Financial accounting worksheet with answers

Gross profit is:

1. ACash in minus cash out
2. BRevenue minus all expenses
3. CRevenue minus cost of goods sold
4. DTotal assets minus total liabilities

In double-entry bookkeeping, every transaction:

1. AIncreases both assets and expenses equally
2. BMust involve cash
3. CIs recorded only once
4. DIs recorded with equal debits and credits

Accounts receivable are:

1. AAmounts the company owes its suppliers
2. BShares owned by investors
3. CAmounts customers owe the company for sales on credit
4. DCash held in the bank

Under IAS 38, how are research and development costs treated?

1. AResearch is capitalised; development is expensed
2. BResearch is expensed; development is capitalised only when strict criteria are met
3. CBoth are always expensed immediately
4. DBoth are always capitalised as intangible assets

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

1. A30%
2. B60%
3. C43%
4. D70%

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

1. A73 days
2. B50 days
3. C36.5 days
4. D7.3 days

Company P buys 70% of the voting shares of S and gains control. How does P report S in its group accounts?

1. AConsolidate 100% of S line by line and show a non-controlling interest
2. BShow one equity-method investment line for its 70% share of S
3. CKeep the investment at cost and report only the dividends received from S
4. DAdd only 70% of each of S's assets, liabilities, income and expenses

A firm with spare capacity gets a one-off order at €35 per unit. Variable cost is €30 and full cost including fixed overhead is €42. Assuming no other effects, should it accept?

1. ANo, the order makes a €7 loss per unit
2. BNo, the price is below full cost
3. CYes, each unit adds €5 contribution
4. DYes, but only if the price exceeds €42