Tag: Accounting

The cost incurred by a firm of bringing goods to a merchantable condition should be included in…?

Select ONE answer:

1. its trading account.
2. its profit and loss account.
3. its balance sheet.
4. None of the above.

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 – The cost of bringing goods to a merchantable condition is a cost of sale, which is matched (offset) against the sales figure in the trading account.

 

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The following information concerns a retailing firm.

• Sales during July – £8,200
• Purchases during July – £6,400
• Stock at 1 July – £1,300
• Stock at 31 July – £900
• Carriage inwards on July purchases – £200

The firm’s cost of sales for July is…?

Select ONE answer:

1. £6,200
2. £6,800
3. £7,000
4. None of the above.

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

• Stock at 1 July                                            £1,300
• Purchases during July                             + £6,400
• Carriage inwards on July purchases    + £200
• Stock at 31 July                                          – £900
• Cost of sales for July                                 = £7,000

 

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Carriage inwards is included in the cost of sales calculation because …?

Select ONE answer:

1. it is a cost associated with the purchase of goods.
2. it should not be shown in the balance sheet.
3. carriage outwards is shown as an expense in the profit and loss account.
4. None of the above.

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. Although it is correct that carriage inwards should not be shown in the balance sheet, this is not a reason why it should be included in the cost of sales calculation.
3. Although it is correct to include carriage outwards as an expense in the profit and loss account, this is not a reason why carriage inwards should be included in the cost of sales calculation.

 

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Which of the following pairs of events would increase the capital of a firm?

Select ONE answer:

1. An increase in the firm’s fixed assets and a corresponding decrease in its current assets.
2. An increase in the firm’s fixed assets and a corresponding increase in its liabilities.
3. A decrease in the firm’s current assets and no change in its liabilities.
4. An increase in the firm’s assets and a smaller increase in its liabilities.

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

• Capital = Assets – Liabilities

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On 1 January, a sole trader had capital of £25,000. During the year, he withdrew £16,000 for his own use and, at 31 December, he had capital of £26,000. If he did not introduce any new capital during the year, his net profit for the year was?

Select ONE answer:

1. £17,000
2. £23,000
3. £29,000
4. £32,000

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 1

• As no capital has been introduced during the year, Capital at 31 December = Capital at 1 January + Net profit for the year – Drawings during the year. Therefore, Net profit for the year = Capital at 31 December – Capital at 1 January + Drawings during the year i.e. £26,000 – £25,000 + £16,000 = £17,000

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