Accounting Multiple Choice Question – 11 February 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 a sole trader

  • Total of all assets at 1 July – £3,300
  • Total of all liabilities at 1 July – £4,500
  • Net profit earned during July – £2,000
  • Capital introduced during July – £5,000
  • Drawings during July – £1,700

Select ONE answer:

  1. £4,000
  2. £4,100
  3. £4,500
  4. £4,600

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

  • Capital = Assets – Liabilities (as per the Accounting Equation)
  • Capital at 1 July = Total Assets at 1 July + Total Liabilities at 1 July i.e. -£1,200 = £3,300 + (-£4,500)
  • Capital at 31 July = Capital at 1 July + Capital introduced during July + Net profit earned during June – Drawing during July i.e. -£1,200 +£5,000 + £2,000 – £1,700 = £4,100

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