Accounting Multiple Choice Question – 13 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

In the Profit and Loss Account of a VAT-registered firm, the sales figure . . .

Select ONE answer:

  1. should be exclusive of any VAT charged on sales.
  2. should exclude cash sales.
  3. should exclude credit sales.
  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
  2. Incorrect – The sales figure shown in the profit and loss account should be the total of cash sales and credit sales exclusive of VAT.
  3. Incorrect – As for answer B above.
  4. Incorrect

 

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Accounting Multiple Choice Question – 12 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A VAT-registered car dealer allows a customer £6,500 (including VAT at the rate of 21%) for his used car as a trade-in against a new car, the retail price of which is £15,000 (including VAT at the rate of 21%).

As a result of this transaction, the car dealer is liable to pay VAT of ….

Select ONE answer:

  1. £1,475.21
  2. £1,785.00
  3. £3,150.00
  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

Net sale incl. VAT = £15,000 – £6,500 = £8,500
Net sale excl. VAT: £8,500/ 121 * 100 = £7,024.79
VAT on net sale = £7,024.79 * 21% = £1,475.21

  1. Correct
  2. Incorrect
  3. Incorrect
  4. Incorrect

 

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Accounting Multiple Choice Question – 11 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A VAT-registered sole trader has the following VAT-inclusive transactions for a three-month VAT period.

  • Sales £11,000
  • Purchases for re-sale £5,500
  • Other purchases £1,100

If the rate of VAT is 10%, all sales are liable to VAT and VAT can be reclaimed on all purchases, the sole trader’s VAT liability for the period is ….

Select ONE answer:

  1. £340
  2. £390
  3. £400
  4. £440

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

Sales incl. VAT = £11,000
VAT on sales = £11,000/ 110 * 10 = £1,000

Purchases incl. VAT = £5,500 (for re-sale) + £1,100 (other purchases) = £6,600
VAT on purchases = £6,600 / 110 * 10 = £600

VAT liability = VAT on sales – VAT on purchases = £1,000 – £600 = £400
Alternatively, this may be solved as follows: Value added (incl. VAT) = £11,000 – £6,600 = £4,400 VAT incl. in Value added (incl. VAT) = £4,400/ 110 * 10 = £400

  1. Incorrect
  2. Incorrect
  3. Correct
  4. Incorrect

 

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Accounting Multiple Choice Question – 10 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The amount of VAT included in goods costing £200, inclusive of VAT at the rate of 21%, is …

Select ONE answer:

  1. £31.50
  2. £34.71
  3. £42.00
  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

Let Cost = 100%
Cost + 21% = 121% = £200
VAT = 21% = £200/ 121 ” 21 = £34.71
Proof: £200 – £34.71 = £165.29 and £165.29 + 21% = £200

  1. Incorrect
  2. Correct
  3. Incorrect
  4. incorrect

 

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Accounting Multiple Choice Question – 9 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

If the total of sales, including VAT at the rate of 10%, amounts to £1,800, the total of sales excluding VAT amounts to:

Select ONE answer:

  1. £1,620
  2. £1,636
  3. £1,720
  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

Let Sales (excl. VAT) = 100%
Therefore, Sales (incl. VAT) = 110% = £1,800
Therefore, Sales excl. VAT (100%) = £1,800/ 110 * 100 = £1,636
Proof: £1,636 + 10% — £1,800

For exam purposes, you may find it quicker, and more foolproof, to do this question as follows:
Sales excluding VAT + 10% = £1,800

  1. Incorrect – £1,620 + 10% = £1,782
  2. Correct £1,636 + 10% = £1,800
  3. Incorrect £1,720 + 10% = £1,892
  4. incorrect

 

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Accounting Multiple Choice Question – 8 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

VAT paid by a taxable person on the purchase of goods and / or services, other than goods or services in respect of which VAT cannot be reclaimed, from another taxable person is known as . . .

Select ONE answer:

  1. output credits.
  2. input credits.
  3. irrecoverable VAT.
  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. Incorrect – There is no such thing as output credits – tax payable on supplies / sales is known as output tax.
  2. Correct
  3. Incorrect – Irrecoverable VAT is VAT paid which cannot be reclaimed. VAT paid by a taxable person on the purchase of goods and / or services, other than goods or services in respect of which VAT cannot be reclaimed, from another taxable person would be recoverable.
  4. Incorrect

 

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Accounting Multiple Choice Question – 7 September 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A firm which sells goods, all of which are exempt from VAT . . .

Select ONE answer:

  1. A cannot be charged VAT by any of its suppliers.
  2. cannot be charged VAT by those who supply services to it.
  3. is charged VAT by its suppliers, but may reclaim all of this VAT from HMRC.
  4. is charged VAT by its suppliers and cannot recover all of this VAT from HMRC.

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. Incorrect – The firm will be charged VAT on the purchase of goods, services and other items which are not exempt or zero-rated.
  2. Incorrect – The firm will be charged VAT on the purchase of services which are not exempt or zero-rated.
  3. Incorrect – Firms selling goods which are exempt from VAT cannot reclaim VAT paid by them on purchases.
  4. Correct

 

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