Category: Accounting

The table shows the gross profit margin and net profit margin of a company.

What caused these changes between 2019 and 2020?

Select ONE answer:

1. a change in products sold leading to lower selling costs
2. a loss of trade discounts on purchases but an increase in cash discounts taken from suppliers
3. an advertising campaign to promote higher sales leading to higher selling prices
4. an increase in both production and selling costs

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
4. Not correct

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

Which statement about bonus shares is true?

Select ONE answer:

1. They may be issued as repayment of debentures.
2. They may be issued at a premium.
3. They may be issued to the holders of preference shares.
4. They may be issued using the premium received from an issue of preference shares.

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

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

A company’s share capital consists of 150,000 ordinary shares of £0.50 each. 

It makes a rights issue of 1 ordinary share for every 3 already held at £1.20 per share. 

It then makes a bonus issue of 1 share for every 5 held. 

Which amount will be shown in the Balance Sheet for share capital? 

Select ONE answer:

1. £120,000
2. £145,000
3. £155,000
4. £165,000

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 ==> (150,000 * £0.5) = 75,000 + (1/3 * 150,000 * £0.5) = £100,000 * 1/5 ==> £120,000
2. Not correct
3. Not correct
4. Not correct

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

When a company is short of liquid funds, for what purpose may the reserves be used? 

Select ONE answer:

1. to finance the take-over of another business the company is anxious to acquire
2. to maintain dividends during periods of low profitability
3. to pay creditors promptly so as to obtain discounts
4. to write down assets whose value to the business has fallen

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

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

A business ends its financial year on 31 December. The stock was not counted until 10 January when it was found to be £104,000 at cost. The following transactions took place from 1 to 10 January. 

• stock purchased  —  £16,000
• stock sold at selling price  —  £15,000

Stock is sold at a mark-up of 25 %. 

What was the value of stock at 31 December? 

Select ONE answer:

1. £99,250
2. £100,000
3. £108,000
4. £108,750

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 ==> £104,000 – £16,000 + (£15,000 / 1.25)
3. Not correct
4. Not correct

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