ABC Text Book

Profitability & Liquidity
I . Profitability Ratio
(1) Gross profit to Sale = Gross Profit x 100 =%

Gross profit margin Net Sale
Gross profit as a % of sale
Gross profit to cost of sale Ratio = Gross Profit x 100 =%

Gross profit Markup Cost of Sale
(2) Overhead Expenses to Sale = Overhead Expenses x 100 =%

Net Sale
(3) Net Profit to Sale Ratio /Net prof = Net Profit x 100 =%
Margin /Net profit as a % of sale Net Sale
(4) Return on Capital Employed (ROCE)

= Net Profit (PBIT) x 100
Capital Employed
Capital employed = Equity + Non current liability

(or )
= Total Asset - Current Liability

II. Liquidity Ratio
(1) Current Ratio = Current Asset :1

Current Liability
Standard Guide Line (2:1)
(2) Acid Test Ratio (or) Quick Ratio = Current asset - Closing inventory
Current liability
:1
(3) Inventory Turnover day = Average inventory (Closing inventory )

Cost of sale
= days
Average inventory = Opening inventory + Closing inventory

2
(4) Inventory Turnover (Time) = Cost of sale
Average inventory (closing inventory)
= times
(5) Debtor collection period (days)

= Trade receivable x 365 = days
Credit sale
(6) Creditor settlement period days = Trade payable x 365 = days

Credit Purchase
Statement of Profit or Loss

Sale/Revenue/Turnover xxx
(-)Sale Return/Return inward (xx)
Net Sale xxx
(-) Cost of Sale

Opening inventory xx
Purchase xx
(-)Purchase return/Return outward (xx)
(+)Carriage inward xx
(-)Closing inventory (xx)
(xxx)
Gross Profit xxx
(+) Other income xxx
(-)Expenses/ Overhead expenses (xxx)
Net Profit xxx
Statement of financial position as at

Asset
Non-current asset xxx
Current asset
Inventory xx
Trade receivable xx
Cash and Bank xx
Total current asset xxx

Current liabiltiy
Trade payable (xx)
Bank overdraft (xx)
Net Current asset /Working capital xxx
Net Asset xxx

2-2000'
(1) The following information relates to a retailer’s business at the end of the first year
of trading: $
Annual sales 33,200
Annual purchase 17,250
Sales returns 2,500
Purchase returns 680
Initial stock value 1,800
Final stock value 1,650
General expenses 900
Postage 110
Telephone 215
Advertising 95
Van expenses 1,420
(a) Calculate: (i) Gross profit

(ii) Net profit
(iii) Gross profit as a percentage of the net turnover
(iv) Overhead expenses as a percentage of the net turnover
(b) Give a brief explanation of :

(i) The difference between gross and net profit
(ii) The gross profit percentage.
3-2010'
(2) Mary is a retailer. In a given trading period her sales were £1,010,000 less sales returns
of £24,500. During the trading period the average amount owed to Mary by her debtors
was £51,300.
(a) Calculate the average credit given by Mary to her debtors, in days.
(b) Give a brief explanation of the average credit given by Mary.
Mary’s ratio for overhead expenses to net sales during the period was 14%.
(c ) Calculate the amount of overhead expenses during this period.
During the trading period: the average credit taken by Mary from her creditors was
21 days; the average money owed by Mary to her creditors was £39,900; her purchases,
before purchase returns, were £700,000.
(d) Calculate:
(i) Mary’s net purchases for the period
(ii) Mary’s purchase returns for the period
3-2011'
(3) The balance sheet of Rhodes Retail at the end of a trading year showed current assets
of £41,764 and current liabilities of £19,700.
The current assets included stock of £15,450, a bank account, cash of £485 and an
amount of £20,330 owed by debtors.
(a) Calculate the:

(i) Current ratio
(ii) Balance in the bank account.
(b) State whether or not you judge the liquidity of the business to be healthy
(c ) Give a reason for your answer to (b).
The average stock held during the trading year was £14,800 and the net purchases
during the year were £186,300.
(d) Calculate the:

(i) Stock held at the beginning of the trading year
(ii) Cost of goods sold
(iii) Rate of stock turn
2-2013'
(4) At the end of the year 2012 the following information applied to Company X:
Current liabilities £7,400,000

Current ratio 2.4 : 1
Acid test ratio 1.15 : 1
(a) Calculate:
(i) the current assets
(ii) the stock held by Company X at that time
(iii) Give one reason why you think the liquidity of Company X is healthy.
During 2012 the following information relates to Trader Y:
Net sales 1,930,000

Cost of goods sold 1,460,000
Overhead expenses 180,000
(b) Calculate:
(i) gross profit
(ii) net profit
(iii) net purchases
(iv) the average period of time (in days) that items remain in stock
3-2013'
(5) The following figures relate to a trading year for trader Amelia.
$
Annual sales 65,000
Annual purchases 42,400
Sales returns 2,950
Purchases returns 2,250
Money owed by debtors at year end 2,890
Money owed to creditors at year end 2,310
Stock at start of year 2,990
Stock at end of year 2,100
Postage and telephone 1,700
Heating and lighting 5,310
Rent 11,605
Bank at year end 1,070
Cash at year end 177
(a) Calculate the ratios for:

(i) overhead expenses to turnover
(ii) end of year working capital
(b) Calculate the ratios for:

(i) Average credit taken from creditors in days
(ii) Average credit given to debtors in days
State which of these, if either;

(iii) Gives the average time it takes Amelia to pay her creditors
(iv) Gives the maximum time it takes Amelia to receive payment from her debtors
4-2013'
(6) The following information relates to business B in the most recent financial year:
$
Overheads 42,357
Turnover (Net sales) 299,250
Capital 420,900
Gross profit 71,820
Stock at start of year 17,000
Stock at end of year 14,500
Calculate:
(a) the gross profit percentage on turnover
(b) the percentage return on capital employed
(c) the average stock held
(d) the annual rate of stockturn
(e) the average number of weeks that items remain in stock
3-2014'
(7) For Company C during Year A (not a leap year), the rate of stock turn was 12.5 per annum
(a) Calculate the average number of days that items were held in stock.
At the end of Year A, the current liabilities of Company C were £596,000, the
current assets (including stock) were £1,341,000, and the stock held was £417,200.
(b) Calculate the:

(i) the current ratio
(ii) the acid test ratio
(c ) Based on your figure for the acid test ratio, advise the owner of Company C
whether the company is healthy or not. Explain your answer with reference to the
standard guideline figure and what that tells us, importantly, about the liquidity
of Company C.
The average stock held during Year A was £430,000.

(d) Calculate the :
(i) the stock held at the beginning of Year A
(ii) the cost of goods sold during Year A
2-2015'
(8) The Balance Sheet of Retailer A at the end of the first year of trading is shown below
Balance Sheet as at 31 December Year 1
$ $ $
Fixed Assets Figure omitted
Current Assets
Stock 9,500
Debtors 14,490
Bank 2,035
Cash 495
26520
Amounts due within 12 months

trade creditors (11,050)
Net Current Asset 15,470
261,300
Amount due after 12 months
mortgage on premises (93,800)
167,500
Using the above figures from the Balance Sheet, calculate for Retailer A the
(i) current ratio
(ii) borrowing ratio (capital gearing ratio)
(iii) fixed assets
During 2014 the following information relates to Retailer B.

£
Net sales 490,000
Cost of goods sold 341,000
Opening stock 24,500
Closing stock 19,500
(b) Calculate the:

(i) gross profit
(ii) net purchases
(iii) rate of stock turnover (stockturn) per annum
April' 2021
(9) Super Showers Inc is a retail company in the US, selling bathroom equipment. In its
last trading year it purchased $2,547,750 (US dollars) of stock and had purchase returns
of $82,175. At the start of the trading year, the amount owed to creditors was $154,000
while at the end of the year the amount owed was $170,240
(a) Calculate the average credit taken by Super Showers Inc in days. Take the trading
year to be 365 days. (4 marks)
The acid test ratio for Super Showers Inc is 1.45 : 1
(b) Explain why this figure is considered healthy.

(2 marks)
Super Showers Inc has a 10-year mortgage on its showroom property with CABG for
$450,000. The company also has a short-term overdraft with CABG of $215,000. It has
shareholder equity of $1,000,000
(c ) Calculate the gearing ratio for Super Showers Inc at the end of its trading year.
Show your working and include current liabilities.
(d ) State two ways in which Super Showers Inc could go about reducing its
gearing ratio. (2 marks)
(Total for Question = 11 marks)

April' 2021
(10) Cross America Banking Group provides foreign exchange services to exporting
companies in South America. One of these is Valparaiso Vineyards, a major
wine-producing company in Chile.
Valparaiso Vineyards’ trading for 2019 showed the following details, in
Chilean pesos ($).
$
Overheads 2202200
Turnover (net sales) 29420000
Capital employed 22930000
Gross profit 4265900
Stock at start of the year 3504000
Stock at end of the year 4307000
(a ) Calculate the:
(i) gross profit percentage on turnover 2 marks
(ii) percentage return on capital employed 3 marks
(iii) annual rate of stockturn 4 marks
(iv) average number of days that items remain in stock. 2 marks
CABG provided a fixed exchange rate to the company throughout 2019 at a rate
of $800 to £1 (British pounds). Valparaiso Vineyards derived 75% of its turnover for
the year from the export of wine, converting payments in British pounds to its own
currency at that exchange rate. However, in November and December 2019 the
Chilean peso depreciated on the open exchange market to an average of $1,000 to £1
(b ) Estimate how much more turnover, in Chilean pesos, the company could have
derived in November and December if it had used the open exchange market
during this two-month period instead of the forward exchange rate offered by
CABG. Assume that sales are level throughout the year, and that the price paid by
foreign buyers in British pounds did not change.
4 marks
Nov-2020'
(11) Gambang Burgers Sdn Bhd is a local fast food franchise on the east coast of Malaysia.
The following information relates to its business for 2019.
RM
Sales 4,245,500
Purchases 1,364,000
Sales returns 3,800
Purchase returns 115,300
Staff costs – direct labour 2,120,000
(a) Calculate the:

(i) cost of goods sold 3 marks
(ii) gross profit 2 marks
(b) Calculate the average number of days for which items remain in stock.
3 marks
The overhead expenses of the business in 2019 were 23% of net sales, after deducting
staff costs for direct labour
(c ) Calculate the:
(i) overhead expenses 2 marks
(ii) net profit as a percentage of net sales. 3 marks

I . Profitability Ratio
(1) Gross profit to Sale = Gross Profit x 100 =%

Gross profit margin Net Sale
Gross profit as a % of sale
Gross profit to cost of sale Ratio = Gross Profit x 100 =%

Gross profit Markup Cost of Sale
(2) Overhead Expenses to Sale = Overhead Expenses x 100 =%

Net Sale
(3) Net Profit to Sale Ratio /Net profit = Net Profit x 100 =%
Margin /Net profit as a % of sale Net Sale
(4) Return on Capital Employed (ROCE)

= Net Profit (PBIT) x 100
Capital Employed
Capital employed = Equity + Non current liability

(or )
= Total Asset - Current Liability

II. Liquidity Ratio
(1) Current Ratio = Current Asset :1

Current Liability
(2) Acid Test Ratio (or) Quick Ratio = Current asset - Closing inventory
Current liability
:1
(3) Inventory Turnover day = Average inventory (Closing inventory ) x 365

Cost of sale
= days
Average inventory = Opening inventory + Closing inventory
2
(4) Inventory Turnover (Time) = Cost of sale

Average inventory (closing inventory)
= times
(5) Debtor collection period (days)

= Trade receivable x 365 = days
Credit sale
(6) Creditor settlement period days = Trade payable x 365 = days

Credit Purchase
(1) (a) Gross profit

Sale 33,200
(-) Sale return (2,500)
(-) Cost of sale

Opening inventory 1,800
Purchase 17,250
Purchase return (680)
(-)Closing inventory (1,650)
(16,720)
Gross Profit 13,980
Net profit
Gross Profit 13,980
(+) Other income
(-) Expenses
General expenses 900
Postage 110
Telephone & Internet 215
Advertising 95
Vehicle expenses 1,420
(2,740)
Net Profit 11,240
(iii) Gross profit as a percentage of the net turnover
= Gross Profit x 100 = 13980 x 100 = 45.54%

Net Sale 30700
(iv) Overhead expenses as a percentage of the net turnover

= Overhead expenses x 100 = 2740/30700 = 8.93%
Net Sale
(b) (i) The difference between gross and net profit

Gross profit is the profit before allowing for overhead expenses.
Net Profit inlcude overhead expenses.
(9) (a)
Average credit taken is
(average creditors / net purchases) x 365
Average creditors:
($154,000 + $170,240) / 2 = $162,120
Net purchases:
$2,547,750 - $82,175 = $2,465,575
So average credit taken:
($162,120 / $2,465,575) x 365 = 24 days
(b)
ratio of more than 1 : 1 is considered healthy,
so a ratio of 1.45 : 1 is healthy.(A1)
This is because the company has sufficient
liquid assets/assets immediately available to
meet its current liabilities.(A1)
Or
The company has sufficient assets to protect it
from damage in the event if unforeseen
demands from its creditors.(A1)
(c )
Gearing ratio is
450,000 215,000 170,240
1000000
0.83524
0.835
Select two from:

• Sell more shares in the company
• Convert short-term loans to shares
• Reduce credit given to customers
• Increase profit margin in order to increase
net profit
(10) Gross profit percentage:

$4,265,900 / $29,420,000 = 0.145 = 14.5%
Net profit
= $4,265,900 - $2,202,200 = $2,063,700 Percentage return on capital employed: $2,063,700 / $22,930,000 = 0.09 = 9%
(iii) Average stock: ($3,504,000 + $4,307,000)/ 2

= $3,905,500
COGS = Net sales - Gross profit
= $29,420,000 - $4,265,900 = $25,154,100
Rate of stockturn: $25,154,100 / $3,905,500 = 6.4407 times per annum (accept 6.4 or better)
(iv) (a) Average days in stock:

365 x $3,905,500 / $25,154,100 = 56.67098 days Accept 57 days or more accurate
(b) 75% of turnover is $29,420,000 x 0.75

= $22,065,000
Two months of this annual revenue is
$22,065,000 / 6 = $3,677,500
Forward exchange rate compared to open exchange is
$1,000 / $800 = 1.25 (=25% more)
At an open exchange the revenue would have increased by 0.25 x $3,677,500 = $919,375
,930,000 = 0.09 = 9%
Stock Exchange
2-2000'
(1) £100 of 5½% Government Stock can be bought for £83.75. A bank invested £60,970 in the
stock.
(a) Calculate the normal value of stock bought by the bank.
The bank held the stock for 4¼ years.
(b) (i) Giving your answer to the nearest penny, calculate the total interest received.
(ii) Calculate the percentage yield over the 4¼ years.
2-2001'
(2) £100 of 9 ½% debenture stock can be bought for £84 ¾. Mrs Carter invested £91,530 in the
stock and held the stock for 3 years.
(a) Giving your answer to the nearest whole number per cent, calculate the interest only
percentage yield.
Miss Lee invested £26,000 in a unit trust with an offer price of £4 per unit, and sold it after
2 ¼ years at £5.09 per unit.
(b) Calculate the number of units purchased.

(c) Calculate how much profit Miss Lee made.
2-2008'
(3) £100 of 3¼% government stock can bought for £102. A bank invested £193,800 in the stock.
(a) Calculate the nominal value of the stock bought by the bank.
The bank held the stock for 4 years.
(b) Calculate the interest received over this period.
The bank could have purchased £204,000 of debenture stock for the £193,800.
(c) Calculate the cost of £100 of the debenture stock.
The bank could have invested the £193,800 instead in a unit trust with an offer price of
£200 per unit, and sold it after 4 years at £225 per unit.
(d) Calculate the number of units that could have been purchased.
Compare the increase in value of the units with the interest on the government stock
and calculate how much more or less the bank would have received if it had invested in
the unit trust instead of government stock.
3-2002'
(4) An investor bought 5,000 8 ½% Preference Shares (nominal value $1) at 170 cents each,
and 2,000 Ordinary Shares (nominal value $0.50) at 430 cents each.
(a) Calculate the total cost of the shares in dollars.

Broker’s commission was 0.25% of the total cost of the shares.
(b) Calculate the cost of the shares including commission.
After 2 years the Preference Shares were sold for a total of $10,500 and the Ordinary
shares were sold at 485 cents each. Broker’s rate of commission was the same as at
the time of purchase.
(c) Calculate the total proceeds from the sale, after commission
The dividends declared on the nominal value of the Ordinary Shares were:
Year 1 15 cents per share
Year 2 12 cents per share
The dividends paid on the Preference Shares were calculated in the normal way.
(d) Calculate:
(i) The total dividends received by the investor on the Ordinary Share
(ii) The total dividends received by the investor on the Preference Shares
(iii) The total profit made by the investor, including purchase, sale, dividends and
commission , as a percentage of the total original expenditure.
2-2010'
(5) An investor bought 2,500 4 ½% Preference Shares (nominal value £1) at 125 pence each,
and 3000 Ordinary Shares (nominal value £0.50) at 205 pence each.
(a) Calculate the total cost of the shares.

Broker’s commission is 0.6% of the nominal value of the shares.
(b) Calculate the commission paid on purchase of the shares.
After 2 years the Preference Shares are sold for a total of £3,400 and the Ordinary Shares
are sold for 192 pence each.
The commission on the sales totaled £45 and dividends declared on the Ordinary Shares
were:
Year 1 = 17 p per share
Year 2 = 11 p per share
(c) Calculate:
(i) The total dividends received by the investor on the Ordinary Share
(ii) The total dividends received by the investor on the Preference Share
(iii) The total received from dividends and sales of the shares, net of commission
3-2010'
(6) Enrico buys 4,500 shares for £17.42 each and pays a commission of £36.
The nominal value of each share is £5.
(a) Calculate the cost of the shares, including commission.
In the first year, the company pays a dividend of 6.5% of the nominal value of the shares.
(b) Calculate the dividends paid to Enrico.
In the second year, the company pays no dividend. At the end of the second year, Enrico
sells 2,500 of the shares for £14.76 each. Enrico pays commission of 0.5% on the income
from the sale.
(c) Calculate the gain or loss to Enrico on the 2,500 shares. Include in your calculations:
The cost of the 2,500 shares at purchase;
- The proceeds and commission on their sale;
- The dividends received on these shares;
- An appropriate proportion of the commission paid on the initial purchase of 4,500 shares.
Enrico also buys 1,150 units in a unit trust for £31,303 and sells them after 3 years at £29
per unit.
(d) Calculate the percentage increase in value per annum.
4-2012'
(7) £100 of 3½ debenture stock can be bought for £91. Interest is paid half yearly. A bank
invested £455,000 in the stock.
(a) Calculate the nominal value of the stock bought by the bank.
The bank held the stock for 2½ years.
(b) Calculate the total interest received on the stock over this period.
The bank purchased 31,000 5½% Preference Shares (nominal value £5) at £1.88 per share.
(c) Calculate the cost of the shares.
(d) Calculate the dividend received each year.
The bank also purchased units in a unit trust with an offer price of £56 per unit, and sold
the units after 3½ years at £63 per unit.
(e) Calculate:
(i) The increase in price per unit
(ii) The increase as a percentage increase per annum.
2-2013'
(8) Simon bought unit trust and invested for income. He invested £150,000 in a unit trust
with an offer price of £ 75 per unit, and sold the units after 3 years at the same price.
During this period he received income from the units of £38,400.This income was not
reinvested in units.
Calculate;
(a) The number of units purchased
(b) The percentage yield per annum.
(c) The (3 year) income per unit.
Simon had to pay the following charges:

Fee on purchase: 0.1% of the sum invested
Fee on sale 0.25% of the sum received from the sale
Fund management fees of £1,350
Calculate:
(d) The total charges paid
(e) The total charges as a percentage of the original investment
(f) Simon’s income net of fees
3-2013'
(9) Susan buys shares in the companies and later receives a dividend from each. She
tabulates the figures as follows:
Company Company Company
A B C
Number of shares 4,000 2,500 ?
Normal value of one share £5.00 ? £0.50
Buying price per share £9.36 £13.02 144p
Broker’s commission £50 ? £60
Total cost of shares, including commission ? £32,625 £17,340
Dividend (percentage of nominal value) 4.50% 5.20% ?
Dividend (£) ? £260 £138
Supply the missing figures.
4-2013'
(10) Steve purchased units in a unit trust with an offer price of £400 per unit, and sold the
units after three years at £451 per unit.
(a) Express the increase in price of the units as a percentage increase per annum,
based on simple interest.
Steve bought 1,750 units in another unit trust and sold them later at £42.80 each,
the total amount received being £8,400 more than he bought them for.
(b) Calculate the original amount that Steve paid per unit.
Steve purchased 25,000 3½% preference shares (nominal value £5 per share) at £7.77
per share.
(c) Calculate:
(i) the total cost of the shares
(ii) the dividend received by Steve each year
(iii) his annual dividend as a percentage of the cost of investment
£100 of government stock can be bought for £88. Steve bought government stock and
found that the nominal value was £28,800 more than the amount he paid for it.
(d) Calculate how much Steve paid for the stock.
2-2014'
(11) Chou bought 35,000 units in a unit trust and sold them later for £17.50 each, the total amount
received being £9,100 more than she bought them for.
(a) Calculate the original amount Chou paid per unit.
Chou also purchased units in a unit trust with an offer price of £120 per unit, and sold the units
after 5 years for £135 per unit.
(b) Express the increase in price of the units as a percentage increase per annum based on
simple interest.
Chou purchased 80,000 2¼% preference shares with a nominal value of £25 per share for
£23.53 each.
(c) Calculate the:
(i) total cost of the shares
(ii) dividend received each year
£100 of 2% Government Stock can be bought for £92. Interest is paid half yearly.
A bank invested £207,000 in the stock and held the stock for 3½ years.
(d) Calculate the:

(i) nominal value of the stock bought by the bank
(ii) total interest received over this period
3-2014'
(12) An investor bought 20,000 ordinary shares (nominal value £5 each) at £5.61 each. She paid a
broker’s commission of 0.25% on the nominal value.
(a) Calculate the cost of buying the shares, including commission.
After three years, the investor sold three-quarters of the shares for £6.40 each.
(b) Calculate the amount received from the sale, before commission.
The following day, the investor sold the remaining shares for £28,000. She paid a broker’s
commission of £180 in total for the two sales.
The dividends declared on the nominal value of the ordinary shares for the three years were:
Year 1 Year 2 Year 3

0.70% 0.60% 1.40%
(c) Calculate the excess of total amount received over total amount paid, including the
purchase, sales, dividends and commissions.
The investor also held stock of nominal value £88,000. Over a period of three years she
received a total of £5,544 interest.
(d) Calculate the annual rate of simple interest at which the stock was offered.
4-2014'
(13) (a) £100 of 4½% debenture stock can be bought for £95. Mrs Spring invested £80,750 in the
stock and held the stock for three years.
Calculate the:
(i) nominal value of the stock purchased by Mrs Spring
(ii) total interest received for the three-year period
(iii) percentage yield for the three-year period, based on interest only
(b) Ms Summers invested £123,750 in debenture stock with a nominal value of £150,000.
(i) Calculate the cost of £100 of debenture stock.
The percentage yield per annum, based on interest only, was approximately 4.85%.
(ii) Calculate the rate of interest on the nominal value of the stock.
2-2015'
(14) Gavin bought unit trusts and invested for income. He invested £130,000 in a unit trust
with an offer price of £65 per unit, and sold the units after 3 years at the same price.
During this period he received income from the units of £10,920. This income was not
reinvested in units.
Calculate the:
(a) number of units purchased
(b) percentage yield per annum
(c ) income per unit for the whole 3-year period
Gavin paid the following charges for the unit trusts:

Fee on purchase: 0.1% of the sum invested on purchase
Fee on sale: 0.2% of the sum received on sale
Fund management fees of £1,040
Calculate:
(d) the total charges paid
(e ) the total charges as a percentage of the original investment
(f) Gavin’s net income
4-2015'
(15) Elena purchased units in Unit Trust C at £160 per unit and sold the units after 4½ years at
£205 per unit.
(a) Calculate the increase in the price of the units as a percentage increase per annum, based
on simple interest.
Elena also bought 11,000 units in Unit Trust D and sold them later at £15.12 each, the total
amount received being £23,100 more than the original cost.
(b) Calculate the original amount Elena paid per unit
Elena purchased debenture stock as follows:

Nominal value of stock purchased $60,000
Amount invested $53,700
Rate of interest on nominal value of stock 3.75 % per annum
Elena later estimated that, over the period of time that she held the stock, she earned
interst of just over 12½% of her investment
(c) Calculate:
(i) the cost of £100 of debenture stock
(ii) the interest received per annum
(iii) 12½% of her investment
(iv) the number of years she held the stock
3-2019'
(16) Avery purchased units in a unit trust with an offer price of £400 per unit, and sold the
units after 4 years at £360 per unit.
(a) Express the change in price of the units as a percentage change per annum,
based on simple interest.
Avery then bought 4,630 units in a different unit trust and sold them 4 years later at
£24.48 each. The total amount received was £16,668 more than he paid for them.
(b) Calculate the original amount that Avery paid per unit.
The units continued to appreciate in value at the same rate of simple interest for a
further 2 years.
(c) Calculate how much Avery could have sold the units for if he had held them for the
extra 2 years.
Avery’s business partner, Breck, bought 12,000 ordinary shares in a company at

635 pence per share, and sold them after 3 years at 755 pence per share.
Broker’s commission for the purchase was 0.5% of the purchase cost.
Broker’s commission for the sale was a flat fee of £350
No dividend was paid for the first two years.
In the final year a dividend of 9 pence per share was paid.
(d) Calculate the total profit made by Breck, taking account of the purchase, the sale,
the dividend and commissions.
(e) Express the average profit per annum as a percentage of the total cost of the shares,
including commissions.
April' 2021
(17) Canadian Government stock with a nominal value of $83 can be purchased for $76
Cross America Banking Group invested $439,052 in the stock.
(a) Calculate the nominal value of the stock purchased by CABG.

(2 marks)
Annual simple interest of 13⁄ 8 % is received by CABG quarterly. CABG held the stock
for 3½ years.
(b) Calculate the total interest earned over this period.

(2 marks)
CABG also purchased 174,000 preference shares for $7.30 per share with a fixed
dividend of 7¼% per annum. The shares had a nominal value of $10
(c ) Calculate the total cost of the shares.

(2 marks)
(d) Calculate the dividend received each year.

(2 marks)
CABG also purchased units in a unit trust with an offer price of $113 per unit. In
the first year after purchase, CABG received interest of 4.3%. In the second year, it
received interest equivalent to $4.181 per unit. At the end of the two years, the units
were still valued at $113
(f) Calculate the interest only percentage yield for the two-year period.
(4 marks)
December' 2021
(18) Azman has owned market stalls in Malaysia for many years. He decides to retire and
invest his funds for an income in retirement. Azman purchased units in a unit trust
with an offer price of RM 4,000 per unit, and sold the units after three years at
RM 4,648 per unit.
(a) Express the increase in price of the units as a percentage increase per annum,
based on simple interest. 2 marks
Azman then bought 1,245 units in a different unit trust and sold them later at
RM 410 each. The total amount received was RM 29,880 more than he paid for them.
(b) Calculate the original amount that Azman paid per unit.
3 marks
Azman later purchased 27,000 shares in a 1¾% preference share (nominal value
RM 90) at RM 97.50 each.
(c ) Calculate the:
(i) total cost of the shares 2 marks
(ii) total dividend received by Azman each year 2 marks
(iii) annual dividend as a percentage of the cost of the investment.

2 marks
RM 1,000 of government stock can be bought for RM 920

Azman bought some of this government stock and found that the nominal value was
RM 245,040 more than the amount he paid for it.
(d) Calculate how much Azman paid in total for his government stock.
3 marks
ed £91,530 in the
3,800 in the stock.

se of 4,500 shares.
ch, the total amount
nit, and sold the units

61 each. She paid a
e three years were:
of three years she
ed £80,750 in the
al value of £150,000.
per annum, based
Stock Exchange
1. Ordinary Share
2. Preference Share Dividend
3. Government Stock
4. Debenture Stock Interest
5. Unit Trust
Governmen Stock / Debenture Stock

* Interest တွက်ရာတွင် အရင်းတန်ဖို း (norminal value ,per value ) ပေါတွင်တွက်ရမည်။
** Government Stock, Debenture Stock တွေမှ ာ nominal value တစ်စောင်သည် အမြဲ 100 ဖြစ်သည်။
Norminal value = Investment x 100

Purchase price
=$
Investment = Purchase cost
Total interest = Norminal value x interest rate (%) x year
% yield = Total interest x 100

Investment
Ordinary Share , Preference Share
Dividend = No. Of shares x Norminal value x dividend %

Or
= No. Of shares x dividend per share
Cost of share = No. Of share x Purchase price
Unit Trust
Profit = Sale -costs
Commission = Norminal rate x %

Total cost x %
Commission ကို Sale တွက် ရင် နှ တ်ရန်
Commission ကို Cost တွက် ရင် ပေါင်းရန်
(1)
(a) Norminal value = Investment x 100
Purchase price
= $ 60,970
$83.75
$72,800
(b) (i) Total interest = Norminal value x interest rate x years

= $ 72800 x 5.5 % x 4.25 years
= $ 17,017
(ii) % yield = Total interest x 100

Investment
= 17,017/60,970 x 100
= 27.9%
(2) % yield = Total interest x 100

Investment
= 30780 / 91530 x 100 = 33.63 % ~ 34 %
Total interest = Norminal value x interest rate x years

= 108 ,000 x 9.5% x 3 years
= 30780
Norminal value = investment / Purchase price x 100
= 91530 /84.75 x 100
= 108000
(b) the number of units purchased.
= Investment cost = 6500 units

Cost per unit
(c) profit Miss Lee made.
= Sale -cost
= 5. 09 x 6500 units - ( $ 4 x 6500 units)
= $ 33085 - 26 ,000 = $ 7085
(3) (a) Norminal value = Investment x 100
Purchase price
= 193,800 / 102 x 100
= 190,000
total interest
Norminal value x interest % x years
= 190,000 3.25 % x 4 years
= 24700
(c)the cost of £100 of the debenture stock.
= Investment x 100
Total purchase
= $ 193,800/204000 x 100
= $ 95
Norminal value = Investment x 100

Purchase price
Purchase price = Investment x 100

Norminal value
= 193,800 / 204000 x 100

= $ 95
(d) Calculate the number of units that could have been purchased.
= Investment cost
Cost per unit
= 193800/200 = $ 969 units
Interest on government stock = $ 24 700
Profit on unit trust

( 225 x 969)- ( 200 x 969) = $ 24225
less received 475

(4) (a) Calculate the total cost of the shares in dollars.
= No. Of shares x Purchase price
Preference share = 5000 share x $ 1.7 = $ 8500

Oridinarr share = 2000 share x $ 4.3 = $ 8600
$17,100
(b) Calculate the cost of the shares including commission.
Total cost of share = 17100

Broker's commission = 42.75
17142.75
(c) the total proceeds from the sale, after commission
Proceed from sale of Preference share 10,500.00

Proceed from sale of ordinary share (4.85x 2000) 9,700.00
Broker commission (42.75)
20,157.25
(d) (i) The total dividends received by the investor on the Ordinary Share
Year 1 (0.15 x 2000 shares) 300

Year 2 (0.12 x 2000 shares) 240
540
(ii) The total dividends received by the investor on the Preference Shares
= No. Of shares x nominal value x dividend % x

= 5000 shares x $ 1 x 8.5 % x 2 years
= $ 850
(iii) The total profit made by the investor, including purchase, sale, dividends and commissions
= Total profit
Total ordinary expenditure
= 4404.50 = 25.69%
(42.75+17100)
Working
Proceed from sale of Preference share 10,500.00
Proceed from sale of ordinary share (4.85x 2000) 9,700.00
Broker commission - at the time of sale (42.75)
Broker commission - at the time of purchase (42.75)
Purchase cost (17,100.00)
Dividend received -ordinary shares 540.00
Dividend received -preference shares 850.00
4,404.50
(5) (a) Total Cost of Share
P Share (2500x$ 1.25) 3,125

O Share (3000 x 2.05) 6,150
9,275
(b) Commission
P Share ( 2500 x $ 1) x 0.6% 15

O Share (3000 x 0.5) x 0.6% 9
24
(c) (i) The total dividends received by the investor on the Ordinary Share
Year 1 (No. Of Share x dividend per share) 510

Year 2 330
840
(ii)The total dividends received by the investor on the Preference Share
= (2500 shares x $ 1) x 4.5% x 2 years

= $ 225
(iii) The total received from dividends and sales of the shares, net of commission
Sale of P share 3,400

Sale of O share 5,760
Total dividend received 1,065
(-) Commission (45)
10,180
(6) Cost of Share including Commission
= (No. Of share x purchase price ) + commission

= 4500 x $ 17.42+ 36
= $ 78426
Calculate the dividends paid to Enrico
= No . Of share X nomianal value x dividend %

= 4500 share x $ 5x 6.5%
= $ 1462.5
(c) Calculate the gain or loss to Enrico on the 2,500 shares. Include in your calculations:
Sale proceed (2500 share x 14.76) 36,900.0

Commission 0.5%x 36900 (184.5)
Dividend received (1462.5 x 2500/4500) 812.5
Total received on sale 37,528.0
Cost of purchase (43,550.0)
Commission paid on purchase (20)
Loss (6,042)
(d) Calculate the percentage increase in value per annum.
Total proceed on sale = (1150 x $29)

= 33,350
= (31303)
Increase in amount 2047
% in increase = 2047 x 100

31303 x 3 years
= 2.17 %
(7) (a) Calculate the nominal value of the stock bought by the bank.
= $ 455,000 x 100 = $ 500,000

$91
(b) total interest

= $ 500,000 x 3.5% x 2.5 years = 43,750
(c) Cost of share = no. Of share x purchase pirce

= 31,000 share x $ 1.88
= 58, 280
(d) Calculate the dividend received each year

= Nomianal value x dividend %
= No. Of share x nominal value x %
= 31,000 x $ 5 x 5.5%
= $ 8525
(e) (i) The increase in price per unit
= $ 63-$ 56
=$7
(ii) The increase as a percentage increase per annum.

= 7 x 100 = 3.57 %
56 x 3.5 years
(11) (a) Calculate the original amount Chou paid per unit.
increase per unit = $ 9100

35 000 units
= $ 0.26 per unit
Original paid per unit = $ 17.5-0.26

= 17.24 per unit
(b) the increase in price of the units as a percentage increase per annum based on simple interest
= 15 x 100 = 2.5 %
120 x 5 years
WN Increase in price = $ 135-$120

= $ 15
(c) (i) total cost of the shares
= No. Of share x purchase price

= 80,000 share x $ 23.53 = $ 1882,400
(ii) dividend received each year
= Nomianal value x dividend %

= 80,000 share x $ 25 per share x 2.25%
= 45,000
(d) (i) nominal value of the stock bought by the bank
= Investment x 100
Purchase price
= 207,000
92
= 225,000
(ii) total interest received over this period
= $ 225,000 x 2% x 3.5 years

= 15,750
(12) (a) Calculate the cost of buying the shares, including commission.
= 20,000 share x $ 5.61 + (20,000x $5 x 0.25%) =$ 112,450
(b) the amount received from the sale, before commission
= 20,000 x 3/4 x $ 6.4 = $ 96,000
(c) the excess of total amount received
Sale of First 96,000

Sale of second 28,000
Dividend received 2,700
Commission on sale (180)
(-) purchase on cost (112,200)
(-) Commission on purchase (250)
14,070
WN Dividend received
Year 1 (20,000 x $5 x 0.7%) 700
Year 2 (20,000 x $5 x 0.6%) 600
Year 3 (20,000 x $5 x 1.4%) 1400
2700
(d) the annual rate of simple interest at which the stock was offered.
= 5544 x 100 =2.1 %

88000 x 3 years
(13) (i) nominal value of the stock purchased by Mrs Spring
= $ 80,750 x 100 = 85000

$95
(ii) total interest received for the three-year period
= $ 85,000 x 4.5 % x 3 years = $ 11,475
(iii) % yield
= total interst x 100
investment
= $ 11,475 x 100 = 14.2 %
$80,750
(b) (i) the cost of £100 of debenture stock.
= investment x 100
nominal value
= 123,750 x 100 = $ 82.5
$150,000
(ii) the rate of interest on the nominal value of the stock.
% yield = total interest x 100

investment
4.85% = Nominal value x interest rat % x no . Of year

investment
4.85% = $ 150,000 x interest rate x 1 years

123 750
interest rate = 4%
(14)
(15) (a) increase per unit = $ 205 - $ 160 = $ 45

% increase per annum = $ 45 x 100 = 6.25 %
$ 160 x 4.5 year
(b) increase per unit = $ 23,100 = $ 2.1

11,000 units
Original paid per unit = $ 15.12 - $ 2.1 = $ 13.02
(d) (i) the cost of £100 of debenture stock

= % 53,700/ $ 60,000 x 100 = $ 89.5
(ii) the interest received per annum

= $ 60,000 x 3.75% = $ 2250
(iii) 12½% of her investment
= 53,700 x 12.5% = $ 6712.5
(iv) the number of years she held the stock
= 6712.5 = 2.98 years `~ 3 years

$2,250
Interest
2-2000'
(1) A bank customer deposits £4,310 at 5.5% per annum compound interest payable annually.
(a) Giving your answer to the nearest penny, state how much will be in the account:
(i) After 3 years
(ii) After 3 years and 3 months
(iii) After 3 years and 90 days
A bank successfully tenders £49,200 for a £50,000 Treasury Bill that runs for three months
and is to be redeemed at par.
(b) Calculate the rate of simple interest paid on the Treasury Bill.
4-2002'
(2) In 1996 a house was worth £88,000. Over the next 5 years it increased in value at a constant
rate of 4% per annum.
(a) Calculate the value of the house after 5 years.
(b) Giving your answer correct to the nearest pound, calculate the value of the house
after 4 ½ years.
The value of a second house increased at the same constant rate over the same 5 years
period. At the end of the 5 years its value was £165,000.
(c) Giving your answer correct to the nearest thousand pounds, calculate the value of the
house at the start of the period.
4-2003'
(3) A bank successfully tenders £487,000 for a Treasury bill that runs for six months and is
to be redeemed at par. Their investment gives a return of 5.3% per annum simple interest.
(a) Calculate the value of the Treasury bill at redemption, giving your answer to the
nearest £100.
Jean deposits a sum of money for three years at a fixed rate of compound interest.
After two years the amount in the account is £171,396, and after three years the
amount in the account is £177,394.86.
(b) Calculate:
(i) The rate of compound interest
(ii) The original sum deposited
(iii) The interest on the account after the first year
4-2008'
(4) Rajesh deposits £15,000 in a bank account at 4% per annum simple interest.
(a) How much interest will Rajesh have earned after 3 years and 56 days?
Rajesh deposits a further £15,000 in another account at 4% per annum compound interest,
for the same period. Interest is added annually and at the end of the period, and is
calculated as compound interest throughout.
(b) How much more interest will Rajesh have earned from this account than from
the simple interest account?
3-2001'
(5) (a) An investment account of $25,000 attracts 4.85% compound interest per annum,
compounded six – monthly.
(i) How much will be in the account after 5 years?
(ii) How much of this is interest?
A bank successfully tenders $96,500 for a $100,000 Treasury bill that has six months to run
(b) Calculate the rate of simple interest paid on the Treasury bill.
2-2013'
(6) Ellie uses the products method to check the interest on her savings account. She calculates
that she is receiving interest at the rate of approximately 0.015% per day.
Calculate:
(a) The annual rate of simple interest paid to Elli
(b) The interest earned on a balance of £12,000:
(i) For two days
(ii) For two years.
From 1 January 2003 to 31 December 2012, the value of Ellie’s house increased from
£200,000 to £320,000.
(c) Calculate the rate of increase per annum based on simple interest.
Ellie believes that the increase is approximately 4.8% per annum based on compound
interest.
(d) Provide a calculation to show if Ellie is correct.
(e) State whether the true rate of compound interest is more than or less than 4.8%
per annum.
3-2013'
(7) The rate of interest on an account is 3.5% per annum.
(a) Based on dividing the amount of interest equally between the first and second halves
of the year , state the rate of interest for a 6- month period (simple interest method).
(b) Based on the same proportional increase in the amount over the first and second
halves of the year, calculate the rate of interest for a 6- month period (compound
interest method).
(c ) Calculate the interest on £5,000 for a 6-month period using the rate calculated in (b).
Yoshi saves money as follows. At the start of the year, he deposits £10,000
At the end of each year, the account earns 4% interest on the amount in the account at
that time, and this is added to the account.
(d) Calculate the amount of interest added at the end of the first year.
At the start of each year after the first, Yoshi deposits an additional amount equal to 5%
of the amount in the account during the previous year.
(e) Calculate:
(i) The amount in the account after Yoshi’s deposit at start of the second year
(ii) The amount in the account after Yoshi’s deposit at the start of the fourth year
4-2013'
(8) A bank successfully tenders £1,976,000 for a £2,000,000 Treasury bill that runs for three
months and is to be redeemed at par.
(a) Calculate the rate of simple interest per annum received on the investment in the
Treasury bill.
The bank tenders £4,650,000 for a £5,000,000 Treasury bill that runs for two years and is due
to be redeemed at par.
(b) Calculate:
(i) The overall percentage interest received on the two-year investment in the
Treasury bill.
(ii) The rate of compound interest per annum that this represents.
The bank buys a €2,500,000 Treasury bill for €2,250,000. One year later, following a bail
out agreement, the bank redeems the bill for €1,800,000.
( c ) Express the loss as a percentage of the investment.
2-2014'
(9) During a period of economic contraction, two investors are affected as follows.
(a) The value of the house belonging to investor A falls at a rate of 10% per annum for
2 years. In each year the percentage is calculated on the value at the start of the year.
If the value of the house is £240,000 at the start of the period, calculate the value of
the house after 2 years.
(b) Investor A is interested to know the effect on a £240,000 house of a reduction in value
of 10% each year for 20 years.
Using the compound interest formula, calculate the value of the house after 20 years.
(c) The value of a unit trust purchased by investor B falls from £32 per unit to £26 per
unit in 1½ years.
(i) Calculate the reduction in value as a percentage per annum based on simple
interest
(ii) Calculate the reduction in value as a percentage per annum based on
compound interest.
3-2014'
(10) (a) A bank successfully tenders £240,000 for a £250,000 Treasury bill that runs for six
months and is to be redeemed at par.
Give your answers to two-figure accuracy, for example 4.7%.

(i) Basing your calculation on simple interest:
Calculate the annual rate of interest paid on the Treasury bill.
(ii) Basing your calculation on compound interest:
Calculate the annual rate of interest paid on the Treasury bill. Use the compound
interest formula.
(iii) Compare your answers to (a)(i) and (a)(ii).
(b) Carl uses the products method to check his bank balance.
He calculates that he is receiving interest at the rate of approximately 0.00685% per day.
Take a year as being 365 days.
Basing your calculation on simple interest, calculate:

(i) the annual rate of interest
(ii) the interest due for a period of seven days when his balance was £999.99 in credit
4-2014'
(11) Customer A deposited £12,000 in Bank B. Interest was added to the principal at the end
of each year and then also earned interest (i.e. compound interest). For the first three
years only, the rate of compound interest on the account was 2.5% per annum.
(a) Calculate the:

(i) interest added to the account at the end of year 1
(ii) amount in the account at the end of year 3 after adding interest
(iii) interest added to the account at the end of year 3
At the end of year 4, after adding interest, the amount in the account was £13,310.37
At the end of year 5, the interest added to the account was £399.31
(b) Calculate the rate of interest earned in year 5.
The rate of compound interest earned in years 6 and 7 was the same in each year.
At the end of year 7, after adding interest, the amount in the account was £14,263.55
(c) Calculate the rate of compound interest per annum earned in years 6 and 7.
3-2000'
(12) Miss Clarke has a bank account on which simple interest is earned at 3 ¼% per annum on
credit balances . Simple interest is charged by the bank at 11% per annum on debit balances.
Interest is calculated daily on all balances and paid/earned at the end of the month.
The account for August is shown below:

Date Detail Debit Credit Balance
$
1 Aug' Balance b/f 1,403.64 Cr
2 Aug' Cheque 350.00 1,053.64 Cr
19 Aug' Cheque 1,195 141.36 Dr
29 Aug' Deposit 2,130.83 1,981.47 Cr
The balance at the end of August, before interest and charges, is $1,981.47 in credit.
(a) Giving your answer to the nearest cent, calculate the interest payable to, or by,
Miss Clarke on 31 August
The bank charges $20 for a letter to Miss Clarke telling her she is more than
$100 overdrawn.
(b) Calculate the final balance figure.
2-2009'
(13) Simone has a bank account on which simple interest is earned at 2 ½% per annum on
credit balances. The bank charges simple interest of 6 ¾% per annum on debit balances.
Interest is calculated at the end of each day on all balances and paid/earned at the end
of the month.
Simone’s bank statement for April 2008 is shown below. Two of the balance figures
are omitted.

$
31 Mar/1 Apr Balance b/f ?
7 Apr' Cheque 327.41 1808.12 Cr
20 Apr' Cheque 2499 ?
25 Apr' Deposit 3654.5 2963.62 Cr
(a) Calculate
(i) The balance brought forward from 31 March
(ii) The balance at the end of the period 20 April to 24 April
(b) Giving your answer correct to four significant figures, calculate the percentage rate
of interest per day payable by the bank to Simone on credit balances.
Simone uses the products method to check the interest she receives from the bank.
(c) Calculate the interest received by Simone for the period from 7 April to 19 April inclusive.
Simone’s house increases in value from £105,000 to £185,000 over a period of 10 years.
(d) Calculate the steady rate of compound interest that this represents.
2-2015'
(14) Miss Marshall has a bank account on which simple interest is earned at 1.5% per annum
on credit balances (Cr). The bank charges simple interest at 8% per annum on debit
balances (Dr). Interest is calculated at the end of each day on the current balance at a daily
rate of interest that is 1/365 of the annual rate, and credited or debited to the account at
the end of the month.
The account for September is shown below.

$
31 Aug' Balance c/f ?
4 Sep' Cheque 2,580 2,823.28 Cr
12 Sep' Cheque 3,000 176.72 Dr
26 Sep' Deposit ? 2,810.78 Cr
The balance at the end of September (length 30 days), before interest, is £2,810.78 in credit.
(a) Calculate the:
(i) opening balance carried forward from 31 August
(ii) amount of the deposit made on 26 September
(b) Show that the interest earned from the 26 September deposit to the end of
September is £0.58,. and provide a more accurate figure
(c ) Calculate the interest charged for the period in September when the account was
in debit.
The interest earned for the first 3 days of September is £0.666
(d) Calculate the balance at the end of September (length 30 days) after interest is paid
and charged.
The bank charges £30 for writing a letter to Miss Marshall (on 1 October) telling her that
she has been overdrawn.
(e ) Calculate this charge as a multiple of the interest charged for the period in September
when the account was in debit.
January 2021 (Total 13 marks)

(15) The value of a factory building in the United Kingdom has increased at the constant
rate of 4.5% per annum for a period of four years, with the rate based on compound
interest. At the end of the four years, in January 2018, the value was £560,000 (British
pounds).
(a) Giving your answer correct to the nearest hundred British pounds (£), calculate
the value of the factory building:
(i) at the start of the four years, in January 2014 3 marks
(ii) one year later, in January 2015. 2 marks
After January 2018, the building is expected to continue to increase in value over the
next three years, at a different constant rate, reaching a value of £620,882
(b) Calculate the annual rate of interest in this three-year period, based on
compound interest. 3 marks
The Royal Bank of Walsall successfully tenders £963,391 for a £1,000,000 Treasury
bill that runs for six months and is to be redeemed at par.
(c ) Calculate the:
(i) rate of simple interest per annum earned on the Treasury bill
3 marks
(ii) value of the Treasury bill after two months. 2 marks
(Total for Question 7 = 13 marks)
Sample Question for New Course

(16) Vladimir, Dave, Klaus and Azam are investing money in various accounts.
Vladimir invests S$70 000 (Singapore dollars) into a Malaysian Supersaver account.
The account offers a fixed 3.4%pa compound interest over four years.
(a) Calculate the interest earned by Vladimir in the first year in Singapore dollars (S$).
2 marks
(b) Calculate the balance in Vladimir’s account after the four-year period,
in Malaysian ringgit (RM).
The exchange rate is RM1 = S$0.32

3 marks
Dave also invests £40 000 (British pounds) into a Malaysian Supersaver account at the
same interest rate for a four-year period. The exchange rate at the time of investment
was £1 = RM5.5
(c) Calculate, in RM, the difference in the balances of Vladimir and Dave at the end of
their investment periods. 2 marks
Klaus invests 400 000€ in a German bank account that pays a fixed rate of
compound interest. The balance in his account after three years is 456 466.45€
(d) Calculate the annual rate of compound interest paid on this investment.
4 marks
Azam invests RM 365 500 in preference shares in a company in the USA.

The purchase price of the shares is $93½ and their par value is $100 .
The exchange rate is $1 = RM4.30
(e) Calculate the cost to Azam of this investment in US dollars ($).

2 marks
A dividend of 2.2% is payable annually for a period of three years.
(f) Calculate the total dividend in US dollars ($) payable to Azam.

3 marks
(g) Calculate the redemption value of the preference shares at the end of three years,
in Malaysian ringgit (RM).
Assume the exchange rate is unchanged. 2 marks
June ' 2021

(17) The logistics manager at Kepastian Komputers thinks that the company needs a larger
warehouse near Port Klang, the port from which most of its products are despatched.
The company’s current warehouse was purchased in January 2017 for RM 3,500,000
and local property experts advise that such property, on average, gains 2.5% in value
each year, based on compound interest.
(a) Calculate the value of the current warehouse:

(i) five years after purchase 2 marks
(ii) four years and six months after purchase. 2 marks
Kepastian Komputers finds a new larger warehouse complex, available to purchase at

the end of June 2021 for RM 5,400,000
(b) (i) Calculate the additional cost of this new warehouse complex if the company
can sell the current warehouse at the value calculated in (a)(ii) above.
2 marks
(ii) On the basis of cost, and given that the value of the new warehouse complex
will rise at the same rate as the current warehouse, state whether Kepastian
Komputers should wait until the end of 2021 before moving. Give a reason for
your answer.
2 marks
For a number of reasons, the finance director decides not to purchase the new
warehouse complex immediately. Instead, he places some funds on a 6-month fixed
rate deposit with a local Malaysian bank. The deposit pays 3.2% annually, based on
simple interest. The deposit will be worth RM 1,000,000 after 6 months.
(c ) Calculate how much the finance director invested in this way to the nearest
50 ringgit.
4 marks
November' 2021
(18) The JuneBank of Singapore successfully tenders S$8,794,788 for a S$9,000,000
Treasury bill that runs for 8 months and is to be redeemed at par.
(a) Calculate the:

(i) rate of simple interest per annum earned on the Treasury bill
3 marks
(ii) value of the Treasury bill after 3 months.
2 marks
The JuneBank offers its customers an investment account that attracts 2.45% interest
per annum.
(b) Calculate how much interest is due on a deposit of S$62,500 for an 18-month
period based on:
(i) simple interest 2 marks
(ii) compound interest, compounded 6 monthly. 3 marks
Hasim deposits S$93,000 at 2.75% per annum compound interest in JuneBank’s

Rack Up Account where interest is calculated daily.
(c ) Calculate the amount of interest earned after 3 years and 128 days. 3 marks
4-2015'
(19) Investor A invests £170,000 in Investment Account B and receives interest, compounded
six-monthly, at a rate of 3% per six months.
(a) Calculate the:

(i) amount in the account after four years
(ii) portion of this amount that is interest, expressed as a percentage of the investment
(iii) annual rate of simple interest that would produce the same amount of interest
over this period
A bank successfully tenders $484,000 for a $500,000 Treasury bill that runs for six months
(b) Calculate the rate of simple interest per annum received on this investment.
(20) 3-2019'
Karnchana deposited 76,000 (Thai baht) in her bank account for 4 years.
(a) Calculate the total interest earned:

(i) at 2.9% simple interest per annum
(ii) at 2.9% compound interest per annum, with interest added at the end of each year.
Chanchai works out his bank interest using the products method, and he makes
calculations based on simple interest. His bank pays 8.25% interest per annum on credit
balances, and charges 12.5% interest per annum on debit balances. Interest is calculated
daily on all balances and the net amount is added or subtracted at the end of each month.
His bank statement for April 2019 shows the following entries in Thai baht.

1/4/2019' Balance b/f 14,500Cr
3/4/2019' Rent for apartment 12,000 2,500Cr
9/4/2019' Utilities for apartment 2,200 300Cr
15/04/19 Grocery store 2,300 2,000Dr
21/04/19 Transport pass 1,000 3,000Dr
27/04/19 Salary 19800 16,800Cr
Chanchai’s balance at the end of April is 16,800 in credit, before application of interest
and charges.
(b) Giving your answer to the nearest baht, calculate the net amount of interest that
will be added to or deducted from Chanchai’s account at the end of the month.
Chanchai’s bank charges 1,000 for a letter sent automatically to account holders
whenever their account exceeds a negative balance of 2,000
This charge appears on the account holder’s statement at the end of the month.
(c ) Calculate the balance brought forward to May in Chanchai’s account, after interest
and charges, assuming no other transactions take place.
compound interest,
on debit balances.
1808.12 Cr
2963.62 Cr
o 19 April inclusive.
Interest
1. Simple interest
2. Compount interest (တို း၊ ရင်းပေါင်း)
Simple interest
10%
Eg Capital Interest Balance
Year 1 1000 100 1000
Year 2 1000 100 1000
200
I = PRT
R =I
PT
A =P+I
I = Interest
P = Principle (အရင်းတန်ဖို း)
R = Interest Rate %
T = Time
Compound Interest
eg
Capital Interest Balance
P I A
Year 1 1000 100 1100
Year 2 1100 110 1210
A = P x (1+r)n
A = Compound amount
N = No. Of years
P = Principle
A =P+I
I = A- P
Effective rate (annual rate )
R = (1 + r )n -1
(1) (a) compound interest
(i) After 3 years
P = $ 4310
r = 5.5 %
A = P x (1+r) n
= 4310 x ( 1+ 0.055)3
= $ 5061
(ii) After 3 years and 3 months
A = $ 4310 x ( 1+ 0.055)3.25
=$ 5129
(iii) After 3 years and 90 days
A = $ 4310 x (1+ 0.055) 3+90/365

= $ 5128
(b) the rate of simple interest paid on the Treasury Bill.
R =I
PT
= 800
49200 x 3/12
= 6.5%
I=A-P
= 50,000 - 49200
= 800
(2) A = P x (1+r) n
= 88000 x (1+ 0.04) 5

= $ 107,065
(b) the value of the house after 4 ½ years.
= 88000 x (1+ 0.04) 4.5

= $ 104,986
(c) the value of the house at the start of the period.
A = P x (1+r) n
P = A
( 1+ r ) n
= 165,000
( 1 + 0.04) 5
=$ 135, 618 ~ 136000
(3) (a) The value of Treasure bill
I = PRT
= $ 487,000 x 5.3% x 6/12

= 12905.5
A =P+I
= 487,000 + 12905.5
=$ 499,900
(i) The rate of compound interest
A = P x (1+r)n
R = A -1
n P
= 177,394.86 -1
171396
= 0.035 x 100
(ii) Original sum deposit
A = P x (1+r)n
P =A
(1+r) n နှ စ် နှ စ် မြှေ ာက်ရဲ့ A တန်ဖို း (base ) တူ ရမည်။
= 171,396
(1+0.035) 2
= $ 160,000
(iii) The interest on the account after the first year
A = P x (1+r)n
= 160,000 x ( 1+0.035)1
= $ 165,600
I =A-P
=$ 165,600- $ 160,000
= $ 5600
(4) (a) Interest that will received after 3 years and 56 days
I = PRT
= $ 15,000 x 0.04 x 3+56/365

= $ 1892
(b) the interest from Compound interest

I = A-P
= 16974.8-15000
=1974.8
A = P x (1+r)n
= 15,000x ( 1+0.04)3+56/365
= $ 16974.8
The amount of interest than simple interest = $ 1974.8-1892.05 = $ 82.75
(5) (i) Amuch will be in the account after 5 years?

A = P x (1+r)n
= 25000 x ( 1+ 0.02425)5x2
= $ 31768.72
(ii) The amount of this is interest?
I = A-P
= 31768.72-25000
= $ 6769
(b) the rate of simple interest paid on the Treasury bill.
R =I
PT
= 3500 x 100 = 7.25%
96500x 6/12
I =A-P
= 100,000 - 96500 = $ 3500
(6) (a) The annual rate of simple interest paid to Elli
= 0015 % x 365 = 5.475% per annual
(b) interest earned amount

(i) for two days
I = PRT
= 12000 x 0.015 % x 2 days
= $ 3.6
(i) for two days

= 12000 x 5.475 % x 2 years
=$ 1314
(c) the rate of increase per annum based on simple interest.
I = PRT
R =I
PT
= 120,000 x 100
200,000x 10
= 6%
I = A-P
= 320,000-200,000 = 120,000
(d) A = P x (1+r)n
= 200,000 x (1+ 0.048)10

= 319,626.53
(e) the true rate of compound interest
(7) (a) Rate of interest for 6 month period

= 3.5% x 6/12
= 1.75%
(b) = (1+r) n -1
= ( 1+ 0.035) 6/12 -1
= 1.73 %
(c) Interest
= 5000 x 1.73% =$ 86.5
(d) Amount of interest add at the end of first year

= 10,000 x 4% = $ 400
(e) (i) The amount in the account after Yoshi’s deposit at start of the second year
(10000+400+ (10,000x 5%)

= 10,900
(ii) The amount in the account after Yoshi’s deposit at the start of the fourth year
at the start of third year
= 10,000 + (10900x 4%)+(10900x5%)
= $ 11881
at the strat of fourth year

= 11881 + (11881x4%)+(11881x 5%)
= $ 12,950.29
(8) (a) Rate of interest

R =I
PT
= $ 24000 = 4.9 %
$1976000x3/12
(b) (i) The overall percentage interest received on the two-year investment in the Treasury bill
R =I
PT
= 350,000 = 3.76%
4650,000 x 2 year
(ii) The rate of compound interest per annum that this represents
A = P x (1+r)n
R =A -1
P
= 5,000,000 -1
2 4,650,000
= 3.7%
(c)the loss as a percentage of the investment.
= Loss
investment
= 450,000 x 100 = 20%
2,250,000
Loss on investment = 2250,000 - 1800,000 = 450,000
(9) (a)
A = P x (1+r) n
= $ 240,000x (1- 0.1) 2
= $ 194,400
(b) the value of the house after 20 years
A = P x (1+r) n
= 240,000 x ( 1-0.1) 20
= 29178.4
(c) (i) Calculate the reduction in value as a percentage per annum based on simple interest
Reduction in value = 32-26=6
I = PRT
R =I
PT
=6 = 12.5%
32x 1.5 years
(ii) Calculate the reduction in value as a percentage per annum based on compound interest
R =A -1 = 12.9%
P
(11) (a) (i) interest added to the account at the end of year 1
= 12,000 x 2.5% = 300
(ii) amount in the account at the end of year 3 after adding interest
A = 12000 x (1+ 0.025)3

= $ 12,922.69
(iii) interest added to the account at the end of year 3

A = 12000 x (1+0.025)2
= 12607.65
Interest = $ 12922.69 - 12,607.5

= 315.19
(b) rate of interest earned in year 5.
R =A -1
P
= 13709.68 = 0.029x 100 = 3%
1 13310.37
end of year 5 = 13310.37+399.31 = 13709.68
(c) the rate of compound interest per annum earned in years 6 and 7.
R =A -1
P
= 14263.5 -1 = 0.019 x100

2 13709.68
= 2%
(12) (a)
Date Dr or Cr Balance No. Of day Product
1 Aug' Cr 1403.64 2 2807.28
2 Aug' Cr 1053.64 17 17911.88
19 Aug' Dr 141.36 10 1413.6
29 Aug' Cr 1981.47 2 3962.94
Total Debit balance = $ 141.36

Total Credit balance = $ 24682.1
Interest due to Miss Clarke = $ 24682.1 x 3.25% x 1/365

= $ 2.198
Interest due to the bank = $ 1413.6 x 11% x 1/365 days

= $ 0.426
(b) the final balance figure = $ 1981.47 + 2.2 - 0.43-$20

= $ 1963.24
(13) (a) (i) the balance brought forward from 31 March

= 327.41+ 1808.12
= 2135 .53
(ii) the balance at the end of the period 20 April to 24
= 1808.12 -2499 = 690.88 (Dr)
(b) Rate of interest per day
= 2.5 % / 365
= 0.00684 %
(c) the interest received by Simone for the period from 7 April to 19 April inclusive.
= $ 1808.12 x 13 day x 0.00684%

= $ 1.67
(d) the steady rate of compound interest that this represents.
R =A -1
P
= 185000 -1
10 105000
= 5.8%
(14) (a) (i) opening balance carried forward from 31 August
= $ 2823.28 + $ 2580 = $ 5403.28
(ii) amount of deposit made on 26 September

= 2810.78 + 176 .72
= 2987.5
(b) Interest per day = 1.5% / 365 days

= 0.004109589%
Interst = $ 2810.78 x 5 days x 0.004109589%

= $ 0.578
(c) interest charge = $ 176.72 x 14 days x 8% /365 days

= $ 0.542
Working
Date Dr (or) Cr Balance No. Of day Product
1 Sep' Cr 5403.48 4 21613.12
4 Sep' Cr 2823.18 8 22586.24
12 Sep' Dr 176.72 14 2474.08
26 Sep' 2810.78 4 11243.12
Total Debit balance = 2474.08

Total Credit balance = 55442.48 x 15% x /365 days
= $ 2.278
(d) Balance at the end of September

= $ 2810.78+ 2.278 - 0.542
= $ 2812.516
(e) Charges as a multiple = $ 30 /0.542

= 55.3
(15) (i) = $ 469600
(ii) $ 490700
(b) 3.5%
(c ) (i) 7.6 %
(c ) (ii) 975,593.95
(16) Interest in first year:
S$70 000 × 0.034 = S$2 380
(b)
Principal in ringgit:
S$70 000 / 0.32 = RM 218 750
Balance after four years:

= RM 218 750 × 1.0344 = RM 250 051.93
Alternatively,
Balance after four years:
= S$70 000 × 1.0344 (M1)
= S$80 016.61866 Exchanged for ringgit: S$80 016.61866 / 0.32(M1)
= RM 250 051.93(A1)
(4) (C )
Dave's principal:
£40 000 × 5.5 = RM 220 000
Dave's balance after four years:

= RM 220 000 × 1.0344
= RM 251 480.80
Difference in balances:
251 480.80 – 250 051.93
= RM 1 428.87
4 (d) Klaus interest rate:
Using R = (n√ (A / P)) – 1

= (3√(456 466.45 / 400 000)) – 1
= 1.045 – 1 = 0.045
= 4.5%
(e )Investment in US dollars:
RM 365 500 / 4.3 = $85 000
(f)
$85 000 buys pref. shares with par value of:
$85 000 / 0.935 = $90 909.090909...
Dividend of 2.2% for 3 years:

$90 909.090909... × 0.022 × 3
= $6 000 (exactly)
Par value in ringgit:

$90 909.090… × 4.3
= RM 390 909.09
Accept RM 390 909
Alternative method
365 500 × (100 / 93.5)
= RM 390 909.09
(17) (a) (i)

Value after 5 years:
5 RM3,500,000(1+ 2.5%) = RM3,959,928.75
(a) (ii)
Value after 4½ years:
4.5 RM3,500,000(1+ 2.5%) = RM3,911,338.82
(b)(i)
Additional cost is
RM5,400,000 – RM3,911,338.82
=RM1,488,661.18
(b)(ii)
No, on the basis of cost, Kepastian should not wait.
Since the new property is worth more than the old,
if both increase in value at the same rate, then the
difference between them will grow.
©
Annual interest is 3.2% simple interest, so the rate
for six months is 1.6%.
The accrued value equals the principal plus interest
A =P + I
A = P + PRT
1,000,000 = P (1 + 0.016)
Hence
P= 1,000,000
1.016
= 984,251.97
Rounded to nearest RM50, this is RM984,250.
(18) (a) (i)

Principal = S$8,794,788
Interest = S$9,000,000 – S$8,794,788
= S$205,212
Rate of interest = 205,212 / (8,794,788 x 2/3)
=0.035000048 = 3.5%
(ii)
Value after three months
= S$8,794,788 x (1 + 3.5%/4)
= S$8,871,742.40 = S$8,871,742
Alternatively,
Interest of S$205,212 relates to 8 months simple interest.

Therefore 3 months interest = S$205,212 x 3 / 8 = S$76,954.5 to which we add S$8.794,788 (M1)
= S$8,871,742.5 = S$8,871,743 (A1)
(b) (i)
Interest = 1.5 x 2.45% x S$62,500
= S$2,296.88
(b)(ii)
Interest = 1.562,500((1.0245)1)2,310.8864×−=
= S$2,310.89
(c )
Time = (3 + 128/365) years = 3.350684931 years
Amount = S$93,000 x (1 + 0.0275)3.35068491
= S$101,849.79
Interest = S$101,849.79 – S$93,000
= S$8,849.79
The exact value of the answer depends on the value used for time. Accept 3.35 or a more accurate value.
Thus final value will be S$8,847.90 or closer to given value for A1 mark.
M1 mark for time must show working and value must lie between 3.3 and 3.4
Alternatively,
Daily interest rate = 365th root of 1.0275 = 1.000074328 (M1)
No of days = 365 x 3 + 128 = 1,223 (M1)
1,22393,000(1.000074328)101,849.81×=
Interest is S$8,849.81
Business Ownership
2-2002'
(1) An industrial product can be manufactured by two different methods of production.
Using method X, fixed costs are £3,400,000 and variable costs are £13 per product.
Using method Y, fixed costs are £2,700,000 and variable costs are £20 per product.
(a) Calculate the level of output for which the total costs are the same.
(b) Calculate the total cost at this output
(c) Calculate the difference between the costs of Method X and Method Y for
an output of 250,000 units.
(d) Which method should be used above condition.
3-2010'
(2) An industrial product may be manufactured by two methods of production.
Using Method X, fixed costs are £6,540,000 per period and variable costs are
£57 per unit.
Using Method Y, fixed costs are £7,800,000 per period and variable costs are
£45 per unit.
(a) Calculate the level of output per period for which the total costs are the same.
(b) Calculate the total cost per period for Method X at this output.
(c) State which method should be chosen for sales and production of 100,000
units per period.
(d) Explain how your answer to (a) supports your answer to (c).
Method X is chosen for production, and a selling price is set for break – even
of 75,000 units per period.
(e) Calculate:
(i) The selling price
(ii) The profit for production and sales of 100,000 units per period
2-2005'
(3) An industrial product can be manufactured by two methods of production.
Using Method X, fixed costs are £2,500,000 per trading period and variable
costs are £485 per unit of product. Using Method Y, fixed costs are £4,780,000
per trading period and variable costs are £390 per unit of product.
(a) Calculate the level of output for which the total costs are the same.
Manufactured by Method X, the product has unit costs of production and

distribution during a trading period as shown in the table below. The figures
include the unit variable costs and total fixed costs as above.
$
Components 255
Labour 175
Production overheads 50
Distribution expenses 130
(b) Calculate the number of units produced in the trading period.

The product is manufactured by Method X and is sold for £645 per unit of product.
(c) Calculate the break – even point for a trading period, and the total costs of
production per trading period at this output level.
4-2004'
(4) A factory manufactures two main products.
Product X has average unit costs of production during a trading year as follows:
$
Components 84
Labour 125
Production overheads 105
Distribution expenses 60
The production overheads do not vary irrespective of how many units are produced.
55% of the distribution expenses vary directly with the number of units produced.
80% of the labour costs vary directly with the number of units produced.
All the cost of the components varies directly with the number of units produced.
(a) Calculate
(i) The variable cost per unit
(ii) The fixed cost per unit for the trading year
Product Y has fixed costs of £3,250,000 and variable costs per unit of £210 during
a trading year. It is sold to wholesalers at £275 per unit.
(b) Calculate
(i) The number of units that must be sold in order to break even
(ii) The level of output required to provide a profit of £455,000.
2-2012'
(5) An industrial product may be manufactured by two methods of production:
Using Method X, fixed costs are£1,500,000 per period and variable costs are £185
per unit of product.
£145 per unit of product.
(a) Calculate the level of output for which the total cost of production using
Method X is equal to the total cost of production using Method Y.
(b) Calculate the total cost of production per period for Method X at this output.
(c) State whether Method X or Method Y should be chosen for an expected

production of 7,000 units per period.
The business owner chooses Method X, and in the first production period
produces and sells 7,000 units at a selling price per unit of £399.
(d) Calculate the profit or loss.

4-2012'
(6) A manufacturer’s product is sold to customers at £ 60 each. Manufacturing
costs are as follows.
Fixed costs per period $1,625,000

Variable cost per unit $47
Calculate;
(a) The profit or loss at a level of production and sales of 110,000 units per period
(b) The level of production and sales to produce a profit of £ 325,000 per period
(c) The fixed costs per unit at a level of production of 130,000 units per period
(d) The break – even point in units per period
(e) The total cost of production at break even
3-2013'
(7) An industrial product may be manufactured by two methods of production:
Using Method X, fixed costs are£2,300,000 per period and variable costs are
(a) Calculate the level of output for which the total cost of production using
Method X is equal to the total cost of production using Method Y.
(b) Calculate the total cost of production per period for Method X at this output.
The business owner chooses Method Y and in the first production period produces
and sells 12,000 units at selling price per unit of £ 399.
(c ) Calculate the profit or loss in this period
In the second production period the fixed and variable costs remain the same.
The owner produces 15,000 units but only sells 13,500 units. Changes in technology
mean that this product has become obsolete and no more can be sold.
(d) Treating the unsold units as having zero value, calculate the profit or loss on
production and sales
4-2013'
(8) Manufacturer A sells product P at £66 per unit of product.
Manufacturing costs are as follows:
Fixed cost per period $1,955,000

Variable cost per unit of product $49
(a) Calculate:
(i) the profit or loss at an output of 150,000 units of product per period
(ii) the break-even point in units of product per period
During a sales period, manufacturer A makes and sells 65,000 units of product Q.
During this period:
the fixed costs of distribution are £78,000 per period
the variable costs of distribution are £4.90 per unit of product
(b) Calculate the total cost of distribution per unit of product during this period.
In another period, manufacturer A makes and sells 125,000 units of product R at

a selling price of £27.50, and makes a profit of £126,150.
The variable costs are £18.80 per unit of product R.
(c) Calculate the break-even point in units of product per period.
3-2014'
(9) Product P had unit costs of production and distribution during trading period A
as follows. A percentage of each figure (the percentage shown) varied directly
with the number of units produced.
$ Percentage that is variable
Components 130 100%
Labour 220 85%
Production overhead 60 0%
Distribution expenses 70 60%
In trading period B, the variable cost per unit was £360, and the fixed cost per unit
was £125. In this period, the product was sold for £500 per unit and produced a
profit of £480,000.
(b) Calculate the number of units produced and sold in trading period B.
In trading period B, unit costs of production were as shown below:
$ Percentage that is variable

Components 129 100%
Labour ? ?
Production overhead 61 0%
Distribution expenses 70 60%
(c ) Calculate, for trading period B,

(i) the cost of labour per unit
(ii) the percentage of the labour cost that varied with the number of units
produced.
4-2014'
(10) Manufacturer A sells a particular product for £499. Production costs are as follows:
Fixed costs per period £433,500
Variable costs £329 per unit
(a) Calculate the break-even point in units produced and sold.
Manufacturer B sells a similar product. By investing in newer machinery, its

fixed costs are higher at £451,000 per period, while variable costs are lower at
£295 per unit. This product is sold by Manufacturer B for £490 per unit.
(b) Calculate the profit or loss per period for Manufacturer A and
Manufacturer B for an output of 2,500 units each.
Manufacturer B then changes the selling price of its product for the following
trading period, while the fixed costs and variable costs remain at £451,000 per
period and £295 per unit. The break-even point for production and sales in this
trading period is 2,200 units.
(c) For this trading period, calculate the:
(i) contribution per item
(ii) selling price
2-2015'
(11) Manufacturer A sells Product P for £275 per unit. Manufacturing costs are as follows:
Fixed costs per period £715,000
(a) Calculate the:
(i) contribution per unit
(ii) break-even point in units produced and sold
Manufacturer A sells Product Q for £300 per unit. Manufacturing costs are as follows:
Fixed costs per period $154,000

Variable costs $ 190 per unit
(b) Draw a break-even chart for Product Q, to an appropriate scale. Your chart
should cover production (output) from 0 units per period to 2,500 units per period.
(c) Show clearly on your chart the:
(i) output (units) for break even
(ii) total manufacturing cost for break even
(iii) profit for an output of 2,000 units
(iv) output for a loss of £55,000
4-2015'
(12) Product A has unit costs of production during a trading period as follows:
Fixed ( $ ) Variable ($)

Production overhead ? 0
Distribution expenses 12 36
Labour ? 68
Material 0 62
(a) Calculate, for Product A, the:

(i) total distribution expenses per unit in this trading period
(ii) fixed distribution expenses as a fraction of the total distribution expenses
The total of all fixed and variable costs per unit in this trading period is £230.
The total cost of labour per unit in this trading period is £85.
(b) Calculate, for Product A in this trading period, the:

(i) fixed cost of labour per unit
(ii) production overheads per unit
(iii)total variable costs as a percentage of the total of all fixed and variable costs
In the same trading period, Product B has variable costs of labour per unit of £78.
This figure is 65% of the total cost of labour per unit for this product.
(c) Calculate the total cost of labour per unit for Product B in this trading period.
3-2019'
(13) Abitfit plc sells its most popular smart watch in the UK for £180 (British pounds)
per unit. Production costs are as follows:
Fixed costs £567,000 per month

(a) Calculate the break-even point in units per month.
Wuahei sells a similar smart watch with fixed costs of £717,000 per month and
variable costs of £132 per unit. This smart watch is sold at a price of £169 each.
Last month Abitfit plc and Wuahei both had an output and sales of 25,000 units.
(b) (i) Calculate and compare the profits of the two manufacturers for last month.
(ii) Calculate Wuahei’s profit per smart watch as a percentage of the sales price.
April' 2021
(14) Marvellous Mendoza Malbec (MMM) is an Argentinian exporter of wine that uses
Cross America Banking Group for its banking needs within Argentina. CABG provides
payroll and settlement services to the company.
MMM exports red wine to the UK. Each bottle of wine sells in the UK for £8, and the
variable costs in the production, converted to British pounds, are £2.75 per bottle.
The fixed costs per quarter for MMM are £579,000
(a) Using the graph paper, construct a break-even chart showing sales revenue and
total costs for a quarter, plotted against the number of bottles of wine produced
and sold in that quarter. The maximum output in a quarter is 150,000 bottles.
(4 marks)
(b) Use your graph to estimate the:
(i) break-even point in the number of bottles produced and sold, and the sales
revenue generated from this quantity (2 marks)
(ii) level of output that will lead to a loss of £200,000 (1 marks)
(iii) profit generated from an output of 130,000 bottles. (1 marks)
The following information is about the variable costs per bottle produced:
Materials 27% of variable costs
Labour To be calculated
Overhead expenses £1.10
(c ) Calculate the variable cost of labour per bottle. (3 marks)
December' 2021
(15) Bellissima Batik Sdn Bhd manufactures batik fabric in Sarawak for sale in markets
throughout Malaysia.
There are two methods of creating batik fabric – painting on the fabric by hand, and
printing using a block. Hand-painting is much more time consuming and requires
highly skilled staff, and the finished product is much more expensive to buy than
block-painted batik, which is faster to manufacture.
Bellissima Batik Sdn Bhd’s current staff are capable of producing 200 metres of
hand‑painted batik in a week, with a variable cost of RM 15 per metre.
Alternatively, the company could invest in machinery capable of producing

1,000 metres of block-printed batik in a week. The variable cost of this fabric is
RM 6 per metre. The fixed costs of this process are RM 3,600 per week.
If it were possible to produce 300 metres of either fabric in a week, the total costs of
the hand-painted batik and block-printed batik would be the same.
The owner of Bellissima Batik Sdn Bhd wants to know whether to invest in the
machinery and sell block-printed batik or to maintain the lower level of output
of the higher-priced hand-painted batik.
(a) Calculate the fixed costs per week of producing the hand-painted batik.
( 4 marks)
(b) (i) Using the graph paper, construct a graph that plots the total cost of
producing hand-painted batik (up to 200 metres) and the total cost of
manufacturing block-printed batik (up to 1,000 metres).
Use a scale of RM 0 to RM 30,000 on the y-axis and 0 to 1,000 metres on
the x-axis. 4 marks
(ii) Plot a line on your graph for the revenue from selling hand-painted batik, at
RM 150 per metre up to 200 metres (the maximum for a week with current
staff ). 1 marks
(iii) Plot another line for the revenue from selling block-printed batik, at RM 25
per metre up to 1,000 metres (the maximum using the new machinery).
1 marks
(c ) Consider the profit for each method at its maximum output. Calculate which
method would produce the most profit for Bellissima Batik Sdn Bhd.
3 marks
January '2021
(16) Solidus Solars Ltd manufactures solar panels in Malaysia, mainly for export to the
United States.
Solar panels for private homes can be manufactured using two different methods
of construction: the Hot Wire Method and the Cold Conductor Method.
Using the Hot Wire Method, fixed costs per period are RM 3,280,000 (Malaysian
ringgit) and variable costs are RM 1,100 per solar panel produced.
Using the Cold Conductor Method, variable costs are RM 550 per solar panel
produced.
When 6,000 units are produced in a period, the total costs of the two methods
are the same.
(a) Calculate the fixed costs per period for the Cold Conductor Method.
4 marks
(b) (i) Using the graph paper, construct a single graph that plots for each method
the total cost (on the y-axis) against the number of units produced (on the
x-axis up to 8,000). Show where the two lines cross, and their intercepts on
the y-axis.
4 marks
(ii) Shade the region of your graph that shows when the Hot Wire Method
should be used. 1 marks
(iii) Indicate on your graph an estimate of the total cost to produce 4,500 units
using the Cold Conductor Method.
1 marks
Using the Hot Wire Method, the variable costs of production per unit are as follows:
Overhead expenses: a quarter of the variable costs
Labour: 30% of the variable costs
Materials: To be calculated
(c ) Calculate the variable cost of materials per unit. 3 marks

June' 2021
(17) Kepastian Komputers manufactures a range of wireless routers. Its most popular
router sells for £42 per unit in the UK. Production costs are as follows:
Fixed costs RM 554,900 per month

Variable costs RM 52 per unit.
(a) Calculate the break-even point in routers per month,

assuming an exchange rate of £1 = RM 5.5
4 marks
Tireless Wireless is another Malaysian company that manufactures a similar router

with fixed costs of RM 468,000 per month and variable costs of RM 63 per unit.
This router is sold at the same price of £42 per unit. The exchange rate remains
at £1 = RM 5.5 Last month Kepastian Komputers and Tireless Wireless both had
an output and sales of 5,000 units.
(b) (i) Calculate and compare the profits in RM of the two manufacturers for last
month. 4 marks
(ii) Based on last month’s output and sales, calculate Kepastian Komputers'
profit per router as a percentage of the selling price.
3 marks
At an output of 6,000 units Tireless Wireless would make more profit than Kepastian
Komputers, but as output increases the difference in profit between the two
companies will reduce as Kepastian Komputers' variable costs are lower.
(c ) Calculate the output at which Kepastian Komputers would begin to make more
profit than Tireless Wireless.
3 marks
(Total for Question 6 = 14 marks)
November' 2021
(18) InsuPharm pte Ltd manufactures insulin for people with diabetes in a high-tech
facility in Queenstown, Singapore. Insulin is produced by two main methods – the
‘human’ method, which uses human DNA, and the ‘analogue’ method, which is
laboratory grown.
Human insulin production has fixed costs per year of S$24,500,000 and variable costs
of S$500 per litre produced.
Analogue insulin production has fixed costs per year of S$16,500,000 and variable
costs of S$600 per litre produced.
(a) Calculate the:

(i) level of output for which the total cost of producing the same amount of
insulin by each method is the same
4 marks
(ii) total cost of human insulin production for a year at this level of output.
2 marks
InsuPharm pte Ltd is planning to produce 150,000 litres of insulin in 2022, to be
exported at a selling price of S$1,250 per litre.
(b) Calculate the profit to be made from producing this insulin using the analogue
method. 4 marks
(c ) At this level of production and selling price, would you advise InsuPharm
pte Ltd to produce insulin by the human or analogue method? Give a reason
for your answer. 2 marks
(2) December' 2021
Johor Electronics Sdn Bhd sells its most popular fitness band with the following
prices and sales.
Year 2018 2019 2020

Price (RM) 130 117 95
Sale (units) 5700 6800 9450
(a) Calculate the price relative for the fitness band for the year 2020 with the year
2019 as the base year.
(2 marks)
(b) Calculate an index of prices for the fitness band for the years 2018, 2019 and
2020, with the year 2018 as base year.
(3 marks)
(c) Calculate a chain base index for the sales units of the fitness band
for the figures and years shown.
(3 marks)
Fitness bands have increased in popularity around the world, and the quantity
relative for Johor Electronics Sdn Bhd in 2021, with 2020 as the base year, was 1.44
Prices continued to fall by a further RM 7 from 2020 to 2021.
(d) Calculate the increase in income for the sales of the fitness band in 2021
expressed as a percentage of the income from sales in 2020.
Give your answer correct to 3 significant figures. (5 marks)
(Total for the question = 13 marks)
(3) January ' 2021

Malaysian Mobiles is a company in Malaysia that manufactures and exports mobile
phones. One particular model of phone has been sold for the last three years as follows.
Year 2017 2018 2019

Sale (units) 50000 95000 132000
Price per unit RM320 RM295 RM289
Calculate the:
(a) index of sales (units) of the mobile phones for each of the years 2018 and 2019,
with 2017 as the base year
(3 marks)
(b) chain base indices for the prices of mobile phones

(3 marks)
(c) sales (units) in 2020 if the chain base index for sales in 2020 is 107
(2 marks)
(d) index for the value of total sales for each of the years 2018 and 2019, with 2017 as
the base year.
(4 marks)
(4) July' 2022

Changi Airport authorities published the following data for number of passenger
and the number of aircraft movement (departures or arrivals ) over the last five
years.
Year No. of No. of
Passengers movements
(4) April' -2021

Inflation is the amount by which prices in a country rise each year. It is usually
measured using an index called a consumer price index (CPI). The national manager
of CABG records the year on year annual inflation in Brazil for the past three years
as shown.
Year Annual Inflation in Brazil

2017 2.95%
2018 3.75%
2019 4.31%
(a) Taking 2016 as the base year, create an index for prices in Brazil for each of the
three years 2017 to 2019.
(3 marks)
The National Minimum Wage is the lowest pay rate that is allowed in a particular
country. Generally, any adult employee must earn at least this rate. The wages for
a full-time employee in Brazil, at National Minimum Wage, for the past four years are
given below in Brazilian reals (R$).
Year Monthly Wages

in R$
2016 880
2017 937
2018 954
2019 998
(b) Taking 2016 as the base year (2016=100), create a chain base index for the monthly
National Minimum Wage in Brazil for each of the three years 2017 to 2019.
(3 marks)
(c) Calculate the difference in percentage terms between the increase in prices in
Brazil between 2016 and 2019 and the increase in the monthly National Minimum
Wage in Brazil over the same period.
(3 marks)
(d) The national manager of CABG thinks that adult employees paid at the National
Minimum Wage in Brazil are better off in 2019 than they were in 2016.
State whether he is correct, giving a reason for your answer.
( 2 marks)
(Total for the question = 11 marks)

(1) (a) Level of Output
Method X , Total cost = Method Y , Total cost

Variable cost + Fixed cost = Variable cost + Fixed cost
(Variable cost per unit x Level of output) = (Variable cost per unit x Level of output)
+ Fixed cost + Fixed cost
(13x Output) + 3,400,000 = (20x Output) + 2,700,000

7 Output = $ 700,000
Output = 100,000 Units
(b) the total cost at this output
Method X
= (Variable cost per unit x Output ) + Fixed Cost
= 13 x 100,000 units + 3,400,000
= $ 4,700,00
Method Y
= ( 20x 100,000 unts ) + 2,700,000
= $ 4,700,000
(c) At Output 250,000 unts
Method X , Total cost = $ 6,650,000
Method Y , Total cost = $ 7,700,000
Differece in cost = $ 7,700,000 - $ 6,650,000 = $ 1050,000
(d) Method X should be used when output is expected to be more than 100,000 units.

Variable cost + Fixed cost = Variable cost + Fixed cost
(Variable cost per unit x Level of output) = (Variable cost per unit x Level of output)
+ Fixed cost + Fixed cost
(57 x output) + Fixed cost = (45 x output) + fixed cost
Output = 105,000 units
(b) Total cost at output 105,000 units
Method X , = $ 12,525,000
(c) Method X should be chosen for sale and production of 100,000 units .(no calculation need)
(d) With output below 105,000 units per period, the lower fixed cost of Method X.
(e) (i) Selling Price

BEP (units) = Fixed cost
Contribution per unit
75,000 units = 6540,000

Contribution per unit
Contribition per unit = $ 87.2
Contribution / Unit = Selling price - vairable cost

SP = CPU+ VCPU
= 144.2
(ii) Profit
Contribution - Fixed cost
= (CPU x Sale units) - Fixed cost
= (87.2 x 100,000 unts) - 6540,000
= $ 2180,000

( 485x output) + 2,500,000 = ( 390 x output) + 4780,000
Output = 24000 units
(b) Total cost per units = 255+175+50+130 = 610
Fixed cost per unit = 610 - 485 = $ 125
No. Of unit = 2500,000 /$ 125

= 20,000 units
(c) Break even point (units) = Fixed cost / CPU

= 2,500,000 / $ 160 = 15,625
Total cost at 15,625 units
( 485 x 15625 ) + 2500,000 = $ 10078,125

(4) (a) (i) Variable cost per unit
= 84 + (125x 80%) + (60 x 55%)

= $ 217
(ii) Fixed cost per unit

= ( 125 x 20%)+ 105+ ( 60x 45%)
= $ 157
(b) (i) Product Y

Break even point (unit)
= Fixe cost / CPU
= 3250,000 /65 = 50,000 units
WN CPU = SP- VC per unit

= 275- 210 = 65
(ii) Level of output

= Fixed cost + Target profit
CPU
= 3250,000 + 455,000
$65
= 57,000 units

Method X , Total cost = Method Y, Total cost
1,500,000 + (185x output) = 1,700,000 + (145xoutput)
40 output = 200,000
Output = 5000 units
(b) Total cost of Method X at output of 5,000 units
= (85x 5000 units) + 1,500,000

= 2,425,000
(c) Method Y should be choosen for an expected output of 7,000 unit per period.
(d) Method x
Profit or Loss
= Contribution - Fixed cost
= (214 x 7000 units) - 1,500,000
= $ 2000 (Loss)
WN
CPU = SP -VC = 399-185 = $ 214
(6) (a) The profit or loss at a level of production and sales of 110,000 units per period
= Contribution - Fixed cost

= (13x 110,000 units) - 1,625000)
= $ 195,000 (Loss)
WN
CPU = 60-47 = $ 13
(b) Level of Production and sale

= 1625000+325000 = 150, 000 units
13
(c) Fixed cost per unit at level of prouduction 130,000 units
= 1625000/130000 units
= 12.5 per units
(d) Break even point in units

= 1625,000/13 = 125000 units
(e) total cost of production at break even points

= (47x 125 0000) + 1625,000 = 7500,000
(7) (a) Level of output

Method X, total cost = Method Y, total cost
2300,000 + 215x output = 2,500,000+(190x output)
output = 8000 units
(b) total cost for Method x

= (215x 8000 units) + 2,300,000
= 4020,000
(c) Profit or Loss

CPU = (399-190) = 209
= (209 x 120,000 units) -2500,000

= $ 8000 profit
(d) Profit or Loss

$
Sale (399x 13,500 units) 5,386,500
Total cost
(190x 15,000 units)+2,500,000 (5,350,000)
36,500
(8) (a) (i) Profit or Loss

CPU = 66-49 = 17
= (17x 150,000 units) - 1955,000

= 595,000
(ii) Break even point in unit

= 1955,000/17 = 115 ,000 units
(b) total cost of distribution per unit = 4.9 + 1.2 = $ 6.1
Fixed cost per unit = 78,000 / 65,000 units

= 1.2
(c) Break even point in unit

= Fixed cost / CPU
= 961350/8.7
= 110,500 units
WN
CPU = 27.5-18.8 = $ 8.7
Profit = contribution - fixed cost

Fixed cost = contribution - profit
= (8.7 x 125,000 unit)- 126,150
= $ 961350
(9) (a) (i) Variable cost per unit = 130 + (220x 85%)+ (70x 60%)
= $ 359
(ii) Fixed cost per unit = (220x 15%)+60+ (70x 40%)

= 121
(b) the number of unit produced and sold in trading period B

Profit = Profit per unit x no. Of units
$480,000 = 15 x no. Of unit
no. Of unit = 32000 units
WN
Profit per unit = contribution per unit - fixed cost per units
= 140- 125 = $ 15
CPU = 500-360 = $ 140
(c) (i) Cost of Labour per unit

Total cost per unit = $ 360+125 = $ 485
Labour cost per unit = 485- (129-61-70) = $ 225
(ii) percentage of variable labour cost

= 360- 129- (70x60%) = 189
% of labour cost = 189/225 x 100 = 84%
(10) (a) Break even point in unit = 433500/170 = 2550 units
WN
CPU = 499-329 = 170
(b) Profit or loss

Manufacture A
= (170x 2500 units) - 433,500
= 8500 (loss)
Manufacture B
= ( 195 x 2500 units)- 451,000
= 365,000 (profit )
WN
CPU = 490-295= 195
(c) Contribution per item = Fixed cost

2200 units
= 205 per item
(ii) Selling price

CPU = SP- VC per unit
Selling price = 205+295 = $ 500
(11) Product P
(a) (i) contribution per unit = 275-145 = $ 130
(ii) Break enven point (unit) = 715,000/ 130
= 5500 units
(b) Break even chart

Sale value = $ 300 x 2000 unit = $ 600,000
Total cost = $ 190 x1400 units = 154000
= $ 420,000
(c) (i) BEP (units) = 154,000 = 1400 units

(300- 190)
600000 sale value
500000
400000
300000
200000
100000
500 1000 1500 2000 2500 (sale unit)
(c) (iii) profit = (110 x 2000)- 154,000 = $ 66,000
(iv) output = 154000 - 55000

$110
= 900 units
(12) (a) (i) Total distribution expenses per unit

= 12+36 = $ 48
(ii) Fixed distribution expenses as a fraction of the total distribution expenses

= $ 12 / $ 48
= 1/4
(b) (i) fixed cost of labour per unit

= 85 - 68 = $ 17
(ii) production overhead per unit

= 230-(36+68+62)-(12+17)
= $ 35
(iii) total variable cost as a percentage of the total of all fixed and variable cost
variable cost per unit = ( 36+68+62) = $ 166
= 166/230x100
= 72.2%
(c) total cost of labour cost per unit for Proudct B
= 78x 100 /65
= $ 120
(13)
(14) A1 for x-axis scale for units of output, from 0 to 150,000 A1 for y-axis scale for revenue and costs, from 0 to £1,200,000
(b) (i)
BEP is at 110,286 bottles and £882,286 (approximately)
Accept answers in [105,000, 115,000] and in [£870,000, £890,000]
(b) (ii)
Precise value is 72,190.5 bottles
From graph, accept any answer in
[70,000, 75,000]
(b) (iii)
Precise value is £103,500
From graph, accept any answer in
[£90,000, £110,000]
©
Material costs: 0.27 x £2.75 = £0.7425
Labour cost per unit = £2.75 - £1.10 - £0.7425
= £0.9075 (accept £0.91)
(15)
Total costs of block-printed production
= RM3,600 + (300 x RM6)
= RM5,400
Total variable costs of hand-painted production
= 300 x RM15 = RM4,500
Fixed costs for hand-painted production
= RM5,400 – RM4,500
(b) (i)
(b) (ii)
Correct Hand Rev line on graph
(b) (iii)
Correct Block Rev line on graph
(c )
Hand-painted profit:
(150 x RM200) – (RM900 + 200 x RM15)
= RM26,100
Block-painted profit:
(1,000 x RM25) – (RM3,600 + 1,000 x RM6)
= RM15,400
Thus, hand-painted batik produces more profit at maximum output.
Alternatively,
Award M1 for each of hand-painted and block-painted values read correctly from candidate’s graph in (b)(i)
(16) (a)
Total costs of Hot Wire Method
= RM3,280,000 + (6,000 x RM1,100) = RM9,880,000
Total variable costs of Cold Conductor Method

= 6,000 x 550 = RM3,300,000
Fixed costs for Cold Conductor Method
= RM9,880,000 – RM3,300,000 = RM6,580,000
( b) (ii)
(b) (iii)
(c )
Overhead expenses = 0.25 x RM1,100 = RM275
Labour = 0.3 x RM1,100 = RM330
Materials = RM1,100 - RM275 - RM330 = RM495
Alternatively, Overhead expenses are 25% of the total overhead expenses

Labour is 30%
Therefore Materials are 45%
45% x RM1,100 = RM495
(17) (a)
Convert price: £42 x 5.5 = RM231
Contribution = RM231 – RM52 = RM179
Break-even point = RM554,900 / RM179
= 3,100 routers per month.
(b)(i)
Profit for Kepastian:
(5,000 x RM179) – RM554,900
= RM340,100
Contribution for Tireless Wireless
= (42 x 5.5) – RM63 = RM168
Profit = (5,000 x RM168) – RM468,000
= RM372,000
Profit for Tireless Wireless is RM31,900 greater than
for Kepastian.
(b)(ii)
Profit: RM340,100 / 5,000
= RM68.02 per router.
As a percentage of selling price:
(RM68.02 x 100) / RM231 = 29.445887%
Accept 29% or more accurate
(c )
Level at which profits are equal is given by x in:
(231−52)x −554,900 = (231−63)x − 468,000
Which gives:
(179 168) 86,900
x = 7900
Hence Kepastian will first make more profit when
output and sales are 7,900 + 1 units
=7,901 units
(18) Let Q be the output at which total cost is equal.
Then, 24,500,000+ 500Q = 16,500,000+ 600QQ

Gives
100Q = 8,000,000
Q = 80,000 litres (of insulin)
(a) (ii)
Total cost of insulin using human method:
S$24,500,000 + (80,000 x 500)
= S$64,500,000
(b)
Cost of producing 150,000 litres using analogue method
S$16,500,000 + (150,000 x S$600)
= S$106,500,000
Revenue from sale of 150,000 litres:

150,000 x 1,250 = S$187,500,000
Hence, profit to be generated:
S$187,500,000 – S$106,500,000
= S$81,000,000
(c )
At above 80,000 litres (or their figure in (a)(i)) it is less expensive to manufacture using the human method as the variab
Hence, it would cost less to produce 150,000 litres using the human method.
So, I would recommend the human method as more profit would result.
Alternatively,
Profit for the human method is
187,500,000 – ((150,000 x 500) + 24,500,000)
= S$88,000,000 A1
This is more than the profit using the analogue method, so the human method should be used instead/the analogue me
m 0 to £1,200,000 A1 for a total cost line between (0, 579,000) and (150,000, 991,500) A1 for sales revenue line between (0, 0) and (15
thod as the variable costs per litre are lower.
d/the analogue method is not recommended.

en (0, 0) and (150,000, 1,200,000)
Fixed Asset And Depreciation
(1) A factory owner buys two machines. Machine A costs £1,060,000 and is estimated to have a life of
4 years and a scrap value of £20,000.
(a) Calculate the percentage of the cost to be written off each year. Give your answer correct to
3 significant figures.
(b) Prepare a depreciation schedule that shows:

(i) The annual depreciation for each year
(ii) The accumulated depreciation for each year
(iii) The book value at the end of each year.
Machine B is depreciated by the equal installment method over 6 years. It has the same scrap
value as machine A. It also has the same book value at the end of year one as machine A.
(c) Calculate the original cost of machine B.
(2) A trader buys machinery costing £19,900. He expects it will last for 7 years and have a scrap value of
£1,000. He uses the straight line (equal installment) method of depreciation and depreciates by
a full year in the year of purchase and nothing in the year of disposal.
(a) Prepare the depreciation schedule for the first 3 years to show annual depreciation,
accumulated depreciation, and the book value at the end of each year.
After 3 years, the trader reconsiders the lifetime of the machine. He now believes that new
development in technology mean that it must be replaced in a further two years, at which time it
will have a scrap value of £1,500. He recalculates the depreciation for the fourth and fifth years,
again using the straight line method.
(b) Calculate:
(i) The revised amount of depreciation for year 4
(ii) The increase in annual depreciation from year 3 to year 4
(3) A communications system is purchased for £595,000. It is expected to have a working life of
3 years, after which the scrap value is expected to be £50,000
(a) Using the diminishing balance method, calculate the rate of deprecation.
(b) Prepare a deprecation schedule that shows:
(i) The amount of depreciation each year
(ii) The accumulated depreciation each year
(iii) The book value at the end of each year.
(c) In part (b), the book value at the end year 3 may not be exactly £50,000. Explain why this
would not be a problem.
(4) A machine that costs £195,000 is estimated to have a life of 4 years and a scrap value of £5,000.
(a) Using the reducing balance method, calculate the rate of depreciation and show your workings.
(b) Using the reducing balance method and a rate of depreciation of 60%:
(i) Copy and complete the following depreciation schedule:
Year Yearly Cummulative Book Value at

Depreciation depreciation Year end
Year 0 195,000
Year 1 ? 117,000 78,000
Year 2 46,800 163,800 ?
Year 3 18,720 ? ?
(ii) Calculate the book value at the end of year 4.
(5) A factory machine cost £9,500,000. It is depreciated by the equal installment method.
After 3 years, its book value is £5,600,000
Calculate:
(a) The amount of depreciation each of the first 3 years
(b) The percentage of the original cost depreciated in each of the first 3 years
(c) The depreciation in the third years as a percentage of the book value after 2 years
(d) The expected life of the machine at this rate of depreciation
(e) The rate of depreciation by the diminishing balance method over the first 3 years
that would achieve the same book value at the end of 3 years.
(6) Factory F buys two machines, Machine A costs £95,500 and is estimate to have a life of 4 years
and a scrap value of £7,500. It is depreciated by the equal installment method.
(a) Using the equal installment method, calculate:

(i) The percentage of the cost to be written off during the first year
(ii) The book value after one year
(iii) The accumulated depreciation after three years.
Machine B is depreciated by the equal installment method over five years. It has the same
scrap value as machine A. It also has the same book value at the end of one year as machine A.
(b) Calculate the cost of machine B.

Factory G buys Machine C for £120,000, and depreciates it by the reducing balance
(diminishing balance) method with an annual rate of depreciation of 44%.
(c) Calculate the book value of Machine C after 2 years
(7) Machine A has an initial cost of £290,000 and is depreciated by the equal installment method,
at the rate of £35,000 per year until the book value is less than £35,000.
Calculate, for machine A:

(a) The book value at the end of one year
(b) The anticipated life as a whole number of years
(c) The residual value at the end of that period
Machine B is depreciated by the diminishing balance method.

It has an initial cost of £450,000 and a book value after one year of £270,000
Calculate, for machine B:

(a) The rate of depreciation
(b) The book value after 2 years
(c) The amount of depreciation expected during year 3.
(8) A factory machine that costs £4,600,000 is expected to have a life of 5 years and a scrap value
of approximately £300,000.
Depreciation is first calculated on the basis of the equal installment method.

Using this method it is expected to depreciate each year by 18.7% of its original value.
Calculate:
(a) the amount of depreciation each year
(b) the book value after 3 years
(c) the total depreciation over the period of the first 3 years
As an alternative, depreciation is calculated on the basis of the diminishing balance method.

Using this method it is expected to depreciate each year by 42.5% of its value at the start of that year.
(d) Calculate:
(i) the amount of depreciation in the first year
(ii) the book value after 3 years
(e) State, with workings, the method for which the scrap value is closest to £300,000.
(9) HW
(10) A factory machine costs £500,000 and is expected to have a life of 5 years.
A calculation is made of depreciation using the diminishing balance method.
On this basis it is expected to be worth 65% of its original value after one year.
(a) State the rate of depreciation.

(b) Prepare a depreciation schedule, based on the diminishing balance method for the 5 years,
that shows for each year:
(i) the annual depreciation
(ii) the accumulated depreciation at the end of the year
(iii) the book value at the end of the year
A calculation of depreciation is then made based on the equal installment method, with a
residual value of £50,000 at the end of the 5-year period.
(c) Calculate the annual depreciation.

(d) Prepare a depreciation schedule, based on the equal installment method for the 5 years,
that shows for each year:
(i) the accumulated depreciation at the end of the year
(ii) the book value at the end of the year
(e) State which method shows the highest book value at the end of year 1, and by how much
(11) HW
(12) Machine A costs $150,000 and is estimated to have a life of four years and a scrap value of $5,000.
(a) Using the diminishing balance method, show that the rate of depreciation is approximately
57%. Show all your working, and provide a more accurate percentage value.
(b) Using a rate of depreciation of 57%, copy and complete the following depreciation schedule
for Machine A, inserting the missing figures.
Years Yearly Cummulatived NBV

Depreciation ($) Depreciation ($) at the end of year ($)
0 150,000
1 ? 85,500 64,500
2 36,765 122,265 ?
3 15,809 ?
4 ? ? 5,128
Machine B is depreciated by the diminishing balance method, and has the following book values:
At the end of year 2 $ 220,000
At the end of year 3 $ 110,000
It has a scrap value of approximately $ 7,000.
(c) Calculate the:

(i) book value of Machine B at the end of year 4
(ii) original cost of Machine B
(iii) expected life of Machine B
(16) Hobart Wholefoods Ltd manufactures health foods in Australia. The company buys a new
machine for crushing wheat grains. The machine costs AU$9,400,000.
It is depreciated by 23% of its value each year, using the reducing balance method of depreciation
(a) Prepare a depreciation schedule for the first 4 years showing annual depreciation,
accumulated depreciation and book value at the end of each year.
(b) Calculate the:

(i) amount of depreciation that occurs in the 6th year
(ii) book value at the end of 7 years
(iii) amount of depreciation that occurs in the 9th year.
A second machine for sterilising foods is depreciated for 6 years by the equal instalment
method. The annual depreciation is AU$52,575 and the machine will finally be sold for a
scrap value of AU$26,000
(c) Calculate the original cost of this machine.

Fixed Asset and Depreciation
I Straight line Method (or) Equal instalment Method

II Reducing balance Method (or) Diminishing Method
I Straight line Method (or) Equal instalment Method

1. Annual depreciation expenses
2. Net book value (Carrying value)
3. Total depreciation %
4. Annual depreciation %
5. Schedules
6. Change in scrap value
7. Change in depreciation Method
Depreciation expenses = Orginal cost -scrap value

Total useful life
Or
= ( Original cost -scrap value ) x Dep; %
2. Net book value (Carrying value)
NBV = Original cost -Accumulated depreciation
(Annual dep; expenses x no. Of years)
3. Total depreciation %
(Percentage of the cost that closing/over the useful life.)
= Total depreciation x 100 =%

Original cost
4. Annual depreciation %
(Percentage of the cost for each year )/% of the cost to be written off each year)
= Annual depreciation x 100 =%

Original cost
5. Schedules
1 . Annual depreciation expenses
2. Accumulated depreciation
3. NBV
Year (i) Annual depreciation (ii) Accu; Dep; (iii) NBV

0 xxx xxx xxx
1 xxx xxx xxx
2 xxx xxx xxx
3 xxx xxx xxx
Note ; Depreciation schedule ဆွဲ လျှင် Year 0 ကနေစဆွဲ ရမည်။
6. Change in scrap value
Depreciation expenses = NBV -new scrap value

remaining useful life
Note ; NBV = scrap value ပြောင်းသွားသည့်နှ စ် ၏ NBV

Remaining useful life = Total useful life - ပြီးခဲ့ ပြီးသား နှ စ်တွေကို နှ တ်
7. Change in depreciation Method
Straight line Method Reducing Balance Method
Depreciation expenses =NBV x Depreciation %
ပြောင်းသွားသည့် နှ စ်၏ NBV
Reducing Balance Method Straight line Method
Depreciation expenses = NBV -Scrap value

Remaining useful life
II Reducing Balance Method

2. Schedule
3. Depreciation %
4. NBV

Depreciation expenses = NBV x Depreciation %
2. Schedule
2. Accumulated depreciation
3. NBV
3. Depreciation % (Rate of depreciation)
Depreciation % = scrape value -1

n original cost
n =no . Of year
4. NBV after n th year (n အကြိမ်မြောက် NBV တန်ဖို း)
NBV = Original cost x (1- Depreciation % ) n
5 . Depreciation Amount at the n th
= NBV the previous year before n th X Dep; %
(1) Machine A
Using equal installment Method
(a) The percentage of the cost to be written off each year (Annual depreciation)
= Annual depreciation expenses x 100

Original cost
= 260,000 /1060,000 x 100 = 24. 5%
W-1 Annul depreciation expenses = original cost -scrap value

Total useful life
= 1060,000-20,000 = $ 260,000
4 years
(b) Depreciation schedule
Year (i) Annual depreciation (ii ) Accu; Dep ; (iii) NBV

Year 0 1,060,000
Year 1 260,000 260,000 800,000
Year 2 260,000 520,000 540,000
Year 3 260,000 780,000 280,000
Year 4 260,000 1,040,000 20,000
Machine (B)
Calculation the original cost of Machine B
Annual depreciation expenses = NBV -scrap value

Remaining useful life
156,000 = 800,000 - 20,000

5 years
Original cost = (Annual depreciation exp; x 6 years ) + scrap value

= 156,000 x 6 + 20,000
= 956,000
OR
Total useful life
156,000 = Original cost - 20,000
6 years
Original cost = 956,000
(2) Depreciation schedule for the first three years

Year 0 19,900
Year 1 2,700 2,700 17,200
Year 2\ 2,700 5,400 14,500
Year 3 2,700 8,100 11,800
Annual depreciation expenses = 19900- 1000 = $ 2700

7 years
(b) (i) Revised amount of depreciation for 4 year
Depreciation = NBV -Revised scrap value

Revised Remaining useful life
=11800 -1500 = $ 5150

2 years
(ii) The increase in annual depreciation from year 3 to Year 4
= 5150-2700 = $ 2450
(3) Rate of Depreciation %
scrape value -1
Original cost
n
= 50000 -1
3 595000
=56%
(b)
Year 0 595,000
Year 1 333,200 333,200 261,800
Year 2\ 146,608 479,808 115,192
Year 3 64,508 544,316 50,684
Year 1 Dep; expenses = 595000X 56% = 333200

Year 2 Dep; expenses = 261800 X 56% = 146608
(c) The book value at the end of year 3 may not be exactly $ 50,000 because the rate of
depreciation % part (a) is approximately.
(4) (a) Using Reducing balance Method
Rate of Depreciation %
scrape value -1
Original cost
n
= 5000 -1
3 195000
- 59.98% ~ 60%
(b) (i)
Year 0 195,000
Year 1 117,000 117,000 78,000
Year 2 46,800 163,800 31,200
Year 3 18,720 182,520 12,480
(ii) NBV of Year 4
= 195000 X (1- 0.6) 4
= $ 4992
OT
CV at the end of year 3 = 12480 - 7488

= $ 4992
(5) (a) Using equal installment Method

Amount of depreciation each of the first three years
= (9500,000-5600,000) /3
= 1300,000 each year
(b) The percentage of the original cost depreciated in each of the first 3 years
= Annual depreciation X 100

Original cost
= 1300,000 X100 = 13.68 ~ 13.7%

9,500,000
(c) The depreciation in the third years as a percentage of the book value after 2 years
= Third year depreciation

NBV after 2 years
= 1300,000 x 100
6,900,000
= 18.84 %
(d) The expected life of the machine at this rate of depreciation

Total useful life
1,300,000 = 9500,000-0
Total useful life
Total useful life = 7.3 ~ 7 years
(e) The rate of depreciation by the diminishing balance method over the first 3 years
Depreciation = scrape value -1

n original cost
= 5600,000 -1
3 9,500,000
= 16.15%
(7) Machine A (Equal installment )
(a) The book value at the end of one year
= 290,000 -35,000 = 255 ,000
(b) The anticipated life as a whole number of years
= Original cost - scrap value

Total useful life
35,000 = 290,000 - 0
Total useful life
Total useful life = 8 years
(c) The residual value at the end of that period
= Original cos t- Accumulated depreciation

Scrap value = 290,000- (8 x 35,000)
= $ 10,000
Machine B (Diminishing Method)
(a) The rate of depreciation
= scrape value
n original cost
= 270,000 -1
1 450,000
Year 1 value
= 40 %
n= year 1
(b) The book value after 2 years
= original cost x ( 1- 0.4 ) 2
= $ 162,000
(c) The amount of depreciation expected during year 3.
= NBV x Depreciation %
= 162,000 X 40 %
= $ 64800
(8) (a) the amount of depreciation each year
Depreciation = Original cost -SV

Useful life
= 4600,000 X 18.7%
= 860,200
(b) the book value after 3 years

NBV = Original cost - ( 3 x 860200)
= $ 2019,400
(c) the total depreciation over the period of the first 3 years
= No. Of years x Annual depreciation
= 3 X 860200
= 2580,600
Using Diminishing Method

(i) the amount of depreciation in the first year
= 4600,000 X 42.5%
= $ 1955,000
(ii) the book value after 3 years
= Original cost x (1- Depreciation % ) n
= 4600,000 x ( 1- 0.425 ) 3
= $ 874,503
(e) State, with workings, the method for which the scrap value is closest to £300,000.
Using equal installment
NBV = Cost - Accumulated depreciation

= 4600,000 - ( 5x 860200)
= 299,000
Diminishing Balance Method
= 4600,000 x (1-0.425) 5
= $ 289133
Equal installment method give more close with $ 300,000.
(10) (a) Rate of Depreciation = ( 100- 65%) = 35%
(b) Depreciation Schedules
(b) (i)
Year 0 500,000
Year 1 175,000 175,000 325,000
Year 2 113,750 288,750 211,250
Year 3 73,938 362,688 137,313
Year 4 48,059 410,747 89,254
Year 5 31,239 441,986 58,015
Depreciation for year 1 = 500,000 x 35% = 175,000
Depreciation for year 2 = 325,000 x 35 % = 113,750
Depreciation for year 3 = 211,250 x35 % 73937.5
Depreciation for year 4 = 137,312.5 x 35 % = 48,059
Depreciation for year 5 = 89,253.5 x 35% = 31,239
(c) Annual depreciation = Original cost -scrap value

Useful life
= 500,000 - 50,000 = 90,000
5 years
(d) Depreciation Schedules
Year 0 500,000
Year 1 90,000 90,000 410,000
Year 2 90,000 180,000 320,000
Year 3 90,000 270,000 230,000
Year 4 90,000 360,000 140,000
Year 5 90,000 450,000 50,000
(e) Equal installment Method shows highest net book value and the amount is $ 85,000.
(12) (a) Rate of Depreciation

Depreciation = scrape value -1
n original cost
= 5000 -1
4 150,000
= 52.27% ~ 57.3%
(b)
Years Yearly Cummulatived NBV
Depreciation ($) Depreciation ($) at the end of year ($)
0 150,000
1 85,500 85,500 64,500
2 36,765 122,265 27,735
3 15,809 138,074 11,926
4 6,798 144,872 5,128
(c) Machine B
(i) book value of Machine B at the end of year 4

= 220,000 x (1-0.5)2 = 55,000
Depreciation % = scrap value -1

n orighinal cost
(ii) original cost of Machine B
NBV = original cost x ( 1- depreciaion % ) n
Original cost = NBV / (1- Dep; % ) n
= 220,000
(1- 0.5) 2
= $ 880,000
(iii) expected life of Machine B
NBV = Original cost x ( 1- Depreciation %) n

7000 = 880,000 x ( 1-0.5)n
0.5 n = 7000
880,000
0.5 n = 0.0079545
n = log 0.0079545 shif + Eng တွဲနှိပ်

log 0.5
= 6.97 year ~ 7 years
(16)
(a) Depreciation Schedule
Year 0 9,400,000
Year 1 2,162,000 2,162,000 7,238,000
Year 2 1,664,740 3,826,740 5,573,260
Year 3 1,281,850 5,108,590 4,291,410
Year 4 987,024 6,095,614 3,304,386
Depreciation expenses for Year = NBV X Dep; %

AU $ 9400,000 x 23 % = 2162,000
Depreciation expenses for Year 2 = 7238,000 x 23 % = 1664740
Depreciation expenses for Year 3 = 5573,260 x 23 % = 1281,850
Depreciation expenses for Year 4 = 4291,410 x 23 % = 987024
(b) (i) amount of depreciation that occurs in the 6th year
Book value at Year 5 = 9400,000 x ( 1- 23 % ) 5

= 2544 377.11
Depreciation Amount = NBV x 23 %

= 2544,377 .11 X 23 %
= 585206.73
(ii) book value at the end of 7 years
NBV = 9400,000 x ( 1-23% ) 7

= AU $ 1,508,561.19
(iii) amount of depreciation that occurs in the 9th year.
NBV at year 8 = 9400,000 x ( 1- 23% )8

= 1161,592.1
Dep; for Year 9 = 1161,592.1 x23%

= 267,166.19
(c) Annual depreciation = original cost - scrap value

Useful life
52,575 = Original cost - 26,000

6 years
= 341 ,450
Bankruptcy
4-2008'
(1) The following information relates to the business of a bankrupt trader:
£
Cash in hand 105
Creditors ?
Machinery 11,500
Bank overdraft 25,300
Trade debtors 6,090
Stock 16,420
Office equipment ?
Vehicles 17,000
Total assets 59,140
Total liabilities 97,500
Calculate:
(a) Calculate the value of her office equipment and the amount owed to creditors.
The assets were realized in full at their book values, listed above.
Creditors’ include £3,700, which, together with the bank overdraft, are secured.
Hence, £29,000 of the liabilities, made up of the bank overdraft and other secured
creditors, must be paid first and in full.
(b) the rate in the £ that an unsecured creditor will receive

(c) the amount owed to an unsecured creditor who receives £13,420
3-2008 '
(2) The following information relates to the bankruptcy of Company P:
Total assets available for creditors £52,184
Total owed to secured creditors £11,110
Total liabilities £85,790
Calculate:
(i) How much is owed to unsecured creditors
(ii) The assets available for unsecured creditors
(iii) The rate in the pound paid to unsecured creditors
(b) The following information relates to the bankruptcy of Company Q:
Total liabilities £64,950

Assets available for unsecured creditors £23,310
Rate in the pound paid to unsecured creditors 60 p
Calculate:
(i) How much is owed to unsecured creditors
(ii) How much is owed to secured creditors
(iii) The total assets available for creditors
(3-2002)
(3) Joe is owed $25,000 by a failed company. When the company is declared bankrupt,
Joe finds he is an unsecured creditor and eventually receives only $7,000 in payment.
(a) Calculated the rate in the $ which is payable to unsecured creditors.
The total owed to unsecured creditors by the failed company is $55,000.

The company owes $20,000 to secured creditors.
The expenses of winding up the business are $13, 500.
(b) Calculated the total amount paid to unsecured creditors.

(c ) Calculated the value of the assets of the business prior to incurring winding up expenses.
(d) Express the assets as fractions of the total amount owed to creditors. Give the
fraction in its simplest terms.
(3-2011)
(5) A bankruptcy trader owed £77,200 to her creditors, of which £28,850 was secured against
assets. The assets of the business raised £57,900, out of which £1,974 was paid in fees
during the process of bankruptcy.
(a) Calculate the assets, before fees, as a percentage of the liabilities.

(b) Express this as a ratio of liabilities, in its simplest terms.
Calculate:
(i) how much in the £ was paid to the unsecured creditors
(ii) how much was paid to an unsecured creditor who was owed £22,500
The assets of the business at the time of bankruptcy were as follows:
Asset Value realized

Cash in hand 211
Machinery 9,500
Trade debtors 25,200
Office equipment 2,650
Vehicles 13,400
Plus stock
(c) Calculate the value realized for the stock.
2-2012'
(6) (a) In bankruptcy A unsecured creditors receive £ 0.45. A lender is owed £ 120,000 of
which 20% is secured against assets. Calculate the amount received by the lender
(b) In bankruptcy B; the total liabilities are £ 560,000
The amount owed to unsecured creditors is £ 375,500 and an unsecured creditor who is
owed £50,000 receives £18,000.
The expenses of winding up the business are £ 4,500.
Calculate;
(i) The rate payable to unsecured creditors
(ii) The total assets realized
(c) Sebastian is owned money in two bankruptcies C and D. He is owed £ 28,500 as
unsecured creditors in bankruptcy C that pays £ 0.29 in the pound to unsecured creditors.
He is also owed £ 40,000 in bankruptcy D as the sole secured creditor. The total assets of D,
after winding up expenses realized £ 36,000.
Calculate how much Sebastian receives in total.
(3-2012)
(7) In bankruptcy A, liabilities total £1,700,000 and assets total £612,000.
(a) Write the relationship of assets to liabilities as a ratio in its simplest form.
(b) Calculate the assets as a percentage of liabilities.
Secured creditors were owed £68,000. The remaining creditors were unsecured.
(c) Calculate the dividend payable to unsecured creditors as a rate in the pound.
(d) Using the exact figure for dividend, calculate:

(i) How much is paid to an unsecured creditors who is owed £9,600
(ii) How much is owed to an unsecured creditors who is paid £3,700.
(8)
(2-2013)
(9) Chung is owed £8,500 by Trader T, who is declared bankrupt.
Chung finds he is an unsecured creditor and eventually receives only £1,870 in payment.
Calculate:
(a) The rate in the £ which is payable to unsecured creditors
(b) The amount received by an unsecured creditor who is owed £5,450
(c) The amount owed to an unsecured creditor who is paid £6,160.
The total owed to unsecured creditors by Trader T is £120,000.

She also owes £50,000 to secured creditors
The expenses of winding up the business are £6,900.
(d) Calculate the value of the trader’s assets achieved at liquidation
(e) Express this value of the assets as a percentage of the liabilities before liquidation
(10) Not Need Same Question with 5
(4-2013)
(11) In bankruptcy A, unsecured creditors receive £0.40 in the pound.
A lender is owed £250,000, of which 30% is secured against assets.
(a) Calculate:
(i) the amount received by the lender as a secured creditor
(ii) the amount received by the lender as an unsecured creditor
In bankruptcy B:
the total liabilities are £820,000
the amount owed to secured creditors is £395,000
an unsecured creditor who is owed £60,000 receives £21,000
the expenses of winding up the business are £11,250.
(b) Calculate:
(i) the rate in the pound payable to unsecured creditors
(ii) how much is owed to unsecured creditors
(iii) the total assets realised
Lucy is owed £44,000 as an unsecured creditor in bankruptcy C, which pays £0.17 in the
pound to unsecured creditors.
She is also owed £76,700 in bankruptcy D, as the sole secured creditor.
The total assets of D, after winding up expenses, realized £28,500
(c) Calculate how much Lucy receives in total.
(12)
(3-2014)
(13) The following information relates to the business of a bankrupt trader.
£
Cash in hand 280
Trade creditors 212,000
Value of machinery 32,400
Bank overdraft ?
Trade debtors 47,300
Value of stock 15,900
Value of office equipment 8,300
Value of vehicles ?
The trader’s total assets are 120,180
(a) Calculate the value of vehicles.
The trader’s total liabilities are £237,000, including winding up expenses of £7,000.
(b) Calculate the amount owed to the bank in the form of a bank overdraft.
£32,000 of the liabilities is owed to secured creditors and must be paid first and in full.
The winding up expenses must also be paid in full.
(c) Calculate:
(i) the rate in the £ that an unsecured creditor will receive
(ii) the amount owed to an unsecured creditor who receives £4,305
(iii) the total amount paid to a creditor who is owed £9,000, of which half is secured
(14)
(2-2015)
(15) The following table summarises the bankruptcy of two companies.
Company A Z
£ £
Assets
Total assets available for creditors 520,000 ?
Liabilities
Total owed to secured creditors 403,000 ?
Total owed to unsecured creditors 450,000 350,000
Total liabilities ? 690,000
Distribution of Assets
Assets available for unsecured creditors ? ?
Rate in the pound paid to unsecured creditors ? 0.41
(a) Calculate, for Company A, the:

(i) total liabilities
(ii) assets available for unsecured creditors
(iii) rate in the pound paid to unsecured creditors
(iv) amount owed to an unsecured creditor who is paid £22,100
(v) total assets as a percentage of the total liabilities
(b) Calculate, for Company Z, the total assets available for creditors.
(16) No. Need Same with above questions
(4-2015)
(17) Bankrupt Trader T owed £15,200 to secured creditors and £279,800 to unsecured
creditors.
The assets of the business realised £94,400.
(a) Calculate the business assets as a percentage of the liabilities.
The cost of winding up the business was £9,250 and this is an additional secured
expense.
(b) Calculate the:
(i) total now owed to secured creditors
(ii) total paid to secured creditors
(iii) total paid to unsecured creditors
(iv) dividend paid to unsecured creditors, expressed as a rate in the pound
(v) amount paid to an unsecured creditor who is owed £17,820
(3-2019)
(18) Fallito Farms is a bankrupt company in Italy that owes 94,250€ (euro) to fully
secured creditors and 89,000€ to unsecured creditors.
(a) The assets of the business realised 125,400€.
(i) Express the business assets as a percentage of the liabilities.
(ii) Calculate how much will be paid in total to the unsecured creditors.
(iii) Calculate the dividend rate to be paid to unsecured creditors.
A Spanish services firm, Arruinado Architects, became bankrupt owing money to
several creditors including Juan and Maria. Only one of them is, in part, a secured
creditor.
Juan is owed 12,000€ and is paid 6,645€.
Maria is owed 26,000€ and is paid 9,620€.
(b) State which of them is, in part, a secured creditor. Explain how you know this.
(c) Calculate:
(i) the rate in the euro paid to an unsecured creditor
(ii) how much is owed to one of them as a secured creditor.

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Profitability & Liquidity

(1) Gross profit to Sale = Gross Profit x 100 =%

Gross profit to cost of sale Ratio = Gross Profit x 100 =%

(2) Overhead Expenses to Sale = Overhead Expenses x 100 =%

(4) Return on Capital Employed (ROCE)

Capital employed = Equity + Non current liability

= Total Asset - Current Liability

(1) Current Ratio = Current Asset :1

Standard Guide Line (2:1)

(3) Inventory Turnover day = Average inventory (Closing inventory )

Average inventory = Opening inventory + Closing inventory

(5) Debtor collection period (days)

(6) Creditor settlement period days = Trade payable x 365 = days

Statement of Profit or Loss

(-) Cost of Sale

Net Profit xxx

Statement of financial position as at

Total current asset xxx

Net Current asset /Working capital xxx

Net Asset xxx

(a) Calculate: (i) Gross profit

(b) Give a brief explanation of :

(c ) Calculate the amount of overhead expenses during this period.

(a) Calculate the:

(c ) Give a reason for your answer to (b).

(d) Calculate the:

Current liabilities £7,400,000

During 2012 the following information relates to Trader Y:

Net sales 1,930,000

(a) Calculate the ratios for:

(b) Calculate the ratios for:

State which of these, if either;

(b) Calculate the:

The average stock held during Year A was £430,000.

Amounts due within 12 months

Net Current Asset 15,470

During 2014 the following information relates to Retailer B.

(b) Calculate the:

The acid test ratio for Super Showers Inc is 1.45 : 1

(b) Explain why this figure is considered healthy.

(Total for Question = 11 marks)

(ii) percentage return on capital employed 3 marks

(iii) annual rate of stockturn 4 marks

(iv) average number of days that items remain in stock. 2 marks

(a) Calculate the:

(ii) gross profit 2 marks

(ii) net profit as a percentage of net sales. 3 marks

(Total for Question = 13 marks)

(1) Gross profit to Sale = Gross Profit x 100 =%

Gross profit to cost of sale Ratio = Gross Profit x 100 =%

(2) Overhead Expenses to Sale = Overhead Expenses x 100 =%

(4) Return on Capital Employed (ROCE)

Capital employed = Equity + Non current liability

= Total Asset - Current Liability

(1) Current Ratio = Current Asset :1

Standard Guide Line (2:1)

Standard Guide Line (1:1)

(3) Inventory Turnover day = Average inventory (Closing inventory ) x 365

(4) Inventory Turnover (Time) = Cost of sale

(5) Debtor collection period (days)