Financial accounting worksheet with answers

Money or goods taken out of a sole trader's business for personal use are called:

1. ADrawings
2. BLiabilities
3. CDividends
4. DExpenses

Gross profit is:

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

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

1. AAn expense of this year
2. BA liability (deferred revenue)
3. CA non-current asset
4. DRevenue of this year (cash received)

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

1. A60%
2. B43%
3. C70%
4. D30%

Return on equity (ROE) is calculated as:

1. ANet profit / total revenue
2. BTotal assets / equity
3. CNet profit / shareholders' equity
4. DCurrent assets / current liabilities

Current assets are €300,000 and current liabilities are €150,000. What is the current ratio?

1. A0.5
2. B4.5
3. C1.5
4. D2.0

When does activity-based costing (ABC) give the biggest improvement over traditional absorption costing?

1. AWhen a firm makes only one standard product
2. BWhen overheads are very small compared with direct costs
3. CWhen all costs are variable with labour hours
4. DWhen overheads are large and driven by activities like set-ups rather than volume

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

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