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

The gross profit margin is calculated as:

1. AGross profit ÷ revenue × 100
2. BGross profit ÷ total assets × 100
3. CRevenue ÷ cost of sales × 100
4. DNet profit ÷ revenue × 100

Which body issues International Financial Reporting Standards (IFRS)?

1. AThe European Central Bank (ECB)
2. BThe International Accounting Standards Board (IASB)
3. CThe International Monetary Fund (IMF)
4. DThe World Trade Organization (WTO)

Which error will NOT be revealed by a trial balance?

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

An asset costs €50,000, has a residual value of €5,000 and a useful life of 5 years. What is the annual straight-line depreciation?

1. A€10,000
2. B€5,000
3. C€11,000
4. D€9,000

A company increases its allowance for doubtful receivables. What is the effect?

1. AOnly the notes change; no figures move
2. BAn expense is recognised and net receivables fall
3. CRevenue increases and gross receivables rise by the same amount
4. DCash decreases immediately

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

1. A75 days
2. B15 days
3. C135 days
4. D105 days

After the year end, but before the accounts are approved, a customer who owed money at year end goes bankrupt. Under IAS 10 this is:

1. AAn adjusting event, so receivables are reduced
2. BA change in accounting policy
3. CIgnored, because it happened after the year end
4. DA non-adjusting event, disclosed only