Financial accounting worksheet with answers

Gross profit is:

1. ACash in minus cash out
2. BRevenue minus all expenses
3. CRevenue minus cost of goods sold
4. DTotal assets minus total liabilities

Which of these is an intangible asset?

1. ACash in the bank
2. BA patent
3. CA delivery van
4. DInventory of finished goods

What is the main purpose of an external audit?

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

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€600
2. B€550
3. C€500
4. D€560

Current assets are €300,000 and current liabilities are €150,000. What is the current ratio?

1. A0.5
2. B2.0
3. C4.5
4. D1.5

Which depreciation method charges the same amount every year?

1. AStraight-line
2. BSum-of-the-years'-digits
3. CUnits of production
4. DReducing balance

Operating profit is €200,000 and capital employed (equity plus non-current liabilities) is €1,000,000. What is ROCE?

1. A5%
2. B50%
3. C20%
4. D2%

Two firms have the same operating profit, but one is financed mostly by debt. When operating profit falls by 20%, the highly geared firm's net profit:

1. AFalls by a larger percentage
2. BFalls by a smaller percentage
3. CRises because interest is fixed
4. DFalls by exactly 20% as well