Financial accounting worksheet with answers

A sunk cost is:

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

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

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

Dividends paid to shareholders are recorded as:

1. AA non-current liability once paid
2. BA reduction of retained earnings in equity
3. CRevenue of the shareholders' company
4. DAn expense in the income statement for the year

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

1. A0.17 times a year
2. B60 times a year
3. C16 times a year
4. D6 times a year

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 €1,000
2. BA gain on disposal of €4,000
3. CRevenue of €4,000
4. DA loss on disposal of €1,000

Operating profit is €120,000 and interest expense is €30,000. What is interest cover?

1. A0.25 times
2. B3 times
3. C4 times
4. D90,000 times

An asset has a carrying amount of €500,000, fair value less costs of disposal of €380,000 and value in use of €420,000. What impairment loss is recognised?

1. A€200,000
2. B€80,000
3. C€0
4. D€120,000

Two firms have the same operating profit, but one is financed mostly by debt. When operating profit falls by 20%, the highly geared firm's net profit:

1. ARises because interest is fixed
2. BFalls by a smaller percentage
3. CFalls by a larger percentage
4. DFalls by exactly 20% as well