Category: Accounting

A cash budget is prepared for a new business.

The information available is as follows:

• capital introduced – £60,000
• goods sold in first month – £12,000
• loan from the bank – £20,000

25% of sales constitute cash sales, with the balance payable over the following two months.

What are the total cash receipts in month one?

Select ONE answer:

1. £60,000
2. £72,000
3. £80,000
4. £83,000

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 = = > £60k + £30k + £12k/4

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A company makes three products for which details per unit are given.

• selling price – product X £18 / product Y £35 / product Z £50
• direct materials – product X £4 / product Y £5 / product Z £5
• direct labour hours – product X 0.5 hours / product Y 2 hours / product Z 2.5 hours

The direct labour rate is £8.00 per hour.

Direct labour hours are limited.

In which order should the products be ranked to achieve the maximum profit with the available labour hours?

Select ONE answer:

1. first X & next Y & last Z
2. first Y & next Z & last X
3. first Z & next X & last Y
4. first X & next Z & last Y

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 = = > X = 18 – 4 – (0.5 * 8) = £10; Y = 35 – 5 – (2 * 8) = £14; Z = 50 – 5 – (2.5 * 8) = £25 = = > X £10 / 0.5 hours = £20; Y £14 / 2 hours = £7; Z £25 / 2.5 hours = £10 = = > Therefore X then Z then Y

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

A company is evaluating its plans to close a unit within its business. If closed, the employees at the unit would be redeployed elsewhere in the business.

The costs associated with the closure are as follows:

• net book value of unit assets (no resale value) – £35k
• estimated direct cost of closure of the unit – £25k
• existing fixed overheads apportioned to unit – £16k
• wages of unit employees – £20k

What is the relevant cost of closure of the unit?

Select ONE answer:

1. £25k
2. £41k
3. £61k
4. £96k

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.

What could cause an over-absorption of overhead expenditure?

1. Units produced exceeding the budgeted production
2. Units produced being less than the budgeted production
3. Overhead expenditure being less than budget
4. Overhead expenditure exceeding budget

Select ONE answer:

1. 1 and 2
2. 1 and 3
3. 2 and 4
4. 3 and 4

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

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

Which method will increase company profits?

Select ONE answer:

1. accepting deposits for customers’ orders
2. decreasing rates of depreciation
3. increasing the value of opening stocks
4. writing down the value of closing stocks

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

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