Tag: Capital Exenditure

Accounting Multiple Choice Question – 11 March 2024

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

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Alex Trading plc bought a machine for £5,000 on 1 January 2021, when it had an expected useful life of four years and an expected residual value of £1,000.

Straight-line depreciation is to be applied on a monthly basis.

On 31 December 2023, the machine was sold for £1,600.

The amount to be entered in the 2023 income statement for profit or loss on disposal is?

Select ONE answer:

  1. profit of £600
  2. loss of £600
  3. profit of £350
  4. loss of £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 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct – (£5,000 – £1,000)/4 = £1,000 depreciation per annum for 3 years.    Dr Cost £5000 vs CR Depreciation £3,000 + Proceeds £1,6000 + Loss £400

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Accounting Multiple Choice Question – 8 March 2024

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

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What is the reasoning behind charging depreciation in historical cost accounting?

Select ONE answer:

  1. To ensure funds are available for the eventual replacement of the asset.
  2. To comply with the consistency concept.
  3. To ensure the asset is included in the statement of financial position at the lower of cost and net realisable value.
  4. To match the cost of the non-current asset with the revenue that the asset generates.

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

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Accounting Multiple Choice Question – 2 March 2024

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

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Alex Trading plc purchased a machine for which the supplier’s list price is £28,000.

Alex Trading paid £23,000 in cash, and traded in an old machine, which has a carrying amount of £8,000.

It is the company’s policy to depreciate machines at the rate of 10% per annum on cost.

What is the carrying amount of the machine after one year?

Select ONE answer:

  1. £18,000
  2. £20,700
  3. £22,200
  4. £25,200

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 – The cost of the machine is £28,000. Alex Trading plc paid £23,000 in cash and agreed a trade-in value of £5,000 for the old machine. (The old asset’s carrying amount is irrelevant.) After one year, the carrying amount of the new machine is 90% of £28,000 = £25,200.

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Accounting Multiple Choice Question – 3 January 2024

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

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Which of the following best explains what is meant by ‘capital expenditure?

Capital expenditure is expenditure…?

Select ONE answer:

  1. On non-current assets, including repairs and maintenance
  2. On expensive items over £10,000
  3. On the acquisition of non-current assets, or improvement in their earning capacity
  4. On items relating to owners’ capital

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- Capital expenditure relates to the acquisition of, or improvement of, the earning capacity of non-current assets.
  4. Not correct

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Accounting Multiple Choice Question – 26 December 2023

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

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Which of the following items should be treated as capital expenditure in the financial statements of a sole trader?

Select ONE answer:

  1. £500 taken by the proprietor to buy himself a hi-fi music system for his family home
  2. £400 spent on purchasing a new PC to replace his secretary’s old one
  3. £2,000 on purchasing a machine for resale to his customers
  4. £150 paid to a painter for redecorating his office

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

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