Category: Accounting

The information below shows some extracts from Alex Ltd’s SOFP at 31 December 2014 and at 31 December 2015.

• ordinary shares of £1 each: 31/12/14 – £100M & 31/12/15 – £130M
• share premium account: 31/12/14 – £50M & 31/12/15 – £80M

On 1 July 2015 there was a bonus issue of 1 ordinary share for every 10 held.

On 1 October 2015 there was a rights issue.

There were no other reserve balances.

How much cash was received from the issue of shares in the year ended 31 December 2015?

Select ONE answer:

1. £20M
2. £30M
3. £50M
4. £60M

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 = = > Bonus issue was worth £10M, so Share premium would have gone down £10M. The subsequent rights issue would have been for 20M shares of £1 each at £3 per share = = > £60M

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A company’s SOFP shows the following information:

£1 ordinary shares – £500k
Retained earnings – £400k
10% debentures – £300k
Total Capital Employed & Net Assets – £1,200k

A fully subscribed 1 for 4 rights issue at £2 per share is made and 50 % of the debentures are repaid at par.

What are the net assets following these changes?

Select ONE answer:

1. £1,100k
2. £1,175k
3. £1,225k
4. £1,300k

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 = £1,200 – (£300k / 2) + (500k / 4 * £2) = = > £1,300k

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

Hilary and Lee commenced in partnership on 1 January 2015.

There was no partnership agreement concerning the division of interest on the loan or of profits.

• capital contributions: Hilary £5,000 & Lee £600
• loan to partnership: Hilary £0 and Lee £1,000

At the year end, 31 December 2015, profit for the year before the loan interest was £8,850.

What would be Hilary’s share of the profit?

Select ONE answer:

1. £4,400
2. £4,425
3. £4,800
4. £4,827

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 – Partnership Act 1890 £8,850 – (£1,000 * 05%) / 2 = = > £4,400
2. Not correct
3. Not correct
4. Not correct

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

Alex has not kept proper records for his business.

Between 31 December 2014 and 31 December 2015 his net assets had increased by £30,000.

On 1 January 2015, Alex brought into the business his private car which had cost £12,000, but now has a re-sale value of £8,000.

Drawings for the year ended 31 December 2015 were £16,000.

What was Alex’s profit for the year ended 31 December 2015?

Select ONE answer:

1. £22,000
2. £26,000
3. £34,000
4. £38,000

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct = £30k + £16k – £8k (Calculating Alex’s profit, which is the increase in net assets, £30 000, plus drawings, £16 000, less the value of the car when introduced, £8000 = £38 000.)

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

A club’s treasurer has calculated that there is a deficit in the Income and Expenditure account.

How is this described in the Income and Expenditure account?

Select ONE answer:

1. an excess of expenditure over income
2. an excess of income over expenditure
3. an excess of payments over receipts
4. an excess of receipts over payments

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
2. Not correct
3. Not correct
4. Not correct

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