Tag: Depreciation

Accounting Multiple Choice Question – 3 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 purchases a machine for £15,000 on 1 January 2023.

After incurring transportation costs of £1,300 and spending £2,500 on installing the machine, it breaks down and costs £600 to repair.

Depreciation is charged at 10% per annum.

At what carrying amount will the machine be shown in Alex Trading plc’s statement of financial position at 31 December 2023?

Select ONE answer:

  1. £13,500
  2. £14,670
  3. £16,920
  4. £18,800

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 – Cost (15,000 + 1,300 + 2,500) = £18,800 == > Depreciation (10% x £18,800) == > Carrying amount £16,920
  4. Not 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 – 19 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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Lucy Walton runs a small on-line business, selling silver jewellery that she makes in her house.

She uses a variety of equipment to make the silver jewellery, which she depreciates each year.

She keeps the method of depreciation the same from one financial year to the next.

Select ONE answer:

  1. Materiality
  2. Consistency
  3. Business entity
  4. Prudence

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 – The concept of ‘consistency’ requires that accounting methods are kept the same from one accounting period to the next. This ensures that financial statements from one year can be compared to financial statements for the following year.
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 25 November 2023

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 Ltd policy is to depreciate its equipment by 30% annually using the reducing balance method.

A piece of equipment which was two years old was sold for £6,000 and the profit on sale was £1,590.

What was the cost price of the equipment?

Select ONE answer:

  1. £7,590
  2. £9,000
  3. £9,600
  4. £11,025

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 – £9,000 * 0.3 = £2,700 = £6,300 * 0.3 = £1,890 == > £4,590 == > Dr £1,590 Cr £6,000 Cr £4,590 = Cost £9,000
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 16 November 2023

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 buys a computer for £2,200 on 1 January 2021.

The computer will be used for four years, after which time it will be sold for £280.

The business uses the straight-line method of depreciation. 

What is the depreciation charge for the year ended 31 December 2022?

Select ONE answer:

  1. £480
  2. £550
  3. £960
  4. £1,100

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 – (£2,200 – £280) / 4 = £480
  2. Not correct
  3. Not correct
  4. Not correct

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