Financial accounting worksheet with answers

What is the main purpose of an external audit?

1. ATo decide the company's dividend policy
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 guarantee that no fraud has happened

Gross profit is:

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

How does management accounting mainly differ from financial accounting?

1. AIt is regulated by IFRS and must be published
2. BIt is prepared only for tax authorities
3. CIt only reports on past events
4. DIt provides information for internal decision-making rather than external users

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

1. A2,500 units
2. B500 units
3. C1,500 units
4. D1,000 units

Cost of sales is €600,000 and average inventory is €100,000. What is the inventory turnover?

1. A60 times a year
2. B0.17 times a year
3. C16 times a year
4. D6 times a year

Under IAS 16, which cost should be included in the cost of a new machine?

1. AInstallation costs needed to get it working
2. BRepairs carried out two years later
3. CGeneral office overheads for the year
4. DStaff training costs after it starts operating

In the indirect method of the cash flow statement, depreciation is:

1. AIgnored completely
2. BAdded back to net profit because it is a non-cash expense
3. CSubtracted from net profit
4. DShown in financing activities

A firm with spare capacity gets a one-off order at €35 per unit. Variable cost is €30 and full cost including fixed overhead is €42. Assuming no other effects, should it accept?

1. ANo, the order makes a €7 loss per unit
2. BYes, each unit adds €5 contribution
3. CYes, but only if the price exceeds €42
4. DNo, the price is below full cost