Correct Answer:
C. They occur, regardless of when cash is received or paid
Accrual accounting records assets, liabilities, revenues and expenses as they arise.
November 13, 2026 · Accounting and Finance MCQs, Public Sector Accounting & Auditing MCQs
Under the accrual basis of accounting in the public sector, transactions are recognized when:
Related MCQs
Under the direct write-off method, when a specific receivable is written off as bad:
A.
Accounts receivable is debited and sales is credited
B.
Cash is debited and receivables is credited
C.
Bad debt expense is debited and accounts receivable is credited
D.
Allowance for doubtful debts is debited and cash is credited
Correct answer is:
C. Bad debt expense is debited and accounts receivable is credited
Do you agree with this answer?
Which of the following is an example of a public sector fraud risk indicator?
A.
Payments approved with full documentation
B.
Competitive bidding with several bidders
C.
Payments split into smaller amounts to avoid approval limits
D.
Regular stock verification
Correct answer is:
C. Payments split into smaller amounts to avoid approval limits
Do you agree with this answer?
An example of a direct tax is:
A.
Sales tax
B.
Customs duty
C.
Excise duty
D.
Income tax
Correct answer is:
D. Income tax
Do you agree with this answer?
Re-appropriation means:
A.
Transfer of funds from one head or sub-head to another within the same grant
B.
Returning all money to the treasury
C.
Taking a new foreign loan
D.
Writing off bad debts
Correct answer is:
A. Transfer of funds from one head or sub-head to another within the same grant
Do you agree with this answer?
The historical cost concept requires assets to be recorded at:
A.
Current market value always
B.
Their original purchase cost
C.
Replacement cost always
D.
Expected selling price
Correct answer is:
B. Their original purchase cost
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A department has no opening WIP, completes 1,000 units and has 400 units in closing WIP that are 50% complete for conversion. Equivalent units for conversion cost are:
A.
1,200
B.
1,400
C.
1,000
D.
1,600
Correct answer is:
A. 1,200
Do you agree with this answer?
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