Financial accounting worksheet with answers

A sunk cost is:

1. AA cost saved by a decision
2. BA cost already incurred that cannot be recovered
3. CA cost that will be paid next year
4. DA cost that changes in total with the level of output

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

1. ADrawings by the owner
2. BBuying inventory for cash
3. CA profit for the year
4. DRepaying a bank loan

Contribution per unit is:

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

A company increases its allowance for doubtful receivables. What is the effect?

1. ACash decreases immediately
2. BOnly the notes change; no figures move
3. CAn expense is recognised and net receivables fall
4. DRevenue increases and gross receivables rise by the same amount

Trade receivables are €50,000 and annual credit sales are €365,000. What are the receivable days?

1. A7.3 days
2. B73 days
3. C36.5 days
4. D50 days

Revenue is €200,000 and cost of sales is €140,000. What is the gross profit margin?

1. A30%
2. B60%
3. C70%
4. D43%

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

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

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