Financial accounting worksheet with answers

Where are transactions first recorded before they are posted to the ledger accounts?

1. AIn books of prime entry, such as the journal
2. BIn the balance sheet
3. CIn the trial balance
4. DIn the auditor's report

Dividends paid to shareholders are recorded as:

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

An accrued expense (accrual) is:

1. AAn expense paid in advance that relates to next year
2. BIncome received before it is earned
3. CA cost that will never be paid
4. DAn expense incurred in the period but not yet paid

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. BProspectively, by spreading the remaining carrying amount over the new remaining life
3. CBy changing the original cost of the machine
4. DRetrospectively, by restating all prior years

A company pays its insurance for next year in advance. How is the payment recorded at the year end?

1. AAs revenue
2. BAs a liability
3. CAs an expense of the current year in full
4. DAs a prepaid expense (asset)

A product sells for €40 and has a variable cost of €30. What is its contribution-to-sales (C/S) ratio?

1. A10%
2. B33%
3. C75%
4. D25%

A company "sells" inventory to a bank and must buy it back later at a higher price, keeping the risks and rewards. How should it be accounted for?

1. AAs a contingent asset in the notes
2. BAs a gain on disposal of inventory
3. CAs a secured loan, not a sale
4. DAs revenue on the date of transfer

Under IFRS 15, revenue is recognised:

1. AWhen (or as) the entity satisfies a performance obligation by transferring control to the customer
2. BWhen the contract is signed
3. CAt the end of the financial year
4. DOnly when cash is received