Correct Answer:
D. Interest is a tax-deductible expense
Deductibility of interest reduces taxable income and tax paid.
November 13, 2026 · Accounting and Finance MCQs, Financial Management & Analysis MCQs
The tax shield on debt arises because:
Related MCQs
A bond with a 10% coupon will sell at par if the market interest rate is:
A.
8%
B.
10%
C.
12%
D.
5%
Correct answer is:
B. 10%
Do you agree with this answer?
The journal entry for goods sold on credit is:
A.
Debit Sales, Credit Accounts Receivable
B.
Debit Cash, Credit Sales
C.
Debit Purchases, Credit Accounts Payable
D.
Debit Accounts Receivable, Credit Sales
Correct answer is:
D. Debit Accounts Receivable, Credit Sales
Do you agree with this answer?
Sales are Rs. 200,000 and variable costs are Rs. 120,000. The contribution margin ratio is:
A.
40%
B.
60%
C.
30%
D.
80%
Correct answer is:
A. 40%
Do you agree with this answer?
Inventory days are 60, receivable days are 45 and payable days are 30. The cash conversion cycle is:
A.
75 days
B.
135 days
C.
15 days
D.
105 days
Correct answer is:
A. 75 days
Do you agree with this answer?
The business entity concept states that:
A.
The owner and business are the same person
B.
The business is a separate accounting unit from its owner
C.
The business has no obligations
D.
Only companies are entities
Correct answer is:
B. The business is a separate accounting unit from its owner
Do you agree with this answer?
The cut-off assertion is concerned with whether:
A.
Assets are properly insured
B.
Transactions and events are recorded in the correct accounting period
C.
Employees are paid on time
D.
Taxes are paid before the deadline
Correct answer is:
B. Transactions and events are recorded in the correct accounting period
Do you agree with this answer?
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