Financial accounting worksheet with answers

Which of these is a non-current liability?

1. ATrade payables due to suppliers next month
2. BA bank overdraft
3. CA bank loan repayable in five years
4. DTax due within three months

Which statement shows cash coming in and going out in operating, investing and financing activities?

1. AThe balance sheet
2. BThe cash flow statement
3. CThe notes to the accounts only
4. DThe income statement

Under the cash basis of accounting, income and expenses are recorded when:

1. AThe goods are ordered
2. BThe invoice is approved by the board
3. CThe financial year ends
4. DCash is received or paid

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

1. A16 times a year
2. B6 times a year
3. C60 times a year
4. D0.17 times a year

A company is being sued. Its lawyers say losing is possible but not probable. How is this treated under IAS 37?

1. AIgnored completely
2. BRecognised as a provision on the balance sheet
3. CDisclosed as a contingent liability in the notes
4. DRecognised as an expense and paid into a reserve

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. B1,000 units
3. C667 units
4. D400 units

Under the matching principle, the cost of a product warranty sold with goods this year should be:

1. ARecorded as revenue
2. BEstimated and recognised as an expense in the year of sale
3. CIgnored until the warranty expires
4. DRecognised only when a customer actually makes a warranty claim

A firm has spent €50,000 on market research for a new product and must decide whether to launch it. How should the €50,000 be treated in the decision?

1. AIgnored, because it is a sunk cost
2. BAdded to the launch cost
3. CSpread over the product's expected life
4. DDeducted from expected sales