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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1.Easy

What is the main purpose of an external audit?

  1. ATo give an independent opinion on whether the financial statements give a true and fair view
  2. BTo decide the company's dividend policy
  3. CTo prepare the company's financial statements
  4. DTo guarantee that no fraud has happened
2.Easy

Dividends paid to shareholders are recorded as:

  1. AA reduction of retained earnings in equity
  2. BA non-current liability once paid
  3. CAn expense in the income statement for the year
  4. DRevenue of the shareholders' company
3.Easy

Which of these is normally a fixed cost for a factory?

  1. ASales commission per unit sold
  2. BPackaging for each unit
  3. CRent of the factory building
  4. DRaw materials for each unit
4.Medium

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 changing the original cost of the machine
  2. BRetrospectively, by restating all prior years
  3. CBy recognising a large gain in the current year
  4. DProspectively, by spreading the remaining carrying amount over the new remaining life
5.Medium

An item cost €80. It can be sold for €90, but €20 must be spent to sell it. At what amount is it shown in inventory?

  1. A€60
  2. B€90
  3. C€70
  4. D€80
6.Medium

What is the key difference between absorption costing and marginal costing?

  1. AMarginal costing is required by IFRS for external reporting
  2. BAbsorption costing includes fixed production overheads in inventory; marginal costing treats them as period costs
  3. CMarginal costing includes all overheads in inventory; absorption costing excludes them
  4. DAbsorption costing ignores variable costs
7.Hard

A firm has a net profit margin of 5%, asset turnover of 2 and an equity multiplier (assets ÷ equity) of 1.5. Using the DuPont analysis, what is ROE?

  1. A8.5%
  2. B7.5%
  3. C15%
  4. D10%
8.Hard

A company sells a software licence together with two years of support for one price. Under IFRS 15, how is revenue recognised?

  1. ARecognise half the price in each year without splitting it by obligation
  2. BDefer the whole price and recognise it when the two years of support end
  3. CAllocate the price using standalone selling prices; recognise the licence at delivery and support over two years
  4. DRecognise the whole price at once when the customer signs the contract

Answer key

  1. 1. A · To give an independent opinion on whether the financial statements give a true and fair view
  2. 2. A · A reduction of retained earnings in equity
  3. 3. C · Rent of the factory building
  4. 4. D · Prospectively, by spreading the remaining carrying amount over the new remaining life
  5. 5. C · €70
  6. 6. B · Absorption costing includes fixed production overheads in inventory; marginal costing treats them as period costs
  7. 7. C · 15%
  8. 8. C · Allocate the price using standalone selling prices; recognise the licence at delivery and support over two years

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