Tag: Accounting

A company’s year end is 30 June 2015.

The following events took place after the year-end:

• On 27 July 2015 a major fire took place at the company’s factory.
• On 8 August 2015 a major trade receivable at 30 June 2015 went into liquidation.

In accordance with SSAP 17, Accounting for post balance sheet events, how should the two events be treated in the financial statements?

Select ONE answer:

1. fire – accrued in accounts & trade receivable liquidation – accrued in accounts
2. fire – accrued in accounts & trade receivable liquidation – disclosed in notes
3. fire – disclosed in notes & trade receivable liquidation – accrued in accounts
4. fire – disclosed in notes & trade receivable liquidation – disclosed in notes

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.

A business is sold to a limited company.

The net assets acquired have a total book value of £90,000 and are valued at £100,000.

Goodwill is valued at £30,000.

The purchase price is settled by an issue of ordinary £1.00 shares, valued at £1.25 each.

How many shares are issued?

Select ONE answer:

1. 80,000
2. 96,000
3. 104,000
4. 130,000

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 3

1. Not correct
2. Not correct
3. Correct = £100,000 + £30,000 = £130,000 / £1.25 = = > 104,000 shares
4. Not correct

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

A company is considering redeeming its debentures at par at the start of its financial year.

What will be the effect on the company’s profit and net current assets in the year of redemption?

Select ONE answer:

1. Decrease in profit & decrease in net current assets
2. Decrease in profit & increase in net current assets
3. Increase in profit & decrease in net current assets
4. Increase in profit & Increase in net current assets

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.