Month: July 2023

Accounting Multiple Choice Question – 6 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 acquires the assets and assumes the liabilities of Lucy Ltd which have open market values of:

  • assets – £120k
  • liabilities – £15k

Acorn is to issue a debenture of £50k and 10,000 £1 ordinary shares for the balance of consideration to buy Lucy Ltd.

What will be the credit to the share premium account in the books of Alex Ltd?

Select ONE answer:

  1. £45k
  2. £55k
  3. £60k
  4. £95k

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 – £120k – £15k = £105k – £50k & 10k = £45k
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 5 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 balance sheet of Lucy Ltd shows net assets of £0.5M.

Alex plc buys this business for £0.8M by issuing new share capital.

The fair value of the net assets acquired is £0.7M.

By how much do the net assets of Alex plc increase?

Select ONE answer:

  1. £0.3M
  2. £0.5M
  3. £0.7M
  4. £0.8M

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 – Dr Cash £0.8M Cr SC £0.8M then Dr Assets £0.7M Cr Cash £0.7M – left with Dr Assets £0.7M & Cash £0.1M Cr SC £0.8M

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

Accounting Multiple Choice Question – 3 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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X and Y are in partnership, sharing profits equally.

They agree to admit Z as an equal partner.

Z is to introduce capital into of the partnership worth £100,000.

The partnership goodwill is £60,000 and all adjustments are to be made in the capital accounts.

Which shows the correct situation after the admission of Z to the three partners’ capital accounts?

Select ONE answer:

  1. X a credit of £10k and Y a credit of £10k and Z a credit of £80k
  2. X a credit of £10k and Y a credit of £10k and Z a debit of £20k
  3. X a credit of £30k and Y a credit of £30k and Z a debit of £60k
  4. X a debit of £30k and Y a debit of £30k and Z a credit of £160k

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 – Step 1 – Dr Goodwill £60k Cr X Capital Account £30k and Y Capital Account £30k. Step 2 – Dr Cash £100k Cr Z Capital Account £100k. Step 3 (Goodwill w/o) Dr X Capital Account £20k Dr Y Capital Account £20k Dr Z Capital Account Cr Goodwill £60k
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 2 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 amount shown on the cash flow statement of Alex plc for 2022 as taxation paid amounts to £96,000.

The extract of the Income Statement for Alex plc for 2022 and 2021 is as follows:

  • operating profit for the year – 2022 £350k and 2021 £336k
  • provision for taxation – 2022 (£110k) and 2021 (£104k)
  • profit after taxation – 2022 £240k and 2021 £232k

The liability for taxation at the 2021 year end was £100k.

What is the total tax provision disclosed in the statement of financial position of Alex plc for 2022?

Select ONE answer:

  1. £14,000
  2. £110,000
  3. £114,000
  4. £210,000

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 3

  1. Not correct
  2. Not correct
  3. Correct – £100k + £110k – £96k = = > £114k
  4. Not correct

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