Month: July 2022

A limited company has an authorised share capital of £750 000 and an issued share capital of £450 000 in £1.00 ordinary shares.

It makes a 1 for 3 rights issue of shares at £2.00 per share which is fully taken up.

What is the balance on the share capital account following this transaction?

Select ONE answer:

1. £600 000
2. £700 000
3. £750 000
4. £900 000

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 – £40k / 3 = £150k ==> £450k + £150k = £600k
2. Not correct
3. Not correct
4. Not correct

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

A company made a bonus issue of shares on the basis of 1 for every 3 held.

The directors wish to keep the reserves in the most flexible form.

Balance Sheet extract (before bonus issue) – capital and reserves £000s

• ordinary shares £0.20 each – £900k
• share premium – £100k
• revaluation reserve – £170k
• retained profits £130k
• Total Capital and Reserves – £1,300k

What will be the position after the bonus issue?

Select ONE answer:

1. Share capital – £1,200k / Share premium – NIL / Revaluation reserve – NIL / Retained profits – £100k
2. Share capital – £1,200k / Share premium – NIL / Revaluation reserve – £70k / Retained profits – £30k
3. Share capital – £1,200k / Share premium – NIL / Revaluation reserve – £100k / Retained profits – NIL
4. Share capital – £1,200k / Share premium – £100k / Revaluation reserve – NIL / Retained profits – NIL

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 – £900K / 3 = £300k ==> £100k from share premium , £170k from revaluation reserve & the last £30k from retained profits
2. Not correct
3. Not correct
4. Not correct

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

X and Y are sole traders.

On 1 October 2004 they agreed to form a partnership which would take over the assets of the separate businesses.

At 30 September 2004 the following information was available:

• Goodwill = X £15 000 & Y £12 000
• machinery = X £25 000 & Y £18 000
• stock and debtors = X £8 000 & Y £3 000
• cash at bank /(overdraft) = X £10 000 & Y overdraft of £(4 000)

What was the total of the tangible assets taken over by the partnership?

Select ONE answer:

1. £60 000
2. £64 000
3. £87 000
4. £91 000

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 2

1. Not correct
2. Correct ==> £15K + £12K + £25K + £18K + £8K + £3K + £10K (the overdraft is to be ignored)
3. Not correct
4. Not correct

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

Why is a provision for depreciation made in accounts?

Select ONE answer:

1. to charge the cost of fixed assets against profits
2. to make a provision for repairs
3. to make cash available to replace fixed assets when necessary
4. to show the current market values of fixed assets

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.