1

1 Define ‘shareholders’ equity’.

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[Total: 2]

2 State whether each of the following are classified as a current asset or a current liability.

Overdraft: ................................................................................................................................................

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Trade receivables: ....................................................................................................................................

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Trade payables: ........................................................................................................................................

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Cash in bank: ...........................................................................................................................................

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[Total: 4]

3 Identify two examples of non-current assets.

Example 1: ...............................................................................................................................................

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Example 2: ...............................................................................................................................................

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[Total: 2]

4 Define ‘current liabilities’.

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[Total: 2]

5 Define ‘non-current assets’.

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.................................................................................................................................................................. [2]

[Total: 2]

6 What is meant by ‘capital employed’?

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.................................................................................................................................................................. [2]

[Total: 2]

7 What is meant by ‘non-current liabilities’?

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.................................................................................................................................................................. [2]

[Total: 2]

8 What is meant by ‘non-current assets’?

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.................................................................................................................................................................. [2]

[Total: 2]
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9 Table: Extract from Josh’s balance sheet as at 30 April 2017 ($000)

Calculate the following values.

X:..............................................................................................................................................................

Y: .............................................................................................................................................................. [2]

[Total: 2]

10 What is meant by ‘trade receivables’?

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.................................................................................................................................................................. [2]

[Total: 2]

11 What is meant by ‘non-current assets’?

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.................................................................................................................................................................. [2]

[Total: 2]

12 What is meant by ‘non-current liabilities’?

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.................................................................................................................................................................. [2]
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[Total: 2]

13 Dhoni is a successful small business. It has five shops which sell kitchen equipment such as cooking pots
and knives. Most of its products are sold to restaurants and hotels. The company has received a takeover
offer of $700 000 from a large competitor. Dhoni’s shareholders have been looking at the accounts. They
are not sure whether shareholders would benefit from the takeover. Dhoni’s return on capital employed was
7% in 2015 and 9% in 2016.

Table: Extract from Dhoni’s accounts ($000s)

Identify and explain two reasons why Dhoni has trade receivables.

Reason 1:..................................................................................................................................................

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Explanation:.............................................................................................................................................

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Reason 2:..................................................................................................................................................

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Explanation:.............................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]

14 What is meant by a ‘non-current asset’?

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.................................................................................................................................................................. [2]

[Total: 2]
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15 CLW makes wood furniture, including chairs and tables. Demand has risen quickly over the past 3 years and
the business needs to increase the scale of production at its factory. The factory is located near the city centre
in an area of low unemployment. The Finance Director has produced a business plan, including a balance
sheet. The Finance Director is pleased with CLW’s liquidity.

Table: Extract of financial information

Identify and explain two possible benefits for CLW of holding high inventory (stock) levels.

Benefit 1: .................................................................................................................................................

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Explanation:.............................................................................................................................................

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Benefit 2:..................................................................................................................................................

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Explanation:.............................................................................................................................................

.................................................................................................................................................................. [4]

[Total: 4]

16 What is meant by a ‘balance sheet’?

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.................................................................................................................................................................. [2]

[Total: 2]
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17 What is meant by ‘retained profit’?

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.................................................................................................................................................................. [2]

[Total: 2]