Day: July 10, 2023

Accounting Multiple Choice Question – 10 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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The table below shows the capital structure of Alex plc:

  • share capital made up of £5 shares – £300k
  • share premium account – £200k
  • Retained earnings – £500k
  • 10 % debenture (issued 3 years ago) – £600k
  • OPERATING PROFITS average £150,000 a year.

What is the return on shareholders’ funds?

Select ONE answer:

  1. 9.0%
  2. 9.4%
  3. 15.0%
  4. 18.75%

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 – Correct – (150k – £60k (£600k debenture @ 10%) / £300K + £200k + £500k + £600k ==> 9.0%. – many people forget to deduct the interest of £60k from the operating profits when calculating the return on the shareholders’ funds.
  2. Not correct
  3. Not correct
  4. Not correct

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