Financial accounting worksheet with answers

Depreciation is:

1. ASpreading the cost of a non-current asset over its useful life
2. BA fall in the market value of shares
3. CThe interest paid on debts
4. DPaying off a loan in instalments

Which financial statement shows a company's financial position at one moment in time?

1. AThe income statement
2. BThe balance sheet
3. CThe cash flow statement
4. DThe statement of changes in equity over the year

Which of these is a non-current liability?

1. AA bank loan repayable in five years
2. BTax due within three months
3. CA bank overdraft
4. DTrade payables due to suppliers next month

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

1. AAn expense is recognised and net receivables fall
2. BCash decreases immediately
3. COnly the notes change; no figures move
4. DRevenue increases and gross receivables rise by the same amount

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

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

1. A43%
2. B60%
3. C30%
4. D70%

A company switches to a depreciation method that gives higher charges. Ignoring tax, what happens to cash flow?

1. ACash flow falls by the amount of the extra depreciation
2. BCash flow rises by the extra depreciation
3. CCash flow is unchanged, although profit falls
4. DCash flow and profit both rise

An asset is impaired when its carrying amount is higher than its:

1. AOriginal purchase price
2. BDepreciation charge
3. CRecoverable amount (the higher of fair value less costs of disposal and value in use)
4. DResidual value only