Accounting Multiple Choice Question – 5 May 2022

Alex sent goods to Lucy on a sale or return basis at a selling price of £5,000.

His selling price is based on a mark-up of 25%.

Lucy returned goods with a selling price of £1,000 and purchased the remainder.

What was the net effect on Alex’s inventory value?

Select ONE answer:

1. £800 increase
2. £1,000 increase
3. £3,200 decrease
4. £4,000 decrease

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 – (£5k – £1k) = £4k * 0.8 (25% MUP = 20% GM) ==> £3.2K
4. Not correct

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