Accounting Multiple Choice Question – 16 August 2022

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting

The summarised Balance Sheet of a sole trader shows:

  • fixed assets – £200 000
  • net current assets – £10 000
  • capital – £210 000

He agrees to sell his business to a limited company. The purchase consideration is £260 000 being made up of £60 000 cash, £80 000 debentures and 180 000 ordinary shares of £0.50 each.

Which amount will be credited to the share premium account of the limited company?

Select ONE answer:

  1. £30 000
  2. £50 000
  3. £90 000
  4. £120 000

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 – £60,000 + £80,000 + (180,000 * £0.5) = £230,000 ==> £260k – £230k = £30k
  2. Not correct
  3. Not correct
  4. Not correct

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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