Financial accounting worksheet with answers

In double-entry bookkeeping, every transaction:

1. AIs recorded with equal debits and credits
2. BIs recorded only once
3. CIncreases both assets and expenses equally
4. DMust involve cash

What is the main purpose of a trial balance?

1. ATo list all customers who owe money
2. BTo prove that no errors of any kind exist in the ledger accounts
3. CTo show the company's profit for the year
4. DTo check that total debits equal total credits in the ledger

A sunk cost is:

1. AA cost already incurred that cannot be recovered
2. BA cost that will be paid next year
3. CA cost saved by a decision
4. DA cost that changes in total with the level of output

Which inventory valuation method assumes the oldest goods are sold first?

1. AFIFO (first in, first out)
2. BWeighted average cost
3. CSpecific identification of each item
4. DLIFO (last in, first out)

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. BA gain on disposal of €1,000
3. CA loss on disposal of €1,000
4. DRevenue of €4,000

Operating profit is €120,000 and interest expense is €30,000. What is interest cover?

1. A0.25 times
2. B90,000 times
3. C4 times
4. D3 times

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

1. AAdded back to net profit because it is a non-cash expense
2. BShown in financing activities
3. CIgnored completely
4. DSubtracted from net profit

Company P buys 70% of the voting shares of S and gains control. How does P report S in its group accounts?

1. AAdd only 70% of each of S's assets, liabilities, income and expenses
2. BConsolidate 100% of S line by line and show a non-controlling interest
3. CShow one equity-method investment line for its 70% share of S
4. DKeep the investment at cost and report only the dividends received from S