Tag: KS3

AMW is a partnership in which the profits are shared between, A M and W in the ratio 3:2:1.

The partners wish to incorporate by issuing shares in a new company to the partners and the new company is to take over the assets and liabilities of the partnership.

There will be no cash movements between the business and the partners, or between the partners.

No loan accounts will be created between the business and its shareholders or directors.

Which of the following statements must be true?

Select ONE answer:

1. Shares will be issued in the ratio 3:2:1 to A M and W
2. Shares will be issued to match the partners’ capital
3. Creditors of the business will be in a stronger position after incorporation
4. Dividends will be paid in the ratio 3:2:1 to A M and W

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  –>  Partners’ capital represents partners’ stakes, or ownership, of a business. So do shares. in the absence of cash changing hands, the shares must therefore match the partners’ capital amounts, which are unlikely to be in the profit-sharing ratio 3:2:1
3. Not correct
4. Not correct

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

Alex is a sole trader who currently employs one person.

His business, Stafford Research, performs analysis for marketing and market research companies.

The workload is increasing rapidly, and Alex has realised that he now needs to employ three additional people.

This will mean that new office premises have to be found and new furniture and equipment purchased.

The business operates in a highly competitive sector within the Staffordshire business community.

Identify which TWO of the following factors are disadvantages of his current business structure of being a sole trader in this context:

A A floating charge cannot be uses to secure borrowing
B The Business’s liability is unlimited
C Alex’s liability is unlimited
D Financial statements do not have to be filed at Companies House
E The stringent legal rules that apply to the business’s constitution and the way it operates.

Select ONE answer:

1. AB
2. AC
3. AD
4. AE

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  –>  A floating charge (which gives lenders security for their loan) cannot be created over the business of a sole trader (A), but it can be over the assets of a limited company. This could hinder his ability to raise finance. Currently, Angela has unlimited liability (C) and with the increasing financial commitments of the business it might be better for him personally to seek limited liability, though the business will still have unlimited liability for its own debts (B) – as a sole trader, the business’s liability is not distinct from his own.
3. Not correct
4. Not correct

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

Lucy is a human resources manager with Alex Ltd.

She is currently working on a project designed to increase the spans of control of the managers employed by the company’s largest subsidiary.

Lucy has been asked to identify any factors about the subsidiary that might suggest that increases in spans of control are possible.

Which of the following factors identified by Lucy suggests that increased spans of control are feasible?

Select ONE answer:

1. Subordinates carry out very similar tasks
2. Subordinates are geographically dispersed
3. Frequent, time-consuming problems arise
4. Managers tend to be engaged in large amounts of non-supervisory work

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 – If employees are all carrying out the same or similar tasks, a supervisor will be more able to look after many subordinates (a wider span of control) as they can all be handled in similar ways and will face similar problems.
2. Not correct
3. Not correct
4. Not correct

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