Accounting Multiple Choice Question – 17 September 2019

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

Accounting

A firm, which is registered for VAT, purchased plant and machinery costing £12,100 (including recoverable VAT at the rate of 21%) on credit.

The figures that will be shown in the balance sheet in relation to this transaction are …

Select ONE answer:

   Plant & Machinery            VAT                Creditors

  1. £12,100                                 –                      £12,100 Cr.
  2. £9,680                                  £2,420 Dr.      £12,100 Cr.
  3. £10,000                                £2,100 Dr.      £12,100 Cr.
  4. £10,000                                –                       £12,100 Cr.

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. Incorrect
  2. Incorrect
  3. Correct – Fixed assets should be shown in the balance sheet net of recoverable VAT. Debtors and creditors are always shown inclusive of VAT. There must be a debit entry in the VAT account to reflect the fact that there is VAT recoverable from HMRC.
  4. Incorrect

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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