art mcqs

When one or both aspects of a transaction are recorded in the wrong class or category of account, it is called

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Error of principle
Error of omission
Error of commission
Error of original entry
✅ The correct answer is A.
When one or both aspects of a transaction are recorded in the wrong class or category of account, it is called Error of principle. An error of principle is an accounting mistake in which an entry is recorded in the incorrect account, violating the fundamental principles of accounting.

“Which of the following would explain an adverse variable production overhead efficiency variance? 1 Employees were of a lower skill level than specified in the standard 2 Unexpected idle time resulted from a series of machine breakdown 3 Poor Quality material was difficult to process”

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(1), (2) and (3)
(1) and (2)
(2) and (3)
(1) and (3)
✅ The correct answer is D.
The following that would explain an adverse variable production overhead efficiency variance are Employees were of a lower skill level than specified in the standard and Poor Quality material was difficult to process.

If stock market price is higher than strike price so call option

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price will be lower
rate will be higher
price will be higher
rate will be lower
✅ The correct answer is C.
If stock market price is higher than strike price so call option price will be higher. A stock market, equity market or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately.

Which of the following statement is correct in respect of Endowment policy?

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Shorter the policy term, lesser the investment element
Shorter the policy term, larger the investment element
Longer the policy term, larger the investment element
Term and investment element do not bear any relationship
✅ The correct answer is B.
Shorter the policy term, larger the investment element is correct in respect of Endowment policy.

Weighted average of probabilities is classified as

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average rate of return
expected rate of return
past rate of return
weighted rate of return
✅ The correct answer is B.
Weighted average of probabilities is classified as expected rate of return. The expected return on a financial investment is the expected value of its return. It is a measure of the center of the distribution of the random variable that is the return.

Maturity date decides at time of issuance of bond and legally permissible is classified as

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original maturity
permanent maturity
artificial maturity
valued maturity
✅ The correct answer is A.
Maturity date decides at time of issuance of bond and legally permissible is classified as original maturity. The “original maturity” is the time between the issue date and the maturity date. This date is included in a bond’s indenture at the time of issuance. An investor that purchases a bond on its issuance date will be quoted the original maturity.