Accounting Multiple Choice Question – 26 October 2020

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

Accounting
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A transport business owned by a sole proprietor purchases a new motor vehicle for £25,000 by cheque.

This is charged to the Motor Vehicles Running Expenses account.

What are the effects of this on the end-of-year Balance Sheet?

Select ONE answer:

  1. fixed assets understated & current assets understated
  2. fixed assets overstated & current assets overstated
  3. fixed assets overstated & capital account overstated
  4. fixed assets understated & capital account understated

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 – Original Double Entry made in error Dr Expenses Cr Bank, should have been Dr Fixed Assets (Non-current Assets) Cr Bank

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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