Financial accounting worksheet with answers

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

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

The systematic allocation of the cost of an intangible asset over its useful life is called:

1. AAccrual
2. BDepreciation of land
3. CRevaluation
4. DAmortisation

Money or goods taken out of a sole trader's business for personal use are called:

1. ADividends
2. BExpenses
3. CDrawings
4. DLiabilities

A shop buys 100 units at €10, then 100 units at €12, and then sells 150 units. What is cost of sales using FIFO?

1. A€1,600
2. B€1,650
3. C€1,700
4. D€1,500

A company is being sued. Its lawyers say losing is possible but not probable. How is this treated under IAS 37?

1. AIgnored completely
2. BRecognised as a provision on the balance sheet
3. CDisclosed as a contingent liability in the notes
4. DRecognised as an expense and paid into a reserve

A project costs €100,000 and brings in €25,000 cash per year. What is its payback period?

1. A5 years
2. B25 years
3. C4 years
4. D2.5 years

A company's debt-to-equity ratio rises sharply. What does this usually indicate?

1. AHigher profitability
2. BBetter liquidity in the short term
3. CHigher financial risk because the company relies more on borrowed money
4. DThat shareholders invested more money

Inventory days are 60, receivable days 45 and payable days 30. What is the cash conversion (operating) cycle?

1. A75 days
2. B105 days
3. C135 days
4. D15 days