The Multiple Choice Questions Blog

Alex’s business has extracted the following information from its books of account at 31 December 2021, which is its first year of trading.

• carriage inwards – £12k
• carriage outwards – £15k
• closing inventory – £86k
• purchases – £286k
• returns inwards – £5k
• returns outwards – £2k
• revenue – £524k

What is the gross profit for the year ended 31 December 2021?

Select ONE answer:

1. £301,000
2. £309,000
3. £320,000
4. £328,000

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 ==> (£524k – £5k) – (£0 + £286k – £2k – £86k + £12k)
3. Not correct
4. Not correct

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A trader has suffered inventory losses due to theft during the year.

What is necessary to calculate the value of the inventory stolen?

1 amounts banked for sales and spent on purchases
2 amounts spent for business expenses
3 inventory at the beginning and end of the year
4 percentage of mark-up on purchase price

Select ONE answer:

1. 1, 2 and 3
2. 1, 2 and 4
3. 1, 3 and 4
4. 2, 3 and 4

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.

Lucy provided the following financial information for the year ended 31 December 2021

• purchases – £95,000
• returns inwards – £3,300
• returns outwards – £2,100
• inventory withdrawn for personal use – £4,000
• Inventory on 31 December 2021 was valued at £1,000 more than on 1 January 2021.

What was the cost of sales?

Select ONE answer:

1. £85,700
2. £87,900
3. £89,000
4. £97,100

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 ==> £0 + £95,000 – £1,000 – £2,100 – £4,000
3. Not correct
4. Not correct

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

Why does a trader account for accrued income?

Select ONE answer:

1. so that current liabilities are not overstated
2. so that current liabilities are not understated
3. so that profit is not overstated
4. so that profit is not understated

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 had the following assets and liabilities at 31 December 2021.

• trade receivables – £29,000
• trade payables – £12,600
• short-term bank deposit – £8,800
• bank loan repayable on 1 May 2022 – £20,000
• bank loan interest unpaid – £500
• machinery – £19,400

What was the working capital?

Select ONE answer:

1. £4,700
2. £6,200
3. £15,100
4. £25,700

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 1

1. Correct ==> £29,000 +£8,800 – £12,600 – £20,000 – £500
2. Not correct
3. Not correct
4. Not correct

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