ALMUNTAZIR ISLAMIC SEMINARY

ACCOUNTING TOPIC TEST YEAR 11-ACCOUNTING RATIO

TIME: 50 Minutes
1. The financial year of ZONGO Limited ends on 30 September.

The following information is available.

$ $
For the year ended 30 September 2014
Revenue (sales) -All on credit 480 000

Cost of sales 310 000

Expenses 94 000

Purchases -All on credit 290 000

On 30 September 2014
Capital employed 635 000

Inventory (Closing) 30 800

Trade receivables 56 000

Trade payables 51 500

Bank overdraft 15 300

Short term loan 5 000

REQUIRED

a) Calculate the percentage of gross profit to revenue (sales).

The calculation should be correct to two decimal places.

[2]
The percentage of gross profit to revenue (sales) is lower than in 2013.

b) Suggest two reasons why it is lower.

1. …………………………………………………………………………………………………
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2. …………………………………………………………………………………………………
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[2]

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 c) Calculate the percentage of profit for the year to revenue (sales).

The calculation should be correct to two decimal places.

……………………………………………………………………………………………………………
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[2]

d) suggest two ways in which the percentage of profit for the year to revenue (sales)
could be improved.

e) Calculate the return on capital employed (ROCE).

The calculation should be correct to two decimal places.

[2]

f) Explain the importance of the return on capital employed (ROCE) to ZONGO Limited.

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 [2]

g) Calculate the current ratio.

The calculation should be correct to two decimal places.

[2]

h) Calculate the quick (acid test) ratio.

The calculation should be correct to two decimal places.

[2]

i) Calculate trade receivable turnover correct to two decimal places.

[2]

j) Calculate rate of inventory turnover correct to two decimal places.

[2]

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 Total [20 marks]

2. The following trial balance was extracted from the books of Amir Sadiq as at 31 March 2003

$ $
Capital 33000
Drawings 2500
Buildings at cost 20000
Fixtures and equipment at valuation 3400
Motor vehicles at cost 8000
Provision for depreciation of motor vehicles 3250
Provision for doubtful debts 200
Debtors 7500
Creditors 6700
Bank overdraft 2880
Motor vehicle expenses 1240
General expenses 2030
Wages 11940
Insurance 1470
Carriage inwards 700
Discount received 250
Sales 92100
Purchases 68500
Sales returns 1200
Stock 1 April 2002 9900
––––––– –––––––
138380 138380
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Additional information
1. At 31 March 2003:
Stock was valued at $10200.
Wages outstanding amounted to $1080.
Insurance prepaid amounted to $210.

2. During the year ended 31 March 2003 Amir took goods costing $300 for his own use.
No entries had been made in the accounting records.

3. The provision for doubtful debts is to be maintained at 2% of the debtors.

4. Motor vehicles are to be depreciated at 20% per annum using the reducing balance
method.

5. Fixtures and equipment were valued at $2800 on 31 March 2003. No fixtures and
equipment were bought or sold during the year ended 31 March 2003.

Required:
Prepare income statement for the year ended 31st March 2003
[10 marks]