Finance MCQs

Finance MCQs

Try to answer these 800+ Finance MCQs and check your understanding of the Finance subject. Scroll down and let's begin!

1: ________ is shown on a multiple-step but not on a single-step income statement.

A.   Credited to Inventory

B.   A customer utilizes a prompt payment incentive.

C.   Debited to the Inventory account

D.   Gross profit

2: A lorenz curve graphs the _________________ received by everyone up to a certain quintile.

A.   Unequal distribution over time

B.   Normative shares of income

C.   Cumulative shares of income

D.   Total share of income

3: Abc systems ________.

A.   Highlight the different levels of activities

B.   Limit cost drivers to units of output

C.   Allocate costs based on the overall level of activity

D.   Generally undercost complex products

4: Actual costing is a costing system that traces direct costs to a cost object by ________.

A.   A cost-allocation base can be either financial or nonfinancial

B.   Using the actual direct cost rates times the actual quantities of the direct-cost inputs

C.   Budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base

5: As a rule of thumb, your piti costs shouldn't exceed ________ of your pretax monthly income.

A.   8 percent

B.   18 percent

C.   28 percent

D.   48 percent

6: Budgeted costs are ________.

A.   The costs incurred this year

B.   The costs incurred last year

C.   Planned or forecasted costs

D.   Competitor's costs

7: Changing the method of valuing inventory ignores the principle of ________.

A.   Lower of cost or market

B.   Specific identification

C.   Consistency

D.   Ending inventory comes from the most recent purchases

8: Financial statements are prepared from the balances in a(n) ________.

A.   Unadjusted trial balance

B.   Adjusted trial balance

C.   Chart of accounts

D.   General journal

9: Holders of equity capital ________.

A.   Own the firm

B.   Receive interest payments

C.   Receive guaranteed income

D.   Have loaned money to the firm

10: If you oppose ______, you will likely argue that ______.

A.   Industrial policy; governments, not the free market, should determine which sectors succeed and fail

B.   Anti-cabotage laws; the government doesn't need to support basic research

C.   Industrial policy; the free market, not governments, should determine which sectors succeed and fail

D.   Anti-cabotage laws; the private sector doesn't always support basic research

11: Machine setminusup would most likely be classified as a ________ cost.

A.   Unit-level

B.   Decrease

C.   Batch-level

D.   None of these

12: Managerial accounting information for a company is primarily used by ________.

A.   Work-in-Process Inventory account

B.   It provides information to investors needed for their investment decisions.

C.   The cost of those goods that were completed during the period

D.   Its employees to​ plan, direct and control operations

13: Prior period adjustments ________.

A.   Always increase the beginning balance of retained earning

B.   Are shown on the statement of retained earnings as corrections to the beginning balance

C.   Affect balance sheet accounts only and must be included on single-step income statement

D.   Must be included as a separate line item on a multi-step income statement

14: The revenue recognition principle guides accountants in ________.

A.   Determining when to record revenues

B.   Depreciation Expense

C.   Financial statements can be prepared for specific periods

D.   None of these

15: ____ is considered a social networking site for professionals.

A.   Pinterest

B.   MySpace

C.   Google+

D.   LinkedIn

E.   Facebook

16: _____ and _____ are measures that are used to measure stock market performance.

A.   Unsecured; bonds

B.   Dividend; yield

C.   Indexes; averages

D.   Retained; earnings

17: _______ accounting serves internal users, whereas _______ accounting serves external users.

A.   ​Managerial; financial

B.   ​Managerial; advisory

C.   ​Financial; managerial

D.   ​Investigative; forensic

18: ________have separate cost allocation rates for each activity identified by the company.

A.   Lean thinking

B.   Activity-based costing (ABC) systems

C.   TQM programs emphasize nonfinancial measures

D.   Activity based-costing (ABC) causes more cost distortion, which results from the allocation of indirect costs, based on the types of product activities and product usage

19: By finding the total cost and dividing by the number of units produced ______________ are found.

A.   Average or per unit costs

B.   Good Choices

C.   Law of Diminishing Returns

D.   Marginal Product

20: Changes in activity have a(n) _________ effect on fixed costs per unit.

A.   Inverse

B.   Neutral

C.   Positive

D.   Negative

21: Common stockholders are sometimes referred to as ________.

A.   Rights offering

B.   The stock market

C.   Residual owners

D.   Present value of a constant growing dividend stream

22: Each cost in the activity cost pools are ________ costs.

A.   Manufacturing overhead (MOH)

B.   Activity-based costing (ABC)

C.   Reduction of delivery speed

D.   Overutilizing employees

23: Expenses that fall outside the regular operations of a business are ________.

A.   Included under the other income and expenses section of the income statement

B.   Not considered for the calculation of net income

C.   Generally a substantial part of net income

D.   Recorded in the Retained Earnings account

24: In the cost allocation process, an allocation base ________.

A.   Must be some characteristic that is common to all of the cost objectives.

B.   Ideally should result in cost being allocated based on a cause-and-effect relationship.

C.   Selection is not an easy matter.

D.   All of these answer choices are correct

25: It is important to use the__________ as the standard against which actual cost is compared.

A.   Cumulative budget

B.   Total budget

C.   Budget at completion

D.   Phased budget

26: Managerial finance ________.

A.   Involves tasks such as budgeting, financial forecasting, cash management, and funds procurement

B.   Involves the design and delivery of advice and financial products

C.   Recognizes funds on an accrual basis

D.   Devotes the majority of its attention to the collection and presentation of financial data

27: Market risk is also called __________ and _________.

A.   Systematic risk, diversifiable risk.

B.   Systematic risk, nondiversifiable risk.

C.   Unique risk, non diverse risk.

D.   Unique risk, diversifiable risk.

E.   Firm-specific risk

28: Net operating losses may be _______.

A.   Carried back 2 years or carried forward up to 20 years

B.   Upward sloping

C.   Interest paid on debt

D.   Maximizing the value of the firm's equity

29: One of the main outputs of the _____ process is a cost baseline.

A.   Cost budgeting

B.   Cost control

C.   Estimating costs

D.   Cost forecasts

30: Revenue is earned when ________.

A.   (or as) the business satisfies each performance obligation

B.   The journal entry to record revenue has been prepared

C.   There is a binding agreement to provide goods or services

D.   The business has received cash from the customer

31: Standard deviation measures _____ risk.

A.   Portfolio expected return

B.   Total, systematic

C.   Market risk premium

D.   Portfolio systematic risk

32: The value of internet companies is based primarily on _____.

A.   Growth opportunities

B.   Replacement cost

C.   Current profits

D.   Tobin's q

33: The _______ decision should take precedence over the _____ decision.

A.   Asset allocation; stock selection

B.   Bond selection; mutual fund selection

C.   Stock selection; asset allocation

D.   Stock selection; mutual fund selection

34: The fundamental starting point of all the accounting statements is the ________.

A.   Accounting identity

B.   Computing identity

C.   Investing identity

D.   Financing identity

35: The ____ is not an organized security exchange.

A.   New York Stock Exchange

B.   American Stock Exchange

C.   Midwest Stock Exchange

D.   Pacific Stock Exchange

E.   OTC Exchange

36: The ________ is utilized to value preferred stock.

A.   Capital asset pricing model

B.   Arbitrage pricing model

C.   Zero-growth model

D.   Black-Scholes model

37: Your _____ is an example of a liquid asset.

A.   Home

B.   Car

C.   Checking account

D.   Charge account

E.   Life insurance cash value

38: The value chain is the sequence of business functions in which ________.

A.   Products and services are evaluated with respect to their value to the supply chain

B.   Value is deducted from the products or services of an organisation

C.   Value is added to the products or services from the customers perspective

D.   Usefulness is added to the products or services of an organization.

39: Work performance information and cost forecasts are main outputs of the _____ process.

A.   Cost budgeting

B.   Cost estimating

C.   Cost control

D.   Cost pricing

40: When the total fixed costs increase, the breakeven point ________.

A.   Decreases

B.   Increases

C.   Both of these

D.   None of these

41: In comparing the internal rate of return and net present value methods of evaluation, ________.

A.   Internal rate of return is theoretically superior, but financial managers prefer net present value.

B.   Net present value is theoretically superior, but financial managers prefer to use internal rate of return.

C.   Financial managers prefer net present value, because it is presented as a rate of return.

D.   Financial managers prefer net present value, because it measures benefits relative to the amount invested

42: One year from now bond c should sell for ________ (to the nearest dollar).

A.   $857

B.   $894

C.   $835

D.   $821

43: Proponents of the emh think technical analysts __________.

A.   Should focus on resistance levels.

B.   Should focus on support levels.

C.   Should focus on financial statements.

D.   Are wasting their time

44: Risk aversion is the behavior exhibited by managers who require ________.

A.   An increase in return, for a given increase in risk

B.   Decrease in return, for a given increase in risk

C.   An increase in return, for a given decrease in risk

D.   No changes in return, for a given increase in risk

45: The ______ measure of returns ignores compounding.

A.   Geometric average

B.   Arithmetic average

C.   IRR

D.   Dollar-weighted

46: The bid-ask spread exists because of _______________.

A.   Market inefficiencies

B.   Discontinuities in the markets

C.   The need for dealers to cover expenses and make a profit

D.   Lack of trading in thin markets

47: The change brought about by online competition from amazon and walmart are examples of _____

A.   Same customer preferences.

B.   Changing customer preferences.

C.   Decreasing customer preferences.

D.   None of these

48: The decision to approve a capital budget is an example of a(n) ________ decision.

A.   Structured

B.   Analytic

C.   Semi-structured

D.   Undocumented

E.   Unstructured

49: The primary goal of consistently delivering superior value is to ________.

A.   Expand into global markets

B.   Maximize profits

C.   Build profitable customer relationships

D.   Avoid the need to advertise

50: Total itemized deductions must be ____ to reduce your tax liability.

A.   Greater than your standard deduction

B.   Greater than 5 percent of your adjusted gross income

C.   Greater than 7.5 percent of your adjusted gross income

D.   Less than your taxable income