Tag: Accounting

A business has chosen to use the straight line method of providing for depreciation of equipment.

Why should it continue to use this method in subsequent years?

Select ONE answer:

1. Accounting principles never allow accounting methods to be changed.
2. Other methods of depreciation are unsuitable for depreciating equipment.
3. To ensure that profits are stated on a consistent basis over time.
4. To ensure that the Balance Sheet always shows the market value for equipment.

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 values obsolete stock at net realisable value. 

Which accounting principle has been applied?

Select ONE answer:

1. consistency
2. going concern
3. materiality
4. prudence

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.

Freehold land and buildings are shown in the accounts at a cost price of £200,000 and accumulated depreciation of £40,000.

The property is to be revalued in the books at £340,000. What is the double entry to record this transaction? 

Select ONE answer:

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

• Not correct
• Not correct
• Not correct
• Correct

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

The table shows information relating to the fixed assets of a business. 

What is the figure for fixed asset additions?

Select ONE answer:

1. £2,000
2. £6,000
3. £10,000
4. £16,000

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 ==> £25,000 + £9,000 + £4,000 = £38,000 – £28,000 = £10,000
4. Not correct

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

On 1 October 2018, a company purchased machinery for £26,000 whose year-end is 31 December.

It was decided to depreciate the asset using the reducing balance method at a rate of 20% per annum in the year of acquisition and none in the year of disposal.

On 30 September 2020 the asset was sold for £12,000. 

What is the profit or loss on disposal?

Select ONE answer:

1. £3,600 loss
2. £3,600 profit
3. £4,640 loss
4. £4,640 profit

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 = £26,000 * 0.8 * 0.8 = £16,640 – £12,000 = £4,640 Loss
4. Not correct

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