Tag: Gross Profit Margin

Accounting Multiple Choice Question – 1 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 is a retailer which is registered for VAT.

All sales, and all purchases of goods for resale, attract VAT at the rate of 20%.

For the year to 31 December 2023 Alex Trading plc paid £68,150 to suppliers in respect of goods for resale and showed revenue in the income statement of £89,300 net of VAT.

There was no change in the figures for inventory and trade payables in the statements of financial position as at 31 December 2022 and 2023.

What was Alex Trading plc’s gross profit for the year ended 31 December 2023?

Select ONE answer:

  1. £21,150
  2. £7,850
  3. £39,300
  4. £18,000

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 3

  1. Not correct
  2. Not correct
  3. Correct – £89,300 – (£60,000 / 1.2)
  4. Not correct

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

Accounting Multiple Choice Question – 15 October 2023

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

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The profit margins of Alex Trading Ltd over two years showed the following information at the 31 March year-end

  • Gross profit margin: Year 1 – 37.2% AND Year 2 – 39.1 %
  • Net profit margin: Year 1 – 12.2% AND Year 2 – 11.8 %

What combination of factors could have caused these changes?

Select ONE answer:

  1. a change in the combination of goods sold leading to lower selling costs
  2. a loss of trade discounts on purchases but an increase in cash discounts taken from suppliers
  3. an advertising campaign to promote higher sales leading to higher selling prices
  4. an increase in both production and selling costs

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

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

Accounting Multiple Choice Question – 15 August 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 plc has a gross profit to sales ratio of 40 %, and a net profit to sales ratio of 10 %.

If the sales volume increases by 8 % which of the following will generally be true?

Select ONE answer:

  1. gross profit to sales ratio – Increase AND net profit to sales ratio – Decrease
  2. gross profit to sales ratio – Increase AND net profit to sales ratio – Increase
  3. gross profit to sales ratio – Unchanged AND net profit to sales ratio – Decrease
  4. gross profit to sales ratio – Unchanged AND net profit to sales ratio – Increase

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

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

Accounting Multiple Choice Question – 22 June 2023

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

Photo by Nataliya Vaitkevich on Pexels.com

The accounts of Alex plc show that it has increased its sales revenue by 50 % in one year, whilst its cost of sales has increased by 60 % over the same period.

What is the explanation for the change in the gross profit margin?

Select ONE answer:

  1. an increase in marketing expenses
  2. an increase in sales price
  3. an increase in sales volume
  4. an increase in supplier price

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

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