Financial accounting worksheet with answers

An accrued expense (accrual) is:

1. AA cost that will never be paid
2. BAn expense incurred in the period but not yet paid
3. CIncome received before it is earned
4. DAn expense paid in advance that relates to next year

Where are transactions first recorded before they are posted to the ledger accounts?

1. AIn the trial balance
2. BIn the balance sheet
3. CIn books of prime entry, such as the journal
4. DIn the auditor's report

What is the main purpose of a trial balance?

1. ATo list all customers who owe money
2. BTo show the company's profit for the year
3. CTo check that total debits equal total credits in the ledger
4. DTo prove that no errors of any kind exist in the ledger accounts

Profit for ordinary shareholders is €500,000 and there are 1,000,000 ordinary shares. What are basic earnings per share?

1. A€0.05
2. B€5.00
3. C€2.00
4. D€0.50

Fixed costs are €20,000, the selling price is €50 and the variable cost is €30 per unit. What is the break-even point?

1. A2,000 units
2. B400 units
3. C667 units
4. D1,000 units

Cost of sales is €600,000 and average inventory is €100,000. What is the inventory turnover?

1. A0.17 times a year
2. B60 times a year
3. C6 times a year
4. D16 times a year

Inventory days are 60, receivable days 45 and payable days 30. What is the cash conversion (operating) cycle?

1. A135 days
2. B105 days
3. C75 days
4. D15 days

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

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