Financial accounting worksheet with answers

Information is "material" in financial reporting when:

1. AIt has been checked by the tax authority
2. BLeaving it out or misstating it could influence users' decisions
3. CIt relates to physical materials and inventory
4. DIt exceeds one million euros

Which of these is normally a fixed cost for a factory?

1. APackaging for each unit
2. BRent of the factory building
3. CSales commission per unit sold
4. DRaw materials for each unit

At the break-even point:

1. AProfit is at its maximum
2. BVariable costs equal fixed costs
3. CTotal revenue equals total costs
4. DSales revenue is zero

At 31 December, electricity used in December (€800) has not yet been billed. Which year-end entry is correct?

1. ADebit prepayments, credit cash
2. BDebit electricity expense, credit accruals
3. CDebit accruals, credit electricity expense
4. DNo entry until the bill arrives

Fixed costs are €20,000, the selling price is €50 and the variable cost is €30 per unit. What is the break-even point?

1. A400 units
2. B667 units
3. C2,000 units
4. D1,000 units

Return on equity (ROE) is calculated as:

1. ANet profit / total revenue
2. BTotal assets / equity
3. CCurrent assets / current liabilities
4. DNet profit / shareholders' equity

Under IFRS 16, which lease may a lessee choose to expense on a straight-line basis instead of recognising a right-of-use asset?

1. AA lease with a term of 12 months or less
2. BA ten-year lease of a large production machine
3. CAny lease with monthly payments
4. DAny lease of land and buildings

Closing inventory this year is overstated by €10,000 by mistake. What is the effect on profit, if not corrected?

1. AThis year's profit is overstated and next year's understated by €10,000
2. BBoth years' profits are overstated
3. COnly this year's profit is understated
4. DProfit is unaffected; only the balance sheet changes