Accounting - Interpretation of Accounts

Like most Accounting topics, Interpretation of Accounts involves exactly what its name describes. Examinees are expected to evaluate a firm by calculating various Accounting Ratios and then comment on the performance of the firm over the year just ended based on the results.

This topic is the only topic to be present in the Leaving Certificate Accounting Exam every year. It is always worth 100 marks.

It is a common misconception to believe that the calculations are usually worth 50 marks and that the theory is also worth 50 marks but in truth the calculations are 'usually' worth 45 marks and the remaining 55 marks are usually divided into one question regarding satisfaction with the company and one question asking for advise to shareholders, bank owners or company owners.

(a)
See Accounting - Ratios for formula regarding this question particularly]].

This question is worth 45 or 50 marks and contains 4 or 5 sub-questions. The number of questions and number of marks are not related. This section is to test your knowledge of the accounting formulae and rarely requires any form of understanding or application. The first question usually involves being given a result of a formula and the examinee is to use the formula to find a basic figure (eg. sales, purchases or opening stock). It is common to have an answer to one question be part of the formula for another (usually questions (iii) and (iv)).

(b)/(c)
The second part of the question can either be a question (b) or a question (b) and a question (c). If there are two questions, the first will ask whether or not a given person would be happy with the company's performance and the second will ask for advice to a shareholder, owner, bank manager leanding to the company, employee, potential shareholder, potential owner, etc. The best method to complete this is by addressing a number of topics of evaluation. These topics each involve various ratios which have to be calculated and then the result should be explained positively. The formula, as well as their category are listed in the Accounting - Ratios page.