Tag: Non-Profit

The trial balance of Alex plc, a manufacturer, as at the year-end 30 April 2024 included the following items:

Carriage inwards
Depreciation of delivery vehicles

In the income statement, in respect of depreciation of delivery vehicles and carriage inwards where should each of them be included in which of the 3 headings of the Income Statement?

A Cost of Sales
B Administrative expenses
C Distribution costs

Select ONE answer:

1. A, A
2. A, B
3. B, C
4. A, C

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

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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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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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As at 30 June 2023 Alex plc had £1m 8% loan notes in issue, interest being paid half-yearly on 30 June and 31 December each year.

On 30 September 2023, the company redeemed £250,000 of these loan notes at par, paying interest due up to that date.

On 1 April 2024 Alex plc issued £500,000 7% loan notes at par, interest payable half-yearly on 31 March and 30 September.

What figure should appear in the company’s income statement for finance costs in the year ended 30 June 2024?

Select ONE answer:

1. £88,750
2. £82,500
3. £65,000
4. £73,750

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 –> July – September 1,000,000 × 8% × 3/12 + October – March 750,000 × 8% × 6/12 + April – June 750,000 × 8% × 3/12 & 500,000 x 7% x 3/12

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When Alex plc’s trial balance failed to agree, a suspense account was opened for the difference.

The trial balance totals were:

Debit £864,390
Credit £860,930

The company does not have control accounts set-up for its receivables and payables ledgers.

Which of the following errors can be corrected without affecting the suspense account?

Select ONE answer:

1. In recording an issue of shares at par, cash received of £333,000 was credited to the equity share capital account as £330,000.
2. Cash £2,800 paid for plant repairs was correctly accounted for in the cash book but was credited to the plant asset account.
3. A cheque for £78,400 paid for the purchase of a car was debited to the motor vehicles account as £87,400.
4. A contra between the receivables ledger and the payables ledger for £1,200 was debited in the receivables ledger and credited in the payables ledger.

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

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