Financial accounting worksheet with answers

The systematic allocation of the cost of an intangible asset over its useful life is called:

1. ADepreciation of land
2. BRevaluation
3. CAmortisation
4. DAccrual

Opportunity cost is:

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

Dividends paid to shareholders are recorded as:

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

A project costs €100,000 and brings in €25,000 cash per year. What is its payback period?

1. A5 years
2. B2.5 years
3. C25 years
4. D4 years

Operating profit is €120,000 and interest expense is €30,000. What is interest cover?

1. A3 times
2. B90,000 times
3. C4 times
4. D0.25 times

Cost of sales is €600,000 and average inventory is €100,000. What is the inventory turnover?

1. A0.17 times a year
2. B6 times a year
3. C60 times a year
4. D16 times a year

After the year end, but before the accounts are approved, a customer who owed money at year end goes bankrupt. Under IAS 10 this is:

1. AA non-adjusting event, disclosed only
2. BIgnored, because it happened after the year end
3. CAn adjusting event, so receivables are reduced
4. DA change in accounting policy

Under the matching principle, the cost of a product warranty sold with goods this year should be:

1. AIgnored until the warranty expires
2. BEstimated and recognised as an expense in the year of sale
3. CRecognised only when a customer actually makes a warranty claim
4. DRecorded as revenue