Financial accounting worksheet with answers

Opportunity cost is:

1. AThe total of all past costs
2. BThe cash cost of buying into a new opportunity
3. CThe interest paid on a loan
4. DThe value of the best alternative given up

How does management accounting mainly differ from financial accounting?

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

Under IAS 2, inventory is measured at:

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

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. C10%
4. D75%

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

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

Which ratio measures a company's ability to pay its short-term obligations?

1. AThe gross margin
2. BThe current ratio
3. CReturn on equity
4. DEarnings per share

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

1. AIgnored completely
2. BSubtracted from net profit
3. CAdded back to net profit because it is a non-cash expense
4. DShown in financing activities

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

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