Tag: Sole Traders Financial Statements

Accounting Multiple Choice Question – 26 September 2024

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

apple devices books business coffee
Photo by Serpstat on Pexels.com

On 1 April 2023, Alex who is a sole trader paid £3,080 in local taxes for the year ending 31 March 2024.

This was an increase of 10% on the charge for the previous year.

What is the correct charge for local taxes in Alex’s profit and loss account for the year ended 31 December 2023?

Select ONE answer:

  1. £2,870
  2. £3,003
  3. £3,010
  4. £3,080

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 3

  1. Not correct
  2. Not correct
  3. Correct == > £3,080 × 9/12 + £3,080 * 1.1 * 3/12 = £3,010
  4. Not correct

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

Accounting Multiple Choice Question – 25 September 2024

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

Photo by Pixabay on Pexels.com

Alex is a sole trader prepares financial statements each year to 31 May.

His rent is payable quarterly in advance on 1 January, 1 April, 1 July and 1 October.

Local property taxes are paid each year in two equal instalments on 1 April and 1 October.

His annual rental for the calendar years 2022 and 2023 was £4,800 and £5,400 respectively but on 1 January 2024 this was increased to £6,600 per annum.

Local property tax for the last three years has been as follows:

•Year commencing 1 April 2022 – 3,600

•Year commencing 1 April 2023 – 3,900

•Year commencing 1 April 2024 – 4,500

In preparing his financial statements for the year ended 31 May 2024, the charge to the profit and loss account from his rent and local property tax account would be what for Alex?

Select ONE answer:

  1. £9,900
  2. £10,100
  3. £10,200
  4. £10,300

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 – £4,000 tax +£5,900 rent = £9,900 == > Rent 1June 2023 to 31 December 2023 = 7/12 x £5,400 + 1 January 2024 to 13 May 2024 = 5/12 x £6,600 = £5,900 + Local property tax 1 June 2023 to 31 March 2024 = 10/12 x £3,900 + 1 April 2024 to 31 May 2024 = 2/12 x £4,500 = £4,000
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 24 September 2024

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

apple devices books business coffee
Photo by Serpstat on Pexels.com

A gas accrual for £400 at the reporting date was treated as a prepayment in a sole trader’s financial statements.

As a result the profit was?

Select ONE answer:

  1. Understated by £800
  2. Understated by £400
  3. Overstated by £800
  4. Overstated by £400

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 == > The accrual should have increased expenses by £400 but instead expenses were decreased by £400 leading to an overstatement of profit of £800.
  4. Not correct

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

Accounting Multiple Choice Question – 23 September 2024

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

apple devices books business coffee
Photo by Serpstat on Pexels.com

A trial balance extracted from a sole trader’s records failed to agree, and a suspense account was opened for the difference.

Which of the following matters would require an entry in the suspense account to correct them?

Select ONE answer:

  1. Discount allowed was mistakenly debited to discount received account.
  2. Cash received from the sale of a non-current asset was correctly entered in the cash book and was credited to the disposal account.
  3. The balance on the rent account was omitted from the trial balance.
  4. Goods taken from inventory by the owner had been recorded by crediting Drawings account and debiting Purchases account.

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 == > Answer 1 is a debit to the wrong account and Answer 2 is correct and Answer 4 is double entry although the wrong way round.
  4. Not correct

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

Accounting Multiple Choice Question – 22 September 2024

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

Photo by Pixabay on Pexels.com

A sole trader’s trial balance as at 13 October 2023 does not agree, with the debit side totalling £500 less than the credit side.

During November, the following errors are discovered:

1 The sales daybook for October had been undercast by £150
2 Rent received of £240 had been credited to the rent expense payables (accrual) account from the cash book
3 The allowance for doubtful debts for receivables, which decreased by £420, had been recorded in the allowance for doubtful debts for receivables account as an increase

Following the correction of these errors, the balance on the suspense account would be?

Select ONE answer:

  1. £340 credit
  2. £250 credit
  3. £1,340 debit
  4. £340 debit

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 £500 & CR £840 (Error 3) = DR £340 — > Error 1 requires a debit to the receivables account and a credit to sales with no effect on suspense. Error 2 is simply moving the credit from one account to another with no effect on suspense.
  2. Not correct
  3. Not correct
  4. Not correct

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