Accounting Multiple Choice Question – 7 May 2020

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

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If a company makes a transfer from its profit and loss account to a capital reserve . . .?

Select ONE answer:

  1. shareholders’ funds will be increased.
  2. the relevant amount of money will be transferred to a special bank account.
  3. shareholders’ funds will be decreased.
  4. shareholders’ funds will remain unchanged.

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 – The balance on the profit and loss account (part of shareholders’ funds) will be reduced and the balance on the capital reserve account (also part of shareholders’ funds) will be increased by the same amount.

 

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