The Multiple Choice Questions Blog

A company has the following gross profit and net profit ratios for two years.

• gross profit % = year 1 – 26% & year 2 – 29%
• net profit % = year 1 – 13% & year 2 – 10%

The company’s turnover has remained unchanged for both years.

What is a correct interpretation of these ratios?

Select ONE answer:

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

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The table shows an extract from a company’s final accounts:

• purchases – £28,000
• cost of sales – £24,000
• creditors – £4,200
• accruals – £1,100

What is the trade payables days collection period for the year?

Select ONE answer:

1. 55 days
2. 64 days
3. 69 days
4. 81 days

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 – (£4,200 / £28,000) * 365 days
2. Not correct
3. Not correct
4. Not correct

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A company has issued 80 000 shares of £0.50 each.

These are quoted on the stock exchange at £1.60 each.

The company makes a rights issue on a 1 for 4 basis at a price of £1.20 each.

What is the balance on the Share Capital account after the rights issue?

Select ONE answer:

1. £50 000
2. £100 000
3. £120 000
4. £160 000

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 – 1 in 4 rights issues = 80,000 shares / 4 = 20,000 * 50p = £10,000 + £40,000 = = > £50,000
2. Not correct
3. Not correct
4. Not correct

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

A newly formed company issues

• 1,000,000 ordinary shares of £1 at £2.50 each
• £300,000 5% debentures

Operating profit for the year was £465,000.

The directors recommend an 8% ordinary dividend for the year.

What is the retained profit for the year?

Select ONE answer:

1. £250,000
2. £370,000
3. £385,000
4. £400,000

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 = £465,000 – (1,000,000 £1 shares * 8%) – (£300,000 5% debentures) = = > £465k – £80k – £15k
3. Not correct
4. Not correct

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

At 1 January 2015 the capital structure of Lucy Limited was as follows.

• issued share capital 100 000 ordinary shares of £1 each – £100,000
• share premium account – £30,000

On 1 April 2015 the company made an issue of 20,000 shares for £36,000.

On 1 June 2015 a bonus issue of one share for every six in issue was made.

The share premium account was used for the purpose.

What is the balance on the share premium account at 31 December 2015?

Select ONE answer:

1. £26,000
2. £34,000
3. £46,000
4. £56,000

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 – 1 April 2015 Dr Bank £26,000 Cr SC £20,000 Cr SP £16,000, then 1 June 2015 Dr SP £20,000 (120,000 shares / 6) Cr SC £20,000 = = > SP Balance £30k + £16k – £20k = ££26k
2. Not correct
3. Not correct
4. Not correct

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