Accounting Multiple Choice Question – 21 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A loss incurred upon the disposal of plant and equipment should be . . .

Select ONE answer:

  1. credited to the plant and equipment account.
  2. debited to the profit and loss account.
  3. debited to the provision for depreciation account.
  4. credited to the provision for depreciation account.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not Correct
  2. All profits and losses are recorded in the profit and loss account. Losses are recorded as debits and profits are recorded as credits. The profit earned or loss incurred on disposal is ‘calculated’ in the relevant disposal account. In the case of a loss, the balance on this account will be a credit. This is then transferred to the profit and loss account as a debit.
  3. Not Correct
  4. Not Correct

 

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Accounting Multiple Choice Question – 20 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

When a machine is disposed of, the correct way to record the total depreciation charged on it up to the date of disposal is:

Select ONE answer:

  1. should be included in the trial balance as a debit balance.
  2. should be included in the trial balance as a credit balance.
  3. should sometimes be included in the trial balance as a debit balance and sometimes as a credit balance.
  4. should not be included in the trial balance at all.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not Correct
  2. The (credit) balance on the provision for depreciation of machinery account in a firm’s nominal (general) ledger represents the total depreciation charged to date on machinery currently owned by the firm. When machinery is disposed of, the total depreciation charged on it must be removed from the account – by debiting it. The machinery disposal account is used to calculate any profit or loss arising on the disposal of machinery. This profit or loss is calculated as the difference between the proceeds of the disposal and the net book value of the item(s) being disposed. To achieve this, both the proceeds and the net book value are transferred into the disposal account and any difference is transferred to the profit and loss account. As the net book value of a fixed asset is its cost (or valuation) less than the total depreciation charged on it, both of these must be transferred into the disposal account. In the case of the total depreciation, this is achieved by answer 2.
  3. Not Correct
  4. Not Correct

 

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Accounting Multiple Choice Question – 19 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Upon the disposal of a vehicle, the double-entry which a furniture retailer should make to record the receipt of the sale proceeds is:

Select ONE answer:

Account to Debit        Account to Credit

  1. Bank                                  Sales
  2. Vehicle disposals            Vehicle
  3. Bank                                  Vehicle disposals
  4. Vehicle                              Provision for depreciation

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. The disposal of a fixed asset is not a ‘sale’ and therefore should not be recorded in the sales account. Only sales of goods which were purchased with the intention of being re-sold should be recorded in the sales account.
  2. This is the double-entry required to transfer of cost of the vehicle being disposed of out of the vehicle account and into the vehicle disposal account.
  3. As money has been received, the bank balance will improve. Such an increase in an asset account requires a debit entry. The vehicle disposal account is used to calculate any profit or loss arising on the disposal. Therefore. the amount of the proceeds, clearly part of the calculation. must be recorded in that account – as a credit since the entry in the bank account is a debit.
  4. This is not the correct way to record any part of a fixed asset disposal.

 

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Accounting Multiple Choice Question – 18 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

If the depreciation charge on vehicles for the current year is accounted for by debiting the profit and loss account and crediting the provision for depreciation of vehicles account, then, after the above entries have been made, the balance on the provision for depreciation of vehicles account is . . .

Select ONE answer:

  1. transferred to the vehicles account.
  2. listed in the trial balance.
  3. deducted from the cost/valuation of vehicles in the balance sheet.
  4. transferred to the profit and loss account.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not Correct
  2. The balance brought down on all ledger accounts is initially listed in the trial balance. The balances so listed are then used to prepare a profit and loss account and a balance sheet. The balance listed in the trial balance for any given provision for depreciation account will be deducted from the cost/valuation of the related fixed asset in the balance sheet — but this is after the trial balance has been prepared.
  3. Not Correct
  4. Not Correct

 

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Accounting Multiple Choice Question – 17 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Any balance brought down on a provision for depreciation account . . .

Select ONE answer:

  1. should be included in the trial balance as a debit balance.
  2. should be included in the trial balance as a credit balance.
  3. should sometimes be included in the trial balance as a debit balance and sometimes as a credit balance.
  4. should not be included in the trial balance at all.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not Correct
  2. The cost of any particular category of fixed asset is shown in the trial balance as a debit balance. In order that the net book value of these assets be shown in the balance sheet. as a debit, the total depreciation charged to date on that particular category of fixed assets must be netted off against the balance on the related fixed asset account. Therefore, the balance brought down on any provision for depreciation account must be a credit balance. All ledger account balances, whether debit or credit, should be included in the trial balance.
  3. Not Correct
  4. Not Correct

 

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Accounting Multiple Choice Question – 16 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

If there is a separate provision for depreciation account in the nominal (general) ledger for each category of fixed asset, the double-entry to record the depreciation charge on machinery for the current year is:

Select ONE answer:

Account to Debit        Account to Credit

  1. Profit and loss                Provision for depreciation of machinery
  2. Machinery                      Profit and loss
  3. Profit and loss                Machinery
  4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. The result has to be to reduce net profit (requiring a debit entry in the profit and loss account) and to reduce the book value of machinery (requiring a credit entry in the provision for depreciation of machinery account).
  2. Not Correct
  3. Not Correct
  4. Not Correct

 

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Accounting Multiple Choice Question – 15 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The following information relates to one of several fixed assets acquired by a firm on 1 January 1996.

  • Cost £ 29,800
  • Estimated scrap value £ 5,000
  • Estimated useful economic life 8 years

If all of the firm’s fixed assets are depreciated at the rate of 20% per annum, using the reducing balance method, the total depreciation charged on the above asset up to 31 December 2003 will be:

Select ONE answer:

  1. £4,960
  2. £15,960
  3. £24,800
  4. £29,800

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. Not Correct
  2. Not Correct
  3. 1 January 1996 to 31 December 2003 = 8 years = the estimated useful life of the asset. The total depreciation to be charged over the estimated useful life of any fixed asset (irrespective of depreciation method used) = Cost – Estimated scrap value = £29,800 – £5,000 = £24,800. Therefore, the total depreciation charged on this asset up to 31 December 2003 is £24,800. You will get the same answer if you work out the depreciation year by year.
  4. Not Correct

 

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This work is licensed under a Creative Commons Attribution 4.0 International License.