Financial accounting worksheet with answers

In double-entry bookkeeping, every transaction:

1. AMust involve cash
2. BIs recorded with equal debits and credits
3. CIncreases both assets and expenses equally
4. DIs recorded only once

Dividends paid to shareholders are recorded as:

1. ARevenue of the shareholders' company
2. BA non-current liability once paid
3. CAn expense in the income statement for the year
4. DA reduction of retained earnings in equity

In double-entry bookkeeping, an increase in an asset account is recorded as:

1. AA debit to equity
2. BA debit
3. CA credit to revenue only
4. DA credit

Current assets are €300,000, including inventory of €100,000. Current liabilities are €200,000. What is the quick (acid-test) ratio?

1. A2.0
2. B1.5
3. C0.5
4. D1.0

Which inventory valuation method assumes the oldest goods are sold first?

1. AWeighted average cost
2. BSpecific identification of each item
3. CFIFO (first in, first out)
4. DLIFO (last in, first out)

A company finds that a machine will last 8 years instead of the 5 originally estimated. Under IAS 8, how is this change applied?

1. ABy changing the original cost of the machine
2. BBy recognising a large gain in the current year
3. CProspectively, by spreading the remaining carrying amount over the new remaining life
4. DRetrospectively, by restating all prior years

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€80,000
4. D€120,000

Closing inventory this year is overstated by €10,000 by mistake. What is the effect on profit, if not corrected?

1. ABoth years' profits are overstated
2. BProfit is unaffected; only the balance sheet changes
3. CThis year's profit is overstated and next year's understated by €10,000
4. DOnly this year's profit is understated