Correct Answer:
B. Taxes (the depreciation tax shield)
Depreciation is a non-cash expense, but it reduces taxable profit and therefore tax paid.
November 13, 2026 · Accounting and Finance MCQs, Financial Management & Analysis MCQs
In capital budgeting, depreciation is relevant only because of its effect on:
Related MCQs
Information is considered material if its omission or misstatement could:
A.
Change the audit fee
B.
Affect only the auditor's working papers
C.
Influence the economic decisions of users taken on the basis of the financial statements
D.
Be corrected without any disclosure
Correct answer is:
C. Influence the economic decisions of users taken on the basis of the financial statements
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The present value of future cash flows is Rs. 150,000 and the initial investment is Rs. 100,000. The profitability index is:
A.
1.5
B.
0.67
C.
50,000
D.
2.5
Correct answer is:
A. 1.5
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Overhead is under-absorbed when:
A.
Actual overhead is less than absorbed overhead
B.
Actual overhead equals absorbed overhead
C.
Actual overhead is greater than absorbed overhead
D.
Budgeted overhead is zero
Correct answer is:
C. Actual overhead is greater than absorbed overhead
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Performance audit in the public sector is concerned with:
A.
Only the accuracy of cash books
B.
Only legal compliance
C.
Only tax collection
D.
Economy, efficiency and effectiveness of government programs
Correct answer is:
D. Economy, efficiency and effectiveness of government programs
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Compared with an external auditor, an internal auditor is mainly:
A.
An employee or function inside the entity that evaluates risk management, control and governance
B.
Appointed by the tax authority to check returns
C.
Responsible for giving an opinion to shareholders
D.
Prohibited from reporting to the audit committee
Correct answer is:
A. An employee or function inside the entity that evaluates risk management, control and governance
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Dividend per share is Rs. 5 and market price per share is Rs. 100. The dividend yield is:
A.
20%
B.
0.5%
C.
5%
D.
50%
Correct answer is:
C. 5%
Do you agree with this answer?
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