.Company has been trading for one year as at 31 December 2020 and during that year it paid electricity bills amounting to £760. On 14 January 2021 Company received an electricity bill for the three months to 31 December 2020 for £310. It eventually paid the bill on 31 January 2021. Its accounts for the year ended 31 December 2020 should show: Select one: a. A statement of profit or loss charge for electricity of £1,070 and a prepayment of £310 on the statement of financial position b. A statement of profit or loss charge for electricity of £760 and a prepayment of £310 on the statement of financial position c. A statement of profit or loss charge for electricity of £760 and an accrual of £310 on the statement of financial position d. A statement of profit or loss charge for electricity of £1,070 and an accrual of £310 on the statement of financial position 2. Company started trading on 1 January. Its trial balance at 31 December, the end of its first year of trading is given below.   Debit Credit   £ £ Opening capital    26,000 Turnover   95,000 Purchases 64,000   Rent  6,000   Motor van                      18,000   Drawings 10,000   Other expenses             27,000   Bank overdraft   4,000 Total 125,000   125,000 If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true? Select one: a. The gross profit will be £36,000 and the net profit will be £3,000 b. The gross profit will be £36,000 and the net profit will be £9,000 c. The gross profit will be £31,500 and the net profit will be £25,000 d. The gross profit will be £31,000 and the net profit will be £3,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1.Company has been trading for one year as at 31 December 2020 and during that year it paid electricity bills amounting to £760. On 14 January 2021 Company received an electricity bill for the three months to 31 December 2020 for £310. It eventually paid the bill on 31 January 2021. Its accounts for the year ended 31 December 2020 should show:

Select one:

a. A statement of profit or loss charge for electricity of £1,070 and a prepayment of £310 on the statement of financial position

b. A statement of profit or loss charge for electricity of £760 and a prepayment of £310 on the statement of financial position

c. A statement of profit or loss charge for electricity of £760 and an accrual of £310 on the statement of financial position

d. A statement of profit or loss charge for electricity of £1,070 and an accrual of £310 on the statement of financial position

2. Company started trading on 1 January. Its trial balance at 31 December, the end of its first year of trading is given below.

	Debit	Credit
	£	£
Opening capital		26,000
Turnover		95,000
Purchases	64,000
Rent	6,000
Motor van	18,000
Drawings	10,000
Other expenses	27,000
Bank overdraft		4,000
Total	125,000	125,000

If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true?

Select one:

a. The gross profit will be £36,000 and the net profit will be £3,000

b. The gross profit will be £36,000 and the net profit will be £9,000

c. The gross profit will be £31,500 and the net profit will be £25,000

d. The gross profit will be £31,000 and the net profit will be £3,000

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