Tag: A-Level

A company has decided to increase its gearing.

By which method can this be achieved?

Select ONE answer:

1. increasing retained profits
2. issuing additional debentures
3. issuing new ordinary shares
4. redeeming debentures

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
3. Not correct
4. Not correct

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

A company has ordinary share capital of £5 million in shares of £0.50 and has the following results (£000s):

• operating profit before depreciation – 12 000
• depreciation – 1 500
• interest payable – 2 000
• preference dividends paid – 500

What is the company’s earnings per share for the period?

Select ONE answer:

1. £0.80
2. £0.85
3. £1.00
4. £1.70

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 – £12,000 – (1,500 + 2,000 + 500) = 8,000 / (5,000,000 * 2) = 80p per share
2. Not correct
3. Not correct
4. Not correct

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

What is the correct treatment of non-purchased (inherent) goodwill in the accounts of a company?

Select ONE answer:

1. do not recognise its existence
2. include it in the Balance Sheet as an asset at valuation
3. include it in the Balance Sheet as an asset, to be amortised
4. write it off against reserves

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.

A company’s convertible loan stock will be converted into ordinary shares on 1 January 2007.

How should the company show it in its Balance Sheet at 31 December 2004?

Select ONE answer:

1. authorised capital
2. creditors : amounts falling due after more than one year
3. creditors : amounts falling due within one year
4. issued share capital

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
3. Not correct
4. Not correct

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