Financial accounting worksheet with answers

Opportunity cost is:

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

In double-entry bookkeeping, an increase in an asset account is recorded as:

1. AA credit to revenue only
2. BA credit
3. CA debit to equity
4. DA debit

Contribution per unit is:

1. ARevenue minus fixed costs
2. BSelling price minus variable cost per unit
3. CSelling price minus full absorption cost per unit
4. DFixed costs divided by units sold

Trade receivables are €50,000 and annual credit sales are €365,000. What are the receivable days?

1. A50 days
2. B73 days
3. C36.5 days
4. D7.3 days

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€10,000
4. D€9,000

A company finds that a machine will last 8 years instead of the 5 originally estimated. Under IAS 8, how is this change applied?

1. AProspectively, by spreading the remaining carrying amount over the new remaining life
2. BBy changing the original cost of the machine
3. CBy recognising a large gain in the current year
4. DRetrospectively, by restating all prior years

A parent sold goods to its subsidiary at a profit, and the subsidiary still holds them at year end. What must happen on consolidation?

1. AThe profit is shown twice, once for each company
2. BThe sale is shown as external revenue of the group
3. CThe unrealised profit in inventory is eliminated
4. DNothing, because each company is a separate entity

A company's debt-to-equity ratio rises sharply. What does this usually indicate?

1. AHigher profitability
2. BBetter liquidity in the short term
3. CHigher financial risk because the company relies more on borrowed money
4. DThat shareholders invested more money