Oxford University Press | Online Resource Centre

Choose your answers from a-d by clicking the radio button next to each choice and then press 'Submit' to get your score.

Question 01

If a business pays for only 11 months rent during a financial year, what accounting term is given to the outstanding one month's rent?

a) Repayment

b) Prepayment

c) Underpayment

d) Accrual

Question 02

A business started its financial period with 100 bicycles, then bought 600 bicycles during the period. The cost of 50 bicycles was owing to creditors at the end of the period. It sold 500 bicycles during the financial period, but customers have paid for only 400. Each bicycle was bought for £100 and sold for £150. What is the value of sales to be included in the firm's profit and loss account for the period?

a) £75,000

b) £60,000

c) £105,000

d) £52,500

Question 03

Using the information in question 2, what gross profit would be shown for the financial period?

a) £75,000

b) £50,000

c) £25,000

d) £20,000

Question 04

Using the information in question 2, what is the value of closing stock to be shown on the balance sheet?

a) £45,000

b) £30,000

c) £15,000

d) £20,000

Question 05

A business shows total debtors' balances of £400,000 in its sales ledger at the end of its financial period. One customer owing £40,000 is bankrupt, and there is no possibility of getting the debt paid. A further 2% of debtors are considered doubtful. What debtors' total will be included as a current asset in the balance sheet?

a) £400,000

b) £352,800

c) £352,000

d) £36,200

Question 06

Using the information in question 5, if there had been an existing provision for doubtful debts at the start of the financial year amounting to £8,000, what entry relating to doubtful debts would be shown in the profit and loss account?

a) £800 decrease in provision

b) £15,200 increase in provision

c) £7,200 increase in provision

d) No entry

Question 07

A top dress designer misjudged the fashion market, and has an unsold stock of 100 silk dresses which normally sell for £500 each. They cost the business £200 each to make, but can now only be sold for £100 each (subject to incurring further material costs of £20 per dress). What is the valuation per dress for the purposes of the asset valuation in the balance sheet?

a) £200

b) £500

c) £100

d) £80

Question 08

To arrive at the gross profit of a trading business, which one of the following formulae is applied?

a) Sales - (Opening Stock - Purchases - Closing Stock)

b) Sales - (Opening Stock + Purchases + Closing Stock)

c) Sales - (Opening Stock + Purchases - Closing Stock)

d) Sales - (Opening Stock - Purchases + Closing Stock)

Question 09

Which one of the following would be expected to favour 'partnership' as their preferred form of business organisation?

a) An anti-social unmarried artist who is most contented when working for many months on an oil painting

b) Two electricians who are very worried about being sued for shoddy workmanship

c) A very ambitious business person who wants access to large amounts of capital investment

d) Two solicitors who enjoy working together and are subject to strict professional rules as to what type of business organisation they can set up

Question 10

Share capital is:

a) the way in which capital is divided at the end of each year.

b) the way in which partners decide to divide profits and losses.

c) another name for London's stock exchange.

d) the way in which the ownership of a limited company is divided.

Oxford University Press, Online Resource Centre, Chapter 03.

Chapter 03

Instructions