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Alex plc has calculated the following accounting ratios for the year ended 30 June:

• Gross Profit Margin% – 30% for 2005 and 33% for 2006
• Profit in Relation to Revenue% – 15% for 2005 and 14% for 2006

What could explain the changes in the percentages?

Select ONE answer:

1. A fall in interest payments was equal to an increase in administration costs.
2. An increase in raw material costs was covered by an increase in selling price.
3. An increase in the advertising budget has allowed the firm to increase the selling price.
4. An increase in the advertising budget has led to a rise in sales volume.

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.

Alex ltd’s has cash sales of £69,030 and credit sales of £1,406,070 in a year (360 days).

The Trade Receivable ratio is 40 days.

What is the closing accounts receivable’s balance in £s?

Select ONE answer:

1. 35,152
2. 36,878
3. 156,230
4. 163,900

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 – 156,230 / 1,406,070 * 360 = 40 days
4. Not correct

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

A company makes a bonus issue of shares.

What is the effect on the net assets and the reserves in the balance sheet?

Select ONE answer:

1. net assets increase and reserves decrease
2. net assets increase and reserves unchanged
3. net assets unchanged and reserves decrease
4. net assets unchanged and reserves 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 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.

A company transfers manufactured items from factory to warehouse at cost plus 10 %.

This year the transfer value was £93,500 and at the end of the year the closing inventory was 20 % of the year’s production.

How will the inventory of finished goods be shown in the Income Statement and Statement Of Financial Position?

Select ONE answer:

1. Trading account and Income Statement £17,000 & Statement Of Financial Position £17,000
2. Trading account and Income Statement £18,700 & Statement Of Financial Position £16,830
3. Trading account and Income Statement £18,700 & Statement Of Financial Position £17,000
4. Trading account and Income Statement £17,000 & Statement Of Financial Position £18,700

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 = £93,500 / 110 = 850 *100 * 0.2 = £17,000 SOFP * 1.1 = £18.700 IS
4. Not correct

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

At the beginning of the financial year Alex Ltd’s inventory was valued at £15,000.

During the year, sales of £21,000 and purchases of £18,000 were made.

Unfortunately, all the inventory was stolen on the last day of the financial year.

Goods are marked up by 50 % to calculate selling price.

What is the cost of Alex Ltd’s stolen inventory?

Select ONE answer:

1. £7,500
2. £11,000
3. £19,000
4. £22,500

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 3

1. Not correct
2. Not correct
3. Correct = £15k + £18K – £14k (£21k / 1.5)
4. Not correct

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