Accounting Multiple Choice Question – 20 March 2020

If the cost of servicing a firm’s car was debited to a fixed asset account instead of being debited to the motor expenses account, then. . .?

Select ONE answer:

1. gross profit would be overstated.
2. net profit would be understated.
3. expenses would be understated.
4. net assets would be understated.

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 – Gross profit would not be affected.
2. Not correct – Net profit would be overstated.
3. Correct – The total of expenses would be understated because the £200 motor expenses would be omitted from the list of expenses.
4. Not correct – Net assets would be overstated.

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor View all posts by stuart001uk2014