Financial accounting worksheet with answers

Information is "material" in financial reporting when:

1. AIt relates to physical materials and inventory
2. BLeaving it out or misstating it could influence users' decisions
3. CIt has been checked by the tax authority
4. DIt exceeds one million euros

Accounts payable (trade payables) are:

1. AProfits paid out to shareholders
2. BAmounts the business owes suppliers for purchases on credit
3. CAmounts customers owe the business
4. DCash held in the bank account

Under IAS 2, inventory is measured at:

1. AThe higher of cost and current replacement cost
2. BIts original cost, whatever happens
3. CThe lower of cost and net realisable value
4. DIts expected selling price

Under the accrual basis of accounting, revenue is recognised when:

1. AThe customer pays the invoice, even if goods were delivered earlier
2. BThe tax return is filed
3. CCash is received
4. DIt is earned, whether or not cash has been received

Under IAS 16, which cost should be included in the cost of a new machine?

1. AGeneral office overheads for the year
2. BInstallation costs needed to get it working
3. CStaff training costs after it starts operating
4. DRepairs carried out two years later

Profit for ordinary shareholders is €500,000 and there are 1,000,000 ordinary shares. What are basic earnings per share?

1. A€5.00
2. B€0.50
3. C€2.00
4. D€0.05

In the indirect method of the cash flow statement, depreciation is:

1. AShown in financing activities
2. BIgnored completely
3. CSubtracted from net profit
4. DAdded back to net profit because it is a non-cash expense

A company changes its inventory method from weighted average to FIFO because it gives more relevant information. Under IAS 8, how is this applied?

1. AIt is not allowed to change inventory methods
2. BRetrospectively, restating comparative figures as if FIFO had always been used
3. CBy recognising the whole effect as income this year
4. DProspectively, from the date of the change only