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.

Accounting
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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

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Author: stuart001uk2014

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

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