Category: Accounting

Inventory has been damaged.

• The Inventory cost £1,200.
• It would have sold for £1,800 when perfect.
• It can be sold for £1,700 if repairs are undertaken at a cost of £600.
• To replace the inventory would cost £1,000.

At what value should the damaged inventory be shown in the final accounts?

Select ONE answer:

1. £1,000
2. £1,100
3. £1,200
4. £1,800

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– Lower of cost or NRV ==> £1,200 vs (£1,700 – £600)
3. Not correct
4. Not correct

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

On 30 September 2015 a business’s current assets totalled £28,000. The next day only two transactions took place.

• Inventory bought for cash. The list price of £2,000 was subject to a trade discount of 20% and a cash discount of 5%. Payment was made immediately.
• A bad debt of £400 was written off.

What was the total of current assets on 2 October 2015?

Select ONE answer:

1. £27,680
2. £28,080
3. £29,520
4. £29,600

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 – £2,000 *0.8 = £1,600 * 0.95 = £1,520 ==> £28,000 – £1,520 + £1,600 – £400
2. Not correct
3. Not correct
4. Not correct

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

The accounting year end of a business is 31 October.

On 1 April the business rents out part of its warehouse for an annual rent of £6,000 receivable in equal instalments on 1 April, 1 July, 1 October and 1 January.

At 31 October what would the final accounts show?

Select ONE answer:

1. Profit and Loss Account £ rental income 3,500 / Balance Sheet £ current asset 1,000
2. Profit and Loss Account £ rental income 3,500 / Balance Sheet £ current liability 1,000
3. Profit and Loss Account £ rental income 4,500 / Balance Sheet £ current liability 1,000
4. Profit and Loss Account £ rental income 6,000 / Balance Sheet £ current asset 1,500

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 – April £1,500 + July £1,500 + October (£1,500 / 3) ==> therefore October payment Dr Bank £1,500 Cr Rental Income £500 & Current Liability £1,000
3. Not correct
4. Not correct

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

Which item below should be treated as capital expenditure?

Select ONE answer:

1. the cost of a new printer for an existing computer system
2. repair costs to a car which are not covered by insurance
3. rent paid on a factory, whilst the company negotiated the purchase of the factory
4. the replacement of a wooden fence with a new fence

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.

The table shows the calculation of the net present value of a potential project.

Which cash inflow during Year 1 will give a net present value of zero for the project?

Select ONE answer:

1. £5,516
2. £5,560
3. £5,900
4. £6,440

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 – (£5,516 * 0.91) + £4,980 = £10,000
2. Not correct
3. Not correct
4. Not correct

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