MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
Choose an option to check your answer.
A.
The exact actual cost
B.
A sunk cost
C.
A market price
D.
A predetermined benchmark cost for a unit or activity
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Correct Answer: D. A predetermined benchmark cost for a unit or activity
Explanation:
Standards specify expected quantities and prices under defined conditions.
Choose an option to check your answer.
A.
Occurrence
B.
Completeness
C.
Authorization
D.
Valuation and allocation
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Correct Answer: D. Valuation and allocation
Explanation:
Valuation addresses measurement, estimates, and allocation.
Choose an option to check your answer.
A.
A cost that remains constant in total within the relevant range
B.
A cost constant per unit at all volumes
C.
A cost that always increases with sales
D.
A cost paid once only
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Correct Answer: A. A cost that remains constant in total within the relevant range
Explanation:
Total fixed cost does not change with activity within the relevant range.
Choose an option to check your answer.
A.
Applied overhead is less than actual overhead
B.
Applied overhead exceeds actual overhead
C.
Actual overhead equals applied overhead
D.
No overhead was incurred
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Correct Answer: A. Applied overhead is less than actual overhead
Explanation:
Underapplication means production received too little overhead allocation.
Choose an option to check your answer.
A.
Actual cost is lower than standard cost for the actual output
B.
Actual cost exceeds standard cost
C.
Actual revenue is below budget
D.
No standard exists
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Correct Answer: A. Actual cost is lower than standard cost for the actual output
Explanation:
A favorable cost variance means fewer resources or lower prices were used than expected.
Choose an option to check your answer.
A.
Information used by the auditor to reach conclusions
B.
Only written management representations
C.
The final audit opinion
D.
Only the accounting ledger
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Correct Answer: A. Information used by the auditor to reach conclusions
Explanation:
Evidence may come from inspection, observation, confirmation, recalculation, and analysis.
Choose an option to check your answer.
A.
A cost constant in total
B.
A cost that changes in total in proportion to activity
C.
A cost unrelated to volume
D.
A sunk cost
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Correct Answer: B. A cost that changes in total in proportion to activity
Explanation:
Total variable cost rises or falls with activity.
Choose an option to check your answer.
A.
Actual overhead exceeds applied overhead
B.
Applied overhead exceeds actual overhead
C.
No overhead was applied
D.
Direct costs exceed indirect costs
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Correct Answer: B. Applied overhead exceeds actual overhead
Explanation:
Overapplication means assigned overhead is greater than actual overhead incurred.
Choose an option to check your answer.
A.
To guarantee that no fraud exists
B.
To express an opinion on whether the financial statements are fairly presented
C.
To prepare the financial statements
D.
To manage the client's operations
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Correct Answer: B. To express an opinion on whether the financial statements are fairly presented
Explanation:
An external audit provides reasonable assurance about the financial statements.
Choose an option to check your answer.
A.
The relevance and reliability of evidence
B.
The quantity of evidence
C.
The cost of the audit
D.
The wording of the report
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Correct Answer: B. The quantity of evidence
Explanation:
Sufficiency concerns how much evidence is obtained.
Choose an option to check your answer.
A.
A cost that is entirely fixed
B.
A cost that is entirely variable
C.
A cost containing both fixed and variable components
D.
A cost already incurred
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Correct Answer: C. A cost containing both fixed and variable components
Explanation:
Mixed costs include a base amount plus an activity-related amount.
Choose an option to check your answer.
A.
A method assigning all overhead by one volume measure
B.
A cash accounting system
C.
A system assigning overhead through activities and cost drivers
D.
A tax assessment method
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Correct Answer: C. A system assigning overhead through activities and cost drivers
Explanation:
ABC recognizes that different activities consume resources differently.
