Accounting Multiple Choice Question – 18 December 2019

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

Accounting

On 1 January 1995. a new firm, whose financial year-end is 31 December, rented premises at a cost of £10,000 per annum. payable quarterly in arrears.

Four payments, each of £2,500, were made on 31 March 1995, 2 July 1995, 4 October 1995 and 6 January 1996.

The rent figure in the preliminary trial balance as at 31 December 1995 should be:

Select ONE answer:

  1. £7,500
  2. £10,000
  3. £12,500
  4. £30,000

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 1

  1. Correct – The figure shown in the preliminary trial balance is the balance on the rent account before any adjustments are made in respect of accruals or prepayments at the end of the accounting period. This consists of any opening balance plus the payments made prior to the date of the preliminary trial balance. As this firm is new, there is no opening balance. Therefore, the figure in the trial balance will be £0 + three payments of £2,500 each = £7,500.
  2. Not correct
  3. Not correct
  4. Not correct

 

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Author: stuart001uk2014

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

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