Accounting Multiple Choice Question – 17 December 2019

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

Accounting

If a £500 salaries accrual was inadvertently treated as a prepayment, net profit would be . . .

Select ONE answer:

  1. overstated by £500.
  2. understated by £500.
  3. overstated by £1,000.
  4. understated by £1,000.

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. Correct – For example, if, before any accrual or prepayment adjustments were made, net profit was £2,000 then, by accruing £500 in respect of wages, net profit would be £1,500 whereas by recording a prepayment of £500 in respect of wages net profit would be £2,500 — a difference of £1,000 (overstated).
  4. Not correct

 

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

Author: stuart001uk2014

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

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s