Financial accounting worksheet with answers

A bad debt is:

1. AA loan with a high interest rate
2. BAny loan taken out by a company that is currently making losses
3. CA receivable that the company does not expect to collect
4. DA debt owed to a supplier that is overdue

Contribution per unit is:

1. ASelling price minus full absorption cost per unit
2. BRevenue minus fixed costs
3. CSelling price minus variable cost per unit
4. DFixed costs divided by units sold

An accrued expense (accrual) is:

1. AAn expense paid in advance that relates to next year
2. BA cost that will never be paid
3. CAn expense incurred in the period but not yet paid
4. DIncome received before it is earned

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. C1,000 units
4. D2,500 units

Which error will NOT be revealed by a trial balance?

1. AA debit posted without a matching credit
2. BA sale left out of the books entirely
3. CA balance copied to the wrong column
4. DA wrongly added ledger column

A machine with a carrying amount of €3,000 is sold for €4,000. What is recorded in the income statement?

1. AA gain on disposal of €4,000
2. BRevenue of €4,000
3. CA loss on disposal of €1,000
4. DA gain on disposal of €1,000

Under the matching principle, the cost of a product warranty sold with goods this year should be:

1. AEstimated and recognised as an expense in the year of sale
2. BRecorded as revenue
3. CRecognised only when a customer actually makes a warranty claim
4. DIgnored until the warranty expires

A firm has spent €50,000 on market research for a new product and must decide whether to launch it. How should the €50,000 be treated in the decision?

1. AAdded to the launch cost
2. BDeducted from expected sales
3. CIgnored, because it is a sunk cost
4. DSpread over the product's expected life