Financial accounting worksheet with answers

A variable cost is a cost that:

1. AChanges in total in proportion to the level of activity
2. BIs paid only once when a business starts
3. CStays the same in total within the relevant range of output
4. DIs never included in product costs

In double-entry bookkeeping, every transaction:

1. AIncreases both assets and expenses equally
2. BIs recorded with equal debits and credits
3. CMust involve cash
4. DIs recorded only once

Which financial statement shows a company's financial position at one moment in time?

1. AThe statement of changes in equity over the year
2. BThe income statement
3. CThe cash flow statement
4. DThe balance sheet

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

An asset costs €50,000, has a residual value of €5,000 and a useful life of 5 years. What is the annual straight-line depreciation?

1. A€5,000
2. B€11,000
3. C€10,000
4. D€9,000

A product sells for €40 and has a variable cost of €30. What is its contribution-to-sales (C/S) ratio?

1. A75%
2. B33%
3. C25%
4. D10%

When does activity-based costing (ABC) give the biggest improvement over traditional absorption costing?

1. AWhen all costs are variable with labour hours
2. BWhen a firm makes only one standard product
3. CWhen overheads are large and driven by activities like set-ups rather than volume
4. DWhen overheads are very small compared with direct costs

The going concern assumption means financial statements are prepared assuming the entity:

1. AWill make a profit every year
2. BHas no debts
3. CWill be sold within one year
4. DWill continue to operate for the foreseeable future