Category: Accounting

The following information was provided by a sole trader for the year ended 31 December 2015.

 

What was the business’s profit or loss for 2015?

Select ONE answer:

1. Loss £8,000
2. Loss £14,000
3. Loss £11,000
4. Profit £8,000
5. Profit £14,000

Show your workings to arrive at your answer, and explain and justify your reasons?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – The calculation is as follows: Capital at 31 December 2015 is £29,000 + Drawings of £11,000 making a total of £40,000. Subtract the Capital 1 January 2015 of £32,000 implies that a profit of £8,000 was made by the business in 2015.

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A sole trader has not maintained proper books of account. The following information is available relating to trade receivables for the year ended 30 June 2016.

 

What is the value of credit sales for the year ended 30 June 2016?

Select ONE answer:

 

1. £196,000
2. £200,000
3. £210,000
4. £212,000
5. £214,000

Show your workings to arrive at your answer, and explain and justify your reasons?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 3 – The calculation is as follows: Receipts from trade receivables £205,000 + Sales Returns £7,000 + Trade Receivables at 30 June 2016 of £12,000 – Trade Receivables at 1 July 2015 of £14,000

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A bookkeeper recorded a payment for vehicle repairs in the vehicles account. Which of the following correctly describes the type of error and corrections to be made?

Select ONE MOST LIKELY answer:

 

What is the definition of an accounting error of principle?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 5 – An accounting error is a non-fraudulent discrepancy in financial documentation. The error of commission is a transaction that is calculated incorrectly. An error of principle is a procedural error, meaning that the value recorded was the correct value but placed incorrectly. This is an error of principle, so the value needs to be moved from vehicles to which it was originally debited (the original credit was to cash or bank) to vehicle repairs.

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The owner of a restaurant purchased some equipment on credit for business use but returned the equipment to the supplier as it was damaged.  How should the return of the equipment be recorded in the books of the restaurant?

Select ONE MOST LIKELY answer:

Why is this recorded as a general journal and not as a purchase returns journal?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

 

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – Whilst the equipment was purchased on credit, the original invoice would have been recorded as Dr Equipment (Fixed Assets) Cr Supplier (Balance Sheet) through a general ledger journal. Returning the equipment when it was damaged simply means reversing this journal.

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A business has forecast its telephone expense for the year to be £1800. This consists of a fixed element for line rental which is 1/3 of the total cost; the remaining 2/3 are variable based on the telephone calls made. The business has been informed that the cost of the line rental will be reduced by 1⁄4. However, the cost of calls will increase by 20%.

How much will the revised forecast telephone expense be, assuming the number of calls does not change?

Select ONE answer:

1. £1,845
2. £1,890
3. £1,917
4. £2,040
5. £2,097

Explain and justify your answer?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – Fixed rental element is £1,800 / 3 = £600. A 25% reduction is a £150 saving. The cost of calls is therefore £1,200 which is they go up by 20% will be a £240 cost increase (£1,200 *1.2). The difference between the cost decrease in the fixed and cost increase in the call cost is -£150+£240 = £90 cost increase.

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