Financial accounting worksheet with answers

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 financial year ends
4. DThe invoice is approved by the board

A sunk cost is:

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

Accounts payable (trade payables) are:

1. AAmounts customers owe the business
2. BProfits paid out to shareholders
3. CCash held in the bank account
4. DAmounts the business owes suppliers for purchases on credit

Under IAS 16, which cost should be included in the cost of a new machine?

1. ARepairs carried out two years later
2. BStaff training costs after it starts operating
3. CGeneral office overheads for the year
4. DInstallation costs needed to get it working

Revenue is €200,000 and cost of sales is €140,000. What is the gross profit margin?

1. A43%
2. B60%
3. C70%
4. D30%

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

After the year end, but before the accounts are approved, a customer who owed money at year end goes bankrupt. Under IAS 10 this is:

1. AAn adjusting event, so receivables are reduced
2. BA change in accounting policy
3. CIgnored, because it happened after the year end
4. DA non-adjusting event, disclosed only

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