Foundations in Accountancy Exam Questions
and Answers
Which of the following is a primary purpose of financial accounting?
A. To provide information to external stakeholders
B. To minimize tax liabilities
C. To forecast future budgets
D. To set internal targets
Answer: A
IAS 2 requires inventory to be valued at:
A. Historical cost
B. Net realizable value or cost, whichever is lower
C. Replacement cost
D. Fair value
Answer: B
Which of the following is a qualitative characteristic of useful financial information?
A. Profitability
B. Relevance
C. Tax efficiency
D. Marketability
Answer: B
Which of the following is a current asset?
A. Buildings
B. Trade receivables
C. Debentures
D. Share capital
Answer: B
Which of the following is a limitation of financial statements?
A. They provide historical information
B. They show assets and liabilities
C. They include notes to accounts
D. They are prepared under IFRS
Answer: A
Which of the following is a direct cost?
A. Raw materials
B. Factory rent
C. Supervisor salary
D. Depreciation
, Answer: A
Which of the following is a feature of marginal costing?
A. Separates fixed and variable costs
B. Allocates overheads arbitrarily
C. Provides full cost per unit
D. Accepted for external reporting
Answer: A
Which of the following is a benefit of budgeting?
A. Provides a benchmark for performance evaluation
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of break-even analysis?
A. Assumes linear cost behavior
B. Identifies margin of safety
C. Calculates contribution per unit
D. Determines profit at different sales levels
Answer: A
Which of the following is a responsibility of directors under corporate governance?
A. Preparing audit reports
B. Ensuring financial statements give a true and fair view
C. Approving tax assessments
D. Setting external audit fees
Answer: B
Section B – More MCQs (Questions 11–20)
Which of the following is a source of long-term finance?
A. Trade payables
B. Bank overdraft
C. Debentures
D. Accrued expenses
Answer: C
Which of the following is a feature of IFRS 16?
A. Lease accounting
B. Revenue recognition
C. Financial instruments
D. Inventory valuation
Answer: A
Which of the following is a limitation of ratio analysis?
A. Ignores qualitative factors
, B. Easy to calculate
C. Compares performance over time
D. Highlights liquidity issues
Answer: A
Which of the following is a benefit of variance analysis?
A. Identifies reasons for differences between actual and budgeted results
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a feature of debentures?
A. Equity ownership
B. Fixed interest payment
C. Voting rights
D. Unlimited liability
Answer: B
Which of the following is a limitation of payback period method?
A. Ignores time value of money
B. Considers cash flows
C. Considers profitability
D. Provides decision rule
Answer: A
Which of the following is a benefit of internal controls?
A. Prevents fraud and errors
B. Guarantees profit
C. Eliminates risk
D. Ensures compliance with tax laws
Answer: A
Which of the following is a feature of IFRS 9?
A. Financial instruments classification
B. Revenue recognition
C. Lease accounting
D. Inventory valuation
Answer: A
Which of the following is a limitation of NPV method?
A. Requires estimation of discount rate
B. Considers time value of money
C. Considers all cash flows
D. Provides decision rule
Answer: A
and Answers
Which of the following is a primary purpose of financial accounting?
A. To provide information to external stakeholders
B. To minimize tax liabilities
C. To forecast future budgets
D. To set internal targets
Answer: A
IAS 2 requires inventory to be valued at:
A. Historical cost
B. Net realizable value or cost, whichever is lower
C. Replacement cost
D. Fair value
Answer: B
Which of the following is a qualitative characteristic of useful financial information?
A. Profitability
B. Relevance
C. Tax efficiency
D. Marketability
Answer: B
Which of the following is a current asset?
A. Buildings
B. Trade receivables
C. Debentures
D. Share capital
Answer: B
Which of the following is a limitation of financial statements?
A. They provide historical information
B. They show assets and liabilities
C. They include notes to accounts
D. They are prepared under IFRS
Answer: A
Which of the following is a direct cost?
A. Raw materials
B. Factory rent
C. Supervisor salary
D. Depreciation
, Answer: A
Which of the following is a feature of marginal costing?
A. Separates fixed and variable costs
B. Allocates overheads arbitrarily
C. Provides full cost per unit
D. Accepted for external reporting
Answer: A
Which of the following is a benefit of budgeting?
A. Provides a benchmark for performance evaluation
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of break-even analysis?
A. Assumes linear cost behavior
B. Identifies margin of safety
C. Calculates contribution per unit
D. Determines profit at different sales levels
Answer: A
Which of the following is a responsibility of directors under corporate governance?
A. Preparing audit reports
B. Ensuring financial statements give a true and fair view
C. Approving tax assessments
D. Setting external audit fees
Answer: B
Section B – More MCQs (Questions 11–20)
Which of the following is a source of long-term finance?
A. Trade payables
B. Bank overdraft
C. Debentures
D. Accrued expenses
Answer: C
Which of the following is a feature of IFRS 16?
A. Lease accounting
B. Revenue recognition
C. Financial instruments
D. Inventory valuation
Answer: A
Which of the following is a limitation of ratio analysis?
A. Ignores qualitative factors
, B. Easy to calculate
C. Compares performance over time
D. Highlights liquidity issues
Answer: A
Which of the following is a benefit of variance analysis?
A. Identifies reasons for differences between actual and budgeted results
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a feature of debentures?
A. Equity ownership
B. Fixed interest payment
C. Voting rights
D. Unlimited liability
Answer: B
Which of the following is a limitation of payback period method?
A. Ignores time value of money
B. Considers cash flows
C. Considers profitability
D. Provides decision rule
Answer: A
Which of the following is a benefit of internal controls?
A. Prevents fraud and errors
B. Guarantees profit
C. Eliminates risk
D. Ensures compliance with tax laws
Answer: A
Which of the following is a feature of IFRS 9?
A. Financial instruments classification
B. Revenue recognition
C. Lease accounting
D. Inventory valuation
Answer: A
Which of the following is a limitation of NPV method?
A. Requires estimation of discount rate
B. Considers time value of money
C. Considers all cash flows
D. Provides decision rule
Answer: A
