Tag: Financial Accounting

Which of the following general journal entries may be accepted as being correct according to their narratives?

Select ONE answer:

1. Dr Wages expense account – £87,000 Cr NCA Buildings account – £87,000 (Labour and materials used in construction of a Building extension in a factory)
2. Directors’ personal accounts – £70,000 Cr Directors’ remuneration – £70,000 (Directors’ bonuses transferred to their “current” accounts)
3. Dr Suspense account £10,000 Cr Sales account £10,000 (Correction of £10,000 undercast of the sales account)
4. Dr Discount received account £2,000 Cr Suspense account £2,000 (Correction of misposting of discount received from cash book)

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) is wrong because labour and construction costs of building a factory would be debited to non-current assets cost. (2) is wrong because directors’ remuneration would be debited to the expense account, and (4) is wrong because a mis posting of discount received would be a debit to suspense and a credit to the discount received account.
4. Not correct

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

At the 30 June 2022, the capital structure of Alex plc was as follows:At the 1 April 2023, the capital structure of Alex plc was as follows:

• 300,000 equity ordinary shares of 25p each  £75,000
• Share premium account  £200,000

In the year ended 31 March 2024 the following events took place:

• 1 October 2023 – the company made a 1 for 5 rights issue at £1.20 per share and this was taken up in full.
• 1 January 2024 – the company made a 1 for 3 bonus issue, using the share premium account for the purpose of the issue.

What was the company’s share capital as at the 31 March 2024?

Select ONE answer:

1. £90k
2. £120k
3. £360k
4. £480k

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. Notcorrect
2. Correct ==> Share Capital is £75k + (Rights issue 60,000 * £0.25p = £15k) + (Bonus issue 360,000 / 3 * £0.25p = £30k) ==> £120k
3. Not correct
4. Not correct

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

At the 30 June 2022, the capital structure of Alex plc was as follows:

• 500,000 equity ordinary shares of 25p each  £125,000
• Share premium account  £100,000

In the year ended 30 June 2023 the company made a 1 for 2 rights issue at £1 per share and this was taken up in full.

Later in the year the company made a 1 for 5 bonus issue, using the share premium account for the purpose.

What was the company’s capital structure as at 30 June 2023?

Select ONE answer:

1. Equity Share Capital £450k and Share Premium Account £25k
2. Equity Share Capital £225k and Share Premium Account £250k
3. Equity Share Capital £225k and Share Premium Account £325k
4. Equity Share Capital £212.5k and Share Premium Account £262.5k

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. Notcorrect
2. Correct  –> Share Capital is £125k + (Rights issue 250,000 * £0.25p = £62.5k) + (Bonus issue 150,000 * £0.25p = £37.5k) then Share Premium is £100k + Rights issue 250,000 * £0.75p = £187.5k) – (Bonus issue 150,000 * £0.25p = £37.5k)
3. Not correct
4. Not correct

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