Financial accounting worksheet with answers

The gross profit margin is calculated as:

1. AGross profit ÷ total assets × 100
2. BRevenue ÷ cost of sales × 100
3. CNet profit ÷ revenue × 100
4. DGross profit ÷ revenue × 100

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

1. AAccrual
2. BRevaluation
3. CAmortisation
4. DDepreciation of land

Which statement shows cash coming in and going out in operating, investing and financing activities?

1. AThe income statement
2. BThe notes to the accounts only
3. CThe balance sheet
4. DThe cash flow statement

Retained earnings represent:

1. AAccumulated profits that have not been paid out as dividends
2. BThe share price
3. CMoney owed to shareholders
4. DCash kept in the bank

Current assets are €300,000 and current liabilities are €150,000. What is the current ratio?

1. A1.5
2. B0.5
3. C2.0
4. D4.5

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

1. ABoth are always expensed immediately
2. BResearch is capitalised; development is expensed
3. CBoth are always capitalised as intangible assets
4. DResearch is expensed; development is capitalised only when strict criteria are met

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

A company records routine repair costs as additions to non-current assets instead of expenses. What is the effect this year?

1. AProfit is understated and assets are overstated
2. BOnly cash is affected
3. CProfit and assets are overstated
4. DProfit and assets are understated