Month: March 2021

On 1 October 2018, a company purchased machinery for £26,000 whose year-end is 31 December.

It was decided to depreciate the asset using the reducing balance method at a rate of 20% per annum in the year of acquisition and none in the year of disposal.

On 30 September 2020 the asset was sold for £12,000. 

What is the profit or loss on disposal?

Select ONE answer:

1. £3,600 loss
2. £3,600 profit
3. £4,640 loss
4. £4,640 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 3

1. Not correct
2. Not correct
3. Correct = £26,000 * 0.8 * 0.8 = £16,640 – £12,000 = £4,640 Loss
4. Not correct

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

At the beginning of the year a business has a provision for doubtful debts of £2,600.

At the year end the provision is to be 5% of trade debtors. 

The balance on the Debtors Control account at the year end is £69,200, before writing off a bad debt of £480. 

The business operates a separate Bad Debts account.

What is the entry in the Profit and Loss Account for the provision for doubtful debts? 

Select ONE answer:

1. £836 debit
2. £860 debit
3. £836 credit
4. £860 credit

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 – (£69,200 – £480) * 0.05 = £3,436 – £2,600 ==> £836 debit
2. Not correct
3. Not correct
4. Not correct

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

The table below gives data about rental income for the year ended 31 March 2020. 

Which figure for rental income will appear in the Profit and Loss Account for the year ended 31 March 2020? 

Select ONE answer:

1. £14,010
2. £14,210
3. £14,310
4. £14,510

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 = £13,700 + £560 – £1,400 + £1,300 + £1,750 – £1,600
4. Not correct

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

A company manufactures a single product as shown. 

• selling price £20 per unit
• variable costs £15 per unit 

Its budgeted fixed costs are £200,000.

How many units must the company sell to make a net profit of £50,000? 

Select ONE answer:

1. 10 000 units
2. 30 000 units
3. 40 000 units
4. 50 000 units 

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. Not correct
4. Correct – CM = £20 – £15 = £5 ==> £200,000 / £5 = 40,000 units ==> £50,000 Profit / CM £5 = 10,000 units TOTAL 50,000 units

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

A company considers buying a new machine costing £60,000. The machine will have a life of four years. It will then have a scrap value of £10,000.

The company has a straight line depreciation policy. The table shows the forecast net receipts arising from the purchase of the machine. 

How long will it take the company to ‘pay back’ its investment? 

Select ONE answer:

1. 1 year, 197 days
2. 1 year, 309 days
3. 2 years, 182 days
4. 3 years

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 – £60k – Y1 £20k – Y2 £20k – Y3 £20k

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