Tag: Topic 3

Accounting Multiple Choice Question – 28 March 2024

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

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On 1 June 2013 Alex plc purchased some plant at a price of £43,000.

It cost £1,500 to transport the plant to Alex plc’s premises and set it up, plus £900 for a licence to operate it.

The plant had a useful life of 8 years and a residual value of £3,500.

On 1 June 2015, the directors of Alex plc decided to change the depreciation method to reducing balance, at 40%.

What is the carrying amount of Alex plc’s machine in its statement of financial position at31 May 2016?

Select ONE answer:

  1. £20,025
  2. £20,280
  3. £20,550
  4. £20,955

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 initial amount capitalised is £44,500, as the licence cost is excluded from the value of the plant because it is not a directly attributable cost. Depreciation is initially ((44,500 – 3,500)/8) = £5,125 per annum, so at 1 June 2015 the carrying amount is (44,500 – (2 x 5,125)) = £34,250. Depreciation is then charged at 40% on this figure, giving a depreciation figure of £13,700 for the year to 31 May 2016, and a carrying amount of £20,550
  4. Not correct

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Accounting Multiple Choice Question – 27 March 2024

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

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The bookkeeper of Alex plc has been attempting to reconcile its list of non-current assets held to the non-current assets accounts in the nominal ledger.

The list of non-current assets shows a carrying amount of £300,070, but the net balance of the non-current assets cost and accumulated depreciation accounts in the nominal ledger shows a figure of £351,080.

On investigation the bookkeeper has discovered the only error made during the year was that the disposal of one asset has not yet been recorded in the nominal ledger.

Which TWO of the following scenarios would, individually, explain this difference?

  • 1  An asset was disposed of for £40,950 resulting in a profit on disposal of £10,060
  • 2  An asset was disposed of for £40,950 resulting in a loss on disposal of £10,060
  • 3  An asset was disposed of for £61,070 resulting in a profit on disposal of £10,060
  • 4  An asset was disposed of for £61,070 resulting in a loss on disposal of £10,060

Select ONE answer:

  1. 1 & 2
  2. 1 & 3
  3. 2 & 4
  4. 2 & 3

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 – 2 & 3 – The error in the cost and accumulated depreciation nominal ledger accounts means that an asset with a carrying amount of (£351,080 – £300,070) = £S1,010 must be credited to these accounts and debited to the disposal account. This is balanced in the disposal account by disposal proceeds of £40,950 and a loss on disposal of £10,060 both being credited (2), and also by disposal proceeds of £61,070 being credited and a profit on disposal of £10,060 being debited (3).

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Accounting Multiple Choice Question – 26 March 2024

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

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On 1 January 2014 Alex plc purchased a new machine at a cost of £96,720.

Delivery costs were £3,660 and internal administration costs of £9,450 were incurred.

At that time Alex plc planned to replace the machine in 5 years, when it would have no value, and to depreciate the machine on a straight-line basis.

Alex plc decides on 1 January 2016 that the machine only has one remaining year of useful life.

There is no expected change to the residual value at the end of its life.

How much depreciation will be charged in respect of this machine in Alex plc’s income statement for the year-ended 31 December 2016?

Select ONE answer:

  1. £33,460
  2. £58,032
  3. £60,228
  4. £65,898

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 correct
  2. Correct – The internal administration costs cannot be treated as part of the asset’s cost, so in the first two years’ depreciation of (£96,720 + £3, 660)/ 5 x 2 = £40,152 was charged. This means that the whole of the remaining carrying amount of £60,228 must be allocated as depreciation in 2016 given the revision of the asset’s useful life.
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 25 March 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’s income statement for the year ended 31 December 2024 showed a net profit of £83,600.

It was later found that £18,000 paid for the purchase of a van on 1 January 2024 had been debited to motor expenses account.

It is the company’s policy to depreciate vans at 25% per year.

What is the net profit after adjusting for this error?

Select ONE answer:

  1. £106,100
  2. £70,100
  3. £97,100
  4. £101,600

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 – Draft net profit – £83,600 Add: purchase price – £18,000 Less: additional depreciation – (18,000 x 25%) (£4,500) = Adjusted profit = £97,100
  4. Not correct

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Accounting Multiple Choice Question – 24 March 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 purchased a machine for £120,000 on 1 October 2018.

The estimated useful life is 4 years with a residual value of £4,000.

Alex plc uses the straight-line method for depreciation and charges depreciation on a monthly basis.

The charge for depreciation in the income statement for the year ended 31 December 2018 is?

Select ONE answer:

  1. £4,833
  2. £7,250
  3. £7,500
  4. £29,000

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 2

  1. Not correct
  2. Correct– (£120,000-4,000) / 48 x 3 = £7,250
  3. Not correct
  4. Not correct

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