Correct Answer:
A. When it is earned, regardless of when cash is received
Accrual accounting records transactions when they occur, not when cash moves.
November 13, 2026 · Accounting and Finance MCQs, Financial Accounting MCQs
Under the accrual basis of accounting, revenue is recognized:
Related MCQs
Actual labor rate is Rs. 22 per hour, standard rate is Rs. 20 and actual hours are 100. The labor rate variance is:
A.
Rs. 200 favorable
B.
Rs. 2,000 adverse
C.
Rs. 200 adverse
D.
Rs. 220 favorable
Correct answer is:
C. Rs. 200 adverse
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Unearned (deferred) revenue is reported as:
A.
An asset
B.
Revenue of the current period
C.
An expense
D.
A liability
Correct answer is:
D. A liability
Do you agree with this answer?
Annual demand is 10,000 units, ordering cost is Rs. 50 per order and holding cost is Rs. 4 per unit per year. The Economic Order Quantity (EOQ) is:
A.
250 units
B.
1,000 units
C.
500 units
D.
5,000 units
Correct answer is:
C. 500 units
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An external confirmation of accounts receivable balances mainly provides evidence about:
A.
Valuation of inventory
B.
Completeness of payables
C.
Compliance with tax law
D.
Existence of the receivables
Correct answer is:
D. Existence of the receivables
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Net income is Rs. 60,000 and shareholders' equity is Rs. 400,000. Return on equity (ROE) is:
A.
6.7%
B.
24%
C.
15%
D.
1.5%
Correct answer is:
C. 15%
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A qualified opinion is issued when misstatements are:
A.
Material but not pervasive
B.
Both material and pervasive
C.
Immaterial
D.
Not found at all
Correct answer is:
A. Material but not pervasive
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