Tag: Window Dressing

At Alex Trading Ltd’s accounting year-end, the accountant Simon writes cheques to pay trade payables and records them in the books immediately.

The cheques are then deliberately retained by the accountant for two weeks.

What effect does this have on the year-end statement of financial position?

Select ONE answer:

1. the accounts show a higher figure for cash
2. the accounts show a lower figure for trade payables
3. to improve Alex Trading Ltd’s cash flow
4. to improve Alex Trading Ltd’s gearing

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 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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