Month: September 2022

A firm has £10,000 in the bank and buys inventory for £6,000 paying by cheque.

What will be the effect on its Current ratio and Liquid Capital ratio?

Select ONE answer:

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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

A company has the following gross profit and net profit ratios for two years.

• gross profit % = year 1 – 26% & year 2 – 29%
• net profit % = year 1 – 13% & year 2 – 10%

The company’s turnover has remained unchanged for both years.

What is a correct interpretation of these ratios?

Select ONE answer:

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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

The table shows an extract from a company’s final accounts:

• purchases – £28,000
• cost of sales – £24,000
• creditors – £4,200
• accruals – £1,100

What is the trade payables days collection period for the year?

Select ONE answer:

1. 55 days
2. 64 days
3. 69 days
4. 81 days

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 – (£4,200 / £28,000) * 365 days
2. Not correct
3. Not correct
4. Not correct

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

A company has issued 80 000 shares of £0.50 each.

These are quoted on the stock exchange at £1.60 each.

The company makes a rights issue on a 1 for 4 basis at a price of £1.20 each.

What is the balance on the Share Capital account after the rights issue?

Select ONE answer:

1. £50 000
2. £100 000
3. £120 000
4. £160 000

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 – 1 in 4 rights issues = 80,000 shares / 4 = 20,000 * 50p = £10,000 + £40,000 = = > £50,000
2. Not correct
3. Not correct
4. Not correct

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

A newly formed company issues

• 1,000,000 ordinary shares of £1 at £2.50 each
• £300,000 5% debentures

Operating profit for the year was £465,000.

The directors recommend an 8% ordinary dividend for the year.

What is the retained profit for the year?

Select ONE answer:

1. £250,000
2. £370,000
3. £385,000
4. £400,000

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 = £465,000 – (1,000,000 £1 shares * 8%) – (£300,000 5% debentures) = = > £465k – £80k – £15k
3. Not correct
4. Not correct

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