Day: June 18, 2023

Accounting Multiple Choice Question – 18 June 2023

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

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Alex plc’s draft statement of financial position shows the following balances:

  • Share capital ordinary shares of £10 each – £100,000
  • Share premium reserve – £60,000
  • Profit and loss account (credit) – £210,000

During the year Alex plc:

  • pays a dividend of £70,000
  • makes a bonus issue of 5,000 ordinary shares
  • raises a debenture loan of £120,000.

What will be the total of share capital and reserves after these transactions are completed?

Select ONE answer:

  1. £250,000
  2. £300,000
  3. £350,000
  4. £420,000

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 – Start position is £100K + £60,k + £210k = £370k then £70k dividend payment (bonus issue no impact Dr Share Premium Cr Share Capital + Debenture Loan no impact Dr Cash Cr NCL)
  3. Not correct
  4. Not correct

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