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 66 of 99
- A. horizontally across dimension
- B. horizontally upward dimension
- C. vertically upward dimension
- D. both a and c
Explanation: Dimensional analysis of cost considers movement across the horizontal dimension and upward through the vertical dimension, so both stated…
Correct answer: both a and c- A. nominal rate of return
- B. accrual accounting rate of return
- C. real rate of return
- D. required rate of return
Explanation: The nominal rate reflects the required return before removing inflation, so it includes compensation for investment risk and the loss of…
Correct answer: nominal rate of return- A. net value cash flow method
- B. payback method
- C. single cash flow method
- D. lean cash flow method
Explanation: The payback method measures how long a project takes to recover its initial investment from expected cash inflows.
Correct answer: payback method- A. $10,511,000
- B. $12,105,000
- C. $1,100,000
- D. $11,000,000
Explanation: With uniform annual cash flows, net initial investment equals payback period multiplied by annual cash flow: 4 × $2,750,000 = $11,000,000.
Correct answer: $11,000,0001305. If the nominal rate is 26% and the inflation rate is 12%, then the real rate can be __________?
- A. 13.75%
- B. 11.65%
- C. 12.50%
- D. 13.50%
Explanation: The real rate is calculated as [(1 + nominal rate) ÷ (1 + inflation rate)] − 1: (1.26 ÷ 1.12) − 1 = 12.5%.
Correct answer: 12.50%- A. discounting period
- B. investment period
- C. payback period
- D. earning period
Explanation: For uniform cash inflows, dividing net initial investment by the annual cash flow gives the number of years needed to recover the…
Correct answer: payback period- A. net initial investment
- B. cash flow from operations after paying taxes
- C. cash flow from terminal disposal after paying taxes
- D. all of above
Explanation: Capital investment analysis normally considers the initial investment, operating cash flows after tax, and terminal cash flows such as…
Correct answer: all of above- A. $596,300
- B. $485,300
- C. $496,250
- D. $486,250
Explanation: Average investment is calculated as the average of the initial investment and the amount recovered at the end: ($985,000 + $7,500) ÷ 2 =…
Correct answer: $496,250- A. 3.34 years
- B. 4.34 years
- C. 5.34 years
- D. 6.34 years
Explanation: Payback period is calculated as net initial investment divided by uniform annual cash flow: $6,850,000 ÷ $2,050,000 = 3.34 years.
Correct answer: 3.34 years- A. project dimension
- B. accounting-period dimension
- C. back-flush accounting dimension
- D. lean accounting dimension
Explanation: The vertical dimension examines costs across successive accounting periods, so it is called the accounting-period dimension.
Correct answer: accounting-period dimension- A. lead budgeting
- B. lean budgeting
- C. capital budgeting
- D. relevant budgeting
Explanation: Capital budgeting is the process of evaluating and selecting long-term investments such as machinery, property, or major projects.
Correct answer: capital budgeting- A. internal rate of return
- B. accrual accounting rate of return
- C. net present value
- D. all of above
Explanation: Capital budgeting commonly uses NPV, IRR, and the accounting rate of return to evaluate investment proposals.
Correct answer: all of above- A. accrual accounting rate of return
- B. returned working capital
- C. increase in expected average annual
- D. decrease in expected average annual
Explanation: The accounting rate of return is calculated by dividing average annual accounting profit or income by the capital invested, often…
Correct answer: accrual accounting rate of return- A. project dimension
- B. accounting-period dimension
- C. back-flush accounting dimension
- D. lean accounting dimension
Explanation: The horizontal dimension compares or traces costs across projects, so it is called the project dimension.
Correct answer: project dimension- A. cash flow from operations
- B. terminal disposal of investment
- C. net initial investment
- D. average return on investment
Explanation: Net initial investment combines the machine purchase cost and working-capital outflow, while reducing them by any immediate cash inflow…
Correct answer: net initial investment- A. practical capacity
- B. theoretical costing
- C. standard capacity
- D. actual capacity
Explanation: Practical capacity is the achievable operating capacity after allowing for normal unavoidable interruptions, so it is below theoretical…
Correct answer: practical capacity- A. variable quantity
- B. fixed quantity
- C. price
- D. expense
Explanation: Under variable costing, fixed manufacturing overhead is not attached to inventory; it is charged as a period expense.
Correct answer: expense- A. adjusted labor utilization
- B. unadjusted labor utilization
- C. material utilization
- D. capacity utilization
Explanation: The fixed manufacturing cost rate is calculated by dividing budgeted fixed manufacturing costs by a capacity-based denominator.
Correct answer: capacity utilization- A. denominator level choices
- B. numerator level choices
- C. normal level choices
- D. standard level choices
Explanation: Denominator-level choices determine the capacity base used for product costing, performance evaluation, and sometimes regulatory…
Correct answer: denominator level choices- A. inventory margin
- B. sales margin
- C. Gross margin
- D. production margin
Explanation: An absorption-costing income statement classifies costs by function and reports sales less cost of goods sold to produce gross margin.
Correct answer: Gross margin