Finance and accounting aptitude: Practice 1

10 original teaching questions with answers and explanations.

Instructions for this set

Use only the stated simplified financial assumptions. A calculator is allowed. Figures are hypothetical and do not describe tax or investment rules.

Feedback mode has no time limit or negative marking. The optional timed challenge allows 15 minutes and uses the scoring shown on its rules screen. Those settings are not official assessment rules.

Practise with feedback Optional timed challenge

  1. 1. Revenue is $45,000 and total costs are $36,000 for the same period. What is profit margin as a percentage of revenue?
    1. 15%
    2. 20%
    3. 25%
    4. 80%

    Reference: q-54d40e60-118 · Report this question

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    Answer: B. 20%

    Profit is $45,000 minus the total costs of $36,000, or $9,000. Divide by $45,000 revenue to obtain 20%.
  2. 2. A product costs $64 and has a 25% markup on cost. What is its selling price?
    1. $76
    2. $80
    3. $85.33
    4. $89

    Reference: q-724c5eaf-77 · Report this question

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    Answer: B. $80

    Markup is 0.25 times 64 = $16. Selling price is $80.
  3. 3. Opening cash is $8,400, receipts are $5,600 and payments are $7,250. What is closing cash?
    1. $5,750
    2. $6,750
    3. $7,750
    4. $14,000

    Reference: q-4452fbfb-91 · Report this question

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    Answer: B. $6,750

    8,400 plus 5,600 minus 7,250 = $6,750.
  4. 4. A monthly cost budget is $12,000. Actual cost is $13,500. By what percentage did actual cost exceed budget?
    1. 10%
    2. 11.11%
    3. 12.5%
    4. 15%

    Reference: q-3356345b-108 · Report this question

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    Answer: C. 12.5%

    The excess is $1,500. Divide by the budget of $12,000 to obtain 12.5%.
  5. 5. A machine costs $18,000, has a $3,000 residual value and a five-year useful life. Using straight-line depreciation, what is annual depreciation?
    1. $2,400
    2. $3,000
    3. $3,600
    4. $4,200

    Reference: q-384da227-145 · Report this question

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    Answer: B. $3,000

    Depreciable amount is 18,000 minus 3,000 = $15,000. Spread equally over five years: $3,000 each year.
  6. 6. A business sells 400 units for $25 each. Variable cost is $15 per unit and fixed cost is $2,500 for the same period. These are the only costs. What is profit?
    1. $1,000
    2. $1,500
    3. $2,500
    4. $4,000

    Reference: q-1e711d14-159 · Report this question

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    Answer: B. $1,500

    Revenue is 400 times $25 = $10,000. Total cost is 400 times $15 plus $2,500 = $8,500. Profit is $1,500; equivalently, subtract the $2,500 fixed cost from $4,000 contribution.
  7. 7. Fixed cost is $6,000 and contribution per unit is $15. How many units are needed to break even?
    1. 300
    2. 350
    3. 400
    4. 450

    Reference: q-db8807b2-96 · Report this question

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    Answer: C. 400

    Break-even units equal fixed cost divided by contribution per unit: 6,000/15 = 400.
  8. 8. An invoice of $2,400 has a 2% early-payment discount applied to the whole invoice, with no other charges. What amount is paid?
    1. $2,352
    2. $2,376
    3. $2,400
    4. $2,448

    Reference: q-c12e2169-127 · Report this question

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    Answer: A. $2,352

    The discount is $48. Deduct it from $2,400 to obtain $2,352.
  9. 9. The cash ledger shows $9,200 but includes a $600 receipt entered twice. No other differences exist. What is the corrected balance?
    1. $8,000
    2. $8,600
    3. $9,800
    4. $10,400

    Reference: q-63c85ff4-131 · Report this question

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    Answer: B. $8,600

    Remove one duplicate $600 receipt from $9,200, leaving $8,600.
  10. 10. Annual revenue is $240,000. Domestic revenue is $156,000 and all remaining revenue is international. What share is international?
    1. 25%
    2. 30%
    3. 35%
    4. 65%

    Reference: q-68022bdc-130 · Report this question

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    Answer: C. 35%

    International revenue is $84,000. Its share is 84,000/240,000 = 35%.

Review your method

Return to the finance and accounting aptitude lesson and identify the reasoning step behind each mistake before repeating the set.

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