Month: July 2023

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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What is not required to be disclosed in the published company accounts?

Select ONE answer:

1. auditors’ remuneration
2. depreciation policy
3. legal costs
4. salary of highest paid director

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 3

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

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Alex plc shows the following balances that have been extracted from it’s Statement of Financial Position as at 31 March 2023.

• share premium – £125k
• provision for re-organisation – £90k
• trade payables – £82k
• accruals – £12k
• estimated tax refund – £25k
• bank overdraft – £74k
• cash at bank – £44k

What amount is shown as current liabilities in the accounts?

Select ONE answer:

1. £136,000
2. £168,000
3. £193,000
4. £258,000

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 – £82K + £12k + £74k
3. Not correct
4. Not correct

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

The following events occurred after the year end, but before the financial statements were approved by the directors.

Which is a non-adjusting event?

Select ONE answer:

1. additional depreciation following a property revaluation
2. a fire at a warehouse
3. a major debtor becoming bankrupt
4. a provision for obsolete stock

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.