Category: Accounting

The mark-up on an item which cost £500 and is sold for £625 is?

Select ONE answer:

1. 20%
2. 25% 
3. 33 1/3%
4. None of the above.

 

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 – Mark-up (on cost) 2 Gross Profit as a percentage of cost price = (£625 – £500) / £500 = 25%.
3. Not correct
4. Not correct

 

 

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The gross profit margin earned on an item that cost £500 and is sold for £625 is?

Select ONE answer:

1. 20%
2. 25% 
3. 33 1/3%
4. None of the above.

 

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 – Gross Profit Margin = Gross Profit as a percentage of selling price = (£625 — £500) / £625 = 20%.
2. Not correct
3. Not correct
4. Not correct

 

 

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Bank charges should initially be recorded . . . . . .?

Select ONE answer:

1. by debiting the bank charges account and crediting the bank account.
2. by debiting the bank account and crediting the bank charges account.
3. in the Cash Book (or Cheque Payments Book).
4. by debiting the suspense account and crediting the bank account.

 

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 – Bank charges. like all other transactions and events, should initially be recorded in a book of original entry and subsequently recorded in the general (nominal) ledger.
2. Not correct – Bank charges. like all other transactions and events, should initially be recorded in a book of original entry and subsequently recorded in the general (nominal) ledger.
3. Correct – Bank charges result in the bank balance being reduced. All reductions in the bank balance are initially recorded in the Cash Book (or cheque payments book) and subsequently posted to the nominal (general) ledger.
4. Not correct – No transaction is ever initially recorded in the suspense account. A suspense account arises only after all transactions have been recorded in the nominal (general) ledger. either directly. or via the books of original entry, and a trial balance prepared which is found to be out of balance.

 

 

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If there is a material (significant) debit balance on a suspense account . . .?

Select ONE answer:

1. it should be included as an asset in the balance sheet
2. it should be included as an expense in the profit and loss account.
3. it should be included as a liability in the balance sheet.
4. the underlying error(s) should be located and corrected before preparing financial statements.

 

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 – Including a material debit balance on a suspense account as an asset in the balance sheet may overstate assets as the reason for the debit balance on the suspense account may be unrecorded expenses.
2. Not correct – Including a material debit balance on a suspense account as an expense in the profit and loss account may understate profit as the reason for the debit balance on the suspense account may be unrecorded assets.
3. Not correct – A debit balance on an account cannot represent a liability. A liability has to be a credit balance. A debit balance can only be either an asset or an expense.
4. Correct – If the underlying error(s) are not located and corrected before preparing financial statements the financial statements may be materially incorrect (they will be materially incorrect unless some of the errors discovered offset each other).

 

 

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Which of the following should be entered in a suspense account?

Select ONE answer:

1. Miscellaneous expenses.
2. Any difference between the debit and credit totals of the trial balance which cannot be immediately located pending further investigation.
3. Bad debts recovered.
4. None of the above.

 

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 – Miscellaneous expenses should be entered in a Miscellaneous Expenses account, the total of which is then transferred to the profit and loss account.
2. Correct
3. Not correct – Bad debts recovered should be entered in a Bad Debts Recovered account, the total of which is then transferred to the profit and loss account.
4. Not correct

 

 

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