MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
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Correct Answer: D. The auditor cannot obtain sufficient evidence and the possible effects are material and pervasive
Explanation:
A disclaimer means the auditor does not express an opinion.
It can also result from severe independence problems under applicable rules.
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Correct Answer: D. Income remaining after allowable exclusions and deductions under tax law
Explanation:
Taxable income is the legally defined base for income tax.
It may differ from accounting income due to tax rules.
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Correct Answer: D. A deduction allocating qualifying asset cost over prescribed periods
Explanation:
Tax depreciation allows capital cost recovery according to statutory methods.
It may differ from financial accounting depreciation.
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Correct Answer: D. An asset pledged to secure repayment of a loan
Explanation:
Collateral reduces lender loss if the borrower defaults.
The lender may have legal rights over the pledged asset.
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Correct Answer: A. A compulsory payment imposed by government without a direct equivalent benefit
Explanation:
Taxes finance public services and other government functions.
The taxpayer does not receive an equal direct service for each payment.
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Correct Answer: A. An amount subtracted from income or the tax base
Explanation:
Deductions reduce the amount subject to tax.
Their benefit depends on the taxpayer's applicable marginal rate.
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Correct Answer: A. A consumption tax collected on value added at stages of production and distribution
Explanation:
VAT is collected by registered businesses with credit for tax on inputs.
The final burden is generally intended to fall on consumption.
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Correct Answer: A. A loan backed by collateral
Explanation:
Secured lending gives the bank a claim on specified assets.
It often carries lower risk than comparable unsecured lending.
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Correct Answer: B. A tax imposed directly on income, wealth, or a person
Explanation:
Direct taxes are charged on the taxpayer's income or property.
Income tax and property tax are common examples.
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Correct Answer: B. An amount subtracted directly from tax liability
Explanation:
Tax credits reduce tax payable rather than the tax base.
They may be refundable or nonrefundable depending on law.
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Correct Answer: B. VAT paid or payable on business purchases
Explanation:
Registered businesses may credit eligible input tax against output tax.
This prevents cascading tax through the supply chain.
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Correct Answer: B. A loan not backed by specific collateral
Explanation:
Unsecured lending relies primarily on the borrower's creditworthiness and promise to repay.
It may carry higher pricing due to risk.
