Financial accounting worksheet with answers

In double-entry bookkeeping, an increase in a liability is recorded as:

1. AA credit
2. BA debit
3. CA debit to cash only
4. DNo entry until it is paid

Which of these is an intangible asset?

1. ACash in the bank
2. BA delivery van
3. CInventory of finished goods
4. DA patent

A bad debt is:

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

Cost of sales is €600,000 and average inventory is €100,000. What is the inventory turnover?

1. A16 times a year
2. B60 times a year
3. C0.17 times a year
4. D6 times a year

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

Trade receivables are €50,000 and annual credit sales are €365,000. What are the receivable days?

1. A73 days
2. B36.5 days
3. C7.3 days
4. D50 days

A parent sold goods to its subsidiary at a profit, and the subsidiary still holds them at year end. What must happen on consolidation?

1. AThe profit is shown twice, once for each company
2. BThe unrealised profit in inventory is eliminated
3. CThe sale is shown as external revenue of the group
4. DNothing, because each company is a separate entity

Over three years a company reports rising profits while operating cash flow keeps falling. What should an analyst suspect?

1. AThe company has very high earnings quality
2. BThe company must have repaid all its loans
3. CProfits may be driven by aggressive accruals, such as rising receivables or capitalised costs
4. DDepreciation must have been too high