Month: August 2023

Accounting Multiple Choice Question – 31 August 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 business of Alex, a sole trader, is acquired by a limited company called Lucy Ltd.

  • net assets at valuation – £167,000
  • agreed purchase price – £137,000
  • cash paid in part settlement – £50,000
  • ordinary shares of £1 each – 60,000

What is the premium per ordinary share?

Select ONE answer:

  1. £0.45
  2. £0.95
  3. £1.28
  4. £1.78

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 – £137k – £50k – £60k = £27k / £60k = £0.45 per share
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 30 August 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, a sole trader sold his business to a limited company Lucy Ltd on 31 March 2023.

The net assets of Alex’s business had a total book value of £160,000 and a total fair value of £200,000.

The consideration for the sale was satisfied by the issue of 200,000 £1 ordinary shares (worth £1.25 each) and a cash payment of £20,000.

What is the amount of goodwill arising on the transfer?

Select ONE answer:

  1. £20,000
  2. £60,000
  3. £70,000
  4. £110,000

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 – 200,000 shares * £1.25 + £20,000 cash – £200k fair value
  4. Not correct

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

Accounting Multiple Choice Question – 29 August 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 capital reduction scheme is as follows.

  • Reducing the £1.00 preference shares by 60%.
  • Reducing the £1.00 ordinary shares to shares of £0.05

The statement of financial position of the company immediately before the approval of the scheme was:

  • preference shares – £100,000
  • ordinary shares – £400,000
  • net assets – £500,000

What will be the issued share capital of Alex plc after the capital reduction?

Select ONE answer:

  1. £20,000
  2. £60,000
  3. £80,000
  4. £260,000

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 – £100k * 0.6 + £400k * 0.05
  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 – 28 August 2023

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

Photo by Olya Kobruseva on Pexels.com

The capital structure of Alex plc is:

  • £1 ordinary shares – £40,000
  • convertible loan shares – £20,000
  • share premium – £10,000

The loan share conversion is made on the basis of 1 new ordinary share for every £4 of convertible shares held.

What is the capital structure of Alex plc after the conversion?

Select ONE answer:

  1. ordinary shares £40,000 & share premium £30,000
  2. ordinary shares £45,000 & share premium £25,000
  3. ordinary shares £50,000 & share premium £20,000
  4. ordinary shares £60,000 & share premium £10,000

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 – new ordinary shares £20,000 / 4 = £5,000 & share premium now £10k + £20k – £5k
  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 – 27 August 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 redeems 1,000 preference shares of £1.00 each at a premium of 10 %.

The shares were originally issued at par and there is no share premium account.

How much will be charged to the profit and loss account?

Select ONE answer:

  1. £100
  2. £900
  3. £1,000
  4. £1,100

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 – £1 * 1.1 * 1,000

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