Tag: Limited Companies

Accounting Multiple Choice Question – 15 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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The most important benefit of running a business as a limited company is?

Select ONE answer:

  1. There are several owners
  2. The company has limited liability
  3. The shareholders receive dividends
  4. The shareholders benefit from limited liability

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 – Limited liability is a protection that benefits shareholders, not the company itself. It means that the shareholders are not personally responsible for the debts of the company. As a result, the most a shareholder can lose is the amount they spent on buying the shares.

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Accounting Multiple Choice Question – 1 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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At Alex Trading Ltd’s accounting year-end, the accountant Simon writes cheques to pay trade payables and records them in the books immediately.

The cheques are then deliberately retained by the accountant for two weeks.

What effect does this have on the year-end statement of financial position?

Select ONE answer:

  1. the accounts show a higher figure for cash
  2. the accounts show a lower figure for trade payables
  3. to improve Alex Trading Ltd’s cash flow
  4. to improve Alex Trading Ltd’s gearing

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
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 31 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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Alex Trading plc has 500,000 ordinary shares in issue and the following reserves.

  • share premium – £20,000
  • revaluation reserve – £50,000
  • general reserve – £80,000
  • retained earnings – £40,000

What is the maximum dividend per share?

Select ONE answer:

  1. £0.08
  2. £0.24
  3. £0.34
  4. £0.38

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 – £80k + £40k / 500k
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 30 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 issued share capital of Alex Trading plc is as follows:

  • 400,000 4 % preference shares of £1.00 each fully paid
  • 1,600,000 ordinary shares of £0.50 each fully paid
  • The company’s profit for the year after interest and tax is £128,000

An appropriate dividend cover for the ordinary share is 2.0 times.

What will be the dividend per ordinary share?

Select ONE answer:

  1. £0.035
  2. £0.040
  3. £0.070
  4. £0.080

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 = £128,000 – (£0.4M * 0.04) = £112k / 2 = £56k / 1,600 k shares = £0.035
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 28 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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Alex Trading limited company has the following share capital as at 31 December 2022.

  • ordinary shares of £1 each fully paid – £5M
  • 7.5% preference shares of £ each fully paid – £0.2M

The market price of Alex Trading limited ordinary shares as at 31 December is £1.45.

The company’s statement of changes in equity for the year ended 31 December shows:

  • profit after tax – £470k
  • preference dividend – £15k
  • ordinary dividend – £52k
  • retained profit for the year – £403k

What is the price earnings (P/E) ratio as at 31 December?

Select ONE answer:

  1. 15.4
  2. 15.9
  3. 16.6
  4. 18.0

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 – P/E ratio = price / EPS (profit divided by the outstanding ordinary shares) == > (£470k – £15k) / 5M shares == > 0.091 EPS == > £1.45 share price / £0.091 = PE Ratio 15.9
  3. Not correct
  4. Not correct

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