MCQ Collection
Accounting and Finance MCQs
Practice Accounting and Finance questions with answers and explanations.
Choose an option to check your answer.
A.
Government use of taxation and expenditure to influence the economy
B.
Central-bank control of interest rates
C.
Company dividend policy
D.
Commercial bank lending policy
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Correct Answer: A. Government use of taxation and expenditure to influence the economy
Explanation:
Fiscal policy affects aggregate demand, resource allocation, and income distribution.
Choose an option to check your answer.
A.
Maximizing sales regardless of cost
B.
Maximizing long-term shareholder value
C.
Eliminating all business risk
D.
Holding the largest possible cash balance
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Correct Answer: B. Maximizing long-term shareholder value
Explanation:
Corporate finance generally focuses on sustainable value creation for owners.
Choose an option to check your answer.
A.
Preparing the annual sales budget only
B.
Evaluating long-term investment projects
C.
Managing daily petty cash
D.
Recording payroll
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Correct Answer: B. Evaluating long-term investment projects
Explanation:
Capital budgeting analyzes projects with multi-period cash flows.
Choose an option to check your answer.
A.
The life of a fixed asset
B.
The time from acquiring inventory to collecting cash from customers
C.
The period between dividend payments
D.
The time to issue shares
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Correct Answer: B. The time from acquiring inventory to collecting cash from customers
Explanation:
The operating cycle includes inventory holding and receivable collection periods.
Choose an option to check your answer.
A.
Reducing spending and increasing taxes
B.
Increasing spending or reducing taxes to support aggregate demand
C.
Raising policy interest rates
D.
Selling government assets only
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Correct Answer: B. Increasing spending or reducing taxes to support aggregate demand
Explanation:
Expansionary fiscal policy aims to increase economic activity during weakness.
Choose an option to check your answer.
A.
Money always loses all value after one year
B.
Future money is always worth more than present money
C.
A unit of money today is worth more than the same unit received later
D.
Timing has no effect on value
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Correct Answer: C. A unit of money today is worth more than the same unit received later
Explanation:
Current money can be invested to earn a return.
Choose an option to check your answer.
A.
Accounting profit divided by investment
B.
Future value of revenue only
C.
Present value of project cash inflows minus present value of cash outflows
D.
Cash inflows minus depreciation
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Correct Answer: C. Present value of project cash inflows minus present value of cash outflows
Explanation:
NPV measures the value added after covering the required return.
Choose an option to check your answer.
A.
Current assets divided by current liabilities
B.
Sales minus variable costs
C.
Inventory days plus receivable days minus payable days
D.
Debt plus equity
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Correct Answer: C. Inventory days plus receivable days minus payable days
Explanation:
The cash conversion cycle measures how long cash is tied up in operations.
Choose an option to check your answer.
A.
Increasing spending and cutting taxes
B.
Lowering reserve requirements
C.
Reducing spending or increasing taxes to restrain aggregate demand
D.
Expanding bank credit
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Correct Answer: C. Reducing spending or increasing taxes to restrain aggregate demand
Explanation:
Contractionary policy may be used to reduce inflationary pressure or deficits.
Choose an option to check your answer.
A.
The current value of a future payment
B.
The accounting book value of an asset
C.
The face value of a share
D.
The amount to which a present sum grows after earning returns
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Correct Answer: D. The amount to which a present sum grows after earning returns
Explanation:
Future value compounds the present amount over time.
Choose an option to check your answer.
A.
NPV is negative
B.
Payback is longest
C.
Accounting profit is zero
D.
NPV is positive
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Correct Answer: D. NPV is positive
Explanation:
Positive NPV means the project is expected to earn more than the required return.
Choose an option to check your answer.
A.
Cash divided by sales
B.
Total debt divided by equity
C.
Profit divided by assets
D.
Current assets divided by current liabilities
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Correct Answer: D. Current assets divided by current liabilities
Explanation:
The current ratio is a broad measure of short-term liquidity.
