Gce Model Questions Vol1 2025 Financial Accounting Question 43

Practice objective / multiple choice question 43 from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2025 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 43 GCE_MODEL_QUESTIONS_VOL1 • 2025 • FINANCIAL_ACCOUNTING • objective

The financial data for a municipal council for the year ended 31 March are as follows:\n- Tax revenue: \(\pounds2{,}500{,}000\)\n- Non‑tax revenue (fees): \(\pounds750{,}000\)\n- Capital grants received: \(\pounds1{,}200{,}000\)\n- Capital grants spent: \(\pounds900{,}000\)\n- Operating expenses: \(\pounds2{,}200{,}000\)\n- Depreciation expense: \(\pounds300{,}000\)\n- Interest expense on loans: \(\pounds120{,}000\)\n- Loan repayments (principal) during the year: \(\pounds250{,}000\)\n- Borrowings at the start of the year: \(\pounds3{,}000{,}000\)\nCalculate (i) the net borrowing (increase or decrease in borrowing) during the year, (ii) the total expenditure for the year, and (iii) the surplus or deficit for the year.

Answer Options

A. (i) Net borrowing = \(\pounds150{,}000\) (borrowing increased by \(\pounds150{,}000\)). (ii) Total expenditure = \(\pounds3{,}400{,}000\). (iii) Surplus = \(\pounds-100{,}000\).
Correct Answer B. (i) Net borrowing = -\(\pounds680{,}000\) (borrowing reduced by \(\pounds680{,}000\)). (ii) Total expenditure = \(\pounds3{,}520{,}000\). (iii) Surplus = \(\pounds930{,}000\).
C. (i) Net borrowing = -\(\pounds720{,}000\) (borrowing reduced by \(\pounds720{,}000\)). (ii) Total expenditure = \(\pounds3{,}520{,}000\). (iii) Surplus = \(\pounds870{,}000\).
D. (i) Net borrowing = -\(\pounds500{,}000\) (borrowing reduced by \(\pounds500{,}000\)). (ii) Total expenditure = \(\pounds3{,}600{,}000\). (iii) Surplus = \(\pounds820{,}000\).
Correct Answer
B
Correct Option:
(i) Net borrowing = -\(\pounds680{,}000\) (borrowing reduced by \(\pounds680{,}000\)). (ii) Total expenditure = \(\pounds3{,}520{,}000\). (iii) Surplus = \(\pounds930{,}000\).

About This Question

This is Gce Model Questions Vol1 2025 Financial Accounting Question 43. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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