Multiple choice practice questions

• Q1

  An expense accrual if accounted for would have the following effect on the Income Statement:

  A Increase Net Profit

  B Decrease Net Profit

  C Increase Gross Profit

  D Nil Effect

  B
• Q2

  The firm’s policy is to depreciate motor vehicles on a straight line method. A motor vehicle bought

  for £32,000 is expected to have a useful economic life of 5 years and a scrap value of £2,000. What

  will the annual depreciation value be?

  A £6,000

  B £6,400

  C £5,666

  D £7,200

  A
• Q3

  Randolph Ltd has a tax expense of £77,000 in the Income Statement for the year ended 31 December

  2019. In the Statement of Financial Position, tax payable was £70,000 for the year ended 31 December

  2018 and £79,800 for the year ended 31 December 2019.

  What amount will appear as tax paid in the Statement of cash flows for the year ended 31 December

  2019?

  A £77,000

  B £79,800

  C £67,200

  D £70,000

  C

  (paid - payables)