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

An accrued expense (accrual) is:

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

A bad debt is:

  1. AA debt owed to a supplier that is overdue
  2. BA receivable that the company does not expect to collect
  3. CAny loan taken out by a company that is currently making losses
  4. DA loan with a high interest rate
3.Easy

In double-entry bookkeeping, every transaction:

  1. AIncreases both assets and expenses equally
  2. BIs recorded with equal debits and credits
  3. CMust involve cash
  4. DIs recorded only once
4.Medium

On 1 October a company pays €12,000 rent for the next 12 months. Its year ends on 31 December. What is the rent expense for this year?

  1. A€12,000
  2. B€9,000
  3. C€1,000
  4. D€3,000
5.Medium

Which error will NOT be revealed by a trial balance?

  1. AA debit posted without a matching credit
  2. BA balance copied to the wrong column
  3. CA wrongly added ledger column
  4. DA sale left out of the books entirely
6.Medium

Under IAS 38, how are research and development costs treated?

  1. ABoth are always expensed immediately
  2. BResearch is capitalised; development is expensed
  3. CResearch is expensed; development is capitalised only when strict criteria are met
  4. DBoth are always capitalised as intangible assets
7.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. BShow one equity-method investment line for its 70% share of S
  3. CConsolidate 100% of S line by line and show a non-controlling interest
  4. DKeep the investment at cost and report only the dividends received from S
8.Hard

A company borrows at 5% interest to invest in assets that earn 12%. What is the likely effect on return on equity?

  1. AROE rises and financial risk falls
  2. BROE rises, but financial risk also increases
  3. CROE stays the same, because debt is not equity
  4. DROE falls, because interest is an expense

Answer key

  1. 1. C · An expense incurred in the period but not yet paid
  2. 2. B · A receivable that the company does not expect to collect
  3. 3. B · Is recorded with equal debits and credits
  4. 4. D · €3,000
  5. 5. D · A sale left out of the books entirely
  6. 6. C · Research is expensed; development is capitalised only when strict criteria are met
  7. 7. C · Consolidate 100% of S line by line and show a non-controlling interest
  8. 8. B · ROE rises, but financial risk also increases

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