Multiple Choice Questions 5.1 Archie Ltd purchased 5 cars in the year for 10,000 each.

A bank loan was taken out to finance the purchase of one of the vehicles, 2 vehicles were purchased on credit and will be paid for at the start of the next financial period. What would be the net impact on cash from the purchase of these cars?

5.2 In January 2010 a dividend of 23,000 was authorised and paid by Wilson Ltd. During June 2010 an interim dividend was declared and paid of 13,600. In January 2011 a final dividend was proposed of 26,500. What amount will appear in the cash flow statement under equity dividends for the year-ended 31st December 2010?

5.3 Tomb Stone Ltd buys and sells a single product. The following is an extract from its balance sheet as at 30 September 2010: 2010 m 65 16 2009 m 40 24

Inventories Receivables

Sales and purchases during 2010 were 250m and 150m respectively. 20% of sales were for cash. What were the average settlement period for receivables and the gross profit percentage for the year-ended 30 September 2010?

5.4 What effect should the introduction of a Just-in-Time (JIT) stock control system have upon a companys inventory holding period and payables payment period?

5.5 Fab Ltd purchases and sells a single product. Extracts from the latest accounts of Fab Ltd are as follows: m Inventories Receivables Cash Trade payables Other payables 18 30 10 25 5

The following information is also available: Purchases for the year was 150m; cost of goods sold was 180m What is the most appropriate measure of the companys settlement period for payables and inventory holding period? Settlement period for payables Inventory holding period

5.6 A companys settlement period for receivables has reduced from 35 days in 2009 to 27 days in 2010. Which of the following might be an explanation of this change?

5.7 The accounts of TenStar PLC, which has a 30 June 2010 year-end, include the following items: 000 Receivables: Trade receivables Sale of non current assets 60 20

Sales for the year were 350,000, of which 100,000 were cash sales. The settlement period for receivables for the year-ended 30 June 2010 was:

5.8 What is meant by the term overtrading?