Accounting Multiple Choice Question – 30 April 2022

A business with a year-end of 31 December purchased a motor vehicle on 1 January 2018 for £24,000.

The estimated useful life of the motor vehicle was four years and the estimated residual value at the end of four years was £8,000.

The business depreciates motor vehicles at 25% per annum using the reducing balance method.

No depreciation is charged in the year of disposal.

The motor vehicle was sold on 31 July 2021 for £12,000.

What was the profit on the sale of the motor vehicle?

Select ONE answer:

1. £1,875
2. £4,000
3. £5,250
4. £6,000

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 1

1. Correct ==> £24,000 * 0.75 * 0.75 * 0.75 ==> £10,125 – £12,000 ==> £1,875 profit
2. Not correct
3. Not correct
4. Not correct

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