Financial accounting worksheet with answers

In double-entry bookkeeping, an increase in a liability is recorded as:

1. ANo entry until it is paid
2. BA credit
3. CA debit to cash only
4. DA debit

Where are transactions first recorded before they are posted to the ledger accounts?

1. AIn the trial balance
2. BIn books of prime entry, such as the journal
3. CIn the balance sheet
4. DIn the auditor's report

Which of these is normally a fixed cost for a factory?

1. ARaw materials for each unit
2. BRent of the factory building
3. CSales commission per unit sold
4. DPackaging for each unit

Retained earnings represent:

1. AMoney owed to shareholders
2. BAccumulated profits that have not been paid out as dividends
3. CCash kept in the bank
4. DThe share price

A company increases its allowance for doubtful receivables. What is the effect?

1. ACash decreases immediately
2. BRevenue increases and gross receivables rise by the same amount
3. COnly the notes change; no figures move
4. DAn expense is recognised and net receivables fall

Why can a profitable company run out of cash?

1. AProfit always equals cash
2. BProfitable companies never pay taxes
3. CCash is not recorded in accounting
4. DProfit includes credit sales and non-cash items, while cash may be tied up in receivables and inventory

The standard price of material is €5 per kg. The company buys 1,000 kg for €5,400. What is the material price variance?

1. A€0.40 adverse
2. B€400 adverse
3. C€400 favourable
4. D€5,400 adverse

Tax rules allow faster depreciation of a machine than the company uses in its accounts. What arises under IAS 12?

1. AA deferred tax liability
2. BNo tax effect at all
3. CA deferred tax asset
4. DA refund of current tax paid