Financial accounting worksheet with answers

Dividends paid to shareholders are recorded as:

1. AA reduction of retained earnings in equity
2. BA non-current liability once paid
3. CAn expense in the income statement for the year
4. DRevenue of the shareholders' company

Money or goods taken out of a sole trader's business for personal use are called:

1. ALiabilities
2. BDividends
3. CDrawings
4. DExpenses

Opportunity cost is:

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

Budgeted sales are 1,500 units and the break-even point is 1,000 units. What is the margin of safety?

1. A1,000 units
2. B2,500 units
3. C1,500 units
4. D500 units

A company is being sued. Its lawyers say losing is possible but not probable. How is this treated under IAS 37?

1. ARecognised as a provision on the balance sheet
2. BDisclosed as a contingent liability in the notes
3. CIgnored completely
4. DRecognised as an expense and paid into a reserve

Under IAS 38, how are research and development costs treated?

1. AResearch is capitalised; development is expensed
2. BBoth are always expensed immediately
3. CBoth are always capitalised as intangible assets
4. DResearch is expensed; development is capitalised only when strict criteria are met

A company issues shares at €5 each with a nominal value of €1. The extra €4 per share is recorded as:

1. ARevenue
2. BRetained earnings
3. CShare premium
4. DA liability

Over three years a company reports rising profits while operating cash flow keeps falling. What should an analyst suspect?

1. ADepreciation must have been too high
2. BThe company must have repaid all its loans
3. CThe company has very high earnings quality
4. DProfits may be driven by aggressive accruals, such as rising receivables or capitalised costs