MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
Choose an option to check your answer.
A.
A guarantee of complete accuracy
B.
No assurance at all
C.
A high but not absolute level of assurance
D.
Assurance based only on management statements
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Correct Answer: C. A high but not absolute level of assurance
Explanation:
Audits reduce risk to an acceptably low level but cannot eliminate it.
Choose an option to check your answer.
A.
Its quantity only
B.
Its physical size
C.
Its relevance and reliability
D.
Its cost
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Correct Answer: C. Its relevance and reliability
Explanation:
Appropriate evidence must relate to the audit objective and come from dependable sources.
Choose an option to check your answer.
A.
A cost changing smoothly with every unit
B.
A historical cost
C.
A cost that can never be controlled
D.
A cost that remains fixed over a range and then jumps to a new level
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Correct Answer: D. A cost that remains fixed over a range and then jumps to a new level
Explanation:
Step costs increase when capacity limits are crossed.
Choose an option to check your answer.
A.
The person who delivers materials
B.
A fixed selling price
C.
A tax deduction
D.
A factor that causes or relates to the cost of an activity
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Correct Answer: D. A factor that causes or relates to the cost of an activity
Explanation:
Cost drivers explain resource consumption by activities.
Choose an option to check your answer.
A.
The external auditor
B.
The tax authority
C.
The bank
D.
Management
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Correct Answer: D. Management
Explanation:
Management prepares and fairly presents the financial statements.
Choose an option to check your answer.
A.
An oral statement by an employee
B.
An internally prepared schedule without controls
C.
A photocopy supplied by management
D.
A bank confirmation received directly by the auditor
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Correct Answer: D. A bank confirmation received directly by the auditor
Explanation:
Direct external confirmation reduces the risk of alteration by the client.
Choose an option to check your answer.
A.
The activity range within which cost assumptions are valid
B.
The range of selling prices only
C.
The period before incorporation
D.
The range of tax rates
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Correct Answer: A. The activity range within which cost assumptions are valid
Explanation:
Fixed and variable cost behavior is assumed within a practical operating band.
Choose an option to check your answer.
A.
It uses multiple drivers reflecting diverse overhead consumption
B.
It eliminates all indirect costs
C.
It ignores support activities
D.
It records only cash payments
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Correct Answer: A. It uses multiple drivers reflecting diverse overhead consumption
Explanation:
Products may use support activities in very different proportions.
Choose an option to check your answer.
A.
Freedom from relationships or influences that compromise objectivity
B.
Working without any standards
C.
Avoiding all communication with management
D.
Owning shares in the audit client
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Correct Answer: A. Freedom from relationships or influences that compromise objectivity
Explanation:
Independence must exist in fact and appearance.
Choose an option to check your answer.
A.
Examining records, documents, or tangible assets
B.
Watching a process being performed
C.
Asking questions only
D.
Recalculating ratios only
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Correct Answer: A. Examining records, documents, or tangible assets
Explanation:
Inspection may provide evidence about existence, terms, authorization, or condition.
Choose an option to check your answer.
A.
A future avoidable cost
B.
A past cost that cannot be changed by a current decision
C.
An opportunity benefit
D.
A variable manufacturing cost
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Correct Answer: B. A past cost that cannot be changed by a current decision
Explanation:
Sunk costs are irrelevant to choices between future alternatives.
Choose an option to check your answer.
A.
A method capitalizing all selling costs
B.
A method charging variable production costs to products and treating fixed production overhead as a period cost
C.
A method excluding direct materials
D.
A method used only for taxation
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Correct Answer: B. A method charging variable production costs to products and treating fixed production overhead as a period cost
Explanation:
Marginal costing emphasizes contribution and variable cost behavior.
