Here are 50 MCQs with answers covering:
• Basic Financial Accounting
• Basic Cost Accounting
• Basic Business Acumen
• Basic Internal Control
📘 BASIC FINANCIAL ACCOUNTING (1–15)
1. Which of the following best defines an asset?
A. A future obligation
B. A past expense
C. A resource controlled by the entity expected to provide future economic benefit
D. Owner’s investment
Answer: C
2. Revenue is recognized when:
A. Cash is received
B. Goods are produced
C. Performance obligation is satisfied
D. Invoice is raised
Answer: C
3. Which of the following is NOT a liability?
A. Accounts payable
B. Unearned revenue
C. Accrued expense
D. Prepaid insurance
Answer: D
4. Accrual accounting requires:
A. Cash basis reporting
B. Matching revenues with related expenses
C. Ignoring outstanding expenses
D. Recording only paid transactions
Answer: B
5. Depreciation primarily represents:
A. Market value decline
B. Cash outflow
C. Allocation of asset cost
D. Replacement value
Answer: C
6. Gross profit equals:
A. Sales – Operating expenses
B. Sales – Cost of goods sold
C. Sales – Net income
D. Sales – Taxes
Answer: B
7. Which assumption states business will continue operating?
A. Consistency
B. Prudence
C. Going concern
D. Matching
Answer: C
8. Which financial statement shows financial position at a point in time?
A. Income Statement
B. Cash Flow Statement
C. Balance Sheet
D. Statement of Changes in Equity
Answer: C
9. Inventory is valued at:
A. Market value only
B. Cost or NRV whichever is lower
C. Selling price
D. Replacement cost
Answer: B
10. Which is an example of accrued income?
A. Rent received in advance
B. Salary outstanding
C. Interest earned but not received
D. Prepaid expense
Answer: C
11. Which is NOT part of equity?
A. Retained earnings
B. Share capital
C. Treasury stock (deduction)
D. Accounts payable
Answer: D
12. Trial balance ensures:
A. No fraud exists
B. All accounts are correct
C. Debit equals credit
D. Accurate financial reporting
Answer: C
13. The matching principle relates to:
A. Asset valuation
B. Revenue timing
C. Expense recognition
D. Cash management
Answer: C
14. Contingent liability is recognized when:
A. Possible only
B. Remote
C. Probable and measurable
D. Never
Answer: C
15. Which of the following affects working capital?
A. Purchase of machinery for cash
B. Payment to creditors
C. Issue of shares for cash
D. Conversion of debt to equity
Answer: B
📗 BASIC COST ACCOUNTING (16–30)
16. Prime cost includes:
A. Direct material + Direct labor
B. Direct labor + Overhead
C. Material + Overhead
D. Fixed cost only
Answer: A
17. Contribution margin equals:
A. Sales – Fixed cost
B. Sales – Variable cost
C. Sales – Total cost
D. Sales – Operating income
Answer: B
18. Break-even point occurs when:
A. Profit is maximum
B. Contribution = Fixed cost
C. Sales = Variable cost
D. Net income = Sales
Answer: B
19. Fixed cost per unit:
A. Remains constant
B. Decreases with increase in output
C. Increases with volume
D. Equals variable cost
Answer: B
20. Variable cost per unit:
A. Changes with volume
B. Remains constant
C. Decreases at higher production
D. Is discretionary
Answer: B
21. Which is NOT a product cost?
A. Direct labor
B. Factory rent
C. Administrative salary
D. Direct material
Answer: C
22. Absorption costing includes:
A. Variable manufacturing cost only
B. Fixed manufacturing cost only
C. Both variable and fixed manufacturing cost
D. Selling cost
Answer: C
23. Margin of safety measures:
A. Risk of loss
B. Profit margin
C. Excess of actual sales over BE sales
D. Fixed cost coverage
Answer: C
24. Opportunity cost is:
A. Historical cost
B. Sunk cost
C. Benefit foregone
D. Explicit expense
Answer: C
25. Relevant cost includes:
A. Sunk cost
B. Future avoidable cost
C. Allocated overhead
D. Book value
Answer: B
26. Standard costing is used for:
A. Historical reporting
B. Cost control
C. Tax planning
D. Cash budgeting
Answer: B
27. Under marginal costing, fixed cost is:
A. Product cost
B. Period cost
C. Variable cost
D. Inventoriable cost
Answer: B
28. Cost driver is:
A. Sales manager
B. Activity causing cost
C. Fixed expense
D. Accounting policy
Answer: B
29. High operating leverage indicates:
A. Low fixed cost
B. High variable cost
C. High fixed cost proportion
D. No risk
Answer: C
30. Sunk cost is:
A. Relevant
B. Future cost
C. Irrecoverable past cost
D. Avoidable
Answer: C
📙 BASIC BUSINESS ACUMEN (31–40)
31. Primary objective of business is:
A. Revenue maximization
B. Profit maximization (long-term value creation)
C. Sales growth only
D. Market share only
Answer: B
32. Working capital management focuses on:
A. Long-term assets
B. Short-term assets & liabilities
C. Equity financing
D. Fixed assets
Answer: B
33. ROI equals:
A. Profit / Sales
B. Profit / Investment
C. Sales / Assets
D. Assets / Profit
Answer: B
34. Liquidity risk refers to inability to:
A. Earn profit
B. Pay short-term obligations
C. Expand business
D. Reduce costs
Answer: B
35. Competitive advantage arises from:
A. Higher cost
B. Unique value proposition
C. Large workforce
D. Random pricing
Answer: B
36. SWOT analysis evaluates:
A. Profitability only
B. Financial ratios
C. Internal & external factors
D. Only strengths
Answer: C
37. High debt increases:
A. Liquidity
B. Financial leverage risk
C. Equity
D. Working capital
Answer: B
38. Diversification strategy reduces:
A. Risk concentration
B. Market share
C. Sales
D. Assets
Answer: A
39. Cash flow is more critical than profit because:
A. Profit is illegal
B. Cash pays obligations
C. Profit equals cash
D. Cash reduces revenue
Answer: B
40. Cost leadership strategy focuses on:
A. Premium pricing
B. Lowest production cost
C. Luxury branding
D. Differentiation only
Answer: B
📕 BASIC INTERNAL CONTROL (41–50)
41. Internal control is designed to provide:
A. Absolute assurance
B. Reasonable assurance
C. No assurance
D. Legal immunity
Answer: B
42. Segregation of duties prevents:
A. Efficiency
B. Fraud and errors
C. Profit
D. Documentation
Answer: B
43. Authorization control ensures:
A. Proper approval of transactions
B. Fraud detection only
C. Budget increase
D. Accounting estimates
Answer: A
44. Detective control example:
A. Password access
B. Bank reconciliation
C. Segregation of duties
D. Pre-approval
Answer: B
45. Preventive control example:
A. Internal audit
B. Reconciliation
C. Access restriction
D. Variance analysis
Answer: C
46. Control environment includes:
A. Management integrity
B. Bank accounts
C. Inventory records
D. Cash book
Answer: A
47. Risk assessment involves:
A. Ignoring threats
B. Identifying and analyzing risks
C. Increasing cost
D. Avoiding documentation
Answer: B
48. Information & communication ensures:
A. Gossip
B. Accurate reporting flow
C. Marketing
D. Sales increase
Answer: B
49. Monitoring includes:
A. One-time review only
B. Continuous evaluation of controls
C. Sales audit
D. Advertising
Answer: B
50. Which of the following is MOST appropriate to reduce payroll fraud?
A. Same person prepares & approves payroll
B. HR maintains employee records and Finance processes payment separately
C. No approval needed
D. Manual cash payment only
Answer: B
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Here are One-Word / One-Term Answer Questions covering:
• Basic Accounting
• Economics
• Business Acumen
• Cost Accounting
• Accounting Information Systems (AIS)
• Internal Control
• Statistics
• Strategic Management
• Technology & Data Analytics
• Performance Measurement
📘 BASIC ACCOUNTING CONCEPTS
1. The accounting equation is based on which concept?
Answer: Duality
2. Recording expenses in the same period as related revenue follows which principle?
Answer: Matching
3. The assumption that business will continue indefinitely is called?
Answer: Going concern
4. Revenue is recorded when earned under which basis?
Answer: Accrual
5. Assets minus liabilities equals?
Answer: Equity
6. Allocation of cost of tangible asset over useful life is called?
Answer: Depreciation
7. An obligation arising from past events is called?
Answer: Liability
8. Recording transactions at original cost follows which concept?
Answer: Historical cost
📗 ECONOMICS
9. Demand decreases when price increases due to which law?
Answer: Law of demand
10. Cost of next best alternative is called?
Answer: Opportunity cost
11. Total market value of goods and services is?
Answer: GDP
12. Persistent increase in price level is?
Answer: Inflation
13. Market structure with single seller is?
Answer: Monopoly
14. Situation where quantity demanded equals supplied is?
Answer: Equilibrium
15. Additional satisfaction from one more unit is?
Answer: Marginal utility
📙 BUSINESS ACUMEN
16. Profit divided by investment is?
Answer: ROI
17. Short-term financial strength is measured by?
Answer: Liquidity
18. Excess of current assets over current liabilities is?
Answer: Working capital
19. Analysis of strengths, weaknesses, opportunities, threats is?
Answer: SWOT
20. Risk of inability to meet short-term obligations is?
Answer: Liquidity risk
📕 COST ACCOUNTING
21. Direct material plus direct labor equals?
Answer: Prime cost
22. Sales minus variable cost equals?
Answer: Contribution
23. Level of sales where profit is zero is?
Answer: Break-even
24. Cost that does not change with volume is?
Answer: Fixed cost
25. Irrecoverable past cost is?
Answer: Sunk cost
26. Cost that changes per unit but constant in total is?
Answer: Variable cost
27. Future cost relevant for decision-making is?
Answer: Relevant cost
28. Cost system assigning overhead based on activities is?
Answer: ABC
💻 ACCOUNTING INFORMATION SYSTEMS (AIS)
29. Collection of interrelated components to process financial data is?
Answer: AIS
30. Input → Processing → Output represents?
Answer: System cycle
31. Preventing unauthorized system access is called?
Answer: Access control
32. Software managing database is?
Answer: DBMS
33. Document authorizing transaction processing is?
Answer: Source document
🔐 INTERNAL CONTROL
34. Separation of authorization, custody, and recording is?
Answer: Segregation of duties
35. Control designed to stop errors before occurrence is?
Answer: Preventive control
36. Control identifying errors after occurrence is?
Answer: Detective control
37. Framework commonly used for internal control is?
Answer: COSO
38. Continuous evaluation of controls is?
Answer: Monitoring
📊 STATISTICS
39. Average value is called?
Answer: Mean
40. Middle value of ordered data is?
Answer: Median
41. Measure of data dispersion is?
Answer: Standard deviation
42. Relationship between two variables is measured by?
Answer: Correlation
43. Bell-shaped distribution is called?
Answer: Normal distribution
📈 STRATEGIC MANAGEMENT
44. Long-term direction of organization is?
Answer: Strategy
45. Strategy focused on lowest cost is?
Answer: Cost leadership
46. Unique product strategy is?
Answer: Differentiation
47. Analysis of industry competition is?
Answer: Porter’s Five Forces
48. Tool comparing internal strengths and external environment is?
Answer: SWOT
🤖 TECHNOLOGY & DATA ANALYTICS
49. Large complex datasets are referred to as?
Answer: Big Data
50. Process of extracting patterns from data is?
Answer: Data mining
51. Graphical representation of data is?
Answer: Data visualization
52. Algorithm learning from data without explicit programming is?
Answer: Machine learning
53. Central repository of integrated data is?
Answer: Data warehouse
📊 PERFORMANCE MEASUREMENT
54. Measure of profitability after cost of capital is?
Answer: EVA
55. Non-financial performance framework balancing perspectives is?
Answer: Balanced scorecard
56. Profit before interest and tax is?
Answer: EBIT
57. Ratio measuring efficiency of asset use is?
Answer: Asset turnover
58. Measure of residual profit is?
Answer: Residual income
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