Financial accounting worksheet with answers

Free printable Financial accounting worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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Name: ____________________   Date: ____________

1.Easy

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

  1. ARaw materials for each unit
  2. BPackaging for each unit
  3. CSales commission per unit sold
  4. DRent of the factory building
2.Easy

What is the main purpose of an external audit?

  1. ATo guarantee that no fraud has happened
  2. BTo prepare the company's financial statements
  3. CTo give an independent opinion on whether the financial statements give a true and fair view
  4. DTo decide the company's dividend policy
3.Easy

An accrued expense (accrual) is:

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

What is the key difference between absorption costing and marginal costing?

  1. AAbsorption costing includes fixed production overheads in inventory; marginal costing treats them as period costs
  2. BAbsorption costing ignores variable costs
  3. CMarginal costing is required by IFRS for external reporting
  4. DMarginal costing includes all overheads in inventory; absorption costing excludes them
5.Medium

An asset costs €50,000, has a residual value of €5,000 and a useful life of 5 years. What is the annual straight-line depreciation?

  1. A€11,000
  2. B€5,000
  3. C€9,000
  4. D€10,000
6.Medium

Why can a profitable company run out of cash?

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

Budgeted overhead is €200,000 for 40,000 machine hours. Actual hours are 42,000 and actual overhead is €205,000. What is the result?

  1. AOverhead under-absorbed by €5,000
  2. BOverhead exactly absorbed
  3. COverhead under-absorbed by €10,000
  4. DOverhead over-absorbed by €5,000
8.Hard

Two firms have the same operating profit, but one is financed mostly by debt. When operating profit falls by 20%, the highly geared firm's net profit:

  1. AFalls by a smaller percentage
  2. BRises because interest is fixed
  3. CFalls by exactly 20% as well
  4. DFalls by a larger percentage

Answer key

  1. 1. D · Rent of the factory building
  2. 2. C · To give an independent opinion on whether the financial statements give a true and fair view
  3. 3. B · An expense incurred in the period but not yet paid
  4. 4. A · Absorption costing includes fixed production overheads in inventory; marginal costing treats them as period costs
  5. 5. C · €9,000
  6. 6. A · Profit includes credit sales and non-cash items, while cash may be tied up in receivables and inventory
  7. 7. D · Overhead over-absorbed by €5,000
  8. 8. D · Falls by a larger percentage

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