ACCA Practice Exam Questions and Answers
Which of the following is a primary objective of financial accounting?
A. To assist management in decision-making
B. To provide information to external stakeholders
C. To minimize tax liabilities
D. To forecast future budgets
Answer: B
IAS 16 Property, Plant and Equipment requires assets to be initially measured at:
A. Fair value
B. Historical cost
C. Net realizable value
D. Replacement cost
Answer: B
Which of the following is NOT a qualitative characteristic of financial information
under the Conceptual Framework?
A. Relevance
B. Faithful representation
C. Comparability
D. Profitability
Answer: D
Under IFRS 15, revenue is recognized when:
A. Cash is received
B. Control of goods or services passes to the customer
C. Risks and rewards are transferred
D. The invoice is issued
Answer: B
Which costing method assigns overheads based on activities rather than volume?
A. Absorption costing
B. Marginal costing
C. Activity-based costing
D. Standard costing
Answer: C
The gearing ratio measures:
A. Liquidity position
B. Profitability
C. Financial risk from debt
D. Efficiency of asset use
Answer: C
Which of the following is a limitation of ratio analysis?
,A. Ratios are easy to calculate
B. Ratios ignore qualitative factors
C. Ratios compare performance over time
D. Ratios highlight liquidity issues
Answer: B
In audit, the term ‘materiality’ refers to:
A. The size of the audit team
B. The importance of an item to financial statements
C. The cost of audit procedures
D. The number of transactions tested
Answer: B
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. Setting external audit fees
D. Approving tax assessments
Answer: B
Which of the following is a benefit of budgeting?
A. Guarantees profit
B. Provides a benchmark for performance evaluation
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: B
Which IFRS standard deals with leases?
A. IFRS 9
B. IFRS 15
C. IFRS 16
D. IAS 17
Answer: C
The going concern assumption means:
A. Assets are valued at liquidation value
B. The entity will continue operations for the foreseeable future
C. Profits are guaranteed
D. Liabilities are ignored
Answer: B
Which of the following is a current liability?
A. Bank loan repayable in 5 years
B. Trade payables
C. Share capital
D. Retained earnings
Answer: B
, Which costing method separates fixed and variable costs?
A. Marginal costing
B. Absorption costing
C. Activity-based costing
D. Standard costing
Answer: A
Which of the following is an example of a capital expenditure?
A. Routine maintenance
B. Purchase of new machinery
C. Utility bills
D. Office supplies
Answer: B
The audit risk model includes:
A. Detection risk, inherent risk, control risk
B. Liquidity risk, solvency risk, market risk
C. Operational risk, compliance risk, strategic risk
D. Credit risk, interest rate risk, inflation risk
Answer: A
Which of the following is a limitation of break-even analysis?
A. Assumes linear cost behavior
B. Identifies contribution per unit
C. Calculates margin of safety
D. Determines profit at different sales levels
Answer: A
Which financial statement shows cash inflows and outflows?
A. Statement of financial position
B. Statement of profit or loss
C. Statement of cash flows
D. Statement of changes in equity
Answer: C
Which of the following is a non-current asset?
A. Inventory
B. Trade receivables
C. Buildings
D. Cash
Answer: C
Which of the following is a responsibility of external auditors?
A. Preparing financial statements
B. Expressing an opinion on financial statements
C. Setting corporate strategy
Which of the following is a primary objective of financial accounting?
A. To assist management in decision-making
B. To provide information to external stakeholders
C. To minimize tax liabilities
D. To forecast future budgets
Answer: B
IAS 16 Property, Plant and Equipment requires assets to be initially measured at:
A. Fair value
B. Historical cost
C. Net realizable value
D. Replacement cost
Answer: B
Which of the following is NOT a qualitative characteristic of financial information
under the Conceptual Framework?
A. Relevance
B. Faithful representation
C. Comparability
D. Profitability
Answer: D
Under IFRS 15, revenue is recognized when:
A. Cash is received
B. Control of goods or services passes to the customer
C. Risks and rewards are transferred
D. The invoice is issued
Answer: B
Which costing method assigns overheads based on activities rather than volume?
A. Absorption costing
B. Marginal costing
C. Activity-based costing
D. Standard costing
Answer: C
The gearing ratio measures:
A. Liquidity position
B. Profitability
C. Financial risk from debt
D. Efficiency of asset use
Answer: C
Which of the following is a limitation of ratio analysis?
,A. Ratios are easy to calculate
B. Ratios ignore qualitative factors
C. Ratios compare performance over time
D. Ratios highlight liquidity issues
Answer: B
In audit, the term ‘materiality’ refers to:
A. The size of the audit team
B. The importance of an item to financial statements
C. The cost of audit procedures
D. The number of transactions tested
Answer: B
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. Setting external audit fees
D. Approving tax assessments
Answer: B
Which of the following is a benefit of budgeting?
A. Guarantees profit
B. Provides a benchmark for performance evaluation
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: B
Which IFRS standard deals with leases?
A. IFRS 9
B. IFRS 15
C. IFRS 16
D. IAS 17
Answer: C
The going concern assumption means:
A. Assets are valued at liquidation value
B. The entity will continue operations for the foreseeable future
C. Profits are guaranteed
D. Liabilities are ignored
Answer: B
Which of the following is a current liability?
A. Bank loan repayable in 5 years
B. Trade payables
C. Share capital
D. Retained earnings
Answer: B
, Which costing method separates fixed and variable costs?
A. Marginal costing
B. Absorption costing
C. Activity-based costing
D. Standard costing
Answer: A
Which of the following is an example of a capital expenditure?
A. Routine maintenance
B. Purchase of new machinery
C. Utility bills
D. Office supplies
Answer: B
The audit risk model includes:
A. Detection risk, inherent risk, control risk
B. Liquidity risk, solvency risk, market risk
C. Operational risk, compliance risk, strategic risk
D. Credit risk, interest rate risk, inflation risk
Answer: A
Which of the following is a limitation of break-even analysis?
A. Assumes linear cost behavior
B. Identifies contribution per unit
C. Calculates margin of safety
D. Determines profit at different sales levels
Answer: A
Which financial statement shows cash inflows and outflows?
A. Statement of financial position
B. Statement of profit or loss
C. Statement of cash flows
D. Statement of changes in equity
Answer: C
Which of the following is a non-current asset?
A. Inventory
B. Trade receivables
C. Buildings
D. Cash
Answer: C
Which of the following is a responsibility of external auditors?
A. Preparing financial statements
B. Expressing an opinion on financial statements
C. Setting corporate strategy
