Tag: Topic 7

Accounting Multiple Choice Question – 14 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 is a company that has the following capital structure:

  • £1 ordinary shares – £500k
  • Share premium account – £300k
  • Retained Earnings – £200k
  • Total Capital & Reserves- £1M

The following transactions will take place during the year in the following order:

  • a bonus issue of 1 share for every 5 held;
  • a rights issue of 500 000 shares of £1 each at a premium of £0.50;
  • an issue of debentures of £250,000.

What will be the total of the share capital and reserves of Alex Ltd after the completion of these transactions?

Select ONE answer:

  1. £1.5M
  2. £1.75M
  3. £1.85M
  4. £2M

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– 1. Dr SPA £100k Cr OS £100k = TCR Still £1M; 2. Dr Cash £750k Cr SPA £250k OS £500k = TCR now £1.75M; 3. Dr Cash £250k Cr NCL £250k = TCE is £2M but TCR is still £1.75M
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 18 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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Alex plc’s draft statement of financial position shows the following balances:

  • Share capital ordinary shares of £10 each – £100,000
  • Share premium reserve – £60,000
  • Profit and loss account (credit) – £210,000

During the year Alex plc:

  • pays a dividend of £70,000
  • makes a bonus issue of 5,000 ordinary shares
  • raises a debenture loan of £120,000.

What will be the total of share capital and reserves after these transactions are completed?

Select ONE answer:

  1. £250,000
  2. £300,000
  3. £350,000
  4. £420,000

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 – Start position is £100K + £60,k + £210k = £370k then £70k dividend payment (bonus issue no impact Dr Share Premium Cr Share Capital + Debenture Loan no impact Dr Cash Cr NCL)
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 17 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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Alex plc issues 1M ordinary shares of £1 each for £3 each and £500k 6 % debentures.

By what amount will the net assets of Alex plc increase as a result of these transactions?

Select ONE answer:

  1. No increase
  2. £2.5M
  3. £3.0M
  4. £3.5M

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 Cash £3M + £0.5M Cr NCL £0.5M SC £3M = = > A – L = C = £3.5M – £0.5M = £3M
  4. Not correct

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Accounting Multiple Choice Question – 16 June 2023

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

The directors of lucy Ltd are completing the accounts for the year ended 31 December 2022.

They discover that the Inventory at the start of the financial year at 1 January 2022 was over-valued by £100k.

What is the effect of correcting this error in the accounts?

Select ONE answer:

  1. Profit for the year ended 31 December 2022 DECREASE & Revenue reserves brought forward as at 1 January 2022 DECREASE
  2. Profit for the year ended 31 December 2022 DECREASE & Revenue reserves brought forward as at 1 January 2022 INCREASE
  3. Profit for the year ended 31 December 2022 INCREASE & Revenue reserves brought forward as at 1 January 2022 DECREASE
  4. Profit for the year ended 31 December 2022 INCREASE & Revenue reserves brought forward as at 1 January 2022 INCREASE

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
  4. Not correct

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