Financial accounting worksheet with answers

Revenue minus all expenses equals:

1. AGross profit, before operating expenses
2. BCash flow
3. CNet profit (or loss)
4. DEquity

An accrued expense (accrual) is:

1. AAn expense incurred in the period but not yet paid
2. BIncome received before it is earned
3. CAn expense paid in advance that relates to next year
4. DA cost that will never be paid

How does management accounting mainly differ from financial accounting?

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

Why can a profitable company run out of cash?

1. AProfitable companies never pay taxes
2. BProfit always equals cash
3. CCash is not recorded in accounting
4. DProfit includes credit sales and non-cash items, while cash may be tied up in receivables and inventory

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€0.50
3. C€5.00
4. D€2.00

A firm buys 200 units at €5 and 300 units at €6, then sells 400 units. Using weighted average cost, what is closing inventory?

1. A€600
2. B€560
3. C€550
4. D€500

An increase in accounts receivable during the year, in the indirect cash flow method, is:

1. ASubtracted from profit to get operating cash flow
2. BAdded to profit
3. CNot relevant to cash flow
4. DShown as an investing outflow

An asset has a carrying amount of €500,000, fair value less costs of disposal of €380,000 and value in use of €420,000. What impairment loss is recognised?

1. A€200,000
2. B€0
3. C€120,000
4. D€80,000