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 78 of 99
- A. Direct cost
- B. Cost Sheet
- C. Budget
- D. Marginal Costing.
Explanation: A budget is a central cost-planning tool because it estimates expected costs, revenues and resource requirements for a future period.
Correct answer: Budget- A. 792
- B. 820
- C. 840
- D. 864
Explanation: Standard time for 720 units is 60 hours, giving 12 hours saved; Rowan bonus is 12/60 × 48 × 15 = 144.
Correct answer: 864- A. 8,000 units
- B. 11,000 units
- C. 10,000 units
- D. 9,000 units
Explanation: Average stock equals the average of minimum and maximum stock, so maximum stock is 2 × 9,000 − 4,000 = 14,000 units.
Correct answer: 10,000 units- A. 37.50
- B. 38.25
- C. 24.00
- D. 35.00
Explanation: At 80% capacity, output is 150,000 × 80% = 120,000 units. Required selling price is (120,000 × 14 + 800,000 + 400,000) ÷ 120,000 = 24 per…
Correct answer: 24.00- A. 5,80,000
- B. 5,50,000
- C. 5,00,000
- D. 5,75,000
Explanation: Required production equals sales plus desired closing inventories minus opening inventories: 500,000 + 150,000 + 60,000 − 80,000 − 50,000…
Correct answer: 5,80,000- A. Uncontrollable cost
- B. Sunk cost
- C. Avoidable cost
- D. Opportunity cost
Explanation: The inventory cost was incurred several years ago and cannot be changed by the current keep-or-dispose decision, so it is a sunk cost.
Correct answer: Sunk cost- A. Direct cost
- B. Variable cost
- C. Commercial cost
- D. Conversion cost
Explanation: Commercial cost refers to the costs of running the business apart from manufacturing or production costs, such as administration, selling…
Correct answer: Commercial cost- A. Relevant costs
- B. Differential costs
- C. Target costs
- D. Sunk costs
Explanation: Differential costs are the differences in cost between alternative courses of action, so they change when the decision changes.
Correct answer: Differential costs- A. Variable cost
- B. Unit cost
- C. Total cost
- D. Fixed cost
Explanation: Average cost is total cost divided by the number of units produced, which is also called unit cost.
Correct answer: Unit cost- A. No change occurs to inventories for either use absorption costing or variable costing methods
- B. The use of absorption costing produces a higher net income than the use of variable costing
- C. The use of absorption costing produces a lower net income than the use of variable costing
- D. The use of absorption costing causes inventory value to increase more than they would though the use of variable costing
Explanation: When production equals sales, opening and closing inventory quantities are unchanged, so absorption and variable costing report the same…
Correct answer: No change occurs to inventories for either use absorption costing or variable costing methods- A. 2,40,000
- B. 2,10,000
- C. 2,00,000
- D. 1,80,000
Explanation: Inventory turnover gives cost of goods sold: 36,000 × 5 = 180,000. A 25% gross profit on sales means cost is 75% of sales, so sales =…
Correct answer: 2,40,000- A. Prime cost
- B. Explicit cost
- C. Job order cost
- D. Conversion cost
Explanation: Conversion cost is the cost of transforming raw materials into finished goods, normally consisting of direct labour and manufacturing…
Correct answer: Conversion cost- A. selling Expense
- B. Direct labor
- C. factory overhead
- D. selling Expenses & administrative expenses
Explanation: Period costs are charged to the period in which they are incurred rather than included in inventory cost.
Correct answer: selling Expenses & administrative expenses- A. Opening Stock
- B. Carriage inward
- C. Wages & Salary
- D. Postage & Stamps
Explanation: Cost of goods sold includes opening inventory, inward carriage, and production costs such as direct wages.
Correct answer: Postage & Stamps- A. Working Capital
- B. Circulating capital
- C. Fixed capital
- D. Trading capital
Explanation: Working capital is calculated as current assets minus current liabilities and indicates the short-term operating cushion.
Correct answer: Working Capital- A. Balance Sheet
- B. Cash Flow Statement
- C. Income Statement
- D. None of the above
Explanation: The income statement summarizes revenues earned and expenses incurred during an accounting period, allowing profit or loss to be…
Correct answer: Income Statement- A. $113,000
- B. $643,000
- C. $743,000
- D. $543,000
Explanation: Working capital equals current assets minus current liabilities, so current assets are $265,000 + $378,000 = $643,000.
Correct answer: $643,000- A. current liabilities
- B. long-term liabilities
- C. residual assets value
- D. net residual incomeCompare Credit Cards
Explanation: Since working capital equals current assets minus current liabilities, subtracting working capital from current assets leaves current…
Correct answer: current liabilities- A. $3,855,500
- B. $314,500
- C. $214,500
- D. $114,500
Explanation: Working capital is found by deducting current liabilities from current assets: $250,000 − $135,500 = $114,500.
Correct answer: $114,500- A. imputed assets
- B. residual assets
- C. current assets
- D. nominal assetsHire An Accountant
Explanation: Working capital equals current assets minus current liabilities, so adding current liabilities back to working capital gives current…
Correct answer: current assets