Tag: Management Accounting

Accounting Multiple Choice Question – 3 September 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 plc is a retailer that owns no properties and only has fixtures and fittings as non-current assets, all of which were purchased within the last six months.

The company has been experiencing trading problems for some time.

The directors have concluded that the company is no longer a going concern and have changed the basis of preparing the financial statements to a break-up (gone concern) basis.

Which ONE of the following will be the immediate effect of changing the accounting concept of Going Concern now to the break-up basis?

Select ONE answer:

  1. All fixtures and fittings are transferred from non-current to current liabilities
  2. The company ceases to trade
  3. Fixtures and fittings are valued at their resale value
  4. A liquidator is appointed

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 – All assets are valued at their resale or break-up value, which is the expected selling price in a forced sale position. This is likely to be a substantially lower value than carrying amount for assets such as fixtures and fittings acquired recently. An exception to this may arise in the case of properties, of which Alex plc has no such asset class.
  4. Not correct

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Accounting Multiple Choice Question – 2 September 2024

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

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In relation to purchases Alex plc recorded £9,801 in its purchases journal and £107 in its cash book for the year ended 31 January 2024.

The company’s purchases accruals need to be £75 less than at the previous year end, and prepayments need to be £60 less as well.

What is the figure for purchases that should be included in the cost of sales section in Alex plc’s income statement for the year
ended 31 January 2024?

Select ONE answer:

  1. £9,893
  2. £9,923
  3. £9,786
  4. £9,908

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 Purchases Journal £9,801 + Cash Book Purchases £107 + Decrease in Prepayments £60 = Total £9,968 – Cr Decrease in Accruals £75 == > I/S COS Purchases £9,893
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 1 September 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 plc is a large company with a share capital of 3 million 20p nominal value equity shares.

To raise funds to grow the business it has made a 1 for 4 rights issue of its equity shares at £3.60 per share.

The rights issue was fully taken up but only £1.9 million of the funds raised had been paid up at the year end, 30 September 2023.

The only entry has been t0 debit cash at bank with £1.9 million.

On its extended trial balance Alex plc should do what?

Select ONE answer:

  1. Debit Other Receivables £2,700,000 /. Credit Share capital £150,000, Credit Share premium £2,550,000
  2. Debit Suspense £1,900,000, Debit Other receivables £800,000 / Credit Share capital £750,000, Credit Share premium £1,950,000
  3. Debit Other receivables £800,000 / Credit Share capital £150,000, Credit Share premium £650,000
  4. Debit Suspense £1,900,000, Debit Other receivables £800,000 / Credit Share capital £150,000, Credit Share premium £2,550,000

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 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct == > The initial entry was one sided, so a suspense account with a credit balance of £1.9M must have arisen in the TB. To eliminate the suspense account a debit entry of £1.9M is required. The rights issue is 1 for 4, so (3,000,000/4) = 750,000 × 20p shares are issued, giving a credit of £150,000 in the share capital account. The share premium is therefore (£3.60 – 0.20) = £3.40 per share, which gives a credit to the share premium account of 750,000 × £3.40 = £2,550,000. The remainder of the journal is to record the amount unpaid on the shares ((750,000 ×£3.60) – £1,900,000) = £800,000 as an “other” receivable.

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Accounting Multiple Choice Question – 31 August 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 plc is preparing its financial statements for the year ended 31 December 2023.

Its initial trial balance shows the following balances:

Tax payable as at 1 January 2023 £2,091
Tax paid regarding 2022 in 2023 (as finally agreed with HMRC) £1,762

The estimated tax due for the year ended 13 December 2022 is £2,584.

In Alex plc’s income statement for the year ended 31 December 2023 the figure for tax expense will be?

Select ONE answer:

  1. £1,269
  2. £2,255
  3. £2,584
  4. £2,913

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 ==> Dr Bank Payments £1,762 + Bal c/d £2,584 = Total £4,386 – Cr Balance B/D £2,091 == > I/S £2,255
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 30 August 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 plc is preparing its financial statements for the 12-month reporting period ended 31 August 2023, having prepared an initial trial balance which includes the following balances:

Accruals as at 1 September 2022 £948
Interest paid £2,733

Of the accruals as at 1 September 2022, £362 related to interest payable.

As at 31 August 2023 accruals will include £419 related to interest payable.

In Alex plc’s income statement for the 12-month reporting period ended 13 August 2023 the finance costs will be?

Select ONE answer:

  1. £2,204
  2. £2,676
  3. £2,733
  4. £2,790

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 == > Dr Bank Payments £2,733 + Bal c/d £419 = Total £3,152 – Cr Balance B/D (reversed) £362 == > I/S £2,790

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