Accounting Multiple Choice Question – 26 December 2019

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

A firm records all transactions relating to the expense of both postage and stationery in a single ledger account.

At the beginning of a financial year. there is both a debit balance brought down of £50 and a credit balance brought down of £100 on the account.

Which of the following alternatives could explain this situation?

Select ONE answer:

  1. The firm has a stock of stationery worth £50.
  2. Postage is prepaid to the extent of £100.
  3. The firm has a stock of stationery worth £100.
  4. Postage payable amounts to £50.

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 – In any ledger account, a debit balance brought down represents either an asset or an expense and a credit balance brought down represents either a liability or income. Since the balance on an expense account is either an accrual or a prepayment, the £50 balance has to be a prepayment (asset) and the £100 balance has to be an accrual (liability). This rules out options B (£100 asset), C (£100 asset) and D (£50 liability). When the stationery expense is prepaid, there is a stock of stationery remaining at the end of the year.
  2. Not correct
  3. Not correct
  4. Not correct

 

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Accounting Multiple Choice Question – 25 December 2019

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

A firm records all transactions relating to the expense for both rent and rates in a single ledger account.

At the start of the year there was an accrual in respect of rent of £2,500 and a prepayment in respect of rates of £3,000.

At the end of the year there was rent due of £4,500 and rates prepaid of £3,500. The total expense for both rent and rates for the year was £36,000.

The total amount paid during the year. in respect of both rent and rates, was:

Select ONE answer:

  1. £34,500
  2. £35,500
  3. £36,500
  4. £37,500

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
    Rent & Rates Expense
    Dr Balance b/d (Rates prepaid) £3,000
    Dr Bank £34,500
    Dr Balance c/d (Rent due) £4,500
    Cr Balance b/d (Rent accrued) £2,500
    Cr Profit & Loss (Expense for the year) £36,000
    Cr Balance c/d (Rates prepaid) £3,500
    Totals £42,000
  2. Not correct
  3. Not correct
  4. Not correct

 

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Accounting Multiple Choice Question – 24 December 2019

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

A firm records all transactions relating to the expense for both rent and rates in a single ledger account.

On 1 January there was an accrual of £900 in respect of rent and a prepayment of £600 in respect of rates.

On 31 December there was a rent accrual of £1,100 and rates prepaid of £700.

During the year, £4,800 was paid in respect of rent and £3,100 in respect of rates.

The total expense for both rent and rates for the year is:

Select ONE answer:

  1. £7,800
  2. £8,000
  3. £8,100
  4. £8,200

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 2

  1. Not correct
  2. Correct
    Rent & Rates Expense
    Dr Balance b/d (Rates prepaid) £600
    Dr Bank (Rent paid) £4,800
    Dr Bank (Rates paid) £3,100
    Dr Balance c/d (Rent accrued) £1,100
    Cr Balance b/d (Rent accrued) £900
    Cr Profit and Loss £8,000
    Cr Balance c/d (Rates prepaid) £700
    Totals £9,600
  3. Not correct
  4. Not correct

 

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Accounting Multiple Choice Question – 23 December 2019

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

If rent receivable has been prepaid to the extent of £75 at the end of a firm’s first financial year, the amount of rental income shown in its profit and loss account, relative to the amount of rent it received during the year, will be . . .

Select ONE answer:

  1. the same.
  2. £75 more.
  3. £75 less.
  4. None of the above.

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
    For example, if the rent receivable applicable to the year is £100 and £175 has been received, then, in accordance with the accruals concept, the amount to be shown in the profit and loss account is £100, £75 less than the amount received. This would be shown as follows:
    Rent Receivable Income (B/S)
    Dr Profit and Loss £100
    Dr Balance c/d £75
    Cr Bank £175
    Totals £175
  4. Not correct

 

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Accounting Multiple Choice Question – 22 December 2019

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

During its first financial year, ended on 31 December 1995. a firm paid £3,000 in respect of insurance premiums.

All premiums were paid in advance and, except for the following related to policies with renewal dates similar to the firm’s accounting year-end date.

Policy X                               Policy Y

Annual premium                        £240                                     £1,200
Renewal date                               30 June 1996                      30 April 1996
Premium paid                             1 July 1995                          1 May 1995

The firm’s insurance expense for 1995 was:

Select ONE answer:

  1. £2,280
  2. £2,480
  3. £2,580
  4. £3,000

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 2

  1. Not correct
  2. Correct
    Year-end Prepayment
    Policy X = January to June 1996 = 6 months @ £240 pa. = £120
    Policy Y = January to April 1996 = 4 months @ £1,200 pa. = £400
    Total = £520
    Insurance Expense:
    Dr Bank £3,000
    Cr Profit and Loss £2,480
    Cr Balance c/d (above) £520
    Cr Totals £3000
  3. Not correct
  4. Not correct

 

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Accounting Multiple Choice Question – 21 December 2019

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

A sole trader rents the premises from which he operates and does not pay or receive any other rent.

On 1 January 1995 the rent account in his ledger showed accrued rent payable of £2,500.

During 1995 the trader paid rent totalling £12,750 including all bills in respect of 1995 and one bill for £3,750 in respect of the three months ended on 31 January 1996.

The charge for rent, in the profit and loss account for 1995 was:

Select ONE answer:

  1. £9,000
  2. £11,500
  3. £12,750
  4. £14,000

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 1

  1. Correct
    Dr Bank £12,750
    Cr Balance b/d £2,500
    Cr Profit and Loss £9,009
    Cr Balance c/d (£3,750 / 3 prepaid) £1,250
    Total £12,750
  2. Not correct
  3. Not correct
  4. Not correct

 

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Accounting Multiple Choice Question – 20 December 2019

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

A firm which commenced business on 1 January 1994 rents the premises from which it operates. During 1995 the firm paid rent of £1,320.

This was 10% more than the total rent expense for 1994 – only half of which was paid by 31 December 1994.

If there is no accrual or prepayment in respect of rent at 31 December 1995, the rent expense for the year then ended is:

Select ONE answer:

  1. £600
  2. £720
  3. £1,200
  4. £1,320

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
    £1,320 = 1994 expense + 10%.
    Therefore, 1994 expense = (£1,320/ 110 * 100) = £1,200.
    Only half of the 1994 expense (£600) was paid in 1994.
    Therefore, the other half (£600) was due at 1 January 1995.
    As there is no accrual or prepayment at 31 December 1995, the £1,320 paid has to be made up of the £600 in respect of 1994 and the balance – £720 – in respect of the full expense for 1995.
  3. Not correct
  4. Not correct

 

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