Financial accounting worksheet with answers

An accrued expense (accrual) is:

1. AAn expense paid in advance that relates to next year
2. BA cost that will never be paid
3. CAn expense incurred in the period but not yet paid
4. DIncome received before it is earned

Which of these increases a sole trader's capital (equity)?

1. ADrawings by the owner
2. BBuying inventory for cash
3. CA profit for the year
4. DRepaying a bank loan

Contribution per unit is:

1. ARevenue minus fixed costs
2. BSelling price minus full absorption cost per unit
3. CFixed costs divided by units sold
4. DSelling price minus variable cost per unit

Profit for ordinary shareholders is €500,000 and there are 1,000,000 ordinary shares. What are basic earnings per share?

1. A€0.50
2. B€0.05
3. C€5.00
4. D€2.00

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

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

Which error will NOT be revealed by a trial balance?

1. AA sale left out of the books entirely
2. BA balance copied to the wrong column
3. CA debit posted without a matching credit
4. DA wrongly added ledger column

A company "sells" inventory to a bank and must buy it back later at a higher price, keeping the risks and rewards. How should it be accounted for?

1. AAs a gain on disposal of inventory
2. BAs revenue on the date of transfer
3. CAs a contingent asset in the notes
4. DAs a secured loan, not a sale

Company P buys 70% of the voting shares of S and gains control. How does P report S in its group accounts?

1. AConsolidate 100% of S line by line and show a non-controlling interest
2. BShow one equity-method investment line for its 70% share of S
3. CAdd only 70% of each of S's assets, liabilities, income and expenses
4. DKeep the investment at cost and report only the dividends received from S