Cost Classification & Ethics
75 free practice questions with explanations
PassNova has 75 free AAT Level 2 Accounting practice questions on Cost Classification & Ethics, each with a clear explanation. Practise them in the browser with instant feedback — 100% free, no sign-up, on any device. Updated for 2026.
Cost Classification & Ethics: example questions & answers
Here are 6 example questions from this topic. Practise the full set of 75 free in the browser.
-
A cost that stays the same in total regardless of the level of output, such as factory rent, is classified as a:
- A Variable cost
- B Fixed cost ✓
- C Stepped cost
- D Direct material cost
Answer: A fixed cost remains constant in total over a range of activity. Factory rent does not change whether output rises or falls within that range.
-
A cost that changes in direct proportion to the level of activity, such as raw materials used in production, is a:
- A Fixed cost
- B Variable cost ✓
- C Semi-variable cost
- D Sunk cost
Answer: A variable cost rises and falls in line with output. Raw material consumption increases as more units are produced, making it a variable cost.
-
A cost that is fixed up to a certain level of output and then increases to a new fixed level, such as renting an extra warehouse when capacity is exceeded, is best described as a:
- A Variable cost
- B Stepped (step-fixed) cost ✓
- C Direct labour cost
- D Marginal cost
Answer: A stepped cost stays fixed over a range, then jumps to a higher fixed amount when activity passes a threshold, such as adding warehouse space.
-
Under the AAT Code of Professional Ethics, which fundamental principle requires a member to be straightforward and honest in all professional and business relationships?
- A Objectivity
- B Confidentiality
- C Integrity ✓
- D Professional competence and due care
Answer: Integrity is the principle of being straightforward and honest in all professional and business relationships. It is one of the five AAT fundamental principles.
-
An accountant uses a client's financial information for personal gain and discloses it to a third party without authority. Which fundamental ethical principle has been breached?
- A Confidentiality ✓
- B Professional behaviour
- C Objectivity
- D Professional competence and due care
Answer: Confidentiality requires members not to disclose or use client information without proper authority. Sharing it for personal gain directly breaches this principle.
-
Which fundamental principle requires accountants to keep their knowledge and skills up to date and to act diligently?
- A Integrity
- B Objectivity
- C Professional competence and due care ✓
- D Confidentiality
Answer: Professional competence and due care requires members to maintain up-to-date knowledge and skill and to act diligently in line with current standards.