation

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Analysis and Interpretation MCQs with Answers

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