Accounting Multiple Choice Question – 12 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 August – £7,300
  • Total of all liabilities at 1 August- £6,500
  • Net profit earned during August – £3,000
  • Capital introduced during August- £4,500
  • Drawings during August – £2,700

Select ONE answer:

  1. £5,000
  2. £5,100
  3. £5,600
  4. £5,900

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

  • Capital = Assets – Liabilities (as per the Accounting Equation)
  • Capital at 1 June = Total Assets at 1 August + Total Liabilities at 1 August i.e. £800 = £7,300 + (-£6,500)
  • Capital at 30 June = Capital at 1 August + Capital introduced during August + Net profit earned during August – Drawing during August i.e. £800 +£4,500 + £3,000 – £2,700 = £5,600

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