Accounting Multiple Choice Question -14 October 2023

The following data is available at the end of a financial year for Alex Trading Ltd:

• opening inventory – £500,000
• purchases – £2,250,000
• closing inventory – £750,000
• gross profit margin – 50 %
• Trade receivables collection period – 60 days

Sales are all made on credit and accrue evenly over the 360-day accounting period.

What is the value of trade receivables at the year-end?

Select ONE answer:

1. £333,333
2. £375,000
3. £500,000
4. £666,667

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 – COS = £500k + £2,250k – £750k = £2M * 2 = £4M revenue / 360 * 60 == > £666,667

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