Accountancy Test Questions

QUESTION 1
1.
Why might income tax expense on the income statement differ from actual income taxes paid to the government?
Answer
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a.
Financial statement preparers can use an estimated tax rate.
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b.
The IRS requires deferral of most expenses.
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c.
There are timing differences to when income is recognized and there are items that may or may not be subject to taxation.
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d.
The IRS uses the accrual method of calculating income.
3.3 points
QUESTION 2
1.
Which of the following is a question an analyst would ask when assessing the quality of a firm’s financial statements?
Answer
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a.
Has the firm integrated forward into retailing to final consumers?
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b.
Is the firm diversified across several geographical markets?
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c.
Do earnings include nonrecurring gains or losses?
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d.
Are the company’s products designed to meet a specific market segment?
4.3 points
QUESTION 3
1.
Which of the following economic characteristics is consistent with a pharmaceutical company?
Answer
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a.
Low profit margins.
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b.
Low barriers to entry.
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c.
Low business risk.
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d.
High levels of research and development.
3.3 points
QUESTION 4
1.
Which of the following would not inhibit new entrants into a market?
Answer
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a.
Existing patented technology.
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b.
Existing technological expertise.
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c.
Large required capital investment.
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d.
Lack of rivalry among current participants.
3.3 points
QUESTION 5
1.
As a