Category: Accounting

Accounting Multiple Choice Question – 1 September 2023

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

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Alex ltd has assets with a fair value of £150,000.

There is agreed negative goodwill of £30,000.

Lucy Ltd made an offer to acquire the net assets of Alex Ltd for 16,000 ordinary shares with a face value of £2.00 at a premium of £3 for each share.

How much were the liabilities acquired?

Select ONE answer:

  1. £40,000
  2. £70,000
  3. £80,000
  4. £100,000

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 1

  1. Correct – 16,000 * (£2 + £3) = £80,000 price paid so liabilities equals £150,000 – £30,000 = £120,000 with the difference per Accounting Equation A-L=C where L = £40,000
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 31 August 2023

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

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The business of Alex, a sole trader, is acquired by a limited company called Lucy Ltd.

  • net assets at valuation – £167,000
  • agreed purchase price – £137,000
  • cash paid in part settlement – £50,000
  • ordinary shares of £1 each – 60,000

What is the premium per ordinary share?

Select ONE answer:

  1. £0.45
  2. £0.95
  3. £1.28
  4. £1.78

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 – £137k – £50k – £60k = £27k / £60k = £0.45 per share
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 30 August 2023

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

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Alex, a sole trader sold his business to a limited company Lucy Ltd on 31 March 2023.

The net assets of Alex’s business had a total book value of £160,000 and a total fair value of £200,000.

The consideration for the sale was satisfied by the issue of 200,000 £1 ordinary shares (worth £1.25 each) and a cash payment of £20,000.

What is the amount of goodwill arising on the transfer?

Select ONE answer:

  1. £20,000
  2. £60,000
  3. £70,000
  4. £110,000

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 – 200,000 shares * £1.25 + £20,000 cash – £200k fair value
  4. Not correct

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

Accounting Multiple Choice Question – 29 August 2023

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’s capital reduction scheme is as follows.

  • Reducing the £1.00 preference shares by 60%.
  • Reducing the £1.00 ordinary shares to shares of £0.05

The statement of financial position of the company immediately before the approval of the scheme was:

  • preference shares – £100,000
  • ordinary shares – £400,000
  • net assets – £500,000

What will be the issued share capital of Alex plc after the capital reduction?

Select ONE answer:

  1. £20,000
  2. £60,000
  3. £80,000
  4. £260,000

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 2

  1. Not correct
  2. Correct – £100k * 0.6 + £400k * 0.05
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 28 August 2023

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

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The capital structure of Alex plc is:

  • £1 ordinary shares – £40,000
  • convertible loan shares – £20,000
  • share premium – £10,000

The loan share conversion is made on the basis of 1 new ordinary share for every £4 of convertible shares held.

What is the capital structure of Alex plc after the conversion?

Select ONE answer:

  1. ordinary shares £40,000 & share premium £30,000
  2. ordinary shares £45,000 & share premium £25,000
  3. ordinary shares £50,000 & share premium £20,000
  4. ordinary shares £60,000 & share premium £10,000

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 2

  1. Not correct
  2. Correct – new ordinary shares £20,000 / 4 = £5,000 & share premium now £10k + £20k – £5k
  3. Not correct
  4. Not correct

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