Financial accounting worksheet with answers

How does management accounting mainly differ from financial accounting?

1. AIt is regulated by IFRS and must be published
2. BIt is prepared only for tax authorities
3. CIt provides information for internal decision-making rather than external users
4. DIt only reports on past events

Under IAS 2, inventory is measured at:

1. AThe lower of cost and net realisable value
2. BIts expected selling price
3. CIts original cost, whatever happens
4. DThe higher of cost and current replacement cost

Which of these is a current asset?

1. AInventory
2. BMachinery
3. CLand
4. DA long-term bank loan

Which inventory valuation method assumes the oldest goods are sold first?

1. ASpecific identification of each item
2. BWeighted average cost
3. CFIFO (first in, first out)
4. DLIFO (last in, first out)

A project has a positive net present value (NPV) at the company's cost of capital. This means:

1. AIt earns more than the required return and should add value
2. BIt recovers its cost within one year
3. CIts reported accounting profit will be positive in every year
4. DIt has no risk at all

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

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

Production exceeds sales this period, so inventory rises. How does absorption costing profit compare with marginal costing profit?

1. AThey are always equal
2. BAbsorption costing profit is higher
3. CAbsorption costing shows a loss
4. DMarginal costing profit is higher this period

After the year end, but before the accounts are approved, a customer who owed money at year end goes bankrupt. Under IAS 10 this is:

1. AA change in accounting policy
2. BA non-adjusting event, disclosed only
3. CAn adjusting event, so receivables are reduced
4. DIgnored, because it happened after the year end