Month: September 2021

A company has an issued share capital of 8 million shares at £0.50 par value each. 

It pays a dividend of £1.6 million. The dividend yield is currently 12.5 %. 

What is the current market price of each share?

Select ONE answer:

1. £0.50
2. £0.80
3. £1.60
4. £3.20

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 ==> (1,600,000 / 8,000,000) = £0..20 dividend per share / 1.60 ==> 12.5% dividend yield
4. Not correct

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The Profit and Loss Account of a limited company is shown below:

The company has issued 100,000 ordinary shares of £1 each. Their current market price is £12.

What is the company’s price earnings ratio?

Select ONE answer:

1. 1.5
2. 2
3. 3
4. 6

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 ==> (£400,000 / 100,000) = 4 ==> £12 / 4 = 3
4. Not correct

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What can cause interest cover to fall?

Select ONE answer:

1. conversion of debentures into shares
2. fall in interest rates
3. fall in operating profits
4. preference share issue

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
4. Not correct

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

Alex Limited suffered a substantial uninsured loss of £60,000 when stock was stolen from its premises.

How will the loss be disclosed in the company’s published accounts? 

Select ONE answer:

1. adjustment to reserves
2. exceptional item
3. extraordinary item
4. prior year adjustment

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
3. Not correct
4. Not correct

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

What is included in the Directors’ Report?

Select ONE answer:

1. directors’ emoluments
2. principal activities of the company
3. trade debtors
4. turnover

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
3. Not correct
4. Not correct

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