MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
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Correct Answer: C. A tax imposed on transactions, goods, or services
Explanation:
Indirect taxes are collected through transactions and may be shifted in prices.
Sales tax, VAT, and excise duties are examples.
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Correct Answer: C. A credit reduces tax directly, while a deduction reduces the tax base
Explanation:
A credit is applied after calculating tax.
A deduction lowers the income or value to which the rate applies.
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Correct Answer: C. VAT charged by a business on taxable sales
Explanation:
Output tax is collected from customers on taxable supplies.
Net VAT payable is generally output tax minus allowable input tax.
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Correct Answer: C. The risk that a borrower or counterparty will fail to meet obligations
Explanation:
Credit risk can result in delayed payment or loss of principal and interest.
Banks manage it through analysis, limits, collateral, and monitoring.
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Correct Answer: D. Personal income tax
Explanation:
Income tax is charged directly on taxable income.
The legal taxpayer is generally responsible for paying it.
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Correct Answer: D. The tax rate applied to the next unit of taxable income
Explanation:
The marginal rate affects the tax on additional income.
It may differ from the average tax rate.
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Correct Answer: D. Accepting deposits and providing loans and payment services
Explanation:
Commercial banks connect savers and borrowers and facilitate payments.
They earn income mainly from lending, fees, and financial services.
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Correct Answer: D. The risk that changing rates adversely affect earnings or asset values
Explanation:
Banks often have assets and liabilities repricing at different times.
Rate changes can therefore affect margins and economic value.
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Correct Answer: A. Value-added tax
Explanation:
VAT is imposed on consumption and collected through businesses.
Its burden may be passed to final consumers.
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Correct Answer: A. Total tax liability divided by the tax base or income
Explanation:
The average rate measures the overall percentage burden.
In a progressive system it is often below the marginal rate.
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Correct Answer: A. A deposit withdrawable on demand
Explanation:
Demand deposits include many current and checking accounts.
Customers can access funds without waiting for maturity.
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Correct Answer: A. Risk of loss from failed processes, people, systems, or external events
Explanation:
Operational risk includes fraud, cyber incidents, processing errors, and disruptions.
Controls, resilience, and oversight help reduce it.
