Accounting Multiple Choice Question – 7 October 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A sole trader received an order from a credit customer on the last day of the financial year 31 May 2016. No entries were made in the accounting records for the sale of goods until the invoice was raised on 3 June 2016 when the goods were shipped.

Which accounting concept is being applied?

Select ONE answer:

  1. Consistency
  2. Going concern
  3. Prudence
  4. Realisation
  5. Separate Entity

Define and explain the accounting convention of ‘Materiality’?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – With this convention, the accounts recognise any transactions (and any profits arising from them) at the point of sale or transfer of legal ownership – rather than just when cash actually changes hands. For example, a company that makes a sale to a customer can recognise that sale when the transaction is legal – at the point of contract. The actual payment due from the customer may not arise until several months later, if the customer has been granted some credit terms. In this case an order has been received on the last day of the financial year 31 May 2016, but the actual good were shipped on 3 June 2016, and it is at this point that the sale is related and the appropriate entries for this credit customer raised of Dr Debtors Cr Sales.

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Accounting Multiple Choice Question – 6 October 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The following information was provided by a sole trader for the year ended 31 December 2015.

Table 09

 

What was the business’s profit or loss for 2015?

Select ONE answer:

  1. Loss £8,000
  2. Loss £14,000
  3. Loss £11,000
  4. Profit £8,000
  5. Profit £14,000

Show your workings to arrive at your answer, and explain and justify your reasons?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – The calculation is as follows: Capital at 31 December 2015 is £29,000 + Drawings of £11,000 making a total of £40,000. Subtract the Capital 1 January 2015 of £32,000 implies that a profit of £8,000 was made by the business in 2015.

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Accounting Multiple Choice Question – 5 October 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A sole trader has not maintained proper books of account. The following information is available relating to trade receivables for the year ended 30 June 2016.

 

Table 08

What is the value of credit sales for the year ended 30 June 2016?

Select ONE answer:

 

  1. £196,000
  2. £200,000
  3. £210,000
  4. £212,000
  5. £214,000

Show your workings to arrive at your answer, and explain and justify your reasons?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 3 – The calculation is as follows: Receipts from trade receivables £205,000 + Sales Returns £7,000 + Trade Receivables at 30 June 2016 of £12,000 – Trade Receivables at 1 July 2015 of £14,000

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Accounting Multiple Choice Question – 4 October 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

A bookkeeper recorded a payment for vehicle repairs in the vehicles account. Which of the following correctly describes the type of error and corrections to be made?

Select ONE MOST LIKELY answer:

Table 07.png

 

What is the definition of an accounting error of principle?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 5 – An accounting error is a non-fraudulent discrepancy in financial documentation. The error of commission is a transaction that is calculated incorrectly. An error of principle is a procedural error, meaning that the value recorded was the correct value but placed incorrectly. This is an error of principle, so the value needs to be moved from vehicles to which it was originally debited (the original credit was to cash or bank) to vehicle repairs.

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Accounting Multiple Choice Question – 3 October 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The owner of a restaurant purchased some equipment on credit for business use but returned the equipment to the supplier as it was damaged.  How should the return of the equipment be recorded in the books of the restaurant?

Select ONE MOST LIKELY answer:

Table 06

Why is this recorded as a general journal and not as a purchase returns journal?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

 

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – Whilst the equipment was purchased on credit, the original invoice would have been recorded as Dr Equipment (Fixed Assets) Cr Supplier (Balance Sheet) through a general ledger journal. Returning the equipment when it was damaged simply means reversing this journal.

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Accounting Multiple Choice Question – 2 September 2017

A business has forecast its telephone expense for the year to be £1800. This consists of a fixed element for line rental which is 1/3 of the total cost; the remaining 2/3 are variable based on the telephone calls made. The business has been informed that the cost of the line rental will be reduced by 1⁄4. However, the cost of calls will increase by 20%.

How much will the revised forecast telephone expense be, assuming the number of calls does not change?

Select ONE answer:

  1. £1,845
  2. £1,890
  3. £1,917
  4. £2,040
  5. £2,097

Explain and justify your answer?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – Fixed rental element is £1,800 / 3 = £600. A 25% reduction is a £150 saving. The cost of calls is therefore £1,200 which is they go up by 20% will be a £240 cost increase (£1,200 *1.2). The difference between the cost decrease in the fixed and cost increase in the call cost is -£150+£240 = £90 cost increase.

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Accounting Multiple Choice Question – 1 September 2017

Which is the correct formula for calculating contribution?

Select ONE answer:

  1. Fixed costs divided by variable costs
  2. Fixed costs less variable costs
  3. Sales revenue divided by variable costs
  4. Sales revenue minus variable costs
  5. Fixed costs plus semi-variable costs

Why is knowing the contribution or contribution margin important for any company to know?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 4 – Contribution margin is a product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit.

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