Accounting 9706 · AS & A Level · Analysis and communication of accounting information

Analysis and communication of accounting information — practice question

The directors of N Limited use ratios to assess the company’s performance. The figures below relate to the last two years.

(a)[3]

Calculate the opening inventory on 1 January 2023.

(b)[2]

Calculate the revenue for the year ending 31 December 2024.

(c)[1]

Calculate the closing inventory on 31 December 2024.

(d)[5]

Calculate the inventory turnover (days) for the years ended 31 December 2023 and 31 December 2024.

(e)[2]

Identify two possible drawbacks that could result from this suggestion.

(f)[2]

Identify two ways the inventory turnover (days) ratio could be improved without reducing inventory levels.

Worked solution & mark scheme

This 15-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Opening inventory = $32,000” …