Accounting Multiple Choice Question – 1 March 2024

Alex Trading plc is a retailer which is registered for VAT.

All sales, and all purchases of goods for resale, attract VAT at the rate of 20%.

For the year to 31 December 2023 Alex Trading plc paid £68,150 to suppliers in respect of goods for resale and showed revenue in the income statement of £89,300 net of VAT.

There was no change in the figures for inventory and trade payables in the statements of financial position as at 31 December 2022 and 2023.

What was Alex Trading plc’s gross profit for the year ended 31 December 2023?

Select ONE answer:

1. £21,150
2. £7,850
3. £39,300
4. £18,000

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 – £89,300 – (£60,000 / 1.2)
4. Not correct

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