Accounting Multiple Choice Question – 2 September 2020

Alex depreciates his buildings at the rate of 2% per annum using the straight line method.

He bought land for £200,000. It cost Alex £120,000 to build a warehouse on it. After five years, Alex sold the warehouse for £299,000.

What was the profit or loss on disposal?

Select ONE answer:

1. £9,000 loss
2. £9,000 profit
3. £12,000 loss
4. £12,000 profit

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 1

1. Correct – £200k + £120k = £320k – (5 years * £2.4k p.a.) – £299k = £9 loss
2. Not correct
3. Not correct
4. Not correct

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