Month: April 2024

Accounting Multiple Choice Question – 5 April 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 plc, a retailer, depreciates all vehicles monthly over five years.

On 31 October 2019 Alex plc bought a car at a cost of £18,000 plus VAT, trading in an old car that had cost £16,800 including VAT on 1 July 2017.

A cheque for £13,500 was also handed over. VAT is at a rate of 17.5%.

In respect of this disposal in its income statement for the year ended 31 December 2019 Alex plc will show a loss of?

Select ONE answer:

  1. £1,310
  2. £2,430
  3. £4,460
  4. £5,580

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 – VAT is not treated as input tax when a car is purchased for use in a business (as opposed to being bought as inventory by a car dealer). As Alex plc is a retailer, we can assume that the gross figure should be taken as the cost of both vehicles. The old car had been depreciated for 28 months when it was traded in.
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 4 April 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 plc acquired a new truck on 1 July 2014 for £99,640 including VAT at 17.5%.

The company depreciates all vehicles straight line at 20% per annum on a monthly basis.

What is the carrying amount of Alex plc’s truck at 31 December 2014?

Select ONE answer:

  1. £89,676
  2. £84,800
  3. £76,320
  4. £67,840

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 – VAT on vehicles except for cars is treated as input tax, so the truck’s cost in the ledger accounts is £99,640 x 40/47 = £84,800 (B). This is depreciated at 20% per annum for 6 months, a charge of £8,480. Hence the carrying amount at the year-end is £84,800- £8,480 = £76,320
  4. Not correct

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Accounting Multiple Choice Question – 3 April 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 plc acquired a machine on 31 March 2024, its year end, for £196,600.

It gave the seller a cheque for £110,000 and handed over an old machine with a carrying amount at that date of £34,400.

This machine had cost £60,000. A further sum of £42,000 was then due to the supplier the machine as the final payment.

The only entries made before the initial trial balance was drawn up were to credit cash £110,000 and credit other payables £42,000.

As well as crediting Suspense with £152,000, which of the following sets of adjustments should be made on the extended trial balance to reflect the purchase and disposal in Alex plc’s financial statements?

Select ONE answer:

  1. Debit Machine – cost £196,600, Debit Machine – accumulated depreciation £34,400 – Credit Disposal £79,000
  2. Debit Machine – cost £136,600, Debit Machine – accumulated depreciation £34,400 – Credit Disposal £19,000
  3. Debit Machine – cost £196,600, Debit Machine – accumulated depreciation £25,600 – Credit Disposal £70,200
  4. Debit Machine – cost £136,600, Debit Machine- accumulated depreciation £25,600 – Credit Disposal £10,200

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 accumulated depreciation at the part exchange date is (60,000 – 34,400) = £25,600, and this must be eliminated from the accumulated depreciation account by debiting the account. The machine cost account is debited with the difference between the cost of the old and new machines (196,600 – 60,000) = £136,600. Alex plc is paying a total cash/payables figure of (110,000 + 42,000) = £152,000 for the machine, therefore the part-exchange allowance is (196,600 – 152,000) = £44,600. This is compared to the carrying amount of £34,400 to give a gain on disposal of £1 0,200. DR Accumulated depreciation  £25,600 DR Cost  £136,600 CR Disposal  £10,200 CR Suspense  £152,000

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Accounting Multiple Choice Question – 2 April 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 plc has the following note to its statement of financial position relating to plant and machinery as at 31 May.

2017   2016

   £   £

  • Cost   110,000   92,000
  • Accumulated depreciation   72,000   51,000  
  • Carrying amount   38,000   41,000

During the year to 31 May 2017, the following transactions occurred in relation to plant and machinery:

  • Additions £39,000
  • Loss on disposals £2,000
  • Depreciation charge £27,000

What were the proceeds from disposals of plant and machinery received by Alex plc in the year to 31 May 2017?

Select ONE answer:

  1. £7,000
  2. £8,000
  3. £13,000
  4. £17,000

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
  4. Not correct

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Accounting Multiple Choice Question – 1 April 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 plc has the following information in its financial statements relating to fixtures and fittings as at 31 December:

2019   2018

£   £

  • Cost   600,000   480,000
  • Accumulated depreciation   180,000   218,000
  • Carrying amount   420,000   262,000

During the year to 31 December 2019, the following transactions occurred in relation to fixtures and fittings:

  • Additions £284,000
  • Sales proceeds from disposals £178,800
  • Depreciation charge £66,400

What is Alex plc’s profit or loss on disposals of fixtures and fittings in the year ended 31 December 2019?

Select ONE answer:

  1. £119,200 loss
  2. £119,200 profit
  3. £196,800 profit
  4. £196,800 loss

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
  3. Not correct
  4. Not correct

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