question opt1 opt2 opt3 opt4 opt5 answer

1Which of the following methods assumes that the first inventory purchased is the first inventory sold?
AFIFO B LIFOC. Weighted Average D. Specific Identification opt1

2 If a company is using the specific identification method of inventory costing, which of the following
statements is true?

A The cost of each inventory item can be easily tracked and recorded. B It is likely that different units
of inventory have different unit costs. C The company must have a sophisticated inventory tracking
system. D. All of the above are true. opt4

3 A company has 100 units of inventory with a cost of Birr 50 per unit. On March 1, they purchase 150
additional units of inventory with a cost of Birr 60 per unit. On April 1, they sell 200 units of inventory.
Using the FIFO method, what is the cost of goods sold?

A Birr 11,000 B. Birr 12,000 C. Birr 13,000. D Birr 14,000 opt2

4 Which of the following asset must be depreciated over its useful life? Land Buildings
Account receivable Cash opt2

Which of the following is an example of tangible fixed assets? Goodwill Patents Land and
Buildings Copyright opt3

Which accounting standard specifies the accounting treatment for Property, Plant, and Equipment?
IAS 16 IFRS 9 ASC 606 None of the above opt1

Which of the following costs can be included in the cost of Property, Plant, and Equipment? Repair
and maintenance costs Cost of abandoning an asset Training costs None opt2

What is the main difference between amortization and depreciation? Amortization is for tangible
assets, and depreciation is for intangible assets. Amortization is for intangible assets, and depreciation is
for tangible assets. Amortization is for natural resources, and depreciation is for patented
technologies. None opt2

A company acquired a building for Birr 100,000 and estimates its useful life to be 25 years. What is the
annual depreciation expense of the building in straight-line depreciation? Birr 4,000 Birr
4,500 Birr 5,000 None of the above opt1

When would a company use the revaluation model instead of the cost model for Property, Plant, and
Equipment? When the fair value of the asset can be reliably measured? When the asset is
difficult to value When the company is experiencing financial difficulties All of the above
opt1
Which of the following is a limitation of using the cost model for Property, Plant, and Equipment?
It does not reflect changes in the asset's value It provides a more accurate measure of an
asset's economic benefits It is more useful for heavily depreciated assets All of the above
opt1

Which of the following methods of depreciation is the most conservative? Double-declining

balance depreciation Straight-line depreciation Units-of-production depreciation None
of the above opt2

When should a company perform an impairment test for Property, Plant, and Equipment? When
there is evidence of a significant decrease in the asset's value When the asset has been fully
depreciated When the asset is sold All of the above opt1

Which of the following factors would not affect the useful life of an asset? Technological
advancements Inflation Company's depreciation policy All of the above opt2

A company purchased a machine for Birr 500,000 and expects it to produce 1,000,000 units of product
over its useful life. Assuming the company expects to produce 100,000 units of product in the current
year, what is the depreciation expense for the year using the units-of-production method? Birr
50,000 Birr 62,500 Birr 100,000 None of the above opt2

What are the advantages of a partnership form of business compared to a corporation? Greater
flexibility in ownership structure and tax advantages. Greater access to financial capital and limited
liability protection. Greater management control and less complex legal requirements. None
of the above. opt3

Which of the following is an example of a public enterprise in Ethiopia? Ethiopian Airlines Ethio
Telecom Dangote Cement Ethiopia MOENCO opt2

Which of the following is a characteristic of a public enterprise? Privately owned and controlled Run for
profit Governed by a board of directors Regulated by the stock market opt3

Which of the following is an internal factor affecting the operations of a public enterprise in Ethiopia?
Economic conditions Political stability Regulatory environment Organizational
culture opt4

When the agreement states that the seller is to bear the delivery costs (FOB Destination), therefore, the
buyer records the payment of transportation costs by debiting__________ and by crediting
____________ accounts respectively. Freight out, cash Account payable, cash Cash, account
payableTransportation in, cash opt1

Assume that AtoJafer earned fares of Br. 500 from repair car of his customer to Ato Zelalem and agreed
to collect cash in the near future. From this transaction which account is affected? Increased
assets and Decrease owners’ equity Decrease account receivable and Increase owners’ equity
 Increase account receivable and owners’ equity Decrease account receivable and owners’
equity opt3

Which of the following requires that the activities of the entity be kept separate and distinct from the
activities of its owner and all other entities? Business Entity Concept Historical Cost Principle
Monetary Unit Assumption Fair Value Principle opt1

Which of the following point is referring available discount offered by the seller to encourage early
payments of invoices by the purchaser? A trade discounts Purchase discount A sales discount
Purchase returns and allowance opt3

Which of the following statement is false about the GAAP? The intangible assets under GAAP are
valued at fair value. It divides the current liabilities into two categories- Current and Non-Current
liabilities. It allows capitalization and amortization of some of the development costs over multiple
periods. None of the above opt3

During 2022, Beza Company’s assets decreased Birr 420,000 and its liabilities decreased Birr 370,000. Its
equity therefore: Increased Birr 50,000. Decreased Birr 50,000. Decreased Birr 790,000.
Increased Birr 790,000. opt2

Which one of the following does notinclude physical control? Safes and vaults to store cash. Locked
warehouses for inventories. Independent bank reconciliations. Bank safety deposit boxes for
important papers. opt3

Deposits in transit in a bank reconciliation are: Deducted from the book balance. Added to the
book balance. Added to the bank balance. Deducted from the bank balance opt3

The reconciling item in a bank reconciliation that will cause the depositor to make an adjusting entry is
Outstanding checks. A bank errors. Deposit in transit. Bank service charges
opt4

DH Gada plc has a credit balance of Birr 10,000 in its Allowance for Doubtful Accounts before any
adjustments are made at the end of the year. Based on review and aging of its accounts receivable at
the end of the year, Hughes estimates that Birr 120,000 of its receivables are uncollectible. The amount
of bad debt expense which should be reported for the year is: Birr 10,000. Birr 120,000. Birr
110,000. Birr 130,000 opt3

Auditors must keep confidential information from disclosure to public except: When disclosure is
authorized When there is a right to discloseDisclosure is required by law The entire above
opt4

Amount is said to be material if: Greater than birr 500,000 Fail to alter the decision of reasonable
person Alter the decision of reasonable person All are correct opt3
An intentional misstatement of financial statement is: Error Fraud Tort action None of the
above opt2

Which is not the purpose of Auditing? Tool for internal control Improving efficiency of
economy Increasing credibility of information None of the above opt4

External auditors mainly perform Operational audit Compliance audit Financial audit
None of the above opt3

Which is not the objective of Operational audit? Evaluating Unit performance in relation to established
criteria Assuring that all operating reports are on constant basis Assuring operational efficiency and
economy Assuring fair presentation of financial statements opt4

A management assertion category which asserts whether particular components of an account is

properly classified and disclosed is Valuation Existence and occurrence Presentation
and disclosure Right and obligations opt3

An audit objective which addresses whether all asset recorded really exist on the balance sheet date is
Completeness cut off Existence Accuracy opt3

A file that includes working papers applicable to the year under audit is Current files Account
balance Permanent files Audit report opt1

Which of the following can be a source of information about the legal provisions of the client? Bylaw
Contracts Articles of Incorporation All of the above opt4

Audit report is the final steps in the entire audit process among the standard, collecting and
accumulating sufficient and appropriate evidence is expressed in which paragraph of audit report.
Additional paragraph Scope paragraph Opinion paragraph Introductory paragraph
opt2

Auditors must obtain information about client’s legal documents. Accordingly, which one of the
following cannot be the source of legal document? discussion with client’s personnel
Corporate charter and bylaws if it is corporation business type The corporate minutes and
contracts All are correct and right legal documents. opt1

Which one of the following standards is different from the other? internal control understanding
proper planning and supervision adequate technical training None of them.
opt3

Which of the following is an example of fraud? A company overestimates the amount of inventory on
hand An employee accidentally misstates the company's revenue A company mistakenly records
an asset as a liability An employee intentionally manipulates financial records opt4
Which of the following is an example of a substantive test? Testing the control environment
Confirming account balances with third parties Testing for fraud Reviewing
management's financial representations opt2

Evidence is said to be believable when The provider is independent There is unfortunate internal
control system The auditor obtain them from others Accumulated for the period outside of the audit
opt1

According to the IASB conceptual frame work, earnings Include certain losses that are excluded from
comprehensive income. Are the same as comprehensive income Exclude certain gains and losses
that are included in comprehensive income. Include certain gains and losses that are excluded from
comprehensive income. opt3

Which one of the following elements of financial statements is not reported in the statement of financial
position? Owners’ equity Liability Comprehensive income Account receivable
opt3

What is the fair value hierarchy? A system used to classify fair value measurements based on the
reliability of inputs used A system used to classify assets based on their useful life A
system used to determine the replacement cost of an asset A system used to determine the net
book value of an asset opt1

Which of the following fair value hierarchy or best evidence of fair value considered as Level I input;
Quoted prices for similar/related/comparable asset or liability in an active market and quoted
prices for identical/equal/the same asset or liability in an inactive market. Quoted prices in an
active market for identical asset or liability. Unobservable inputs for the asset or liability.
Observable inputs for the asset or liability. opt2

The Core principle of impairment measurement states; An entity shall write down the carrying amount
of an asset to the recoverable amount if the carrying amount is not recoverable in full. an asset shall
not be carried at below its recoverable amount on statement of financial position, If the carrying
amount is lower than the recoverable amount, the asset is judged to have suffered an impairment loss.
The asset shall be reported on statement of financial position at their net realizable value.
opt1

Which one of the following is true regarding direct write-off method? Direct write-off method could
be applicable if bad debt loss from uncollectible is significant. Bad debt expense becomes debited and
accounts receivable is credited when bad debt loss is recovered. Bad debt expense could be credited and
accounts receivable debited if bad debt loss is recovered. Bad debt expense could be debited and
allowance for doubtful account credited to show the account is written-off. opt3

Edget Co. issued promissory notes for the goods purchased from WushWush Co. on account for birr
41,238 on august 12, 2013. The term of the notes is 95 days with 13% annual interest rate. What is the
amount of interest and maturity value for the notes respectively? Birr 1,441.70 & birr 42,652.70
 Birr 141,469.25 & birr 182,707.25 Birr 509,289.3 & birr 550,527.3 Birr 42,652.70& birr
1,414.70 opt4

Assume MATUSALA Co. has credit sales of Br. 78,000 in 2009. Based on past experience, ABC Co.
estimated 0.5% of credit sales are uncollectible, the adjusting entry for uncollectible accounts expense
at the end of the period, 2009 becomes:39,000 390 78,000 78,390 opt2

Which of the following is not method of computing depreciation on plant asset? Straight line method
Specific identification method Sum of the year digit Units of production method
opt2

Process of allocating cost of natural resourcesto expense is said to be___________ Depletion

Amortization Depreciation Actualization opt1

Company has decided to sell one of its old manufacturing machines on June 30, 2010. The machine was
purchased for Br.80,000 on January 1, 2006, and was depreciated on a straight-line basis for 10 years
assuming no salvage value. If the machine was sold for Br.26,000, what was the amount of the gain or
loss recorded at the time of the sale? Br.18,000 loss Br.54,000 gain Br.22,000 loss Br.46,000loss
opt1

Which type of joint venture involves the creation of a new legal entity? Equity JV Contractual JV
Cooperative JV Partnership opt1

Joint ventures are typically formed for which of the following reasons? To share risks and costs
between the parties To gain access to new markets To combine expertise and resources of the
parties All of the above opt4

How is the venturer's share of profits or losses accounted for in a joint venture? Using the equity
methodUsing the proportionate consolidation method Using the acquisition method None of the
above opt1

What is the primary role of the home office in a branch operation? Providing financial and
administrative support Setting sales targets for the branch Controlling the pricing of the product
Handling all marketing activities opt1

What is the difference between a sales agency agreement and a franchise agreement? A sales agency
agreement involves marketing and sales, while a franchise agreement involves only marketing. A sales
agency agreement is valid for a shorter period than a franchise agreement. A sales agency
agreement involves selling only specific products, while a franchise agreement involves selling the entire
product line. A sales agency agreement is more restrictive than a franchise agreement.
opt3

Which one of the following transactions can decreases the balance of investment in the branch account?
Cash collected by branch Net income reported by branch Branch account receivable
collected by home office Goods forwarded to the branch opt3
A Journal entry debiting Cash in Transit and crediting Investment in Branch is required for: The
home office to record the mailing of a check to the branch early in the accounting period. The
branch to record the mailing of a check to the home office early in the accounting period. The
home office to record the mailing of a check by the branch on the last day of the accounting period.
The branch to record the mailing of a check to the home office on the last day of the accounting
period. opt3

What is the main difference between sales agencies and branches? Sales agencies are owned by
the company, while branches are not. Sales agencies are authorized to sell only specific products,
while branches sell the company's entire product line. Sales agencies are located in a different
country, while branches are located in the same country as the home office. Sales agencies only
market products, while branches handle both marketing and sales. opt2

Which of the following is a temporary difference that creates a deferred tax liability? Accelerated
depreciation for tax purposes Straight-line depreciation for financial statement purposes
Capitalizing interest for financial statement purposes Straight-line depreciation for tax
purposes opt1

The tax base is; The total amount of taxes collected by the government The amount of taxable income
or assets subject to taxation The maximum allowable deductions from taxable income The
percentage of income tax owed based on the tax bracket opt2

Which of the following is an example of a temporary difference that creates a deferred tax asset?
Depreciation expense is greater for tax purposes than accounting purpose Depreciation
expense is greater for accounting purposes than tax purpose A business incurred a loss for tax
purposes, but not for accounting purposes A business incurred a profit for accounting purposes,
but not for tax purposes opt2

One of the following statement is wrong about bearer plant; A living plant that is used in the
production or supply of agricultural produce. The bearer plant is expected to bear a produce for more
than one year. Are accounted for under IPSAS 17, Property, Plant, and Equipment. Are cultivated
to be harvested as agricultural produce. opt4

Biological assets are initially measured at fair value less estimated Point of sales costs. The fair value of
assets can be measured using active market. If an active market does not exist, and then fair value is
determined as per fair value hierarchy. All of the following are among fair value hierarchy EXCEPT?
Recent transaction price for the asset if there is no active market. Market prices for
similar assets, adjusted for the points of difference. Sector benchmarks. Future value of the cash
flows expected to be generated from the asset. opt4

Which of the following is an insurance contract according to IFRS 17? A warranty on a product
A service contract A life insurance policy A lease agreement opt3
How should an insurance company account for changes in the estimate of future claims under IFRS 17?
Record the change in the income statement Record the change in the statement of
comprehensive income Adjust the liability for incurred claims Adjust the liability for remaining
coverage opt3

Which of the following is an example of a reinsurance contract? A life insurance policy A property
insurance policy A health insurance policy A retrocession agreement opt4

What is the long-run objective of financial management? To maximize profits To maximize

earnings per share. To maximize shareholder wealth To maximize return on investment
opt3

What is the primary purpose of financial statement analysis? To predict future financial performance
To understand the company's financial health and performance To compare the company's
performance to that of its competitors To make investment decisions opt2

If a company has Br. 100,000 in current assets, Br. 30,000 in inventory, and Br.50,000 in current
liabilities, what is its acid test ratio? 1.4 2 2.3 3.3 opt3

How does the time value of money affect investing? Investing allows money to grow over time due
to compound interest Investing is not affected by the time value of money Investing only benefits
investors in the short-term Investing can lead to a loss of value over time opt1

What is the risk-return tradeoff? The higher the risk, the lower the potential return The
higher the risk, the higher the potential return The lower the risk, the higher the potential return
The lower the risk, the lower the potential return opt2

A company has a beta of 1.5 and the risk-free rate is 2%. Assuming an expected market return of 8%,
what is the cost of equity using the CAPM? 10% 11% 12% 13% opt3

How would a company choose between two capital budgeting projects with different investment
amounts and net present values using the NPV method?By choosing the project with the highest net
present value By choosing the project with the highest investment amount By choosing the project
with the highest initial cash inflow By calculating the profitability index of each project
opt1

The Oil Company is planning to purchase a machine known as machine X. Machine X would cost Br.
25,000 and would have a useful life of 10 years with zero salvage value. The expected annual cash inflow
of the machine is Br.10, 000. What is payback period of machine X? 1.7 years 2.3 years
2.5years 2.8 years opt3

Which of the following best defines the optimal capital structure? The capital structure that
maximizes the company's profitability The capital structure that minimizes the company's risk The
capital structure that balances the company's risk and profitability The capital structure that
maximizes the company's liquidity opt3
Which of the following dividend policies is most appropriate for a company that has a stable earnings
stream and a large number of conservative investors? Irregular dividend payout ratio High dividend
payout ratio Low dividend payout ratio No dividend payout opt2

What is the difference between a stable dividend policy and a residual dividend policy? A stable
dividend policy maintains a consistent dividend payout, while a residual dividend policy pays out
dividends only after all other expenses are covered. A stable dividend policy pays out dividends only
after all other expenses are covered, while a residual dividend policy maintains a consistent dividend
payout. A stable dividend policy pays out dividends based on a target payout ratio, while a residual
dividend policy pays out dividends based on the availability of funds. A stable dividend policy pays
out dividends based on the availability of funds, while a residual dividend policy pays out dividends
based on a target payout ratio. opt1

Which of the following is NOT a common financial statement used in financial forecasting? Income
statement Cash flow statement Customer feedback report Balance sheet opt3

Which one of the following is not an application of working capital management? Day to day
expenditure of business Current obligation for payment Expenditure in the usual course of business
Expenditure to acquire capital assets opt4

What is Economic Order Quantity (EOQ)? The minimum amount of inventory that should be
ordered The maximum amount of inventory that should be ordered The optimal amount of
inventory that should be ordered The total amount of inventory that should be ordered
opt3

What is the primary goal of aggressive financing strategies? Minimizing risk Maximizing short-term
profits Building a sustainable business model Maintaining a steady cash flow opt2

Which of the following is a reason why a company might experience an unfavorable direct materials
quantity variance? A greater than anticipated waste in the manufacturing process. An increase in
the cost per unit of raw materials. A decrease in the cost per unit of raw materials. A lower than
anticipated waste in the manufacturing process. opt1

A manufacturing company has actual variable manufacturing overhead of Br 75,000 and standard
variable manufacturing overhead rate of Br12 per hour. If the actual hours worked during January 2022
are 6,000 hours, what is the variable overhead spending variance of the company for the month of
January, 2022? Br 3,500 Favorable. Br 3000 Unfavorable. Br 3,500 Unfavorable. Br 3,000
Favorable. opt2

Which of the following is an example of irrelevant information? The price of a product when making a
purchasing decision. The color of someone's hair when making a hiring decision. The
qualifications of a job candidate when making a hiring decision. The reputation of a company when
making a purchasing decision. opt2
If the budgeted contribution margin for budgeted and actual sales mix are Br 35000 and Br 27000, then
the sales mix variance will be: Br 8,000 Br 80,000 Br 62,000 Br 35,000
opt1

Which one of the following is the correct formula for calculating of materials mix variance? (Actual
mix - Budgeted mix) x Actual quantity. (Budgeted mix - Actual mix) x Actual quantity. (Actual mix -
Budgeted mix) x Budgeted quantity. (Budgeted mix - Actual mix) x Budgeted quantity.
opt3

Micromax is multinational manufacturer company which manufactures and sells small speakers that are
used in mobile phones. The speakers are sold in bulk to mobile manufacturing companies where
complete mobiles are produced. The direct material of Micromax multinational company is a thin
copper coil. One meter of the copper coil is the standard requirement to manufacture one speaker. The
standard cost to manufacture one speaker requires direct materials of Br 1.50 (1 meter × Br 1.50 per
meter), direct labor of Br 1.00, and manufacturing overhead Br 0.50. If Micromax multinational company
purchased 5,000 meters of copper coil at Br 1.70 per meter and produced 2,500 speakers using 3,000
meters of copper coil during the period, the materials price variance for Micromax multinational
company will be: 2000 Favorable.2,500 Unfavorable. 1,500 Favorable. 1,000
Unfavorable. opt4

Which budgeting technique involves setting targets for each department based on the previous year's
performance? Zero-based budgeting. Incremental budgeting. Activity-based budgeting. Capital
budgeting. opt2

Which of the following is an example of indirect financing? an SSU purchasing a financial claim
from a commercial bank an SSU purchasing a financial claim from an underwriter an SSU
purchasing a financial claim from a DSU an SSU purchasing a financial claim from a dealer
opt1

Primary capital markets are most likely to finance raw materials plant and equipment
operating expenses none of the above opt2

Which of the following is not a characteristic of money market instruments? low default risk short-
term to maturity high marketability small denomination opt4

To increase the money supply immediately, the government would most likely Lower the Discount
Rate Lower reserve requirements Buy securities on the open market Issues a treasury bond
opt3

An increase (shift to right) in the supply of loanable funds (SL) may not be related to: an increase in
the money supply. an increase in personal income taxes. an increase in household thriftiness.
an increase in household income. opt2
Deficit spending units (DSU) are represented in loanable funds theory as demanders of loanable funds.
suppliers of loanable funds. DSUs are not represented in the loanable funds theory of
interest ratedetermination. demanders of financial claims. opt1

Which of the following is the best alternative for small investors to invest in a money market? locally;
their credit union indirectly; negotiable CDs directly; commercial paper indirectly;
money market mutual funds opt4

Which of the following money market instruments would typically be used in internationaltransactions?
a Treasury bill commercial paper a banker's acceptance a negotiable CD opt3

The purchase of one million dollars of Treasury Bonds, delivered in 60 days, from agovernment
securities dealer is: a call option a forward contract a swap a put opt2

Which of the following is NOT a direct tax? Income tax Property tax Excise tax All of
the above opt3

What is the main purpose of a tax system? To generate revenue for the government To
regulate the economy To redistribute income All of the above opt4

What is the main purpose of a tax expenditure? To increase revenue for the government To
reduce tax liability for taxpayersTo regulate the economy None of the above opt2

What is the difference between a tax credit and a tax deduction? A tax credit reduces the amount
of tax owed, while a tax deduction reduces taxable income. A tax credit reduces taxable income,
while a tax deduction reduces the amount of tax owed. A tax credit and a tax deduction have the same
effect on taxes. A tax credit is only available to individuals, while a tax deduction is only available to
businesses. opt1

Which of the following taxes is typically levied on goods and services? Property tax Corporate tax
Excise tax Estate tax opt3

What is a tax base? The amount of money that the government collects in taxes The amount of
income that is subject to tax The rate at which a tax is levied The number of taxpayers in a given area
opt2

What is a tax loophole? A legal way to reduce taxable income or avoid paying taxes A type of tax
evasion A tax that is levied on a specific activity or product A tax credit that is available to all
taxpayers opt1

Which of the following is a source of government revenue in Ethiopia? Foreign aid Voluntary
donations Fees for public services All of the above opt4

Which of the following is a characteristic of a regressive tax system? Tax rates increase as income
increases Tax rates decrease as income increases Tax rates remain constant as income increases
Tax rates are based on a fixed amount opt2
Which of the following is a disadvantage of a tax system that relies heavily on foreign aid? It can
create a dependency on foreign countries It can increase corruption and inefficiency It can
lead to high inflation rates It can reduce economic growth opt1

Which of the following taxes is imposed on the profits of businesses in Ethiopia? Excise tax Sales
tax Income tax Property tax opt3

What is the main purpose of public finance? To increase private sector profits To ensure equal
distribution of income To increase government spending To reduce the size of government
opt2

What is a progressive tax system? A tax system where high income earners pay a lower
percentage of their income in taxes than low income earners A tax system where low income earners
pay a lower percentage of their income in taxes than high income earners A tax system where
everyone pays the same amount of tax A tax system where only corporations pay taxes opt2

What is tax evasion? Failing to pay taxes that are owed Legally avoiding taxes Paying too
much in taxes A tax on imported goods opt1

Which of the following is NOT a responsibility of management accounting? Budgeting

Financial reporting Cost analysis Performance evaluation opt2

Which of the following is an example of a direct cost? Rent Marketing expenses Salaries of
production workers Office supplies opt3

A company has beginning raw materials inventory of $20,000, purchases of raw materials during the
period of $50,000, and ending raw materials inventory of $15,000. What is the cost of direct materials
used during the period? $85,000 $35,000 $65,000 $55,000 opt4

The cost of goods sold for a manufacturing firm for the month of January was $90,000. The finished
goods inventory was $15,000 on January 1 and $17,500 on January 31. Beginning and ending work-in-
process inventories were $20,000 and $25,000, respectively. What was the cost of goods manufactured
during January? $92,500 $90,000 $87,500 $97,500 opt3

A company has beginning work in process inventory of 500 units, direct materials costs of $2,500,
conversion costs of $5,000, and 8,000 units completed during the period. Beginning work in process
inventory is 100% complete with respect to direct materials and 60% complete with respect to
conversion cost. What is the cost per equivalent unit of direct materials using the weighted average
method? $0.25 $0.30 $0.35 $0.40 opt2

KK Company estimated that it would use 5,000 direct labor hours and incur $60,000 in manufacturing
overhead costs in 2022. However, the actual direct labor hours used during the year were 4,800 and the
actual manufacturing overhead costs incurred were $65,000. The company uses direct labor hour as an
allocation base. What will over/under absorbed overhead for the year 2022? $7,400 over absorbed
$7,400 under absorbed $2,600 over absorbed $2,600 under absorbed opt2
Which of the following funds is used to account for trust and fiduciary activities of the government?
General fund Capital projects fund Permanent fund Agency fund opt4

What is the purpose of a capital projects fund? To pay off government debt To fund ongoing
operations and services To fund specific projects or programs that involve construction, acquisition, or
improvement of major capital facilities or infrastructure To support political campaigns opt3

Which of the following funds is used to account for the acquisition, construction, and maintenance of
infrastructure assets? Enterprise fund Internal service fund General fund Capital projects fund
opt4

What is the purpose of an enterprise fund? To fund ongoing operations and services To
account for the costs of goods and services provided to other departments within the same government
entity To establish reserves for unanticipated expenditures To account for business-type activities
that charge fees for services opt4

Which of the following funds is used to account for endowments or other investments that are intended
to be held in perpetuity? Permanent fund Debt service fund Enterprise fund Internal
service fund opt1

What is the purpose of a debt service fund? To pay off government debt To fund ongoing
operations and services To establish reserves for unanticipated expenditures To account for
resources used to pay principal and interest on long-term debts opt4

Which of the following funds would be used to account for the financial resources that are used to
support central services such as human resources, information technology or purchasing? General
fund Permanent fund Debt service fund Internal service fund opt4

What is the main objective of International Public Sector Accounting Standards (IPSAS)? To harmonize
financial reporting standards across all public sector entities globally To provide guidelines for anti-
corruption and transparency in public sector entities To ensure that public sector entities have
consistent and fair accounting practices To provide a framework for financial reporting based on accrual
accounting principles opt3

What is the primary purpose of the cash basis IPSAS? To provide a framework for financial reporting
based on accrual accounting principles To provide guidance on how cash should be accounted for
within a public sector entity To ensure compatibility with the accrual basis IPSAS Accountability
opt2

Which of the following is NOT one of the Pillars of IPSASB's conceptual framework? Accountability
Transparency Control Comparability opt3

Which of the following is NOT one of the components of Financial Statements as per IPSAS? Balance
Sheet Statement of Financial Performance Statement of Cash Flows Statement of Assets
and Liabilities opt4
Which of the following is NOT an IPSAS requirement for presentation of financial statements? Proper
classification, presentation and disclosure of information Disclosure of major components of net
worth Disclosure of contingent liabilities Disclosure of revenue forecasts opt4

What is the purpose of the IPSAS Cash Basis? To provide a framework for accounting for cash
transactions in the public sector To provide a framework for accounting for revenue recognition in the
public sector To provide a framework for accounting for long term liabilities in the public sector
All of the above opt1

Why is it important for public sector entities to adopt IPSAS? To provide transparency and
accountability for financial reporting To standardize how financial reports are prepared To
comply with global accounting standards None opt1

What is the purpose of the IPSASB's Conceptual Framework? To provide guidance for the
development of new international public sector accounting standards To state the purpose and
objectives of public sector financial statements To explain the underlying concepts and principles that
guide the development of IPSASAll opt3

Which type of fund is used for expenses related to operating a government entity? General Fund
Capital Fund Special Revenue Fund Permanent Fund opt1

What is the main difference between an Enterprise Fund and an Internal Service Fund? An Enterprise
Fund charges fees to external users while an Internal Service Fund charges fees to departments within
the same government entity. An Enterprise Fund does not charge fees while an Internal Service Fund
does. Only private sector entities use Internal Service Funds. There is no difference between an
Enterprise Fund and an Internal Service Fund. opt1

A company sells a product for Br 50 per unit. The variable cost per unit is Br 30 and the fixed costs are Br
20,000. What is the margin of safety of this company in monetary unit if total sells of the company is
2,000 units? Br 20,000 Br 40,000 Br 50,000 Br 30,000 opt3

Which one of the following is/are not correct about reasons of purchasing treasury stock by a particular
corporation/s? To increase earnings per share by decreasing numbers of shares outstanding To
reduce dividend payments by increasing number of shares outstanding To reissue at higher price
To issue the share acquired for stock dividend opt2

XYZ Partnership reports Net income of Br 60,000. If partners X ,Y and Z have an income sharing ratio of
5:3:2 respectively, Y’s share of the net income is: Br.30,000 Br.18,000 Br.12, 000
Br.22, 000 opt2

Which of the following is not a characteristic of partnership? Mutual agency limited life limited
liability income division opt3

The winding up of the operation of the business enterprise is known as Dissolution Admission
Withdrawal Liquidation opt4
Which of the following is not a characteristic of corporation? Corporation has a separate legal
existence The ownership of a corporation is divided in shares of stock Corporation is subject
to double taxation Stockholders of a corporation have unlimited liability opt4

If merchandise inventory is being valued at cost and general price level consistently increases, FIFO
method of inventory costing reports: Higher cost of merchandise soldLower cost of ending inventory
lower income tax expense higher net income opt4

Which of the following is rate for overtime work performed from 6:00AM to 10:00 PM? 2 ½ times
ordinary hourly rate 2 times ordinary hourly rate 1½ times ordinary hourly rate 1¼times
ordinary hourly rate opt3

According to the employment income tax proclamation no 979/2016 of Ethiopia, which one of the
following earnings of an employee is subject to taxation? Amounts paid to cover the actual cost
of medical treatment of employees. Hardship Allowance. Payments received as a compensation
or gratitude in relation to personal injuries suffered by that person or the death of another person.
Over time earnings opt4

The book value of an asset is defined as Cost Minus Salvage Value Cost Minus Accumulated
Depreciation. Cost Minus Salvage Value Minus Accumulated Depreciation. Estimated Fair Market
Value. opt2