MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
Choose an option to check your answer.
A.
Assuming management is dishonest in every case
B.
A questioning mind and critical assessment of audit evidence
C.
Accepting all explanations without evidence
D.
Avoiding professional judgment
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Correct Answer: B. A questioning mind and critical assessment of audit evidence
Explanation:
Professional skepticism requires alertness to contradictions and possible misstatement.
Choose an option to check your answer.
A.
Sending a letter to a customer
B.
Watching a process or procedure being performed
C.
Comparing financial ratios
D.
Inspecting title deeds
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Correct Answer: B. Watching a process or procedure being performed
Explanation:
Observation provides evidence about performance at a particular time.
Choose an option to check your answer.
A.
A recorded accounting expense in every case
B.
A past unavoidable cost
C.
The benefit sacrificed by choosing one alternative over another
D.
An allocated overhead
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Correct Answer: C. The benefit sacrificed by choosing one alternative over another
Explanation:
Opportunity cost measures the value of the next-best alternative forgone.
Choose an option to check your answer.
A.
Sales revenue minus fixed costs
B.
Gross profit minus tax only
C.
Sales revenue minus variable costs
D.
Assets minus liabilities
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Correct Answer: C. Sales revenue minus variable costs
Explanation:
Contribution first covers fixed costs and then profit.
Choose an option to check your answer.
A.
The risk that the client earns a loss
B.
The risk that audit fees are unpaid
C.
The risk that the auditor gives an inappropriate opinion on materially misstated statements
D.
The risk of every minor error
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Correct Answer: C. The risk that the auditor gives an inappropriate opinion on materially misstated statements
Explanation:
Audit risk concerns failure to detect a material misstatement before issuing the opinion.
Choose an option to check your answer.
A.
Asking management to confirm its own balance
B.
Reviewing an internal memo
C.
Obtaining a direct written response from a third party
D.
Comparing current and prior-year totals
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Correct Answer: C. Obtaining a direct written response from a third party
Explanation:
Confirmations are commonly used for bank balances and receivables.
Choose an option to check your answer.
A.
Any historical cost
B.
Every allocated fixed cost
C.
A cost identical under all choices
D.
A future cost that differs between decision alternatives
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Correct Answer: D. A future cost that differs between decision alternatives
Explanation:
Relevant costs are avoidable and differential future amounts.
Choose an option to check your answer.
A.
10
B.
30
C.
80
D.
20
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Correct Answer: D. 20
Explanation:
Unit contribution equals selling price minus variable cost.
Choose an option to check your answer.
A.
The risk that audit procedures fail
B.
The risk that controls fail to prevent or detect misstatement
C.
The risk of issuing a qualified opinion
D.
The susceptibility of an assertion to material misstatement before considering controls
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Correct Answer: D. The susceptibility of an assertion to material misstatement before considering controls
Explanation:
Some accounts or transactions are naturally more complex, judgmental, or fraud-prone.
Choose an option to check your answer.
A.
Repeating a control independently
B.
Observing employees
C.
Interviewing management
D.
Checking the mathematical accuracy of documents or records
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Correct Answer: D. Checking the mathematical accuracy of documents or records
Explanation:
Recalculation verifies arithmetic such as depreciation or invoice totals.
Choose an option to check your answer.
A.
A system accumulating costs separately for distinct jobs or batches
B.
A system averaging costs over continuous identical production only
C.
A method of recording sales tax
D.
A cash budgeting method
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Correct Answer: A. A system accumulating costs separately for distinct jobs or batches
Explanation:
Job costing suits customized or distinguishable work.
Choose an option to check your answer.
A.
Contribution margin divided by sales revenue
B.
Fixed cost divided by sales
C.
Profit divided by assets
D.
Variable cost divided by fixed cost
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Correct Answer: A. Contribution margin divided by sales revenue
Explanation:
The ratio shows contribution earned from each unit of sales currency.
