Month: August 2022

What is the correct treatment of non-purchased (inherent) goodwill in the accounts of a company?

Select ONE answer:

1. do not recognise its existence
2. include it in the Balance Sheet as an asset at valuation
3. include it in the Balance Sheet as an asset, to be amortised
4. write it off against reserves

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.

A company’s convertible loan stock will be converted into ordinary shares on 1 January 2007.

How should the company show it in its Balance Sheet at 31 December 2004?

Select ONE answer:

1. authorised capital
2. creditors : amounts falling due after more than one year
3. creditors : amounts falling due within one year
4. issued share capital

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.

A company has issued £1 000 000 of 8 % convertible loan stock, which the holder can convert in November 2007 into ordinary shares at a rate of 1 share for each £2.00 of loan stock held.

What is the correct presentation in the final accounts for the year ended 31 December 2004?

Select ONE answer:

1. Balance Sheet – Long Term loan £1 000 000 & Profit and Loss – Dividend £80 000
2. Balance Sheet – Long Term loan £1 000 000 & Profit and Loss – Loan Interest £80 000
3. Balance Sheet – Ordinary Share Capital £500 000 & Profit and Loss – Dividend £40 000
4. Balance Sheet – Ordinary Share Capital £500 000 & Profit and Loss – Loan Interest £40 000

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
3. Not correct
4. Not correct

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