Financial accounting worksheet with answers

What is the basic accounting equation?

1. AAssets = Liabilities + Equity
2. BProfit = Assets − Liabilities
3. CAssets = Revenue − Expenses
4. DEquity = Assets + Liabilities

A budget is:

1. AA report written by the external auditor
2. BA record of last year's transactions
3. CA financial plan for a future period
4. DA list of the company's shareholders

Revenue minus all expenses equals:

1. AGross profit, before operating expenses
2. BCash flow
3. CEquity
4. DNet profit (or loss)

Which error will NOT be revealed by a trial balance?

1. AA sale left out of the books entirely
2. BA balance copied to the wrong column
3. CA wrongly added ledger column
4. DA debit posted without a matching credit

What is the key difference between absorption costing and marginal costing?

1. AMarginal costing is required by IFRS for external reporting
2. BMarginal costing includes all overheads in inventory; absorption costing excludes them
3. CAbsorption costing ignores variable costs
4. DAbsorption costing includes fixed production overheads in inventory; marginal costing treats them as period costs

Return on equity (ROE) is calculated as:

1. ANet profit / shareholders' equity
2. BTotal assets / equity
3. CNet profit / total revenue
4. DCurrent assets / current liabilities

An increase in accounts receivable during the year, in the indirect cash flow method, is:

1. ANot relevant to cash flow
2. BSubtracted from profit to get operating cash flow
3. CShown as an investing outflow
4. DAdded to profit

Under IFRS 15, revenue is recognised:

1. AWhen the contract is signed
2. BWhen (or as) the entity satisfies a performance obligation by transferring control to the customer
3. COnly when cash is received
4. DAt the end of the financial year