Financial accounting worksheet with answers

Which of these is a non-current liability?

1. AA bank overdraft
2. BA bank loan repayable in five years
3. CTax due within three months
4. DTrade payables due to suppliers next month

Contribution per unit is:

1. ARevenue minus fixed costs
2. BSelling price minus full absorption cost per unit
3. CSelling price minus variable cost per unit
4. DFixed costs divided by units sold

At the break-even point:

1. AProfit is at its maximum
2. BTotal revenue equals total costs
3. CSales revenue is zero
4. DVariable costs equal fixed costs

The prudence (conservatism) concept suggests that accountants should:

1. AValue assets at their selling price
2. BAlways record the highest possible profit to attract investors
3. CAvoid overstating assets and income under uncertainty
4. DIgnore possible losses

Under IAS 16, which cost should be included in the cost of a new machine?

1. AInstallation costs needed to get it working
2. BRepairs carried out two years later
3. CStaff training costs after it starts operating
4. DGeneral office overheads for the year

A machine with a carrying amount of €3,000 is sold for €4,000. What is recorded in the income statement?

1. AA gain on disposal of €4,000
2. BRevenue of €4,000
3. CA loss on disposal of €1,000
4. DA gain on disposal of €1,000

An asset is impaired when its carrying amount is higher than its:

1. AResidual value only
2. BOriginal purchase price
3. CRecoverable amount (the higher of fair value less costs of disposal and value in use)
4. DDepreciation charge

Making a part costs €10 materials, €6 labour and €4 variable overhead, plus €5 of fixed overhead that continues anyway. A supplier offers it at €22. What should the firm do on cost grounds?

1. ABuy it, because fixed costs are always relevant
2. BMake it, because the full cost of €25 is below €22
3. CBuy it, because the full cost of €25 per unit is above €22
4. DMake it, because the relevant cost of €20 is below €22