Financial accounting worksheet with answers

Revenue minus all expenses equals:

1. ACash flow
2. BGross profit, before operating expenses
3. CNet profit (or loss)
4. DEquity

Opportunity cost is:

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

Dividends paid to shareholders are recorded as:

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

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

1. AGeneral office overheads for the year
2. BStaff training costs after it starts operating
3. CInstallation costs needed to get it working
4. DRepairs carried out two years later

Cost of sales is €600,000 and average inventory is €100,000. What is the inventory turnover?

1. A0.17 times a year
2. B6 times a year
3. C16 times a year
4. D60 times a year

Why can a profitable company run out of cash?

1. AProfit includes credit sales and non-cash items, while cash may be tied up in receivables and inventory
2. BCash is not recorded in accounting
3. CProfit always equals cash
4. DProfitable companies never pay taxes

A company switches to a depreciation method that gives higher charges. Ignoring tax, what happens to cash flow?

1. ACash flow falls by the amount of the extra depreciation
2. BCash flow and profit both rise
3. CCash flow is unchanged, although profit falls
4. DCash flow rises by the extra depreciation

Under IFRS 15, revenue is recognised:

1. AWhen the contract is signed
2. BOnly when cash is received
3. CWhen (or as) the entity satisfies a performance obligation by transferring control to the customer
4. DAt the end of the financial year