MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
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Correct Answer: B. Arranging affairs within the law to reduce tax liability
Explanation:
Tax avoidance uses legal provisions, though aggressive schemes may be challenged by anti-avoidance rules.
It differs from illegal evasion.
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Correct Answer: B. The central bank provides emergency liquidity to eligible financial institutions
Explanation:
Emergency central-bank lending can prevent temporary liquidity problems from spreading.
It is normally subject to safeguards and conditions.
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Correct Answer: B. A payment instrument issued and guaranteed by a bank
Explanation:
The bank receives funds before issuing the draft.
This makes it more secure than an ordinary personal cheque.
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Correct Answer: C. An independent assurance and consulting activity within an organization
Explanation:
Internal audit evaluates governance, risk management, and controls.
It reports within the organization while maintaining functional independence.
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Correct Answer: C. A tax calculated as a percentage of value
Explanation:
Ad valorem means according to value.
Sales and property taxes are often calculated this way.
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Correct Answer: C. Correct registration, recordkeeping, filing, and payment under tax law
Explanation:
Compliance covers both accurate reporting and timely payment.
Good systems aim to make voluntary compliance easier.
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Correct Answer: C. Cash and balances held to meet withdrawals and regulatory requirements
Explanation:
Reserves support settlement and liquidity.
Some reserves may be required by regulation or held voluntarily.
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Correct Answer: C. Moving money electronically between accounts
Explanation:
Electronic transfers use banking and payment networks.
They may be domestic, international, immediate, or scheduled.
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Correct Answer: D. An intentional act involving deception to obtain an unjust or illegal advantage
Explanation:
Fraud involves intent, unlike error.
Financial reporting fraud and asset misappropriation are major categories.
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Correct Answer: D. A fixed amount charged per physical unit
Explanation:
Specific taxes use units such as liters, kilograms, or cigarettes.
The liability does not directly change with the product's price.
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Correct Answer: D. An examination of a taxpayer's return and records by the tax authority
Explanation:
A tax audit checks whether tax has been calculated and reported correctly.
It may focus on selected issues or the full return.
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Correct Answer: D. The minimum proportion of certain deposits banks must hold as reserves
Explanation:
Reserve requirements influence liquidity and potential credit creation.
Their use varies across monetary systems.
