Correct Answer:
B. Managers and shareholders
Managers (agents) may not always act in the best interests of shareholders (principals).
November 13, 2026 · Accounting and Finance MCQs, Financial Management & Analysis MCQs
The agency problem arises from a conflict of interest between:
Related MCQs
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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Horizontal (trend) analysis compares:
A.
Items within one period only
B.
Financial statement items over several periods
C.
Two different industries
D.
Debits and credits
Correct answer is:
B. Financial statement items over several periods
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A management representation letter:
A.
Is written confirmation from management that supports other audit evidence but cannot replace it
B.
Is enough evidence on its own for any assertion
C.
Is issued by the auditor to the shareholders
D.
Is needed only for sole proprietorships
Correct answer is:
A. Is written confirmation from management that supports other audit evidence but cannot replace it
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An investment of Rs. 100,000 generates equal annual cash inflows of Rs. 25,000. The payback period is:
A.
2.5 years
B.
5 years
C.
4 years
D.
0.25 years
Correct answer is:
C. 4 years
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Net income is Rs. 50,000 and total assets are Rs. 500,000. Return on assets (ROA) is:
A.
1%
B.
25%
C.
100%
D.
10%
Correct answer is:
D. 10%
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Fund accounting is commonly used in the public sector because:
A.
Government has no assets
B.
All money is treated as one pool
C.
It avoids the need for budgets
D.
Resources are separated into funds according to purposes or legal restrictions
Correct answer is:
D. Resources are separated into funds according to purposes or legal restrictions
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