ACCA EXAM PRACTICE QUESTIONS : 300
QUESTIONS WITH DETAILED
EXPLANATIONS CORRECT ANSWERS
2025|2026||ALREADY GRADED A+
1 Which of the following statements is true?
A The directors of a company are liable for any losses of the company
B A sole trader business is owned by shareholders and operated by the
proprietor
C Partners are liable for losses in a partnership in proportion to their profit share
ratio
D A company is run by directors on behalf of its members CORRECT
ANSWERS D A company is run by directors on behalf of its members
2 Which of the following best describes management accounts?
A Management accounts are mandatory accounts which reflect the past
performance of a business and are prepared in accordance with strict accounting
requirements
B Management accounts are normally prepared monthly on a rolling basis and
include details of past performance as well as budgets and forecasts
C Management accounts are required by law and include sufficient detail for
managers control the business and prepare for the future
D Management accounts include information computed to be relevant to
managers and are generally prepared annually CORRECT ANSWERS B
Management accounts are normally prepared monthly on a rolling basis and
include details of past performance as well as budgets and forecasts
3 Which of the following best explains why employees are interested in the
financial statements of their employer?
,A To compare the business with its competitors in order to decide whether to
seek employment with one of those competitors
B To assess the effect of the business on the local economy, community and
environment
C To assess whether the business will continue into the foreseeable future
D To assess the profitability of the business in order to decide whether to invest
in it CORRECT ANSWERS C To assess whether the business will continue
into the foreseeable future
4 Which of the following user groups require the most detailed financial
information?
A The management
B Investors and potential investors
C Government agencies CORRECT ANSWERS A The management
5 Which of the following statements are true?
1 Accounting can be described as the recording and summarising of
transactions.
2 Financial accounting describes the production of a statement of financial
position and income statement for internal use.
A 1 only
B 2 only CORRECT ANSWERS A 1 only
6 The main aim of financial accounting is to:
A record all transactions in the books of account
B provide management with detailed analyses of costs
,C present the financial results to the organisation by means of recognised
statements
D calculate profit CORRECT ANSWERS C present the financial results to
the organisation by means of recognised statements
7 Which one of the following sentences does NOT explain the distinction
between financial accounts and management accounts?
A Financial accounts are primarily for external users and management accounts
are primarily for internal users
B Financial accounts are normally produced annually and management accounts
are normally produced monthly
C Financial accounts are more accurate than management accounts
D Financial accounts are audited by an external auditor and management
accounts do not normally have an external audit CORRECT ANSWERS C
Financial accounts are more accurate than management accounts
242 The Standards Advisory Council are responsible for:
(1) issuing guidance in relation to emerging issues.
(2) advising the IASB on major standard-setting projects.
A 1 and 2
B 1 only
C 2 only
D Neither 1 nor two CORRECT ANSWERS C 2 only
243 Which of the following assumptions underlie the Framework for the
presentation and preparation of financial statements?
A Accruals and consistency
B Prudence and going concern
, C Accruals and going concern
D Consistency and prudence CORRECT ANSWERS C Accruals and going
concern
244 Which of the following are true?
1 International accounting standards are effective only if adopted by national
regulatory bodies.
2 Accounting standards provide guidance on accounting for all types of
transaction. CORRECT ANSWERS A 1 only
245 Which one of the following statements is correct?
A The prudence concept requires assets to be understated and liabilities to be
overstated
B To comply with the law, the legal form of a transaction must always be
reflected in financial statements
C If a non-current asset initially recognised at cost is revalued, the surplus must
be credited in the statement of cash flows
D In times of rising prices, the use of historical cost accounting tends to
understate assets and overstate profits CORRECT ANSWERS D In times of
rising prices, the use of historical cost accounting tends to understate assets and
overstate profits
246 Which of the following characteristics of financial information contribute to
reliability according to the IASB's Framework for the Preparation and
Presentation of Financial Statements?
1 Completeness.
2 Prudence.
3 Neutrality.
QUESTIONS WITH DETAILED
EXPLANATIONS CORRECT ANSWERS
2025|2026||ALREADY GRADED A+
1 Which of the following statements is true?
A The directors of a company are liable for any losses of the company
B A sole trader business is owned by shareholders and operated by the
proprietor
C Partners are liable for losses in a partnership in proportion to their profit share
ratio
D A company is run by directors on behalf of its members CORRECT
ANSWERS D A company is run by directors on behalf of its members
2 Which of the following best describes management accounts?
A Management accounts are mandatory accounts which reflect the past
performance of a business and are prepared in accordance with strict accounting
requirements
B Management accounts are normally prepared monthly on a rolling basis and
include details of past performance as well as budgets and forecasts
C Management accounts are required by law and include sufficient detail for
managers control the business and prepare for the future
D Management accounts include information computed to be relevant to
managers and are generally prepared annually CORRECT ANSWERS B
Management accounts are normally prepared monthly on a rolling basis and
include details of past performance as well as budgets and forecasts
3 Which of the following best explains why employees are interested in the
financial statements of their employer?
,A To compare the business with its competitors in order to decide whether to
seek employment with one of those competitors
B To assess the effect of the business on the local economy, community and
environment
C To assess whether the business will continue into the foreseeable future
D To assess the profitability of the business in order to decide whether to invest
in it CORRECT ANSWERS C To assess whether the business will continue
into the foreseeable future
4 Which of the following user groups require the most detailed financial
information?
A The management
B Investors and potential investors
C Government agencies CORRECT ANSWERS A The management
5 Which of the following statements are true?
1 Accounting can be described as the recording and summarising of
transactions.
2 Financial accounting describes the production of a statement of financial
position and income statement for internal use.
A 1 only
B 2 only CORRECT ANSWERS A 1 only
6 The main aim of financial accounting is to:
A record all transactions in the books of account
B provide management with detailed analyses of costs
,C present the financial results to the organisation by means of recognised
statements
D calculate profit CORRECT ANSWERS C present the financial results to
the organisation by means of recognised statements
7 Which one of the following sentences does NOT explain the distinction
between financial accounts and management accounts?
A Financial accounts are primarily for external users and management accounts
are primarily for internal users
B Financial accounts are normally produced annually and management accounts
are normally produced monthly
C Financial accounts are more accurate than management accounts
D Financial accounts are audited by an external auditor and management
accounts do not normally have an external audit CORRECT ANSWERS C
Financial accounts are more accurate than management accounts
242 The Standards Advisory Council are responsible for:
(1) issuing guidance in relation to emerging issues.
(2) advising the IASB on major standard-setting projects.
A 1 and 2
B 1 only
C 2 only
D Neither 1 nor two CORRECT ANSWERS C 2 only
243 Which of the following assumptions underlie the Framework for the
presentation and preparation of financial statements?
A Accruals and consistency
B Prudence and going concern
, C Accruals and going concern
D Consistency and prudence CORRECT ANSWERS C Accruals and going
concern
244 Which of the following are true?
1 International accounting standards are effective only if adopted by national
regulatory bodies.
2 Accounting standards provide guidance on accounting for all types of
transaction. CORRECT ANSWERS A 1 only
245 Which one of the following statements is correct?
A The prudence concept requires assets to be understated and liabilities to be
overstated
B To comply with the law, the legal form of a transaction must always be
reflected in financial statements
C If a non-current asset initially recognised at cost is revalued, the surplus must
be credited in the statement of cash flows
D In times of rising prices, the use of historical cost accounting tends to
understate assets and overstate profits CORRECT ANSWERS D In times of
rising prices, the use of historical cost accounting tends to understate assets and
overstate profits
246 Which of the following characteristics of financial information contribute to
reliability according to the IASB's Framework for the Preparation and
Presentation of Financial Statements?
1 Completeness.
2 Prudence.
3 Neutrality.
