Tag: Business Owner

A gas accrual for £400 at the reporting date was treated as a prepayment in a sole trader’s financial statements.

As a result the profit was?

Select ONE answer:

1. Understated by £800
2. Understated by £400
3. Overstated by £800
4. Overstated by £400

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 == > The accrual should have increased expenses by £400 but instead expenses were decreased by £400 leading to an overstatement of profit of £800.
4. Not correct

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

A trial balance extracted from a sole trader’s records failed to agree, and a suspense account was opened for the difference.

Which of the following matters would require an entry in the suspense account to correct them?

Select ONE answer:

1. Discount allowed was mistakenly debited to discount received account.
2. Cash received from the sale of a non-current asset was correctly entered in the cash book and was credited to the disposal account.
3. The balance on the rent account was omitted from the trial balance.
4. Goods taken from inventory by the owner had been recorded by crediting Drawings account and debiting Purchases account.

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 == > Answer 1 is a debit to the wrong account and Answer 2 is correct and Answer 4 is double entry although the wrong way round.
4. Not correct

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