Tag: Topic 16

Alex plc is finalising certain figures that will appear in its financial statements as at 30 September 2023.

In its initial trial balance for the year-end, Alex plc has a figure for tax payable as at 1 October 2022 of £114,520.

The total tax charge in the income statement for the year to 30 September 2023 is £145,670, and tax paid in the year was £123,090.

The tax payable balance that will appear in Alex plc’s statement of financial position as at 30 September 2023 is?

Select ONE answer:

1. £91,940
2. £114,520
3. £137,100
4. £382,000

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 3

1. Not correct
2. Not correct
3. Correct == > Dr Bank Payments £123,090 + Bal c/d £137,100 = Total £260,190 – Cr Balance B/D £114,520 == > I/S £145,670
4. Not correct

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Alex plc has share capital of 300,000 £1 (face value) shares as at 1 March 223. These 300,000 shares were issued at a price of £1.50
per share.

On 28 February 2024 Alex pic made a 2 for 3 bonus issue.

Before accounting for this the balance on the retained earnings reserve as at 28 February 2024 was £717,000.

In its statement of financial position as at 28 February 2024 the balance on Alex plc’s retained earnings reserve will be?

Select ONE answer:

1. £517,000
2. £567,000
3. £667,000
4. £717,000

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 3

1. Not correct
2. Not correct
3. Correct – £717,000 – £50k (balance of Bonus issue of £200,000, remaining £150K taken from share reserve).
4. Not correct

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

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. The company ceases to trade
2. All fixtures and fittings are transferred from non-current to current assets
3. Fixtures and fittings are valued at their historical book 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 2

1. Notcorrect
2. Correct ==> If a company is no longer a going concern, then the directors have concluded that it will not trade for the foreseeable future (i.e. less than twelve months) and so all non-current assets and liabilities are transferred to current assets and current liabilities respectively
3. Not correct
4. Not correct

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

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

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