Month: March 2022

Why does a trader account for accrued income?

Select ONE answer:

1. so that current liabilities are not overstated
2. so that current liabilities are not understated
3. so that profit is not overstated
4. so that profit is not 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

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

A company had the following assets and liabilities at 31 December 2021.

• trade receivables – £29,000
• trade payables – £12,600
• short-term bank deposit – £8,800
• bank loan repayable on 1 May 2022 – £20,000
• bank loan interest unpaid – £500
• machinery – £19,400

What was the working capital?

Select ONE answer:

1. £4,700
2. £6,200
3. £15,100
4. £25,700

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 ==> £29,000 +£8,800 – £12,600 – £20,000 – £500
2. Not correct
3. Not correct
4. Not correct

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

What is the effect on the financial statements if closing inventory is overvalued?

Select ONE answer:

1. profit for the year – understated & total assets – overstated
2. profit for the year – overstated & total assets – overstated
3. profit for the year – understated & total assets – understated
4. profit for the year – overstated & total assets – 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 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.

The sales ledger control account of a business showed a balance of £14,320.

A customer, who owes £1,000, has also supplied the business with £400 of goods.

This was offset against the amount owed by the customer.

What was the sales ledger control account balance after the offset?

Select ONE answer:

1. £13,720
2. £13,920
3. £14,720
4. £14,920

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 ==> £14,320 – £400
3. Not correct
4. Not correct

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

Which statement is not correct about the benefit to a business of maintaining control accounts?

Select ONE answer:

1. ensures that all types of errors can be detected
2. helps in the preparation of financial statements
3. provides immediate totals of trade receivables and trade payables
4. reduces risk of fraud as jobs are performed by different staff members

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
2. Not correct
3. Not correct
4. Not correct

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