Month: April 2022

In Electromac’s third year of trading it experienced cash flow problems despite making a high profit.

To improve its cash flow position Electromac should?

Select ONE answer:

1. give longer credit terms to customers
2. pay its suppliers immediately
3. use a factoring service
4. increase its inventory levels

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct – payments will be delayed which will reduce the amount of cash flowing into the business and worsen the cash flow position.
2. Not correct – this will result in more cash leaving the business before it needs to which will put more pressure on cash flow.
3. Correct – Cash flow is the movement of money in and out of a business. Electromac needs cash immediately to meet its day to day operations. Factoring will give immediate payment and therefore should ease cash-flow.
4. Not correct – more cash will be tied up in inventory which will worsen the cash flow situation.

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Increasing incomes in the UK economy result in a greater demand for clothing at all price levels.

Clothing is therefore best described as?

Select ONE answer:

1. a normal good
2. an inferior good
3. a substitute good
4. a complementary good

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – A normal good has a positive income elasticity of demand. As incomes rise consumers have more disposable income. Consumers are likely to choose to spend the increased.
2. Not correct – inferior goods would see a decrease in demand as consumers switch to more normal goods/it has a negative YED.
3. Not correct – clothing is not being used as an alternative to another product.
4. Not correct – clothing is not directly linked to any other product and clothing can be purchased independently from other goods.

This work is licensed under a Creative Commons Attribution 4.0 International License.

Electromac manufactures a wide range of fitness accessories.

In 2021 it launched its latest product, The LittleKen.

This has been described as being a question mark/problem child.

In the Boston Matrix a question mark/problem child is?

Select ONE answer:

1. generates all of Fitbit’s profits
2. has a high market share
3. has potential for growth
4. should no longer be produced

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct – The LittleKen is only one of ElectroMac’s wide range of fitness accessories which will also generate profits.
2. Not correct – A question marks/problem child do not have a high market share unlike cash cows and stars.
3. Correct – A question mark/problem child e.g. are new products with a low share of a high growth market. The LittleKen is a new fitness product and has just been launched in to the market. It may or may not be able to survive/compete in the market.
4. Not correct – The LittleKen is a new product and has a potential for high growth unlike dogs.

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following is an inventory control chart for a Staffordshire bakery selling fancy birthday cakes.

What is the reorder quantity of fancy birthday cakes?

Select ONE answer:

1. 5
2. 10
3. 15
4. 25

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Maximum inventory level – Minimum inventory level. 30 – 5 = 25 fancy birthday cakes

This work is licensed under a Creative Commons Attribution 4.0 International License.