Financial accounting worksheet with answers

A variable cost is a cost that:

1. AIs never included in product costs
2. BStays the same in total within the relevant range of output
3. CChanges in total in proportion to the level of activity
4. DIs paid only once when a business starts

Contribution per unit is:

1. ASelling price minus full absorption cost per unit
2. BFixed costs divided by units sold
3. CSelling price minus variable cost per unit
4. DRevenue minus fixed costs

How is cost of goods sold calculated for a trading business?

1. APurchases + closing inventory
2. BOpening inventory − purchases + closing inventory
3. CRevenue − purchases − closing inventory
4. DOpening inventory + purchases − closing inventory

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

A shop buys 100 units at €10, then 100 units at €12, and then sells 150 units. What is cost of sales using FIFO?

1. A€1,500
2. B€1,600
3. C€1,650
4. D€1,700

Retained earnings represent:

1. ACash kept in the bank
2. BAccumulated profits that have not been paid out as dividends
3. CThe share price
4. DMoney owed to shareholders

When does activity-based costing (ABC) give the biggest improvement over traditional absorption costing?

1. AWhen overheads are large and driven by activities like set-ups rather than volume
2. BWhen a firm makes only one standard product
3. CWhen all costs are variable with labour hours
4. DWhen overheads are very small compared with direct costs

The going concern assumption means financial statements are prepared assuming the entity:

1. AWill continue to operate for the foreseeable future
2. BWill be sold within one year
3. CWill make a profit every year
4. DHas no debts