The Multiple Choice Questions Blog

A company wishes to raise finance without increasing gearing.

Which option will it use?

Select ONE answer:

1. a bonus issue of ordinary shares
2. an issue of debentures
3. can issue of preference shares
4. a rights issue of ordinary shares

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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Which is NOT a source of long-term finance?

Select ONE answer:

1. bank overdraft
2. debentures
3. ordinary shares
4. preference shares 

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. Not correct
3. Not correct
4. Not correct

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

Which of the following will increase gearing?

Select ONE answer:

1. conversion of loan stock into shares
2. transfer of a general reserve to the Profit and Loss Account
3. upward revaluation of freehold premises
4. writing off Goodwill

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.

The issued share capital of PQR Ltd. is:

1. 500,000 6 % preference shares of £1.00 each fully paid
2. 3,000,000 ordinary shares of £0.50 each fully paid

The company also has a long-term liability consisting of £200,000 of 7.5 % debentures, which were issued some years ago.

The company’s operating profit is £285,000.

What will be the dividend per ordinary share?

Select ONE answer:

1. £0.04
2. £0.0425
3. £0.045
4. £0.475

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 – (£500k * 0.06) + (£200k * 0.075) = £45k ===> £285 – £45k = £240k / 6,000k shares ===> £0.04
2. Not correct
3. Not correct
4. Not correct

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

Which business should have the highest fixed asset turnover?

Select ONE answer:

1. a car manufacturer
2. a hotel
3. an oil company
4. a retail department store

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.