Financial accounting worksheet with answers

Free printable Financial accounting worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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Name: ____________________   Date: ____________

1.Easy

Which of these is a current asset?

  1. ALand
  2. BMachinery
  3. CA long-term bank loan
  4. DInventory
2.Easy

What is the main purpose of an external audit?

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

Which of these is capital expenditure?

  1. APaying for the van's fuel
  2. BPaying the monthly electricity bill
  3. CPaying staff wages
  4. DBuying a new delivery van
4.Medium

Which error will NOT be revealed by a trial balance?

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

Under IAS 38, how are research and development costs treated?

  1. AResearch is expensed; development is capitalised only when strict criteria are met
  2. BBoth are always capitalised as intangible assets
  3. CResearch is capitalised; development is expensed
  4. DBoth are always expensed immediately
6.Medium

Why can a profitable company run out of cash?

  1. AProfitable companies never pay taxes
  2. BProfit includes credit sales and non-cash items, while cash may be tied up in receivables and inventory
  3. CProfit always equals cash
  4. DCash is not recorded in accounting
7.Hard

An investor holds 30% of a company's shares and has significant influence but not control. How is the investment usually accounted for in group accounts?

  1. AAs a joint operation with line-by-line sharing
  2. BBy full consolidation as a subsidiary
  3. CUsing the equity method as an associate
  4. DAt cost with no changes ever
8.Hard

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. BRises because interest is fixed
  3. CFalls by exactly 20% as well
  4. DFalls by a smaller percentage

Answer key

  1. 1. D · Inventory
  2. 2. A · To give an independent opinion on whether the financial statements give a true and fair view
  3. 3. D · Buying a new delivery van
  4. 4. C · A sale left out of the books entirely
  5. 5. A · Research is expensed; development is capitalised only when strict criteria are met
  6. 6. B · Profit includes credit sales and non-cash items, while cash may be tied up in receivables and inventory
  7. 7. C · Using the equity method as an associate
  8. 8. A · Falls by a larger percentage

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