Correct Answer:
D. Resources are separated into funds according to purposes or legal restrictions
Each fund is a separate set of accounts for a specific purpose.
November 13, 2026 · Accounting and Finance MCQs, Public Sector Accounting & Auditing MCQs
Fund accounting is commonly used in the public sector because:
Related MCQs
According to IAS 2, inventories are measured at:
A.
The higher of cost and selling price
B.
Selling price always
C.
The lower of cost and net realizable value
D.
Replacement cost only
Correct answer is:
C. The lower of cost and net realizable value
Do you agree with this answer?
Public debt is best described as:
A.
The accumulated stock of past government borrowing
B.
The annual budget deficit only
C.
The tax revenue of a year
D.
The money supply
Correct answer is:
A. The accumulated stock of past government borrowing
Do you agree with this answer?
The assertion 'rights and obligations' means that:
A.
All assets are physically present
B.
All sales are cash sales
C.
The entity holds or controls the rights to assets and liabilities are its obligations
D.
Management has the right to appoint the auditor
Correct answer is:
C. The entity holds or controls the rights to assets and liabilities are its obligations
Do you agree with this answer?
Drawings made by the owner of a sole proprietorship:
A.
Reduce the owner's equity (capital)
B.
Increase the owner's equity
C.
Are recorded as business expenses
D.
Are recorded as revenue
Correct answer is:
A. Reduce the owner's equity (capital)
Do you agree with this answer?
The primary goal of financial management is generally considered to be:
A.
Maximization of current year profit
B.
Minimization of taxes only
C.
Maximization of shareholders' wealth
D.
Maximization of sales
Correct answer is:
C. Maximization of shareholders' wealth
Do you agree with this answer?
Lapse of appropriation means that:
A.
Unspent funds carry forward automatically
B.
The budget is increased
C.
Unspent budget allocations expire at the end of the fiscal year
D.
Audit is cancelled
Correct answer is:
C. Unspent budget allocations expire at the end of the fiscal year
Do you agree with this answer?
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