MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
Choose an option to check your answer.
A.
A chronological list of transactions only
B.
A cash budget
C.
An audit report
D.
A collection of individual accounts
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Correct Answer: D. A collection of individual accounts
Explanation:
The ledger groups transaction effects by account.
Choose an option to check your answer.
A.
An account updated only at year-end
B.
A fixed asset
C.
A liability
D.
An account updated continuously for purchases and sales
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Correct Answer: D. An account updated continuously for purchases and sales
Explanation:
A perpetual system records inventory and cost of sales with each transaction.
Choose an option to check your answer.
A.
The entity will liquidate immediately
B.
The entity never makes losses
C.
The entity has unlimited cash
D.
The entity is expected to continue operating for the foreseeable future
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Correct Answer: D. The entity is expected to continue operating for the foreseeable future
Explanation:
Going concern supports measuring assets and liabilities on a continuing-use basis.
Choose an option to check your answer.
A.
Transferring journal entries to ledger accounts
B.
Preparing a bank deposit
C.
Closing the business
D.
Calculating tax only
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Correct Answer: A. Transferring journal entries to ledger accounts
Explanation:
Posting updates each relevant ledger account from the journal.
Choose an option to check your answer.
A.
Inventory determined by physical count at the end of the period
B.
Inventory updated after each sale
C.
Inventory recorded as an expense immediately
D.
Inventory ignored in accounts
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Correct Answer: A. Inventory determined by physical count at the end of the period
Explanation:
Periodic systems do not continuously update cost of goods sold.
Choose an option to check your answer.
A.
Information is material if its omission or misstatement could influence users' decisions
B.
Every small error must always change the audit opinion
C.
Only cash items are material
D.
Materiality depends only on transaction count
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Correct Answer: A. Information is material if its omission or misstatement could influence users' decisions
Explanation:
Materiality depends on size, nature, and context.
Choose an option to check your answer.
A.
A final audited financial statement
B.
A list of ledger balances used to check equality of debits and credits
C.
A list of only cash transactions
D.
A tax return
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Correct Answer: B. A list of ledger balances used to check equality of debits and credits
Explanation:
A trial balance tests the arithmetic equality of debit and credit balances.
Choose an option to check your answer.
A.
The latest costs
B.
The earliest costs
C.
Average replacement costs
D.
The highest costs only
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Correct Answer: B. The earliest costs
Explanation:
FIFO assumes the oldest inventory units are sold first.
Choose an option to check your answer.
A.
A cost shared by all departments only
B.
A cost that can be traced economically to a specific cost object
C.
A cost unrelated to production
D.
A cost that never changes
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Correct Answer: B. A cost that can be traced economically to a specific cost object
Explanation:
Direct costs can be identified with a product, job, service, or department.
Choose an option to check your answer.
A.
Posting only one side of an entry
B.
Adding the debit column incorrectly
C.
Complete omission of a transaction
D.
Recording unequal debit and credit amounts
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Correct Answer: C. Complete omission of a transaction
Explanation:
If a transaction is omitted entirely, neither debit nor credit is recorded.
Choose an option to check your answer.
A.
Uses only the oldest cost
B.
Uses only the newest cost
C.
Assigns an average unit cost to inventory and cost of sales
D.
Uses selling price instead of cost
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Correct Answer: C. Assigns an average unit cost to inventory and cost of sales
Explanation:
Weighted average blends the costs of available units.
Choose an option to check your answer.
A.
A cost paid only in cash
B.
A cost that is always fixed
C.
A cost that cannot be traced economically to one cost object
D.
A cost charged directly to one job
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Correct Answer: C. A cost that cannot be traced economically to one cost object
Explanation:
Indirect costs support multiple cost objects and require allocation.
