A-LevelAccountingFinancial Ratios and Financial Statements AnalysisOct/Nov 2011Paper 1 Q231 Mark
A firm has calculated the following accounting ratios for the year ended 30 June: year ended 30 June 2010 30 June 2011 gross profit on sales 30% 33% net profit on sales 15% 14% What could explain the changes in the percentages?
Afall in interest payments was equal to an increase in administration costs.
BAn increase in raw material costs was covered by an increase in selling price.
CAn increase in the advertising budget has allowed the firm to increase the selling price.
DAn increase in the advertising budget has led to a rise in sales volume.
✓ Correct Answer
The correct answer is C. This question tests the candidate's understanding of financial ratios and financial statements analysis within the Accountingsyllabus. The examiner's mark scheme requires...
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Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
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