Month: May 2020

In the accounts of a limited company, the balance on a provision for depreciation account . . . ?

Select ONE answer:

1. is shown under the heading ‘current liabilities’.
2. is shown under the heading ‘capital and reserves’.
3. is shown as an appropriation of profit.
4. is deducted from the cost or valuation of the related fixed assets.

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 – Fixed assets are shown in the balance sheet at their net book value i.e. their cost or valuation less the cumulative provision for depreciation on them.

 

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In the accounts of a limited company, remuneration paid to directors, during the current accounting period, in respect of the same period . . .?

Select ONE answer:

1. is shown as an appropriation of profit.
2. is shown as part of the company’s cost of sales.
3. is shown as an expense in the profit and loss account.
4. None of the above.

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
2. Not correct
3. Correct – Remuneration paid to directors , during the current accounting period, in respect of the same period is an expense, and, just like any other expense, is charged as an expense in the profit and loss account (in accordance with the accruals concept).
4. Not correct

 

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Which of the following is NOT normally found in the capital and reserves section of a company’s balance sheet?

Select ONE answer:

1. Share premium account
2. Profit and loss account balance
3. Dividends payable
4. Ordinary share capital

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
2. Not correct
3. Correct – Dividends payable are a current liability.
4. Not correct

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the balance sheet of a limited company, the profit and loss account balance is shown under the heading. . .?

Select ONE answer:

1. current liabilities
2. fixed assets
3. current assets
4. capital and reserves

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 – Current liabilities are liabilities which are due to be discharged within one year.
2. Not correct – Fixed assets are assets which have an expected useful economic life of more than one year and were purchased in order to be used on a continuing basis rather than solely for resale.
3. Not correct – Current assets are cash and positive bank balances and other assets likely to be converted into cash or bank balances within a year as a result of normal trading operations.
4. Correct – The company is being financed, in part, by the amount of its retained profit.

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

The balance on the profit and loss account, as shown in the balance sheet of a company, represents?

Select ONE answer:

1. any profit earned by the company during the most recent accounting period.
2. the cumulative profits earned by the company since the date of its incorporation, less any losses, dividends, or transfers to reserves.
3. money set aside for specific future uses.
4. money available for daily operations.

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 – The profit earned during the most recent accounting period is shown in the Profit and Loss Account.
2. Correct
3. Not correct – The balance on the profit and loss account is a profit or a loss – cash is not the same as profit.
4. Not correct – As for answer C above.

 

This work is licensed under a Creative Commons Attribution 4.0 International License.