Financial accounting worksheet with answers

Free printable Financial accounting worksheet: 8 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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Name: ____________________   Date: ____________

1.Easy

The systematic allocation of the cost of an intangible asset over its useful life is called:

  1. ADepreciation of land
  2. BAccrual
  3. CAmortisation
  4. DRevaluation
2.Easy

In double-entry bookkeeping, an increase in a liability is recorded as:

  1. AA debit
  2. BA credit
  3. CA debit to cash only
  4. DNo entry until it is paid
3.Easy

A customer pays in advance for services the company will provide next year. At year end the money is shown as:

  1. ARevenue of this year (cash received)
  2. BAn expense of this year
  3. CA non-current asset
  4. DA liability (deferred revenue)
4.Medium

Which depreciation method charges the same amount every year?

  1. ASum-of-the-years'-digits
  2. BReducing balance
  3. CStraight-line
  4. DUnits of production
5.Medium

An asset costs €50,000, has a residual value of €5,000 and a useful life of 5 years. What is the annual straight-line depreciation?

  1. A€11,000
  2. B€10,000
  3. C€9,000
  4. D€5,000
6.Medium

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

  1. A60%
  2. B70%
  3. C43%
  4. D30%
7.Hard

A company's debt-to-equity ratio rises sharply. What does this usually indicate?

  1. AHigher profitability
  2. BBetter liquidity in the short term
  3. CThat shareholders invested more money
  4. DHigher financial risk because the company relies more on borrowed money
8.Hard

Over three years a company reports rising profits while operating cash flow keeps falling. What should an analyst suspect?

  1. AThe company has very high earnings quality
  2. BThe company must have repaid all its loans
  3. CDepreciation must have been too high
  4. DProfits may be driven by aggressive accruals, such as rising receivables or capitalised costs

Answer key

  1. 1. C · Amortisation
  2. 2. B · A credit
  3. 3. D · A liability (deferred revenue)
  4. 4. C · Straight-line
  5. 5. C · €9,000
  6. 6. D · 30%
  7. 7. D · Higher financial risk because the company relies more on borrowed money
  8. 8. D · Profits may be driven by aggressive accruals, such as rising receivables or capitalised costs

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