Financial accounting worksheet with answers

In double-entry bookkeeping, every transaction:

1. AIs recorded only once
2. BIs recorded with equal debits and credits
3. CIncreases both assets and expenses equally
4. DMust involve cash

Gross profit is:

1. ACash in minus cash out
2. BRevenue minus all expenses
3. CTotal assets minus total liabilities
4. DRevenue minus cost of goods sold

Accounts receivable are:

1. ACash held in the bank
2. BAmounts customers owe the company for sales on credit
3. CShares owned by investors
4. DAmounts the company owes its suppliers

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

1. A1,000 units
2. B1,500 units
3. C500 units
4. D2,500 units

Which ratio measures a company's ability to pay its short-term obligations?

1. AThe gross margin
2. BThe current ratio
3. CEarnings per share
4. DReturn on equity

Retained earnings represent:

1. AMoney owed to shareholders
2. BCash kept in the bank
3. CAccumulated profits that have not been paid out as dividends
4. DThe share price

Under IFRS 15, revenue is recognised:

1. AAt the end of the financial year
2. BOnly when cash is received
3. CWhen the contract is signed
4. DWhen (or as) the entity satisfies a performance obligation by transferring control to the customer

When does activity-based costing (ABC) give the biggest improvement over traditional absorption costing?

1. AWhen a firm makes only one standard product
2. BWhen all costs are variable with labour hours
3. CWhen overheads are large and driven by activities like set-ups rather than volume
4. DWhen overheads are very small compared with direct costs