Accounting Multiple Choice Question – 25 November 2023

Alex Trading Ltd policy is to depreciate its equipment by 30% annually using the reducing balance method.

A piece of equipment which was two years old was sold for £6,000 and the profit on sale was £1,590.

What was the cost price of the equipment?

Select ONE answer:

1. £7,590
2. £9,000
3. £9,600
4. £11,025

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 – £9,000 * 0.3 = £2,700 = £6,300 * 0.3 = £1,890 == > £4,590 == > Dr £1,590 Cr £6,000 Cr £4,590 = Cost £9,000
3. Not correct
4. Not correct

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