Accounting MCQs

Accounting MCQs

These Accounting multiple-choice questions and their answers will help you strengthen your grip on the subject of Accounting. You can prepare for an upcoming exam or job interview with these 50 Accounting MCQs.
So scroll down and start answering.

1: Which statement is not an advantage of robotic process automation (RPA)?

A.   Bots are more creative than humans

B.   Bots do no need to take time off

C.   Bots improve efficiency

D.   Bots can eliminate human errors

2: What effect does a contra asset account have on a balance sheet?

A.   A contra asset is not an accounting term

B.   A contra asset has a credit balance and therefore a negative effect on total assets

C.   A contra asset with a positive balance will increase overall liabilities

D.   A contra asset has a debit balance and therefore a positive effect on total assets

3: Internal controls may be preventative, detective, corrective, or directive. Which is a detective control?

A.   Data backups

B.   Physical inventory check

C.   Employee background checks

D.   Physical locks on inventory warehouse

4: On March 15, a business receives an invoice from the power company for utilities used in February. The retailer pays the invoice on April 1. The business uses accrual-based accounting. Which month should the business recognize the expense?

A.   April

B.   March

C.   No record required

D.   February

5: Which choice is a general guideline for adequate separation of duties to prevent both fraud and error?

A.   A person who has control over an asset should not safeguard that asset.

B.   A person who has temporary or permanent custody of an asset should not account for that asset.

C.   A person who has record-keeping responsibility should not make journal entries.

D.   A person who has operational responsibility should not authorize transactions for the area.

6: What does the cost of a unit of product under absorption costing method consist of?

A.   Direct materials, direct and indirect labor, and fixed overhead

B.   Direct materials, indirect labor, and variable and fixed overhead

C.   Direct materials, direct labor, and both variable and fixed overhead

D.   Direct materials, direct and indirect labor, and variable overhead

7: Which answer best describes accruals and deferrals?

A.   Accruals are past cash receipts and payments, while deferrals are expected future cash receipts and payments.

B.   Both accruals and deferrals are both expected future cash receipts and payments.

C.   Accruals are expected future cash receipts and payments, while deferrals are past cash receipts and payments.

D.   Both accruals and deferrals are not expected past cash receipts and payments.

8: What do you call a situation where more than one person collaborates to circumvent existing internal controls?

A.   Assigned responsibility

B.   Segregation of duties

C.   Fraud prevention

D.   Collusion

9: Which is not an example of an internal control activity?

A.   Review of manufacturing plan

B.   Segregation of duties

C.   Bank reconciliations

D.   Approval process

10: Which budgeting approach request justification of all expenditures?

A.   Zero-based budgeting

B.   Master budgeting

C.   Rolling budgets

D.   Bottom-up budgeting

11: What does the discontinued operations section of the income statement refer to?

A.   Disposal of a major product line or major geographical area of operations

B.   Sale of unused or obsolete equipment and discontinued inventory

C.   A plant shutdown or decommissioning of a facility

D.   Net income or loss for products completed and sold

12: How are the three financial statements (income, statement, balance sheet, and cash flow statement) linked?

A.   Only the assets are reflected in the cash flow statement, and the net income expenses correlate with the liabilities.

B.   The net income goes to retained earnings, but the cash flow remains independent.

C.   The gross profit goes to retained earning, and the shareholder equity total is added to the cash flow statement

D.   The net income goes to the retained earning and to the cash flow statement

13: Which is not one of the four perspectives of the balanced scorecard?

A.   Internal business

B.   Learning and growth

C.   Quantitative

D.   Customer

14: What would be deducted from the balance per books when doing a bank reconciliation?

A.   Deposits in transit

B.   Bank service fees

C.   Outstating checks

D.   Electronic fund transfers/payments

15: What situation could be the results of the three retails store employees sharing the same cash register?

A.   A thorough internal control activity

B.   A violation of assignment of responsibility

C.   A violation of segregation of duties

D.   A support process to avoid fraud

16: A firm has $1,000 in debt and $3,000 in assets. What is the firm's debt-to-equity ratio?

A.   3

B.   2

C.   0.5

D.   0.33

17: What is the purpose of an operational audit?

A.   Assessing the company's compliance with environmental laws and regulations

B.   Evaluating whether the organization is meeting the metrics set by management in order to achieve the goals and objectives set forth by the board of directors

C.   Assessing the organization's control mechanisms for overall efficiency and reliability

D.   Evaluating compliance with applicable laws, regulations, policies, and procedures

18: Which choice is not a component of internal control?

A.   Information and communication

B.   Risk mitigation

C.   Monitoring

D.   Control environment

19: What is the difference between the cost of an asset and the accumulated depreciation for that asset?

A.   Depreciation value

B.   Prepaid asset

C.   Depreciation expense

D.   Book value

20: A company budgeted 1,200 washers, but only 1,000 are produced. It costs $10 to produce a widget. What is the materials variance?

A.   200

B.   2000

C.   350

D.   20

21: Who does an audit committee report to?

A.   External auditors

B.   Senior management

C.   Board of directors

D.   Union of employee representatives

22: Which section of a financial annual report describes the corporation's accounting methods?

A.   Notes to the financial statements

B.   An auditor's report

C.   Listing of the stockholders

D.   Management discussion and analysis

23: A favorable efficiency variance for direct manufacturing labor indicates that ________.

A.   A lower wage rate than planned was paid for direct labor

B.   A higher wage rate than planned was paid for direct labor

C.   Less direct manufacturing labor-hours were used during production than planned for actual output

D.   More direct manufacturing labor-hours were used during production than planned for actual output

24: In the table above at an output of four units the amount of normal profit is _________ .

A.   Positive Figure

B.   Negative Figure

C.   Zero

25: The comprehensive planning document for the entire organization is called the ______ budget.

A.   Master

B.   Operating

C.   Financial

D.   None of these

26: Creating the conceptual design and selecting dbms software are part of the ____ phase of the dblc.

A.   Planning

B.   Implementation

C.   Database design

D.   Verification

E.   Operation

27: The highminuslow method basically fits a line through the highest and lowest ________ points.

A.   Variable cost

B.   Volume

C.   Fixed cost

D.   None of the above ..

28: The cash basis of accounting ignores ________.

A.   Payables

B.   Liabilities

C.   Unearned revenue

D.   Receivables

29: The revenue recognition principle guides accountants in ________.

A.   Ensuring only revenues received in cash are recorded

B.   Determining when to record expenses

C.   Determining when to record revenues

D.   Ensuring expenses are deducted from revenues

30: The sales discounts forfeited account ________.

A.   Is a contra Sales Revenue account

B.   Represents additional sales revenue

C.   Is a balance sheet account

D.   Represents the discount lost when a customer does not pay within the discount period

31: Under the perpetual inventory system, discounts taken on an invoice by the buyer would be ________.

A.   Cost of goods sold

B.   Credited to cost of goods sold

C.   Net sales revenue

D.   Credited to merchandise inventory

32: _____ precisely indicates how much of a firm's sales is converted into profits.

A.   Break-even price

B.   Working capital turnover

C.   Return on revenue

D.   Inventory turnover

33: Long-term investments are made by the investment center manager for the purpose of ________.

A.   Increasing profits

B.   Decreasing profits

C.   Increasing interest expense

D.   Decreasing plant assets

34: When a note receivable is honored, cash is debited for the note's ________ value.

A.   Maturity value

B.   Face value

C.   Cash realizable value

D.   Net realizable value

35: The ultimate control of the corporation rests with the ________.

A.   Board of directors

B.   Stockholders

C.   Chairperson

D.   Chief operating officer

36: Agency costs are likely to arise when _____.

A.   Principals and agents have same goals

B.   Principals and agents have different goals

C.   Both a and b

D.   None of the above

37: A__________________ communicates general rules that cut across the entire organization.

A.   Build, Acquire, and Implement

B.   Audits

C.   Policy principles document.

D.   Evaluate, Assess, and Perform

38: This purchase of paper ______ part of gdp because the paper is ______ good.

A.   Is​ not; an intermediate

B.   The fraction of a change in disposable income that is saved

C.   Aggregate Demand; recessionary gap

D.   Only the value of the bread sold in a​ store;

39: A ____ deals with the preparation for and recovery from a disaster, whether natural or man-made.

A.   Incident Response Planning

B.   Business Continuity Plan

C.   Types of Security Policies

D.   Disaster Recovery Planning

40: Evaluated receipts settlement is ________.

A.   A streamlined process that bypasses paper documents altogether

B.   A process that eliminates the need for separation of duties

C.   A procedure that compresses the payment approval process into a single step by comparing the receiving report to the purchase order

D.   None of above

41: Explicit costs of an ipo tend to be around ______ of the funds raised.

A.   1%

B.   7%

C.   15%

D.   25%

42: After john garcia became sick after eating licorice; the licorice then became a(n) __________.

A.   Chocolate

B.   Licorice

C.   Both a and b

D.   None of the above

43: Generally, debt consolidation loans ____ monthly payments and ____ the interest rate on the debt.

A.   Increase; increase

B.   Decrease; decrease

C.   Decrease; increase

D.   Increase; decrease

44: The goal of working capital management is to ________.

A.   Achieve a balance between short-term and long-term liabilities so that they add to the achievement of a firm's overall goals

B.   Achieve a balance between a firm's non-current assets and non-current liabilities

C.   Achieve a balance between profitability and risk that contributes positively to a firm's value

D.   Achieve a balance between short-term and long-term assets so that they add to the achievement of a firm's overall goals

45: Under bush 43, the u.s. budget deficit neared __________ trillion dollars a year.

A.   1

B.   2

C.   3

D.   4

46: A credit card would be an example of a(n) ____________________ loan.

A.   Installment loan

B.   Secured loan

C.   Open-end

D.   Teaser rate

47: Stockbrokers loan money to clients who have ____ accounts.

A.   Services

B.   Goods

C.   Money

D.   Margin

48: Other variable costs per unit subtracted from total cogs per unit equals ________.

A.   Contribution margin per unit

B.   Survive five or more years

C.   Public employee credit union

D.   Utilities and rent

49: Elements of tone include _____.

A.   Details

B.   Dialogue

C.   Imagery

D.   Setting

50: A factor which has been a major reason for heightened interest in business ethics is ________.

A.   Corporate collapses

B.   Investors who are uneducated and unaware

C.   Decreased corporate governance

D.   Decreased profits