Correct Answer:
B. Not overstate assets or income and not understate liabilities or expenses
Prudence calls for caution under uncertainty.
November 13, 2026 · Accounting and Finance MCQs, Financial Accounting MCQs
The prudence (conservatism) concept suggests that a business should:
Related MCQs
The pre-tax cost of debt is 10% and the tax rate is 30%. The after-tax cost of debt is:
A.
7%
B.
3%
C.
13%
D.
10%
Correct answer is:
A. 7%
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An expansionary fiscal policy involves:
A.
Reducing government spending and raising taxes
B.
Increasing government spending or cutting taxes
C.
Raising interest rates
D.
Selling government bonds only
Correct answer is:
B. Increasing government spending or cutting taxes
Do you agree with this answer?
Fiscal federalism deals with:
A.
The monetary policy of the central bank
B.
Only international trade
C.
Only local taxes
D.
The division of revenue-raising and spending responsibilities among levels of government
Correct answer is:
D. The division of revenue-raising and spending responsibilities among levels of government
Do you agree with this answer?
Sensitivity analysis in capital budgeting examines:
A.
Only the best case scenario
B.
Past performance of the firm
C.
How changes in one input variable affect the project's NPV
D.
The effect of tax rates on dividends
Correct answer is:
C. How changes in one input variable affect the project's NPV
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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
D.
The number of taxpayers
Correct answer is:
C. Who finally bears the burden of a tax
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A by-product is a product that:
A.
Has the greatest sales value of all products
B.
Is produced after the split-off by choice
C.
Cannot be sold
D.
Has a relatively minor sales value compared with the main product
Correct answer is:
D. Has a relatively minor sales value compared with the main product
Do you agree with this answer?
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