A-LevelAccountingPreparation of financial statements9706/12 · Feb/Mar 2021 · Q121 Mark

At the end of his first year of trading, the trader lost all of his inventory in a fire. He knows the values of sales and purchases and wishes to calculate the value of the inventory lost. Which ratio should he use?

Agross margin

Bprofit margin

Ctrade payables turnover

Dtrade receivables turnover

✓ Correct answer

A: gross margin

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Topic: Preparation of financial statements, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Feb/Mar 2021 Paper 1 Variant 2, question 12.

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