Financial accounting worksheet with answers

Which is a liability?

1. AShare capital paid in by owners
2. BA loan from a bank
3. CInventory
4. DCash in hand

Opportunity cost is:

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

A variable cost is a cost that:

1. AChanges in total in proportion to the level of activity
2. BStays the same in total within the relevant range of output
3. CIs never included in product costs
4. DIs paid only once when a business starts

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

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

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

1. AThe gross margin
2. BReturn on equity
3. CEarnings per share
4. DThe current ratio

A company increases its allowance for doubtful receivables. What is the effect?

1. AAn expense is recognised and net receivables fall
2. BOnly the notes change; no figures move
3. CRevenue increases and gross receivables rise by the same amount
4. DCash decreases immediately

Production exceeds sales this period, so inventory rises. How does absorption costing profit compare with marginal costing profit?

1. AThey are always equal
2. BAbsorption costing shows a loss
3. CMarginal costing profit is higher this period
4. DAbsorption costing profit is higher

Budgeted overhead is €200,000 for 40,000 machine hours. Actual hours are 42,000 and actual overhead is €205,000. What is the result?

1. AOverhead exactly absorbed
2. BOverhead over-absorbed by €5,000
3. COverhead under-absorbed by €10,000
4. DOverhead under-absorbed by €5,000