Day: March 2, 2024

Accounting Multiple Choice Question – 2 March 2024

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

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Alex Trading plc purchased a machine for which the supplier’s list price is £28,000.

Alex Trading paid £23,000 in cash, and traded in an old machine, which has a carrying amount of £8,000.

It is the company’s policy to depreciate machines at the rate of 10% per annum on cost.

What is the carrying amount of the machine after one year?

Select ONE answer:

  1. £18,000
  2. £20,700
  3. £22,200
  4. £25,200

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 – The cost of the machine is £28,000. Alex Trading plc paid £23,000 in cash and agreed a trade-in value of £5,000 for the old machine. (The old asset’s carrying amount is irrelevant.) After one year, the carrying amount of the new machine is 90% of £28,000 = £25,200.

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