Practise 45 real questions on Ratios and interpretation from 2021 to 2026. See the answer and explanation as soon as you answer.
Ratios and interpretation is one of the 6 main topics in our O Level Accounting (Cambridge (CAIE) 7707) question bank, and about 10% of its real questions come from it. Tayyari Karo has 45 real questions on this topic from 2021 to 2026, from Paper 1, Paper 2; 40 are multiple choice and marked instantly, and the rest are structured questions with a model answer. By difficulty: 20 medium, 15 hard, 10 easy.
Work through the questions below, then open the explanation for each one. Redo the ones you missed a few days later.
These are real past-paper questions. Think of your answer first, then open the explanation.
Eling owned a clothes shop. Her sales were $45 000, and her gross margin was 33 1/3 %.
What was the value of Eling's cost of sales?
Answer: C. $30 000
Gross profit = 1/3 of $45 000 = $15 000, so cost of sales = $30 000.
Trade receivables turnover 42 days; customers allowed 30 days; business struggles to pay suppliers. Which correct? 1 customers take longer than allowed; 2 average 42 days to be paid; 3 easier to pay suppliers if paid in 30 days; 4 efficient credit control.
Answer: C. 1, 2 and 3
Turnover 42 > 30 so 1 and 2 true; faster payment would help 3; control is inefficient 4 false.
George: non-current assets $15000, inventory $12000, trade receivables $18000, trade payables $8000, liquid (acid test) ratio 1.2:1. What was the bank overdraft?
Answer: A. $7000
Acid test = 18000 / (8000 + overdraft) = 1.2 -> overdraft = 7000.
Ramiz works as a sales manager in a car showroom, paid on the number of cars sold. Which ratio is relevant to Ramiz?
Answer: C. rate of inventory turnover
Inventory turnover reflects how quickly cars are sold.
How would current assets be listed in decreasing order of liquidity?
Answer: B. cash, bank, trade receivables, inventory
The current ratio of X is 2 : 1. The current ratio of Y is 1.3 : 1. What does a comparison of these ratios show?
Answer: B. X has more liquidity than Y.
| Session | Paper 1 | Paper 2 |
|---|---|---|
| May/June 2026 | 4 | 1 |
| May/June 2025 | 4 | – |
| Oct/Nov 2025 | 3 | 1 |
| May/June 2024 | 4 | – |
| Oct/Nov 2024 | 3 | 1 |
| May/June 2023 | 4 | – |
| Oct/Nov 2023 | 1 | – |
| May/June 2022 | 4 | 1 |
| Oct/Nov 2022 | 5 | – |
| May/June 2021 | 3 | 1 |
| Oct/Nov 2021 | 5 | – |
45 real O Level Accounting (7707) questions on Ratios and interpretation from 2021 to 2026, from Paper 1, Paper 2. Each one shows the year, session and paper it came from.
Yes. Every question shows the correct answer and a short explanation the moment you answer.
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