Correct Answer:
C. Ignores the time value of money and cash flows after the payback period
Simple payback is easy but ignores timing and later cash flows.
November 13, 2026 · Accounting and Finance MCQs, Financial Management & Analysis MCQs
A major limitation of the payback period method is that it:
Related MCQs
Under the ISAs, analytical procedures are required to be performed at which stages of the audit?
A.
Only when fraud is suspected
B.
Only during the interim visit
C.
Risk assessment and the overall review near the end of the audit
D.
Only for listed companies
Correct answer is:
C. Risk assessment and the overall review near the end of the audit
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The imprest cash system in a government office means that:
A.
No cash is ever kept
B.
Cash is deposited daily with no records
C.
All payments are made in kind
D.
A fixed amount of cash is kept for petty expenses and replenished on submission of vouchers
Correct answer is:
D. A fixed amount of cash is kept for petty expenses and replenished on submission of vouchers
Do you agree with this answer?
Tracing from source documents (e.g. goods received notes) to the accounting records mainly tests:
A.
Occurrence
B.
Rights and obligations
C.
Presentation
D.
Completeness
Correct answer is:
D. Completeness
Do you agree with this answer?
If the marginal propensity to consume (MPC) is 0.8, the simple expenditure multiplier is:
A.
5
B.
1.25
C.
0.8
D.
0.2
Correct answer is:
A. 5
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Conversion cost is the sum of:
A.
Direct materials and direct labor
B.
Direct materials and factory overhead
C.
Direct labor and factory overhead
D.
Selling and administrative expenses
Correct answer is:
C. Direct labor and factory overhead
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Actual price is Rs. 12, standard price is Rs. 10 and 500 units were purchased. The material price variance is:
A.
Rs. 1,000 adverse
B.
Rs. 1,000 favorable
C.
Rs. 5,000 adverse
D.
Rs. 600 adverse
Correct answer is:
A. Rs. 1,000 adverse
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