accounting - unit 1 report extract (year 11 2026)

For inventory reports, what does a high profit margin and high turnover indicate?

ideal position. the business earns a significant amount from each sale, enhancing profitability. Consistent contribution to cash flow. Provides funds for expansion, marketing, investment and product development. avoids overstock and reduces storage costs. Stable/reliable revenue contributions, predictable inventory management & planning. Acts as a buffer between maintaining customer satisfaction if there are issues with the supply chain or demand dips.

For inventory reports, what does a high profit margin and low turnover indicate?

Each sale generates a good profit, but products are sold less frequently. Business is not generating enough revenue in a timely manner, causing cash flow challenges. Can harm profitability and hinder ability to reinvest or expand. Requires more storage space and may cause wastage/spoilage.

for inventory reports, what does low profit margin and high turnover indicate?

the constant flow of sales generates substantial revenue overall. Improved cash flow, which helps the business stay financially active and maintain liquidity. Business must sell even higher volumes to remain profitable. Requires careful cost management. Causes issues if demand dips due to unforeseen circumstances.

For inventory reports, what does low profit margin and low turnover indicate?

Slow sales tie up cash in unsold, slow-moving stock, leading to cash flow problems and potential losses (strains financial resources). Business incurs high storage costs and risks having outdated products/wastage. Makes it difficult to generate profit. Leads to fewer investments and financial stability.

For inventory reports, what should you say for the item with the highest turnover?

Requires stock levels to be kept to optimum level to avoid shortages and capitalise on profitability. Acts as a buffer between maintaining customer satisfaction if there are issues with the supply chain or demand dips.

What is the first recommendation to give for inventory reports?

Have a ‘sale’ (discount) of slow-moving stock such as…

What is the second recommendation to give for inventory reports?

Display slow-moving stock at front of counter to promote impulse purchase

What is the third recommendation to give for inventory reports?

2-1 or heavily discounted sale on items that move slowly

What is the forth recommendation to give for inventory reports?

Increase price of popular items such as… by up to 10%

What is the fifth recommendation to give for inventory reports?

Increase demand for ____ by promoting them as the business’s signature brand product. This can be achieved using social media, billboards and other forms of advertisement.

For inventory reports, what should you do if there’s one product that does well and the rest do terribly?

increase price and demand for popular item, promote popular item as business’s signature brand product, reallocate funds towards production of popular product, hold a ‘final’ sale for worst product before temporarily discontinuing it until demand resurfaces

what is the sixth recommendation to give for inventory reports?

hold a ‘final’ sale of ____ (worst product) before temporarily discontinuing it until demand resurfaces

if our account receivables paid within 30 days, what are the positives?

strong cash flow, smoother operations, better financial planning, can meet its obligations, can pay suppliers, salaries and overhead expenses, no penalties or relying on external borrowing, can invest in growth opportunities + expand + upgrade, reduces administrative burden of chasing overdue payments/debts

if our business paid within 30-60 days, what are the issues?

disrupts cash flow, makes it harder to cover operating expenses, cannot honour its own commiments, may necessitate short-term borrowing, increasing interest costs and reducing profit margins, delays in growth initiatives or investment decisions, administrative costs, relationships are strained with suppliers, creditors and customers

For inventory reports, what do you need to do after listing recommendations?

explain how they’ll solve issues. ie: Implementing these strategies will lead to better turnover of stock, reduce wastage and storage costs. It should also lead to an increase in profit margins for popular items and therefore revenue.

if our account receivables paid after 90+ days, what is the issues?

poses significant financial and operational risks, increases likelihood of bad debt, severely impacts liquidity, forcing businesses to resort to costly financial options, undermines stakeholder confidence, jeopardizes reputation, may need to write off uncollectible amounts, creates a drag on financial health and growth opportunities.

what is the major difference between accounts receivables paying 30-90 days and 90+ days?

90+ days poses a higher risk of non-payment, resulting in bad debt write-offs. Accounts in 90+ days are more likely to become bad-debts in the future.

for account receivable report extracts, what do you talk about?

provide an overall interpretation of total accounts receivables (ie: amount still owing, amount paid within 30 days), explain good creditors (demonstrates timely payment), bad creditors (least reliable) and moderate (may be considered slow to repay)

for account receivable report extracts, what is the first recommendation?

improve credit terms - introduce stricter credit limits or require partial upfront payments for customers with a history of late payments

for account receivable report extracts, what is the second recommendation?

enhance monitoring and follow-ups: implement a system to monitor receivables and send reminders as soon as balances become overdue.

for account receivable report extracts, what is the third recommendation?

segment customers: classify customers based on payment behaviour and tailor strategies. For example, reward reliable payers (ie: …) with discounts or incentives for early payments. Focus collection efforts on high-risk accounts like …

for account receivable report extracts, what is the forth recommendation?

review overdue balance: prioritise collection of balances in the “over 90 days” category through direct communication or legal action if necessary.

for account receivable report extracts, what is the fifth recommendation?

sell credit to Debt Collector. This will recoup some funds from ptential bad debts with significant amounts outstanding.