Financial accounting worksheet with answers

At the break-even point:

1. ASales revenue is zero
2. BTotal revenue equals total costs
3. CProfit is at its maximum
4. DVariable costs equal fixed costs

In double-entry bookkeeping, an increase in a liability is recorded as:

1. ANo entry until it is paid
2. BA debit to cash only
3. CA credit
4. DA debit

How does management accounting mainly differ from financial accounting?

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

A company pays its insurance for next year in advance. How is the payment recorded at the year end?

1. AAs revenue
2. BAs a liability
3. CAs a prepaid expense (asset)
4. DAs an expense of the current year in full

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

1. A6 times a year
2. B60 times a year
3. C0.17 times a year
4. D16 times a year

A shop buys 100 units at €10, then 100 units at €12, and then sells 150 units. What is cost of sales using FIFO?

1. A€1,650
2. B€1,600
3. C€1,700
4. D€1,500

A company switches to a depreciation method that gives higher charges. Ignoring tax, what happens to cash flow?

1. ACash flow rises by the extra depreciation
2. BCash flow and profit both rise
3. CCash flow is unchanged, although profit falls
4. DCash flow falls by the amount of the extra depreciation

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

1. AAllocate the price using standalone selling prices; recognise the licence at delivery and support over two years
2. BRecognise the whole price at once when the customer signs the contract
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