Financial accounting worksheet with answers

At the break-even point:

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

A customer pays in advance for services the company will provide next year. At year end the money is shown as:

1. AA non-current asset
2. BRevenue of this year (cash received)
3. CAn expense of this year
4. DA liability (deferred revenue)

Where are transactions first recorded before they are posted to the ledger accounts?

1. AIn the trial balance
2. BIn books of prime entry, such as the journal
3. CIn the auditor's report
4. DIn the balance sheet

Which error will NOT be revealed by a trial balance?

1. AA debit posted without a matching credit
2. BA wrongly added ledger column
3. CA sale left out of the books entirely
4. DA balance copied to the wrong column

Current assets are €300,000 and current liabilities are €150,000. What is the current ratio?

1. A0.5
2. B4.5
3. C2.0
4. D1.5

The prudence (conservatism) concept suggests that accountants should:

1. AAlways record the highest possible profit to attract investors
2. BAvoid overstating assets and income under uncertainty
3. CIgnore possible losses
4. DValue assets at their selling price

Machine hours are scarce. Product X earns €20 contribution and needs 4 hours; product Y earns €15 and needs 2 hours. Which should be made first?

1. AX, because it earns more contribution per unit
2. BEither, because the total contribution is the same
3. CY, because it earns €7.50 per hour versus €5 for X
4. DX, because it uses more machine time

After the year end, but before the accounts are approved, a customer who owed money at year end goes bankrupt. Under IAS 10 this is:

1. AIgnored, because it happened after the year end
2. BA non-adjusting event, disclosed only
3. CAn adjusting event, so receivables are reduced
4. DA change in accounting policy