Financial accounting worksheet with answers

In double-entry bookkeeping, an increase in an asset account is recorded as:

1. AA credit
2. BA credit to revenue only
3. CA debit to equity
4. DA debit

Which of these is a non-current liability?

1. ATax due within three months
2. BTrade payables due to suppliers next month
3. CA bank loan repayable in five years
4. DA bank overdraft

Opportunity cost is:

1. AThe cash cost of buying into a new opportunity
2. BThe value of the best alternative given up
3. CThe total of all past costs
4. DThe interest paid on a loan

Which ratio measures a company's ability to pay its short-term obligations?

1. AEarnings per share
2. BThe current ratio
3. CThe gross margin
4. DReturn on equity

A machine with a carrying amount of €3,000 is sold for €4,000. What is recorded in the income statement?

1. ARevenue of €4,000
2. BA gain on disposal of €4,000
3. CA loss on disposal of €1,000
4. DA gain on disposal of €1,000

An asset costs €50,000, has a residual value of €5,000 and a useful life of 5 years. What is the annual straight-line depreciation?

1. A€5,000
2. B€10,000
3. C€9,000
4. D€11,000

A company records routine repair costs as additions to non-current assets instead of expenses. What is the effect this year?

1. AProfit and assets are understated
2. BProfit is understated and assets are overstated
3. COnly cash is affected
4. DProfit and assets are overstated

Closing inventory this year is overstated by €10,000 by mistake. What is the effect on profit, if not corrected?

1. AOnly this year's profit is understated
2. BProfit is unaffected; only the balance sheet changes
3. CThis year's profit is overstated and next year's understated by €10,000
4. DBoth years' profits are overstated