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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1.Easy

What is the main purpose of an external audit?

  1. ATo give an independent opinion on whether the financial statements give a true and fair view
  2. BTo prepare the company's financial statements
  3. CTo guarantee that no fraud has happened
  4. DTo decide the company's dividend policy
2.Easy

How does management accounting mainly differ from financial accounting?

  1. AIt is prepared only for tax authorities
  2. BIt is regulated by IFRS and must be published
  3. CIt only reports on past events
  4. DIt provides information for internal decision-making rather than external users
3.Easy

How is cost of goods sold calculated for a trading business?

  1. APurchases + closing inventory
  2. BOpening inventory − purchases + closing inventory
  3. CRevenue − purchases − closing inventory
  4. DOpening inventory + purchases − closing inventory
4.Medium

A machine with a carrying amount of €3,000 is sold for €4,000. What is recorded in the income statement?

  1. AA gain on disposal of €1,000
  2. BA loss on disposal of €1,000
  3. CA gain on disposal of €4,000
  4. DRevenue of €4,000
5.Medium

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

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

When preparing a bank reconciliation, which item explains why the bank statement balance is higher than the cash book balance?

  1. ACash deposited but not yet credited on the bank statement
  2. BA direct debit not yet entered in the cash book
  3. CCheques issued but not yet presented to the bank
  4. DBank charges not yet entered in the cash book
7.Hard

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

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

Machine hours are scarce. Product X earns €20 contribution and needs 4 hours; product Y earns €15 and needs 2 hours. Which should be made first?

  1. AEither, because the total contribution is the same
  2. BX, because it earns more contribution per unit
  3. CY, because it earns €7.50 per hour versus €5 for X
  4. DX, because it uses more machine time

Answer key

  1. 1. A · To give an independent opinion on whether the financial statements give a true and fair view
  2. 2. D · It provides information for internal decision-making rather than external users
  3. 3. D · Opening inventory + purchases − closing inventory
  4. 4. A · A gain on disposal of €1,000
  5. 5. C · As a prepaid expense (asset)
  6. 6. C · Cheques issued but not yet presented to the bank
  7. 7. A · Profits may be driven by aggressive accruals, such as rising receivables or capitalised costs
  8. 8. C · Y, because it earns €7.50 per hour versus €5 for X

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