Financial accounting worksheet with answers

Which of these increases a sole trader's capital (equity)?

1. AA profit for the year
2. BRepaying a bank loan
3. CDrawings by the owner
4. DBuying inventory for cash

Opportunity cost is:

1. AThe interest paid on a loan
2. BThe total of all past costs
3. CThe cash cost of buying into a new opportunity
4. DThe value of the best alternative given up

What is the main purpose of an external audit?

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

A firm buys 200 units at €5 and 300 units at €6, then sells 400 units. Using weighted average cost, what is closing inventory?

1. A€600
2. B€550
3. C€560
4. D€500

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

1. A1,500 units
2. B500 units
3. C2,500 units
4. D1,000 units

Fixed costs are €20,000, the selling price is €50 and the variable cost is €30 per unit. What is the break-even point?

1. A1,000 units
2. B2,000 units
3. C400 units
4. D667 units

An asset has a carrying amount of €500,000, fair value less costs of disposal of €380,000 and value in use of €420,000. What impairment loss is recognised?

1. A€200,000
2. B€0
3. C€80,000
4. D€120,000

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

1. A105 days
2. B135 days
3. C15 days
4. D75 days