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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Name: ____________________   Date: ____________

1.Easy

Which of these is an intangible asset?

  1. AA delivery van
  2. BInventory of finished goods
  3. CCash in the bank
  4. DA patent
2.Easy

A variable cost is a cost that:

  1. AChanges in total in proportion to the level of activity
  2. BIs paid only once when a business starts
  3. CIs never included in product costs
  4. DStays the same in total within the relevant range of output
3.Easy

The systematic allocation of the cost of an intangible asset over its useful life is called:

  1. ARevaluation
  2. BAccrual
  3. CAmortisation
  4. DDepreciation of land
4.Medium

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

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

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

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

Under IAS 38, how are research and development costs treated?

  1. ABoth are always capitalised as intangible assets
  2. BResearch is expensed; development is capitalised only when strict criteria are met
  3. CBoth are always expensed immediately
  4. DResearch is capitalised; development is expensed
7.Hard

Production exceeds sales this period, so inventory rises. How does absorption costing profit compare with marginal costing profit?

  1. AAbsorption costing shows a loss
  2. BAbsorption costing profit is higher
  3. CThey are always equal
  4. DMarginal costing profit is higher this period
8.Hard

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

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

Answer key

  1. 1. D · A patent
  2. 2. A · Changes in total in proportion to the level of activity
  3. 3. C · Amortisation
  4. 4. C · As a prepaid expense (asset)
  5. 5. C · Absorption costing includes fixed production overheads in inventory; marginal costing treats them as period costs
  6. 6. B · Research is expensed; development is capitalised only when strict criteria are met
  7. 7. B · Absorption costing profit is higher
  8. 8. A · Cash flow is unchanged, although profit falls

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