Accounting MCQ

For which non-current assets is the revaluation method of depreciation most appropriate?

• loose tools

• motor vehicles

• office equipment

• plant and machinery

Azeem depreciates his buildings at the rate of 2% per annum using the straight-line method.

He bought land for $200 000. It cost $120 000 to build a warehouse on it. After five years he sold the warehouse for $299 000.

What was the profit or loss on disposal?

• $9 000 loss

• $9 000 profit

• $11 000 loss

• $11 000 profit

Why should accrued expenses be shown in the financial statements of a business?

• so that the correct total of current assets is shown in the statement of financial position

• so that the total income of a period is matched against the total costs of that period

• to show how much customers owe the business

• to show the amount owed to credit suppliers

A trader sold goods to Aliff on credit. Aliff was unable to pay the amount owing and the balance on his account was written off.

Which entries will the trader make to write off this irrecoverable debt?

• Dr - irrecoverable debts, Cr - Sales

• Dr - irrecoverable debts, Cr - Alif

• Dr - Sales, Cr - Irrecoverable debts

• Dr - Alif, Cr - Irrecoverable debts

Izzat maintains a position for doubtful debts at 5% of the trade receivables at the end of each financial year. On 1 January 2020 the trade receivables amounted to $3500 and the provision for doubtful debts was $175.

The income statement for the year ended 31 December 2020 was debited with $15 for the provision of doubtful debts.

How much did the trade receivables owe on 31 December 2020?

• $3040

• $3200

• $3610

• $3800

Which group contains only trading businesses?

• driving school, motor insurance agency, vehicle repair business

• driving school, motor insurance agency, petrol station

• motor parts shop, vehicle repair business, car dealership

• motor parts shop, petrol station, car dealership

Which statement is correct?

• cost of sales – gross profit – sales returns = revenue

• cost of sales – gross profit + sales returns = revenue

• cost of sales + gross profit – sales returns = revenue

• cost of sales + gross profit + sales returns = revenue

How is capital employed calculated?

• current assets – current liabilities

• non-current assets + current assets

• owner’s capital + non-current liabilities

• owner’s capital + total liabilities

Syafidah and Syakirah are in partnership, sharing profits and losses equally. Interest on capital account balances is to be allowed at 5%.

The capital account balances at the start of the year were: Syafidah $10000; Syakirah $20000. The profit for the year was $28000.

How much was credited to Syafidah’s current account at the end of the year?

• $13 250

• $13 750

• $14 000

• $14 250

The issued share capital of Mel Limited consists of ordinary shares.

The retained earnings were $45 000 on 1 September 2020. These had increased to $75 000 on

31 August 2021. The company earned a profit for the year of $80 000. What was the total ordinary share dividend for the year?

• $30 000

• $35 000

• $45 000

• $50 000