Financial Accounting
79 practice questions with explanations — 15 free to try
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PassNova has 79 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 79-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 statement of profit or loss 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.