ACCA Applied Skills Practice Test

ACCA Applied Skills is the middle ACCA route for candidates applying technical accounting, audit, taxation, law, performance, and finance knowledge to workplace-style problems.

Use these 12 original sample questions for initial self-assessment. If ACCA Applied Skills is the Finance Prep route you want next, use the Notify me form on this page.

What Applied Skills practice should test

• selecting the right technical accounting, reporting, audit, tax, or finance treatment
• applying law, ethics, controls, and assurance concepts to realistic business scenarios
• interpreting data, performance evidence, and financial-management trade-offs
• avoiding answers that calculate correctly but ignore reporting, audit, or stakeholder context

Sample Exam Questions

These questions use concise business scenarios across the Applied Skills areas. They are designed for self-assessment and are not official ACCA questions.

Question 1

Topic: financial reporting

A company signs a five-year lease for equipment and controls the use of the asset during the lease term. Which issue should be considered first under lease accounting?

• A. Whether the supplier’s logo appears on the contract
• B. Whether all leases are ignored until cash is paid
• C. Whether the asset can be renamed internally
• D. Whether the arrangement creates a right-of-use asset and lease liability

Best answer: D

Explanation: Applied Skills reporting questions often require recognizing the substance of an arrangement. If the company controls the use of the asset, lease recognition may be required.

Question 2

Topic: performance management

A division has a favourable sales volume variance but an adverse contribution margin variance. What is the best interpretation?

• A. Higher volume may have been achieved through discounting or a less profitable sales mix
• B. The favourable volume variance proves performance is excellent
• C. Contribution margin is irrelevant when sales volume rises
• D. The division should stop selling immediately

Best answer: A

Explanation: Variances should be interpreted together. More units sold can still reduce profitability if discounts, mix, or variable costs weaken contribution.

Question 3

Topic: audit and assurance

An auditor receives a management-prepared receivables schedule. What would most improve evidence reliability?

• A. Accepting the schedule because management prepared it
• B. Comparing only the total to last year’s total
• C. Obtaining external confirmations or testing the schedule back to underlying records
• D. Removing all receivables from the audit plan

Best answer: C

Explanation: Audit evidence is stronger when it is independently confirmed or tested to source records. A management-prepared schedule alone is not usually sufficient.

Question 4

Topic: taxation

A business expense is recorded in the accounts, but tax rules may restrict its deductibility. What should the accountant do?

• A. Assume all accounting expenses are automatically deductible
• B. Review the relevant tax treatment before calculating taxable profit
• C. Remove the expense from the accounting records
• D. Ignore tax because accounting profit is enough

Best answer: B

Explanation: Taxable profit and accounting profit can differ. Applied Skills tax questions often test whether the candidate separates accounting recognition from tax deductibility.

Question 5

Topic: business law

A company director enters a contract while knowingly exceeding authority. What is the main issue?

• A. A lower inventory holding cost
• B. A standard costing variance
• C. A depreciation estimate
• D. Potential breach of duty and authority concerns

Best answer: D

Explanation: Law questions often use business facts to test authority, duties, and consequences. A director who exceeds authority may create governance and legal issues.

Question 6

Topic: financial management

A project has a positive expected return but large downside risk if exchange rates move against the company. What should be assessed?

• A. Only the expected return
• B. Hedging options, sensitivity, cash-flow exposure, and risk appetite
• C. Whether exchange rates can be ignored after approval
• D. Whether all foreign projects are unacceptable

Best answer: B

Explanation: Financial management decisions should consider risk as well as return. Sensitivity and hedging analysis can show whether the project fits the company’s risk appetite.

Question 7

Topic: controls

A payroll clerk can add new employees and approve monthly payroll payments. What is the main control weakness?

• A. Excessive depreciation
• B. Price elasticity
• C. Poor segregation of duties
• D. Inventory obsolescence

Best answer: C

Explanation: The same person should not be able to create employees and authorize payments without independent review. This creates a risk of error or fraud.

Question 8

Topic: audit risk

A client has implemented a new revenue system shortly before year end. What audit risk increases?

• A. Risk that revenue data migration, configuration, or controls may be incorrect
• B. Risk that audit planning is no longer required
• C. Risk that inventory count procedures disappear
• D. Risk that all revenue is automatically misstated

Best answer: A

Explanation: New systems can create risks around configuration, data migration, access rights, and control operation. The auditor should respond with appropriate testing, not assume automatic failure.

Question 9

Topic: working capital

A supplier offers a discount for payment within 10 days, but the company would need to use an overdraft to pay early. What should finance compare?

• A. Discount percentage only
• B. Supplier preference only
• C. Annual depreciation charge only
• D. Discount benefit with overdraft cost and liquidity impact

Best answer: D

Explanation: An early-payment discount is not automatically beneficial. The company should compare the discount with financing cost and cash-flow pressure.

Question 10

Topic: financial reporting estimates

Management wants to reduce the warranty provision because no claims have arrived in the first month after launch. Historical data for similar products shows claims usually arise after six months. What is the best response?

• A. Remove the provision entirely
• B. Keep the estimate under review and use relevant evidence, including claim timing for similar products
• C. Ignore historical data because it is inconvenient
• D. Record the provision as revenue

Best answer: B

Explanation: Provisions depend on evidence and reasonable estimates. Early absence of claims may not be persuasive if comparable products usually show claims later.

Question 11

Topic: performance measurement

A service team is rewarded only for reducing average call time. Complaints and repeat calls increase. What should be added?

• A. No new measures because speed is enough
• B. Only more sales targets
• C. First-contact resolution, complaint rate, customer satisfaction, and quality review
• D. A measure based on office size

Best answer: C

Explanation: A narrow performance measure can create dysfunctional behavior. The measure set should balance efficiency with service quality and customer outcome.

Question 12

Topic: professional judgement

A finance manager calculates that a restructuring is profitable, but the plan depends on staff skills that the company does not currently have. What should the recommendation include?

• A. The capability gap, training or hiring plan, timing risk, and financial effect
• B. The calculation only
• C. A conclusion that the restructuring is risk-free
• D. A decision to ignore implementation

Best answer: A

Explanation: Applied Skills answers should not stop at the calculation. The best recommendation considers whether the business can actually implement the plan.

Applied Skills quick checklist

Related ACCA pages

• Applied Knowledge
• Strategic Professional
• ACCA qualification updates