Tag: Accounting

A business’s Income Statement for 2019 showed insurance as £8,000. On 1 January insurance owing was £1,600.

On 31 December 2019 insurance paid in advance was £1,200.

What was the actual amount paid for insurance through the bank account for the year ended 31 December 2019?

Select ONE answer:

1. £7,600
2. £8,000
3. £8,400
4. £10,800

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 – Reversal of 2018 accrual is £1,600 + Income Statement of £8,000 + end of year prepayment of £1,200

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A transport business owned by a sole proprietor purchases a new motor vehicle for £25,000 by cheque.

This is charged to the Motor Vehicles Running Expenses account.

What are the effects of this on the end-of-year Balance Sheet?

Select ONE answer:

1. fixed assets understated & current assets understated
2. fixed assets overstated & current assets overstated
3. fixed assets overstated & capital account overstated
4. fixed assets understated & capital account understated

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 – Original Double Entry made in error Dr Expenses Cr Bank, should have been Dr Fixed Assets (Non-current Assets) Cr Bank

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Which accounting objective is being applied when financial information affects business decisions?

Select ONE answer:

1. comparability
2. relevance
3. reliability
4. understandability

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. Correct
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 going concern principle?

Select ONE answer:

1. Accounting records are prepared assuming that the business will continue to operate in the foreseeable future.
2. Income and expense should be accounted for in the same way they were accounted for in previous periods.
3. Profit should not be anticipated and losses should be written off as soon as they are known.
4. Revenue and costs should be recognised as they are earned or incurred, not when the money is received or paid.

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 one of the costs below is normally classified as an indirect cost?

Select ONE answer:

1. carriage inwards
2. factory rent
3. production materials
4. production wages

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.