Category: Accounting

A business sells stock to a credit customer at a selling price greater than cost.

What effect will this transaction have on the current and quick (acid test) ratios?

Select ONE answer:

1. Both ratios will be unchanged.
2. Both ratios will increase.
3. The current ratio will increase while the quick ratio will not change.
4. The current ratio will not change while the quick ratio will increase.

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.

When a shareholder sells some shares for less than he paid for them, what will happen to the share capital of the company?

Select ONE answer:

1. It will fall by the nominal value of the shares sold.
2. It will fall by the sales proceeds of the shares sold.
3. It will increase by the amount received from the sale of the shares.
4. It will remain the same as before.

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 is financed by: 

1. 10,000 £1 ordinary shares
2. £5,000 10% loan

Net profit before interest and taxation is £2,500. 

Tax payable is £400. 

What is the maximum dividend per share payable from this year’s profits? 

Select ONE answer:

1. £0.16
2. £0.20
3. £0.21
4. £0.25

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 — (£2,500 – (£5,000 *0.1) – £400) / 10,000 = £0.16
2. Not correct
3. Not correct
4. Not correct

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

The treasurer of a tennis club has provided the following information for a year.

What will the club’s Income and Expenditure account show?

Select ONE answer:

1. A surplus of £1,560
2. A surplus of £1,670
3. A surplus of £1,740
4. A surplus of £1,850

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 – (75 * £95) – (£850 + £110 – £95 + £4,700)
2. Not correct
3. Not correct
4. Not correct

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

A company has an authorised share capital of 2 million £0.25 ordinary shares of which 1.6 million 
are in issue

It is proposed to pay a dividend totalling £40 000.

Which correctly describes the amount of dividend?

Select ONE answer:

1. £360
2. £560
3. £940
4. £1,140

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 – £40,000 / (1,600,000 / 0.25)
3. Not correct
4. Not correct

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