Correct Answer:
C. Actual overhead is greater than absorbed overhead
Under-absorption means too little overhead was charged to production compared with the actual amount.
November 13, 2026 · Accounting and Finance MCQs, Cost & Management Accounting MCQs
Overhead is under-absorbed when:
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Which of the following is a test of controls?
A.
Confirming receivable balances with customers
B.
Recalculating depreciation expense
C.
Inspecting purchase orders for evidence of authorization signatures
D.
Counting inventory at year end
Correct answer is:
C. Inspecting purchase orders for evidence of authorization signatures
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An auditor holding shares in the audited client creates which type of threat?
A.
Self-interest threat
B.
Advocacy threat
C.
Familiarity threat
D.
Intimidation threat
Correct answer is:
A. Self-interest threat
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Contribution margin is Rs. 120,000 and operating income is Rs. 30,000. The degree of operating leverage is:
A.
0.25
B.
3
C.
90,000
D.
4
Correct answer is:
D. 4
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The weighted average cost of capital (WACC) is:
A.
The cost of equity only
B.
The average cost of all sources of capital weighted by their proportions in the capital structure
C.
The interest rate on the latest loan
D.
The dividend rate on preference shares only
Correct answer is:
B. The average cost of all sources of capital weighted by their proportions in the capital structure
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In a bank reconciliation, outstanding (unpresented) cheques are:
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Deducted from the bank statement balance to find the adjusted bank balance
B.
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C.
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Correct answer is:
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Do you agree with this answer?
Tax incidence refers to:
A.
The date on which the tax is due
B.
The rate of tax
C.
Who finally bears the burden of a tax
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Correct answer is:
C. Who finally bears the burden of a tax
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