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

What is the basic accounting equation?

  1. AEquity = Assets + Liabilities
  2. BProfit = Assets − Liabilities
  3. CAssets = Revenue − Expenses
  4. DAssets = Liabilities + Equity
2.Easy

Information is "material" in financial reporting when:

  1. AIt has been checked by the tax authority
  2. BIt relates to physical materials and inventory
  3. CIt exceeds one million euros
  4. DLeaving it out or misstating it could influence users' decisions
3.Easy

Under the cash basis of accounting, income and expenses are recorded when:

  1. ACash is received or paid
  2. BThe goods are ordered
  3. CThe invoice is approved by the board
  4. DThe financial year ends
4.Medium

A machine costs €10,000 and is depreciated at 20% a year on the reducing balance. What is the depreciation charge in year 2?

  1. A€4,000
  2. B€1,800
  3. C€2,000
  4. D€1,600
5.Medium

Profit for ordinary shareholders is €500,000 and there are 1,000,000 ordinary shares. What are basic earnings per share?

  1. A€0.05
  2. B€2.00
  3. C€5.00
  4. D€0.50
6.Medium

When preparing a bank reconciliation, which item explains why the bank statement balance is higher than the cash book balance?

  1. ACheques issued but not yet presented to the bank
  2. BBank charges not yet entered in the cash book
  3. CA direct debit not yet entered in the cash book
  4. DCash deposited but not yet credited on the bank statement
7.Hard

An investor holds 30% of a company's shares and has significant influence but not control. How is the investment usually accounted for in group accounts?

  1. ABy full consolidation as a subsidiary
  2. BAs a joint operation with line-by-line sharing
  3. CUsing the equity method as an associate
  4. DAt cost with no changes ever
8.Hard

Company P buys 70% of the voting shares of S and gains control. How does P report S in its group accounts?

  1. AAdd only 70% of each of S's assets, liabilities, income and expenses
  2. BKeep the investment at cost and report only the dividends received from S
  3. CShow one equity-method investment line for its 70% share of S
  4. DConsolidate 100% of S line by line and show a non-controlling interest

Answer key

  1. 1. D · Assets = Liabilities + Equity
  2. 2. D · Leaving it out or misstating it could influence users' decisions
  3. 3. A · Cash is received or paid
  4. 4. D · €1,600
  5. 5. D · €0.50
  6. 6. A · Cheques issued but not yet presented to the bank
  7. 7. C · Using the equity method as an associate
  8. 8. D · Consolidate 100% of S line by line and show a non-controlling interest

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