All Free Accounting MCQs with Answers
Every Accounting question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
1,971 questions · page 36 of 99
- A. market equity
- B. total assets employed
- C. total assets available
- D. stockholders' equity
Explanation: Total assets employed are found by removing idle assets from total assets available for use.
Correct answer: total assets employed- A. net income
- B. after tax income
- C. residual income
- D. operating incomeFinance
Explanation: Residual income equals income minus the required return on the investment or assets employed.
Correct answer: residual income- A. net income
- B. nominal income
- C. residual income
- D. residual investment
Explanation: Economic value added is a refined form of residual income that subtracts a capital charge from after-tax operating profit.
Correct answer: residual income- A. weighted average cost of capital
- B. economic value added
- C. after-tax operating income
- D. net income
Explanation: The weighted average cost of capital is the after-tax average required return on the company’s long-term sources of finance, weighted…
Correct answer: weighted average cost of capital- A. return on sales
- B. investment turnover
- C. residual income
- D. return on investment
Explanation: Return on investment is calculated by dividing income by the investment base, usually expressed as a percentage.
Correct answer: return on investment- A. DuPont investment
- B. return on investment
- C. investment
- D. investment turnoverCompare Investment Apps
Explanation: Investment represents the total resources employed to generate operating income, such as assets committed to the business.
Correct answer: investment- A. interactive control system
- B. belief system
- C. boundary system
- D. diagnostic control system
Explanation: A belief system communicates the organization’s purpose, mission, and core values to guide employee behavior.
Correct answer: belief system- A. 8.24%
- B. 7.24%
- C. 9.24%
- D. 10.24%
Explanation: Return on sales equals operating income divided by revenue: $5,650,000 ÷ $68,558,000 × 100 ≈ 8.24%.
Correct answer: 8.24%- A. residual income
- B. return on after-tax operating income
- C. return on sales
- D. return on investmentCompare Credit Cards
Explanation: Return on sales uses operating income as the numerator and revenue as the denominator.
Correct answer: return on sales- A. $30,500
- B. $20,500
- C. $25,500
- D. $32,500Compare Investment Apps
Explanation: Residual income equals operating income minus the required return on investment: $375,000 − (13% × $2,650,000) = $30,500.
Correct answer: $30,500- A. accrual accounting rate of return
- B. accounting rate of return
- C. nominal rate of return
- D. both a and b
Explanation: Return on investment is commonly called the accounting rate of return, and accrual accounting rate of return is a fuller name for the same…
Correct answer: both a and b- A. interactive control system
- B. belief system
- C. boundary system
- D. diagnostic control systemHire Grant Writers
Explanation: A boundary system sets the limits of acceptable behavior through rules, codes of conduct and prohibited actions.
Correct answer: boundary system- A. residual income
- B. return on investment
- C. return on sales
- D. investment turnoverCompare Investment Apps
Explanation: The DuPont relationship decomposes ROI into return on sales multiplied by investment turnover.
Correct answer: return on investment- A. interactive control systems
- B. belief systems
- C. boundary systems
- D. diagnostic control systems
Explanation: Diagnostic control systems use performance measures to compare actual results with targets and identify corrective action.
Correct answer: diagnostic control systems- A. $142,020
- B. $172,020
- C. $162,020
- D. $152,020
Explanation: EVA equals after-tax operating income minus the capital charge: $185,000 − [11% × ($485,000 − $367,000)] = $172,020.
Correct answer: $172,020- A. congruent costs
- B. imputed costs
- C. operating costs
- D. transfer costs
Explanation: Imputed costs are not recorded through ordinary accounting entries but are assigned for decision-making or performance measurement, such…
Correct answer: imputed costs- A. return on sales * investment turnover
- B. return on sales + investment turnover
- C. return on sales - investment turnover
- D. investment turnover + residual incomeCompare Investment Apps
Explanation: Under the DuPont method, ROI is decomposed as return on sales multiplied by investment turnover.
Correct answer: return on sales * investment turnover- A. congruent cost of investment
- B. transfer cost of investment
- C. operating cost of investment
- D. imputed cost of investmentHire An Accountant
Explanation: Multiplying the investment base by the required rate of return produces an imputed cost of investment, also called a capital charge.
Correct answer: imputed cost of investmentHire An Accountant- A. flexible costs
- B. variable costs
- C. overhead costs
- D. fixed costs
Explanation: Standard costing allocates overhead by applying the standard overhead rate to the standard quantity or activity level allowed for actual…
Correct answer: overhead costs- A. variable overhead cost
- B. fixed overhead cost
- C. fixed batch cost
- D. variable batch costGet Executive Coaching
Explanation: Energy, machine maintenance, indirect materials and engineering support generally change with production activity, so they are classified…
Correct answer: variable overhead cost