QUESTION: 9

CORRECT TEXT
The following is extracted from MN's statement of financial position at 30 September 20X1.

Calculate the gearing (measured as debt:equity) ratio of MN at 30 September 20X1.
Give your answer to one decimal place.

63.8, 63.78, 63.7, 63.80

Answer(s): A

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QUESTION: 10

Which TWO of the following statements about bonds and their issue are true?

Credit rating agencies assign risk categories to bond issues.
Bonds are a form of loan capital, traded on stock exchanges.
Bonds are a risk-free form of investing because they will always be repaid.
All bonds have the same terms and conditions when issued.
A bond issue is never underwritten because the return is fixed and guaranteed.

Answer(s): A,B

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QUESTION: 11

KL sells luxury leather handbags and has 3 stores in exclusive shopping areas. Following years of static revenues and margins, in August 20X6 KL opened a fourth store at a busy airport terminal which is proving to be successful.
The revenue and gross profit of KL for the years ended 31 March 20X7 and 20X6 are as follows:

Which of the following would be a contributing factor to the movement in the gross profit margin of KL?

A worldwide shortage of leather resulting in increased prices from suppliers.
The opportunity to sell handbags in the airport store at a premium price.
KL locating a new supplier prepared to supply handbags at a cheaper price.
KL locating a new supplier closer to the warehouse, reducing distribution costs.

Answer(s): A

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QUESTION: 12

The following information relates to DEF for the year ended 31 December 20X7:
- Property, plant and equipment has a carrying value of $3,500,000 and a tax written down value of $2,500,000.
- There are unused tax losses to carry forward of $1,250,000. These tax losses have arisen due to poor trading conditions which are not expected to improve in the foreseeable future.
- The corporate income tax rate is 25%.
In accordance with IAS 12 Income Taxes, the financial statements of DEF for the year ended 31 December 20X7 would recognise deferred tax balances of:

Option A
Option B
Option C
Option D

Answer(s): A

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