Tag: Cambridge Assessment

Alex plc’s SOFP showed the following:

• net assets – £10M
• £1 ordinary shares – £5M
• Retained earnings – £5M

The company intends to purchase one million of its own shares at a price of £1.50 per share.

What is the value of the resulting balance on retained earnings AFTER the purchase?

Select ONE answer:

1. £3.5 million
2. £4.0 million
3. £4.5 million
4. £5.0 million

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 – 1M * £1.5 each = £1.5M == > Dr Shares £1M Dr Retained Earnings £0.5M Cr Cash £1.5M
4. Not correct

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During the year ended 31 March 2022, Alex plc sold plant and machinery for £8,000.

This plant had cost £60,000 and had a book value of £10,000.

An additional £140,000 was spent on new plant and machinery, which was depreciated at the end of the year by 20%.

In preparing the cash flow statement at the end of the year, how are the above transactions shown under the capital expenditure heading?

Select ONE answer:

1. Cash Inflow £NIL and Cash Outflow £132,000
2. Cash Inflow £8,000 and Cash Outflow £112,000
3. Cash Inflow £8,000 and Cash Outflow £140,000
4. Cash Inflow £10,000 and Cash Outflow £140,000

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

1. Correct – £140k – £8k
2. Not correct
3. Not correct
4. Not correct

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Which decreases the net cash inflow from operating activities?

Select ONE answer:

1. decrease in stock
2. increase in creditors
3. increase in debtors
4. repayment of borrowings

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.

The sales budget for Alex plc shows monthly sales of 300 units for July and 600 units for August.

Stock at the start of a month is budgeted to be 50 % of the month’s planned sales.

10 % of production in a month is faulty.

What is the actual production quantity for July to achieve the budgeted sales?

Select ONE answer:

1. 300 units
2. 450 units
3. 495 units
4. 500 units

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 == >
   • To determine the actual production quantity for July, we need to follow these steps:
     • Step 1: Calculate the planned sales for July
     • Planned sales for July = 300 units
     • Step 2: Calculate the opening stock for July
       • Opening stock for July = 50% of planned sales for July
       • Opening stock for July = 50% x 300 = 150 units
     • Step 3: Determine the total units required for July
       • Total units required for July = Planned sales for July + Opening stock for July
       • Total units required for July = 300 + 150 = 450 units
     • Step 4: Determine the production quantity required for July
       • To determine the production quantity required for July, we need to consider the faulty production. Since 10% of production is faulty, the actual production required to meet the budgeted sales for July is:
       • Actual production for July = Total units required for July / (1 – % of faulty production)
       • Actual production for July = 450 / (1 – 10%) = 500 units
       • Therefore, the actual production quantity for July to achieve the budgeted sales is 500 units.

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A LP vinyl record has a selling price of £10.

• cost per LP vinyl record:
• direct materials – £1.20
• direct labour – £0.80
• factory overhead (fixed) – £1.40
• royalty payment – £1.00
• administration overhead (fixed) – £0.60

What is the contribution per LP vinyl record?

Select ONE answer:

1. £5.00
2. £6.00
3. £7.00
4. £8.00

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 = £1.4 + £1 + £0.60 == > £3 therefore £10 – £3 = £7 contribution
4. Not correct

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