MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
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A.
Expenditure exceeds revenue
B.
A budget in which revenue equals expenditure
C.
Revenue exceeds expenditure
D.
No taxes are collected
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Correct Answer: B. A budget in which revenue equals expenditure
Explanation:
A balanced budget has neither a fiscal deficit nor surplus under the stated measure.
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A.
It guarantees more borrowing
B.
It eliminates inflation immediately
C.
It tends to make borrowing more expensive and reduce credit demand
D.
It has no effect on financial conditions
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Correct Answer: C. It tends to make borrowing more expensive and reduce credit demand
Explanation:
Higher policy rates normally raise market funding and loan costs.
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A.
A fixed debt obligation
B.
A bank reserve
C.
An ownership interest with residual claims and usually voting rights
D.
A tax certificate
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Correct Answer: C. An ownership interest with residual claims and usually voting rights
Explanation:
Common shareholders own part of the company.
Choose an option to check your answer.
A.
A shortage of government agencies
B.
A difference between cash and profit
C.
Conflict of interest between principals and agents
D.
A tax dispute
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Correct Answer: C. Conflict of interest between principals and agents
Explanation:
Managers may pursue goals that differ from shareholders' interests.
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A.
Revenue exceeds expenditure
B.
Exports exceed imports
C.
Government expenditure exceeds government revenue
D.
Assets exceed liabilities
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Correct Answer: C. Government expenditure exceeds government revenue
Explanation:
A deficit requires financing through borrowing, reserves, or other means.
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A.
A commercial bank selling insurance
B.
A government collecting sales tax
C.
A company issuing shares
D.
Central-bank purchase or sale of securities to influence liquidity
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Correct Answer: D. Central-bank purchase or sale of securities to influence liquidity
Explanation:
Purchases generally add reserves to the banking system, while sales withdraw them.
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A.
Interest paid to bondholders
B.
A tax paid to government
C.
A loan installment
D.
A distribution of company earnings or assets to shareholders
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Correct Answer: D. A distribution of company earnings or assets to shareholders
Explanation:
Dividends may be paid in cash or shares.
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A.
The process of preparing tax returns
B.
A method of pricing bonds
C.
A bank's cash management
D.
The system by which companies are directed, controlled, and held accountable
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Correct Answer: D. The system by which companies are directed, controlled, and held accountable
Explanation:
Governance allocates rights and responsibilities among boards, managers, owners, and stakeholders.
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A.
Expenditure exceeds revenue
B.
Imports exceed exports
C.
Debt exceeds assets
D.
Government revenue exceeds government expenditure
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Correct Answer: D. Government revenue exceeds government expenditure
Explanation:
A surplus allows debt reduction, reserve accumulation, or future spending.
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A.
Prohibition of riba
B.
Requirement of unlimited speculation
C.
Prohibition of all profit
D.
Mandatory unsecured lending
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Correct Answer: A. Prohibition of riba
Explanation:
Islamic finance prohibits riba and emphasizes lawful trade and risk-sharing structures.
Choose an option to check your answer.
A.
A hybrid security with priority over common stock in dividends and liquidation
B.
A secured bank loan
C.
A common share with unlimited votes
D.
A tax-free bond in every case
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Correct Answer: A. A hybrid security with priority over common stock in dividends and liquidation
Explanation:
Preferred shares often pay a stated dividend and usually have limited voting rights.
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A.
Current assets minus current liabilities
B.
Total assets minus equity
C.
Revenue minus expenses
D.
Cash plus long-term debt
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Correct Answer: A. Current assets minus current liabilities
Explanation:
Net working capital measures short-term financial capacity.
