Month: January 2025

Accounting Multiple Choice Question – 31 January 2025

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 wants to make sure it has access to standby funds, but it cannot borrow money at short notice.

It will be able to meet its financial needs if?

Select ONE answer:

  1. It lowers its level of current assets
  2. It shortens the maturity schedule of financing
  3. It increases the level of non-current assets
  4. It lengthens the maturity schedule of financing

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 == > Lengthening the maturity schedule of financing means putting in place longer term borrowing agreements with its financiers which would thereby provide a stand-by. Lowering the level / availability of cash or cash equivalents would be unhelpful. Shortening the maturity schedule of financing would increase the risk of facilities not being renewed, further threatening the availability of standby funds. Investing in increasing the level non-current assets would reduce cash or absorb borrowing capacity so would not assist at all.

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Accounting Multiple Choice Question – 30 January 2025

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

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There are a number of motives that influence how much a business wishes to hold in cash.

When a company holds cash in order to make the payments that are necessary to keep the business going, such as wages, taxes and payments to suppliers, the motive behind this is?

Select ONE answer:

  1. The transactions motive
  2. The finance motive
  3. The precautionary motive
  4. The speculative motive

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 == > The transactions motive means that a business holds cash to meet its current day-to-day financial obligations.
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 29 January 2025

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 is trying to decide on its optimal level of current assets.

The company’s management face a trade-off between?

Select ONE answer:

  1. Profitability and risk
  2. Inventory and receivables
  3. Equity and debt
  4. Short-term and long-term borrowing

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 == > All businesses face a trade-off between being profitable and being liquid. Less liquidity may yield greater profitability, but less liquidity equals greater risk. As both inventory and receivables (2) are current assets the trade-off between these does not affect the overall level of the value of current assets. The equity and debt (3) trade-off is concerned with long-term capital structure rather than current assets. The short-term versus long-term borrowing trade-off (4) is a financing decision unrelated to current assets.
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 28 January 2025

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

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Two brothers, Ken and Alex, run a family-owned removals company called Ted Moves It Ltd based in Staffordshire which is currently facing liquidity problems and needs an injection of funds.

From the following list of sources of finance available to the company, identify which would be classified as a source of short-term finance?

Select ONE answer:

  1. Share capital
  2. Bank Loan
  3. Factoring
  4. Commercial mortgage

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 == > Short-term funds are those used to cover normal operations and can be taken to mean finance available for up to one year. An example is debt factoring. Bank loans and mortgages are debt finance provided for more than one year, while share capital is equity finance that is also provided for more than one year.
  4. Not correct

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Accounting Multiple Choice Question – 27 January 2025

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

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Which aspects of an organisation’s performance with respect to sustainability are measured using ‘triple bottom line’ measures?

Select ONE answer:

  1. Economy, effectiveness, efficiency
  2. Economic, social, environmental
  3. Profitability, liquidity, investment
  4. Productivity, activity, profitability

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 == > The triple bottom line measures an organisation’s performance in terms of its achievement of sustainability goals relating to social, economic and environmental factors.
  3. Not correct
  4. Not correct

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