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

Accounts receivable are:

1. AAmounts customers owe the company for sales on credit
2. BCash held in the bank
3. CShares owned by investors
4. DAmounts the company owes its suppliers

Which statement shows cash coming in and going out in operating, investing and financing activities?

1. AThe notes to the accounts only
2. BThe balance sheet
3. CThe cash flow statement
4. DThe income statement

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

1. AIt is earned, whether or not cash has been received
2. BCash is received
3. CThe tax return is filed
4. DThe customer pays the invoice, even if goods were delivered earlier

A firm buys 200 units at €5 and 300 units at €6, then sells 400 units. Using weighted average cost, what is closing inventory?

1. A€550
2. B€500
3. C€560
4. D€600

Net working capital is:

1. ARevenue minus operating expenses
2. BNon-current assets minus long-term loans
3. CTotal assets minus total liabilities
4. DCurrent assets minus current liabilities

A firm has spent €50,000 on market research for a new product and must decide whether to launch it. How should the €50,000 be treated in the decision?

1. AIgnored, because it is a sunk cost
2. BAdded to the launch cost
3. CDeducted from expected sales
4. DSpread over the product's expected life

An asset is impaired when its carrying amount is higher than its:

1. AOriginal purchase price
2. BResidual value only
3. CRecoverable amount (the higher of fair value less costs of disposal and value in use)
4. DDepreciation charge