Financial accounting worksheet with answers

A sunk cost is:

1. AA cost that will be paid next year
2. BA cost already incurred that cannot be recovered
3. CA cost saved by a decision
4. DA cost that changes in total with the level of output

How does management accounting mainly differ from financial accounting?

1. AIt is prepared only for tax authorities
2. BIt only reports on past events
3. CIt is regulated by IFRS and must be published
4. DIt provides information for internal decision-making rather than external users

Which is a liability?

1. AShare capital paid in by owners
2. BCash in hand
3. CInventory
4. DA loan from a bank

A firm buys 200 units at €5 and 300 units at €6, then sells 400 units. Using weighted average cost, what is closing inventory?

1. A€550
2. B€560
3. C€500
4. D€600

Which costs are relevant when making a business decision?

1. AFuture cash flows that differ between the alternatives
2. BCosts already paid for the project
3. CAllocated fixed overheads that do not change with the decision
4. DAll costs in last year's income statement

Under the accrual basis of accounting, revenue is recognised when:

1. ACash is received
2. BThe tax return is filed
3. CIt is earned, whether or not cash has been received
4. DThe customer pays the invoice, even if goods were delivered earlier

Machine hours are scarce. Product X earns €20 contribution and needs 4 hours; product Y earns €15 and needs 2 hours. Which should be made first?

1. AX, because it uses more machine time
2. BX, because it earns more contribution per unit
3. CEither, because the total contribution is the same
4. DY, because it earns €7.50 per hour versus €5 for X

In the indirect method of the cash flow statement, depreciation is:

1. AShown in financing activities
2. BSubtracted from net profit
3. CAdded back to net profit because it is a non-cash expense
4. DIgnored completely