Tag: Topic 15

Accounting Multiple Choice Question – 4 July 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 Ltd purchases the net assets of the Lucy & Michelle partnership for a cash payment of £1.2M
The agreed values for their partnership at the date of acquisition were as follows:

  • Non-Current Assets – £2M
  • Current Assets – £0.6M
  • Current Liabilities – £0.4M
  • Non-current liabilities – £0.8M
  • Capital accounts (credit) – £1.7M
  • Current accounts (debit) – £0.3M

What is the figure for goodwill?

Select ONE answer:

  1. £0.2M negative
  2. £0.2M positive
  3. £0.8M negative
  4. £0.8M positive

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 – £2M + £0.6M – £0.4M – £0.8M = £1.4M – £1.2M = £0.2M negative
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 3 July 2023

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

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X and Y are in partnership, sharing profits equally.

They agree to admit Z as an equal partner.

Z is to introduce capital into of the partnership worth £100,000.

The partnership goodwill is £60,000 and all adjustments are to be made in the capital accounts.

Which shows the correct situation after the admission of Z to the three partners’ capital accounts?

Select ONE answer:

  1. X a credit of £10k and Y a credit of £10k and Z a credit of £80k
  2. X a credit of £10k and Y a credit of £10k and Z a debit of £20k
  3. X a credit of £30k and Y a credit of £30k and Z a debit of £60k
  4. X a debit of £30k and Y a debit of £30k and Z a credit of £160k

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 – Step 1 – Dr Goodwill £60k Cr X Capital Account £30k and Y Capital Account £30k. Step 2 – Dr Cash £100k Cr Z Capital Account £100k. Step 3 (Goodwill w/o) Dr X Capital Account £20k Dr Y Capital Account £20k Dr Z Capital Account Cr Goodwill £60k
  2. Not correct
  3. Not correct
  4. Not correct

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

Accounting Multiple Choice Question – 11 June 2023

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

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Partnership capitals is respectively £60K for Alex and £90k for Lucy.

The partnership agreement provides for interest on capital at 10% per annum, but makes no other financial provisions

Profits for the current year is shown as £75k in the Income Statement.

How will the total profits be divided between the partners Alex and Lucy?

Select ONE answer:

  1. Alex £30.0k and Lucy £45.0k
  2. Alex £36.0k and Lucy £39.0k
  3. Alex £37.5k and Lucy £37.5k
  4. Alex £39.0k and Lucy £36.0k

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 correc
  2. Correct – If a partnership agreement allows interest on capitals but makes no other financial provisions, then under the Partnership Act the balance of profits is shared equally by the partners. Therefore, £75k – £15k (£150k * 10%) = £60k / 2 = £30k each then Alex £30k = £6k = £36k and Lucy £30k + £9k = £39k
  3. Not correct
  4. Not correct

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