Category: Accounting

When a manufacturing business has purchased raw materials on credit then the impact on its assets and / or liabilities is:

Select ONE answer:

1. Effect upon Assets – Decrease bank / Effect upon Liabilities – Decrease creditors
2. Effect upon Assets – Increase cash / Effect upon Liabilities – No impact
3. Effect upon Assets – Increase cash / Effect upon Liabilities – Decrease loan
4. Effect upon Assets – Increase stock / Effect upon Liabilities – Increase creditors

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – As a result of the business buying raw materials it has increased its stock as it now has more raw materials than it previously had, and it now has more creditors than it previously had having brought the items on credit.

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When a business has been granted a bank loan and the money transferred into its bank account, the impact on its assets and / or liabilities is:

Select ONE answer:

1. Effect upon Assets – Decrease bank / Effect upon Liabilities – Decrease loan
2. Effect upon Assets – Decrease bank / Effect upon Liabilities – Increase debtors
3. Effect upon Assets – Increase bank / Effect upon Liabilities – Increase loan
4. None of the above

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 3 – As a result of the business being granted a bank loan and receiving money into its bank account, then it now has more money in its bank account than it previously enjoyed, and it owes more money to the bank than it previously had.

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When a business receives money from one of its debtors by cheque, the impact on its assets and / or liabilities is:

Select ONE answer:

1. Effect upon Assets – Decrease bank / Effect upon Liabilities – Decrease creditors
2. Effect upon Assets – Increase bank / Effect upon Liabilities – Decrease debtors
3. Effect upon Assets – Increase cash / Effect upon Liabilities – Decrease loan
4. Effect upon Assets – Increase stock / Effect upon Liabilities – Decrease capital

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – As a result of the business receiving money from one of its debtors by cheque, it has more money that in previously had in its bank account and is owed less than it previously was by its debtors.

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When a business pays one of its creditors by cheque, then the impact on their assets and / or liabilities is:

Select ONE answer:

1. Effect upon Assets – Decrease bank / Effect upon Liabilities – Decrease creditors
2. Effect upon Assets – Increase bank / Effect upon Liabilities – Increase creditors
3. Effect upon Assets – Decrease bank / Effect upon Liabilities – Increase creditors
4. None of the above

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 1 – The business has less money in its bank account because it has just paid some money to one of its creditors & it also owes less to its creditors because the money it paid was used to settle a debt which it previously owed.

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The following is a list of the assets and liabilities of a firm at a particular date:

• Premises owned by the firm – £20,000
• Money owned by the firm to its creditors – £3,000
• Stock owned by the firm – £8,500
• Loan received by the firm from a bank – £4,000
• Cash in the firm’s safe – £100

Which of the following amounts is the firm’s capital at that date is the correct one?

Select ONE answer:

1. £21,100
2. £21,600
3. £32,400
4. None of the above

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2:
Assets
– Premises owned by the firm £20,000
– Stock owned by the firm £8,500
– Cash in the firm’s safe £100
– Total Assets – £28,600

Liabilities
– Money owned by the firm to its creditors £3,000
– Loan received by the firm from a bank £4,000
– Total Liabilities – £7,000

Net Assets or Capital = Assets – Liabilities or £28,600 – £7,000 = £21,600

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