ACSBR 2024 POA P1 QP with ANS

ACS Barker1Naomi’s financial year ends on 30 September. The following information was provided.2021$2022$2023$Current AssetsInventory8 00015 00035 000Trade receivables5 0007 00012 000Cash at bank4 000 600Total current assets17 00022 60047 000Current LiabilitiesShort-term borrowings10 000Trade payables3 0007 5009 000Total current liabilities3 0007 50019 000REQUIRED(a)Explain what is meant by the liquidity of a business.[2](b)Calculate the following ratios for the year ended 30 September 2023. Your answers should be corrected to two decimal places. (i)Working capital (current) ratio[2](ii)Quick (acid test) ratio[2]

Preliminary Examination 20242Secondary 4 Express/Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 1 The following information relates to the three years ended 30 September 2021 and 2022.202120221Working capital (current) ratio5.673.012Quick (acid test) ratio3.001.01(c)Taking into account the above information and your answers to (a)(i) and (ii), (i)Comment on the liquidity position of Naomi’s business for the year ended 30 September 2023. [5] (ii)Suggest two reasons to explain the liquidity position of Naomi’s business for the year ended 30 September 2023. [2]

Preliminary Examination 20243Secondary 4 Express/Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 1 (d)Advise Naomi on two measures she may take to improve her liquidity position. [2] (e)Explain why the quick (acid test) ratio is a more accurate measure of the liquidity than the working capital (current) ratio. [2] The business profit has remained the same over the three years ended 30 September 2021, 2022 and 2023.REQUIRED(f)Advise Naomi why the liquidity of the business has changed even though profit has remained the same over the three years.[2]

Preliminary Examination 20244Secondary 4 Express/Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 1 Naomi is considering comparing the profitability of her business with that of a competitor.REQUIRED(g)Name one profitability ratio which Naomi could use.[1][Total: 20]2Abrahm runs a retail business with a financial year end of 31 July. The following ledger account has been prepared at 31 July 2024.Sale of motor vehiclesDateDebitCreditBalance2024$$$July 31Motor vehicles24 00024 000 DrAccumulated depreciation of motor vehicles11 71212 288 DrOther receivables: Hybrid10 800 1 488 DrIncome summary 1 488-REQUIRED(a)Interpret each of the entries in the sale of motor vehicles account.(i)Motor vehicles[1](ii)Accumulated depreciation of motor vehicles[1](iii)Other receivables: Hybrid[1](iv)Income summary[1]

Preliminary Examination 20245Secondary 4 Express/Secondary 5 Normal (Academic)Principles of Accounts 7087 Paper 1 During the yearAbrahm had extended his shop premises at a cost of $17 500, which included $1500 for repairs to the existing shop premises. He had included the total