Financial accounting worksheet with answers

A budget is:

1. AA list of the company's shareholders
2. BA financial plan for a future period
3. CA report written by the external auditor
4. DA record of last year's transactions

What is the basic accounting equation?

1. AAssets = Liabilities + Equity
2. BEquity = Assets + Liabilities
3. CAssets = Revenue − Expenses
4. DProfit = Assets − Liabilities

Which statement shows cash coming in and going out in operating, investing and financing activities?

1. AThe income statement
2. BThe cash flow statement
3. CThe notes to the accounts only
4. DThe balance sheet

A product sells for €40 and has a variable cost of €30. What is its contribution-to-sales (C/S) ratio?

1. A25%
2. B33%
3. C75%
4. D10%

Which depreciation method charges the same amount every year?

1. AUnits of production
2. BStraight-line
3. CReducing balance
4. DSum-of-the-years'-digits

Which error will NOT be revealed by a trial balance?

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

In the indirect method of the cash flow statement, depreciation is:

1. AShown in financing activities
2. BAdded back to net profit because it is a non-cash expense
3. CIgnored completely
4. DSubtracted from net profit

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 half the price in each year without splitting it by obligation
3. CRecognise the whole price at once when the customer signs the contract
4. DDefer the whole price and recognise it when the two years of support end