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FRM Part I Accounting & Finance Questions
Practise accounting & finance (finance) for the Financial Risk Manager Part I: 10 multiple-choice questions, each with the correct answer and a worked explanation. Click an option to check it, or “New questions” for another set.
Accounting & Finance practice
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Q1.A debit entry increases:
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Answer: B — Assets and expenses
In double entry, debits increase assets and expenses; credits increase liabilities, equity and revenue.
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Q2.$3,000 is invested at 5% compounded annually. What is it worth after 3 years?
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Answer: B — $3,473
FV = PV(1 + r)ⁿ = 3,000 × 1.05^3 = $3,473.
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Q3.Diversification mainly reduces:
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Answer: C — Unsystematic (specific) risk
Holding many assets reduces company-specific risk, not market risk.
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Q4.Find the present value of $800 received at the end of each year for 2 years at 5%.
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Answer: D — $1,488
PV of an ordinary annuity = PMT × [1 − (1 + r)⁻ⁿ]/r = 800 × 1.8594 = $1,488.
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Q5.Under the accounting equation, Assets =
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Answer: B — Liabilities + Equity
Assets = Liabilities + Owners’ equity.
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Q6.Find the compound interest on $33,000 at 10% per annum for 2 years, compounded annually.
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Answer: B — $6,930
A = P(1 + R/100)^T = 33,000 × 1.10^2 = 39,930; CI = A − P = $6,930.
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Q7.A company’s net income divided by shareholders’ equity is:
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Answer: B — ROE
Return on equity = net income ÷ shareholders’ equity.
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Q8.Find the present value of $1,600 received at the end of each year for 9 years at 6%.
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Answer: C — $10,883
PV of an ordinary annuity = PMT × [1 − (1 + r)⁻ⁿ]/r = 1,600 × 6.8017 = $10,883.
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Q9.The CAPM expected return equals:
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Answer: A — Rf + β(Rm − Rf)
Capital Asset Pricing Model: risk-free rate + beta × market risk premium.
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Q10.What is the present value of $8,000 received in 2 years at a 4% discount rate?
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Answer: B — $7,396
PV = FV/(1 + r)ⁿ = 8,000 / 1.04^2 = $7,396.
How to approach accounting & finance questions
Master the accounting equation, the three financial statements and time value of money: FV = PV(1 + r)ⁿ, PV of an annuity = PMT × [1 − (1 + r)⁻ⁿ]/r. Ratios link the statements.
About FRM Part I
Financial Risk Manager Part I — conducted by Global Association of Risk Professionals (GARP). Foundations of risk management, quantitative analysis, markets and valuation.
Original practice questions written for this site in the style and difficulty of each exam’s syllabus. They are not past papers and the site is not affiliated with any exam body. Exam patterns, marking schemes and syllabi change — always check the latest official notification.
FRM Part I practice topics
| Topic | Section | Question source |
|---|---|---|
| Probability & Combinatorics | Mathematics | Calculated (new numbers every set) |
| Accounting & Finance | Finance | Calculated + question bank |
| Simple & Compound Interest | Quantitative aptitude | Calculated (new numbers every set) |
| Averages & Statistics | Quantitative aptitude | Calculated (new numbers every set) |