Acca financial Accounting (FA) Study Text ac ca (FA)

State whether each of the following statements is true or false. 

(3 marks)

True/False 

(i) 

A highly-geared entity will always have a higher 

operating profit percentage than an ungeared entity 

undertaking similar business activities 

(ii) 

If the average trade receivables collection period has 

increased from 35 days to 45 days, this is not always 

an indication of poor credit control by an entity 

(iii) 

If an entity purchases an item of plant and equipment 

for cash during the year, this will be disclosed in the 

statement of cash flows for the year as an investing 

activity