IGCSE Accounting Paper-1: Specimen Questions with Answers 334 - 337 of 338

Passage

Gulzar opened a toy car factory on 1 May 2019. He provided the following information at the end of his first accounting year.

Gulzar Opened a Toy Car Factory on 1 May 2019
$
Purchases of raw materials14000
Direct factory wages9800
Indirect factory wages7500
Factory insurance300
General factory expenses200
Carriage inwards650
Factory Electricity900
Stock at 30 April 2020:
Raw materials1000
Work in progress1550
Finished goods2850

Factory machinery, $ 20000, was purchased on 1 May 2019 and is to be depreciated by 10 % per annum.

Question 334 (4 of 8 Based on Passage)

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One Liner▾

Calculate the Net Profit Ratio. (Marks 2)

Explanation

Question 335 (5 of 8 Based on Passage)

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Short Answer▾

Suggest two ways in which the above two ratios can be improved. (Marks 2)

Explanation

  • Selling Price per unit can be increased to increase sales revenue so as to improve both Gross Profit Ratio as well as Net Profit Ratio.
  • Further, Net Profit Ratio is much lesser than the Gross Profit Ratio because of high administration and selling expenses.
  • Administration and selling expenses can be controlled to improve the Net Profit Ratio.

Question 336 (6 of 8 Based on Passage)

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One Liner▾

Define and give one example of each of the following types of inventory. (Marks 2)

Work in progress

Explanation

Work in progress is a semi-finished good. It is good in intermediate stage between raw material and finished goods. It needs some further processing to become finished goods.

In the manufacturing plastic toy car, moulded toy parts (unassembled) are Work in Progress.

Question 337 (7 of 8 Based on Passage)

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Write in Brief

One Liner▾

Define and give one example of each of the following types of inventory. (Marks 2)

Finished goods

Explanation

Finished Goods are those which have completed the manufacturing process and are ready to be sold to the consumer.

In plastic toy car manufacturing, finished toy cars are finished goods.

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