Accounting Multiple Choice Question – 15 April 2020

John and Mary, the only two partners in a firm, invested capital of £40,000 and £60,000 respectively and agreed their entitlements to be:

• John = Annual salary: £14,000; Interest on capital (per annum): 10%; Share of remaining profit or loss: 40%
• Mary = Annual salary: £20,000; Interest on capital (per annum): 10%; Share of remaining profit or loss: 60%

If the profit for the year was £80,000, how much, in total, would John be entitled to receive?

Select ONE answer:

1. £14,400
2. £18,000
3. £21,600
4. £32,400

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

• Profit for the year £80,000
• John & Mary
• Salary: £14,000 & £20,000 = £34,000
• Interest on capital (10%): £4,000 & £6,000 =£10,000
• Profit remaining: £36,000
• Share of profit (40% : 60%): £14,400 & £21,600 £36,000
• Totals receivable: £32,400 & £47,600 = £80,000

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 View all posts by stuart001uk2014