Tag: Capital Investment

A company’s plant and machinery ledger account for the year ended 30 September 2023 was as follows:

PLANT AND MACHINERY

DR  1 October 2022  Balance B/D  £381,200

DR  1 December 2022  Cash  £18,000

DR  Total  £399,200

CR  1 June 2023  Disposal Account  £36,000

CR  30 September 2023  Balance c/d  £363,200

CR  Total  £399,200

The company’s policy is to charge depreciation at 20% per year on the straight-line basis.

What is the depreciation charge in the income statement for the year ended 30 September 2023?

Select ONE answer:

1. £74,440
2. £84,040
3. £72,640
4. £76,840

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 –  December addition – 18,000 x 20% x 10/12 = £3,000,  June disposal – 36,000 x 20% x 8/12 = £4,800,  Balance – 345,200 x 20% = £69,040 = Total  £76,840

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An asset register showed a total carrying amount of £67,460.

A non-current asset costing £15,000 had been sold for £4,000, making a loss on disposal of £1,250.

No entries had been made in the asset register for this disposal.

The correct balance on the asset register is?

Select ONE answer:

1. £42,710
2. £51,210
3. £53,710
4. £62,210

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 –  Balance b/d £67,460  Less: Cost of non-current asset sold £15,000 Add: accumulated depreciation of asset sold (15,000 -(4,000 + 1,250)) = £62,210

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

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

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