Accounting Multiple Choice Question – 17 April 2020

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

Tom and Joan formed a partnership.

In addition to investing £15,000, Tom transferred ownership of a building, which had cost him £45,000, to the partnership. At the time of the transfer, the market value of the building was £60,000. The mortgage of £35,000 on the building was taken over by the partnership.

The amount to be recorded in Tom’s capital account is?

Select ONE answer:

  1. £25,000
  2. £40,000
  3. £60,000
  4. £75,000

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 2

  1. Not correct
  2. Correct – Capital = Cash (£15,000) + Value of the building to the partnership (£60,000 market value – £35,000 mortgage) thus £40,000
  3. Not correct
  4. Not correct

 

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