The Multiple Choice Questions Blog

The Balance Sheet of a sole trader shows net assets of £500,000.

A limited company buys this business for £800,000 by issuing new share capital.

The fair value of the net assets acquired is £700,000.

How much do the net assets of the purchasing company increase?

Select ONE answer:

1. £300,000
2. £500,000
3. £700,000
4. £800,000

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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A Balance Sheet extract shows: 

All the loan stock is to be converted to ordinary shares in the proportion of £1 loan stock to 1 new ordinary share. 

After the conversion, what will be the net asset value per share?

Select ONE answer:

1. £0.80
2. £0.90
3. £1.00
4. £1.30

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 ==> (£1,000 + £400) / £1,400 / £1,800 – £540 + (140 * 2)
3. Not correct
4. Not correct

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What right does convertible loan stock give the investor?

Select ONE answer:

1. Current asset investments are included under ‘management of liquid reso acquire ordinary shares in the company at a given price in addition to the loan stock
2. to obtain higher rates of interest on future convertible loan stock
3. to convert the loan into ordinary shares issued at a discount
4. to convert the loan into ordinary shares at a given future date and at a specified price

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.

Lucy Limited’s balance sheet at 31 December is as follows:

The share premium account arose on the issue of the ordinary shares.

The preference shares are now redeemed at a premium of 20%. 

What will be the balance on the Capital Redemption Reserve after this transaction?

Select ONE answer:

1. NIL
2. £1,900
3. £2,000
4. £2,400

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.

The following information has been extracted from the final accounts of Company A for the last two years.

What will be the amount appearing on the cash flow statement for year 2 with respect to taxation paid? 

Select ONE answer:

1. £48,000
2. £50,000
3. £52,000
4. £55,000

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 – £50,000 + £55,000 – £57,000 ==> £48,000
2. Not correct
3. Not correct
4. Not correct

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