2.1

Question 1

non-financial information

Answer 1

Number of competitors in the area, the number of customer complaints and even the predicted weather for the next month can all influence which strategies are implemented.

Question 2

Strategy that could be implemented to improve its Net Profit Margin without affecting its Gross Profit Margin.

Answer 2

changing staff rosters to reduce Wages
moving premises to reduce Rent expense
changing promotional strategies to reduce Advertising expense

Question 3

Closing the ledger is necessary to:

Answer 3

Transfer the revenue and expense amounts to calculate profit for the current Period. Reset the revenue and expense accounts to zero in readiness for the next Period.

Question 4

Net Profit Margin (NPM)

Answer 4

A profitability indicator that indicates expense control

Question 5

Gross Profit Margin (GPM)

Answer 5

A profitability indicator that measures the average mark-up

Question 6

Benefits of Graphical representations

Answer 6

Graphical representations can assist with the Understandability in communicating financial information.