Financial accounting worksheet with answers

An accrued expense (accrual) is:

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

A variable cost is a cost that:

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

In double-entry bookkeeping, an increase in a liability is recorded as:

1. AA debit
2. BA credit
3. CNo entry until it is paid
4. DA debit to cash only

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

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

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

1. A1.5
2. B1.0
3. C0.5
4. D2.0

A project has a positive net present value (NPV) at the company's cost of capital. This means:

1. AIt recovers its cost within one year
2. BIt has no risk at all
3. CIt earns more than the required return and should add value
4. DIts reported accounting profit will be positive in every year

Under IFRS, how is purchased goodwill treated after acquisition?

1. AIt is not amortised but tested for impairment at least annually
2. BIt is written off against equity immediately
3. CIt is revalued upwards every year
4. DIt is amortised over 20 years

In the indirect method of the cash flow statement, depreciation is:

1. AShown in financing activities
2. BSubtracted from net profit
3. CAdded back to net profit because it is a non-cash expense
4. DIgnored completely