FREE ACCA Applied Skills Questions and Answers

Question 1

In contract law, what is the main requirement for an agreement to be legally enforceable?

Accepted Answer

Offer and acceptance

Answer

For an agreement to be legally enforceable as a contract, there must be a clear offer by one party and an unequivocal acceptance of that offer by the other party. This mutual assent, often referred to as a "meeting of the minds," is fundamental to forming a valid and binding agreement.

Question 2

What is the purpose of variance analysis in performance management?

Accepted Answer

To identify deviations from budgeted performance

Answer

Variance analysis is a key performance management tool used to compare actual financial or operational results against budgeted or standard amounts. Its purpose is to identify and explain the differences (variances), helping management understand why performance deviated and take corrective actions.

Question 3

Which of the following taxes is considered indirect?

Accepted Answer

Value-added tax (VAT)

Answer

Value-added tax (VAT) is considered an indirect tax because it is levied on goods and services at each stage of production and distribution, but ultimately borne by the final consumer. Unlike direct taxes such as income tax, it is not directly imposed on an individual's or company's income or profits.

Question 4

Which financial statement shows the movement of cash during a specific period?

Accepted Answer

Statement of Cash Flows

Answer

The Statement of Cash Flows reports the cash generated and used by a company during a specific accounting period. It categorizes cash movements into operating, investing, and financing activities, providing crucial insights into a company's liquidity and solvency.

Question 5

What is the primary objective of an external audit?

Accepted Answer

To provide an independent opinion on financial statements

Answer

The primary objective of an external audit is to provide an independent and objective opinion on whether a company's financial statements are presented fairly, in all material respects, in accordance with applicable accounting standards. This enhances the credibility and reliability of financial information for stakeholders.

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA - Association of Chartered Certified Accountants Certification Practice Test

FREE ACCA Applied Skills Questions and Answers