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

A sunk cost is:

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

A customer pays in advance for services the company will provide next year. At year end the money is shown as:

  1. AA liability (deferred revenue)
  2. BA non-current asset
  3. CRevenue of this year (cash received)
  4. DAn expense of this year
3.Easy

Which of these is a current asset?

  1. AMachinery
  2. BA long-term bank loan
  3. CInventory
  4. DLand
4.Medium

A project has a positive net present value (NPV) at the company's cost of capital. This means:

  1. AIt has no risk at all
  2. BIts reported accounting profit will be positive in every year
  3. CIt earns more than the required return and should add value
  4. DIt recovers its cost within one year
5.Medium

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

  1. AAn expense is recognised and net receivables fall
  2. BRevenue increases and gross receivables rise by the same amount
  3. CCash decreases immediately
  4. DOnly the notes change; no figures move
6.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€10,000
  2. B€11,000
  3. C€9,000
  4. D€5,000
7.Hard

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

  1. ABetter liquidity in the short term
  2. BThat shareholders invested more money
  3. CHigher profitability
  4. DHigher financial risk because the company relies more on borrowed money
8.Hard

Making a part costs €10 materials, €6 labour and €4 variable overhead, plus €5 of fixed overhead that continues anyway. A supplier offers it at €22. What should the firm do on cost grounds?

  1. ABuy it, because fixed costs are always relevant
  2. BMake it, because the relevant cost of €20 is below €22
  3. CBuy it, because the full cost of €25 per unit is above €22
  4. DMake it, because the full cost of €25 is below €22

Answer key

  1. 1. A · A cost already incurred that cannot be recovered
  2. 2. A · A liability (deferred revenue)
  3. 3. C · Inventory
  4. 4. C · It earns more than the required return and should add value
  5. 5. A · An expense is recognised and net receivables fall
  6. 6. C · €9,000
  7. 7. D · Higher financial risk because the company relies more on borrowed money
  8. 8. B · Make it, because the relevant cost of €20 is below €22

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