Day: July 4, 2023

Accounting Multiple Choice Question – 4 July 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 Ltd purchases the net assets of the Lucy & Michelle partnership for a cash payment of £1.2M
The agreed values for their partnership at the date of acquisition were as follows:

  • Non-Current Assets – £2M
  • Current Assets – £0.6M
  • Current Liabilities – £0.4M
  • Non-current liabilities – £0.8M
  • Capital accounts (credit) – £1.7M
  • Current accounts (debit) – £0.3M

What is the figure for goodwill?

Select ONE answer:

  1. £0.2M negative
  2. £0.2M positive
  3. £0.8M negative
  4. £0.8M positive

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 – £2M + £0.6M – £0.4M – £0.8M = £1.4M – £1.2M = £0.2M negative
  2. Not correct
  3. Not correct
  4. Not correct

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