Financial Accounting
67 practice questions with explanations — 15 free to try
PassNova has 67 ACCA Applied Knowledge practice questions on Financial Accounting, each with a clear explanation. A 15-question taster is free with no sign-up; the full bank is part of PassNova Premium. Updated for 2026.
Financial Accounting: example questions & answers
5 worked examples with answers and explanations below. Try 15 ACCA Applied Knowledge questions free in the browser; the full 67-question Financial Accounting bank is part of PassNova Premium.
Which of the following items would appear in a company's Statement of Financial Position (Balance Sheet)?
- ATrade payables owed to suppliers✓
- BDepreciation charge for the current year
- CRevenue from sales in the year
- DCost of goods sold during the year
Answer: Trade payables are a current liability appearing on the Statement of Financial Position. Revenue, depreciation, and cost of goods sold are income statement items reflecting performance over an accounting period.
The accounting equation is:
- AAssets = Liabilities − Equity
- BAssets = Liabilities + Equity✓
- CAssets + Equity = Liabilities
- DAssets − Liabilities = Revenue
Answer: The fundamental accounting equation states that Assets = Liabilities + Equity. This equation must always balance and underpins the double-entry bookkeeping system used in all financial reporting.
A business has opening inventory of £12,000, purchases of £68,000, and closing inventory of £15,000. What is the Cost of Goods Sold?
- A£65,000✓
- B£80,000
- C£55,000
- D£71,000
Answer: COGS = Opening inventory + Purchases − Closing inventory = £12,000 + £68,000 − £15,000 = £65,000. This represents the cost of inventory actually consumed or sold during the accounting period.
What does the term 'going concern' assume in the preparation of financial statements?
- AThe business will continue to operate for the foreseeable future✓
- BAll assets will be sold at their current market value
- CThe business is currently generating a profit
- DThe business will cease trading within 12 months
Answer: The going concern assumption means financial statements are prepared on the basis the entity will continue operating for the foreseeable future, with no intention to liquidate or materially curtail operations.
A business purchases equipment for £50,000. Using straight-line depreciation over 5 years with no residual value, what is the annual depreciation charge?
- A£12,500
- B£10,000✓
- C£5,000
- D£8,000
Answer: Straight-line depreciation = (Cost − Residual value) ÷ Useful life = (£50,000 − £0) ÷ 5 = £10,000 per year. This spreads the cost evenly across the asset's entire useful life.