Accounting Multiple Choice Question – 6 February 2021

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

apple devices books business coffee
Photo by Serpstat on Pexels.com

A company purchases a business with net assets of £110,000. In addition, the Goodwill of the business is valued at £10,000.

The purchase price of the business is settled by the issue of 80,000 £1 ordinary shares in the company. 

What will be the entry in the company’s Share Premium account?

Select ONE answer:

  1. debit £40,000
  2. credit £40,000
  3. debit £30,000
  4. credit £30,000

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 – £110k + £10k – £80k = £40k credit
  3. Not correct
  4. Not correct

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