Financial accounting worksheet with answers

Under the cash basis of accounting, income and expenses are recorded when:

1. AThe goods are ordered
2. BCash is received or paid
3. CThe invoice is approved by the board
4. DThe financial year ends

Which of these is normally a fixed cost for a factory?

1. ASales commission per unit sold
2. BRaw materials for each unit
3. CPackaging for each unit
4. DRent of the factory building

Information is "material" in financial reporting when:

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

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

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

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

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

1. A25%
2. B75%
3. C33%
4. D10%

Budgeted overhead is €200,000 for 40,000 machine hours. Actual hours are 42,000 and actual overhead is €205,000. What is the result?

1. AOverhead over-absorbed by €5,000
2. BOverhead under-absorbed by €5,000
3. COverhead under-absorbed by €10,000
4. DOverhead exactly absorbed

Inventory days are 60, receivable days 45 and payable days 30. What is the cash conversion (operating) cycle?

1. A105 days
2. B15 days
3. C135 days
4. D75 days