Financial accounting worksheet with answers

Which financial statement shows a company's financial position at one moment in time?

1. AThe balance sheet
2. BThe cash flow statement
3. CThe statement of changes in equity over the year
4. DThe income statement

Which of these is a current asset?

1. ALand
2. BA long-term bank loan
3. CInventory
4. DMachinery

The systematic allocation of the cost of an intangible asset over its useful life is called:

1. ARevaluation
2. BAccrual
3. CDepreciation of land
4. DAmortisation

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 prepaid expense (asset)
3. CAs revenue
4. DAs a liability

Budgeted sales are 1,500 units and the break-even point is 1,000 units. What is the margin of safety?

1. A500 units
2. B1,000 units
3. C1,500 units
4. D2,500 units

At 31 December, electricity used in December (€800) has not yet been billed. Which year-end entry is correct?

1. ANo entry until the bill arrives
2. BDebit accruals, credit electricity expense
3. CDebit prepayments, credit cash
4. DDebit electricity expense, credit accruals

The going concern assumption means financial statements are prepared assuming the entity:

1. AWill continue to operate for the foreseeable future
2. BHas no debts
3. CWill make a profit every year
4. DWill be sold within one year

A company sells a software licence together with two years of support for one price. Under IFRS 15, how is revenue recognised?

1. ARecognise the whole price at once when the customer signs the contract
2. BAllocate the price using standalone selling prices; recognise the licence at delivery and support over two years
3. CDefer the whole price and recognise it when the two years of support end
4. DRecognise half the price in each year without splitting it by obligation