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Multiple Choice Multiple Answer: List of Attempted Questions and Answers
Multiple Choice Multiple Answer: List of Attempted Questions and Answers
True/False
People external to the organization do not have any access to
Question
the costing records.
Correct Answer True
True/False
A cheque received from a customer but not deposited into bank
Question
must be recorded in the cash book.
Correct Answer True
Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of
an account , Omission of posting an account in the ledger
Posting on the wrong side of an account , Omission of posting
Your Answer
an account in the ledger
True/False
Question Due to compensating errors the arithmetical accuracy of the trial
balance get affected.
Correct Answer False
Factory Cost Repair for factory building Repair for factory building
True/False
Perpectual inventory system includes continuous verification of
Question physical stock at regular intervals.
Correct Answer True
True/False
Per unit cost of variable overheads may reduce as the volume of
Question
output increases but the total overheads remain constant.
Correct Answer False
True/False
Machine hour rate is calculated as (amount of overheads to be
Question
absorbed)/(labour hours required for production)
Correct Answer False
True/False
To take make or buy decision under the marginal costing , if
Question purchase price of the product is less than its variable cost it is
advisable to go for manufacturing proposition.
Correct Answer False
True/False
Question Budget is prepared for a fixed period of time.
True/False
Question Depreciation does not involve cash out flow
Your Answer
True/False
Question The bin card and stores ledger, being independent records,
comparison of these two records should be avoided.
Correct Answer False
True/False
Question Error of commission refer to a situation where a transaction is
not recorded in the books of account.
Correct Answer False
Correct Answer Those costs which will arise as a result of the proposed action
Your Answer Those costs which will arise as a result of the proposed action
True/False
Question Factory overheads consist of all overhead costs incurred from
the stage of procurement of material till the production of
finished goods.
Correct Answer True
True/False
Question Bank reconciliation statement must be prepared before the
preparation of profit and loss account and balance sheet.
Correct Answer True
True/False
Question The variable costs are controllable at the lower lever.
True/False
Question The purchase account should be debited when an order is
placed with the supplier of material.
Correct Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Correct Answer The benefit of time saved is divided equally between the
employer and employee
Your Answer The benefit of time saved is divided equally between the
employer and employee
True/False
Question The sum of indirect material cost, indirect labour cost and
indirect expenses is termed as factory cost.
Correct Answer False
Correct Answer Health and safety services , Canteen facility , Loans at reduced
rate of interest
Your Answer Health and safety services , Canteen facility
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
True/False
Question Linking overhead to a cost unit is known as overhead
absorption.
Correct Answer True
True/False
Question The best way to reduce labour cost is to recruit cheap labour.
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Malik started business by contributing cash Rs.50,000/- and his personal car worth
Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer False
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-
sheet
Profitability statement Indicates the amount of profit earned Indicates the amount of profit earned
True/False
Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms
belonging to the different industries.
Correct Answer False
Your Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer False
Your Answer False
True/False
Question Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True
Real A/C Debit what comes in, Credit what goes out Debit the receiver, Credit the giver
Trade Discount Not accounted for in the books of Accounts Not accounted for in the books of
Accounts
Cash Discount Accounted for in the books of Accounts Accounted for in the books of Accounts
Rs.1 Personal A/C Debit the receiver, Credit the giver Debit what comes in, Credit what goes out
True/False
Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True
Your Answer True
True/False
Question The effect of price reduction is always reduction in the margin of safety and also
reduction in the break even point.
Correct Answer False
Your Answer False
True/False
Question Price based on Uniform Costing may be taken to be reliable and representative of the
whole industry.
Correct Answer True
Your Answer False
True/False
Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to
give bonus to the employees.
Correct Answer False
Your Answer False
True/False
Question A fixed budget is useful only when the actual level of activity corresponds to
the budgeted level of activity.
Correct Answer True
Your Answer True
Question The operating profit as per cost statement may differ from the profit as per
Profit and Loss Account due to existence of
Correct Answer Depreciation on plant and machinery , Interest on loans taken from other ,
Interest on loans granted to others
Your Answer Depreciation on plant and machinery , Preliminary expenses written off
Question If the sales forecast is less than the past sales but the top management
insists upon a certain amount of additional profits, then following steps can be taken to
achieve the target profit
Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer Increase the sales volume , Reduce cost of sales , Increase the selling efforts
Question Any amount of profit earned in the past which is not distributed to the owner,
belongs to the creditors.
Correct Answer False
Your Answer True
Question Under time rate system a worker is paid on the basis of production achieved
by him in a given time.
Correct Answer False
Your Answer False
Question Budgeted profit and loss account and budgeted balance sheet are also known
as ________.
Correct Answer Master budget
Your Answer Master budget
Question Which of the following budgets may be termed as a long term budget?
Correct Answer Capital expenditure budget , Research and Development expenditure budget ,
Budget of a transportation company
Your Answer Capital expenditure budget , Research and Development expenditure budget ,
Budget of a transportation company
Question Piece rate systems are very useful in the following circumstances:
Correct Answer Units of output are measurable , Job is standardised , The flow of work is
regular
Your Answer Work delays are frequent , Job is standardised , The flow of work is regular
Question P&L statement which is a period statement & relates to a certain period tells
about results of operations.
Correct Answer True
Your Answer True
Liabilities All the amount owed by the business All the amount owed by the business
Assets All the properties owned by the business All the properties owned by the business
Question Judge the given statement according to the given criteria. Goods being real
account, when goods are lost by fire, the goods account should be debited because the
goods are not going out of the factory.
Correct Answer The statement is correct but the reason is incorrect
Your Answer The statement and the reason both are incorrect
Question Financial accounting may deal with the ascertainment of cost & calculation of
profitability of the individual product.
Correct Answer False
Your Answer False
Question Financial Accounting primarily protects the interests of the outsiders dealing
with organization in various capacities.
Correct Answer True
Your Answer False
Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which
account should be debited?
Correct Answer Investment account - Rs.170,000/-
Your Answer Investment account - Rs.170,000/-
Question The data for two materials P and Q is given below : Material P : opening stock
Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening
stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of
the given statements relevant to the data given are correct.
Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster
moving material , Consumption of material Q is Rs.860,000/-
Your Answer Inventory turnover period for material P is 40.5 days , Material Q is faster moving
material , Consumption of material Q is Rs.860,000/-
Question Cost Accounting is concerned with calculation of the profitability and state of
affairs of the organization as a whole.
Correct Answer False
Your Answer True
Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour
when the level of efficiency is between________.
Correct Answer 90% to 100%
Your Answer 90% to 100%
Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth
Your Answer Sell carpets
Question Direct labour hour rate method of absorption of overheads is suitable where
most of the production is done by using machines.
Correct Answer False
Your Answer True
Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter
of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004,
156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20
Correct Answer 153,000 units
Your Answer 136,000 units
Question The sales mix variance highlights the fact that the actual mix of sales has been
in the same ratio as budgeted.
Correct Answer False
Your Answer True
Question The selection of ________ may depend upon the various factors like
characteristics of the business organisation, tax considerations, statutory requirements
etc.
Correct Answer Accounting period
Your Answer Accounting period
Question Calculate the machine hour rate. The amount of overhead pertaining to June,
2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator.
During the month June, 2004 the machine operator has been paid for 5,670 hours.
Correct Answer Rs.29.98
Your Answer Rs.30/-
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages
and fair wages.
Correct Answer True
Your Answer True
Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of
sales value.
Correct Answer 0.75
Your Answer 0.75
Question Select the cost that indicates increased or decreased total cost due to the
increased or decreased volume of operations.
Correct Answer Differential cost
Your Answer Differential cost
Question 1) Financial statements are basically in two forms i.e. profitability statement
and balance sheet.
Correct Answer True
Your Answer True
Question The variance which measures the deviation of the rate actually paid to labour
as from the standard hourly rate is known as:
Correct Answer Labour rate variance
Your Answer Labour rate variance
Question If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal
contribution, ________ account should be debited in the books of accounts of the
business.
Correct Answer Drawings
Your Answer Capital
Question Uniform costing may lead to monopolistic conditions within the industry,
prices may be raised and customers may suffer.
Correct Answer True
Your Answer False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is
termed as factory cost.
Correct Answer False
Your Answer False
True/False
Question Budgetary control is one of the techniques of management accounting.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True
Your Answer False
True/False
Question In the ledger account only credit entries relating to a particular account are posted.
Correct Answer False
Your Answer False
Global Tender Any supplier from the global market can fill the tender Any supplier from the global
market can fill the tender
Single Tender Tender from only one supplier Tender from only one supplier
Limited Tender Tenders from reliable but few suppliers Tenders from reliable but few suppliers
Open Tender Any supplier from the local market can fill the tender Any supplier from the local
market can fill the tender
True/False
Question Fixed overhead variances may be calculated either on the basis of units of output or
on the basis of standard hours.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting discloses the financial performance & Financial status of the
business as a whole
Correct Answer True
Your Answer True
True/False
Question Cost Accounting is a legal requirement.
Correct Answer False
Your Answer False
True/False
Question Cash account can have a credit balance.
Correct Answer False
Your Answer True
True/False
Question Period cost is the cost assigned to the products.
Correct Answer False
Your Answer False
True/False
Question Book keeping is clerical while accounting is managerial
Correct Answer True
Your Answer True
True/False
Question Financial Statements which are generated as a result of the management accounting
report & financial performance of the organization as a whole.
Correct Answer False
Your Answer False
True/False
Question An entry in the stores ledger is required for transfer of material from one job to
another in the same department.
Correct Answer False
Your Answer False
True/False
Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement
the Uniform costing system.
Correct Answer False
Your Answer True
True/False
Question Bank reconciliation statement can be prepared on weekly basis.
Correct Answer True
Your Answer True
Select The Blank
Question The ________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Correct Answer Control
Your Answer Control
True/False
Question 1) Cost Accounting and Management Accounting are similar to each other in many
respects.
Correct Answer True
Your Answer True
True/False
Question The reports generated by financial accounting are meant for the use by management
for effective decisions.
Correct Answer True
Your Answer False
True/False
Question Cost Accounting may be considered to be a part of management Accounting.
Correct Answer True
Your Answer True
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are
yet to be made.
Correct Answer True
Your Answer True
True/False
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair
wages.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is not at all a legal requirement
Correct Answer True
Your Answer True
Plan of investment in fixed assets Capital Expenditure Budget Capital Expenditure Budget
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are yet to be
made.
Correct Answer True
Your Answer True
True/False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed
as Overheads.
Correct Answer True
Your Answer True
True/False
Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Correct Answer False
Your Answer False
True/False
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer True
True/False
Question While preparing the labour cost budget, factors such as overtime working or night
shift working may be ignored.
Correct Answer False
Your Answer False
True/False
Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to
give bonus to the employees.
Correct Answer False
Your Answer False
True/False
Question It is very easy to measure the portion of increased sales which is due to expenditure
incurred for advertisement of the product
Correct Answer False
Your Answer True
True/False
Question The role of the budget committee may be taken as an advisory role to the Chief
Executive.
Correct Answer True
Your Answer True
True/False
Question Depreciation under Reducing Balance Method is calculated as (Number of units *
Rate of depreciation per unit)
Correct Answer False
Your Answer False
True/False
Question All cash sales are recorded in the sales register.
Correct Answer False
Your Answer True
Transport facilities to employees Preventive cost of labour turnover Preventive cost of labour
turnover
Relationship between supervisor and worker Avoidable cause of labour turnover Avoidable cause
of labour turnover
Increased spoilage and defectives Replacement cost of labour turnover Replacement cost of
labour turnover
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer False
Your Answer True
True/False
Question Uniform costing may lead to monopolistic conditions within the industry, prices may
be raised and customers may suffer.
Correct Answer True
Your Answer True
True/False
Question Indirect material cost is an integral part of finished goods.
Correct Answer False
Your Answer False
True/False
Question Generally speaking income represents wealth increase and business success; higher
the income, lower will be the success of a business.
Correct Answer False
Your Answer False
True/False
Question Cost Accounting is concerned with calculation of the profitability and state of affairs of
the organization as a whole.
Correct Answer False
Your Answer False
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
Correct Answer True
Your Answer True
True/False
Question P&L statement which is a period statement & relates to a certain period tells about
results of operations.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting primarily protects the interests of the outsiders dealing with
organization in various capacities.
Correct Answer True
Your Answer True
Normal Standards Anticipated to be achieved in future Established for a longer period of time
Basic Standards Established for a longer period of time Once established can never be altered
Current Standards Established for a shorter period of time Established for a shorter period of time
True/False
Question Management Accounting is the process of analysis and interpretation of financial
data collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True
True/False
Question Trading account is an important account which will be used to analyse how
successful and how efficiently the firm runs its business.
Correct Answer True
Your Answer True
True/False
Question Financial accounting may deal with the ascertainment of cost & calculation of
profitability of the individual product.
Correct Answer False
Your Answer False
True/False
Question Financial Accounting discloses the financial performance & financial statements of
the business as a whole.
Correct Answer True
Your Answer True
Purchase budget Forecast of quantity and value of materials Forecast of quantity and value of
materials
Budget committee Analyses the performance of different budget centres Analyses the
performance of different budget centres
Cash budget Assists in predicting shortage of cash Assists in predicting shortage of cash
True/False
Question The labour cost which can be identified with the individual cost centre is known as the
Direct Labour Cost.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True
True/False
Question Variable cost + Profit = Sales
Correct Answer False
Your Answer False
True/False
Question Cash account can have a credit balance.
Correct Answer False
Your Answer False
True/False
Question Budgetary control is one of the techniques of management accounting.
Correct Answer True
Your Answer True
True/False
Question All personal expenses of the owner should be debited to the organisation's profit and
loss account.
Correct Answer False
Your Answer False
Factory overheads Repair for factory building Repair for factory building
True/False
Question The amount of profit which is retained by the organisation is transferred to 'Reserves
and Surplus' in the balance sheet.
Correct Answer True
Your Answer True
True/False
Question Yield variance equal to zero indicates that the standard yield and actual yield are the
same.
Correct Answer True
Your Answer True
True/False
Question Book keeping is clerical while accounting is managerial
Correct Answer True
Your Answer True
Spirit of mutual trust Requisite for uniform costing Requisite for uniform costing
Avoids cut throat competition Advantage of uniform costing Advantage of uniform costing
Treatment given to research and development costs Fields covered by uniform costing Fields
covered by uniform costing
True/False
Question Material mix and material yield variance can be calculated even when only one raw
material is used for production.
Correct Answer False
Your Answer False
True/False
Question Management Accounting is not at all a legal requirement
Correct Answer True
Your Answer True
True/False
Question Cost Accounting is a legal requirement.
Correct Answer False
Your Answer False
True/False
Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True
Your Answer True
True/False
Question Trading account is used to analyse how successfully and how efficiently the firm
runs, particularly with regards to the maintenance of the gross profit margin.
Correct Answer True
Your Answer True
True/False
Question Standard costing is always accompanied by a system of budgeting but budgetary
control may be operated in business where standard costing is impracticable.
Correct Answer True
Your Answer True
True/False
Question In marginal costing, under and over absorption of fixed overheads is bound to arise.
Correct Answer False
Your Answer True
True/False
Question New companies can adopt Uniform costing system as a ready-made system.
Correct Answer True
Your Answer False
True/False
Question Cost Accounting may be considered to be a part of management Accounting.
Correct Answer True
Your Answer True
True/False
Question 1) Cost Accounting and Management Accounting are similar to each other in many
respects.
Correct Answer True
Your Answer True
True/False
Question Credit balance in interest account indicates income for the organisation.
Correct Answer True
Your Answer True
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question The bin card and stores ledger, being independent records,
comparison of these two records should be avoided.
Correct Answer False
True/False
Question Error of commission refer to a situation where a transaction is
not recorded in the books of account.
Correct Answer False
Correct Answer Those costs which will arise as a result of the proposed action
Your Answer Those costs which will arise as a result of the proposed action
True/False
Question Factory overheads consist of all overhead costs incurred from
the stage of procurement of material till the production of finished
goods.
Correct Answer True
True/False
Question Bank reconciliation statement must be prepared before the
preparation of profit and loss account and balance sheet.
Correct Answer True
True/False
Question The variable costs are controllable at the lower lever.
True/False
Question The purchase account should be debited when an order is
placed with the supplier of material.
Correct Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Correct Answer The benefit of time saved is divided equally between the
employer and employee
Your Answer The benefit of time saved is divided equally between the
employer and employee
True/False
Question The sum of indirect material cost, indirect labour cost and
indirect expenses is termed as factory cost.
Correct Answer False
Correct Answer Health and safety services , Canteen facility , Loans at reduced
rate of interest
Your Answer Health and safety services , Canteen facility
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
True/False
Question Linking overhead to a cost unit is known as overhead absorption.
True/False
Question The best way to reduce labour cost is to recruit cheap labour.
Correct Answer False
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in
a significant manner.
Correct Answer True
Your Answer True
True/False
Question Financial accounting may deal with the ascertainment of cost &
calculation of profitability of the individual product.
Correct Answer False
Your Answer False
True/False
Question The reports generated by financial accounting are meant for
the use by management for effective decisions.
Correct Answer True
Your Answer True
Personal A/C Debit the receiver, Credit Debit the receiver, Credit
the giver the giver
Real A/C Debit what comes in, Debit what comes in,
Credit what goes out Credit what goes out
Nominal A/C Debit all the expenses, Debit all the expenses,
Credit all the incomes Credit all the incomes
Tangible assets Building, Machinery Building, Machinery
In tangible assets Patents, Trade marks Patents, Trade marks
True/False
Question Credit note is an intimation send to person dealing with the
business that his account being debited for the purpose
indicated therein.
Correct Answer False
Your Answer True
True/False
Question Amount invested in purchasing Fixed Asset is a revenue
expenditure.
Correct Answer False
Your Answer False
True/False
Question As per double entry system o accounting , total of all debits
should be equal to all credits.
Correct Answer True
Your Answer True
True/False
Question Fixed cost tends to vary with time rather than with level of
activity.
Correct Answer True
Your Answer True
True/False
Question To take make or buy decision under the marginal costing , if
purchase price of the product is less than its variable cost it is
advisable to go for manufacturing proposition.
Correct Answer False
Your Answer False
True/False
Question For better control, variances of a period may be compare with
the previous period.
Correct Answer True
Your Answer True
True/False
Question Expected standards are more realistic and useful for cost
control.
Correct Answer True
Your Answer True
True/False
Question The difference between standard cost and actual cost is
termed as Variance.
Correct Answer True
Your Answer True
Correct Answer Geographical location of the supplier , Price quoted by the supplier ,
Goodwill of the supplier
Your Answer Geographical location of the supplier , Price quoted by the supplier ,
Goodwill of the supplier
True/False
Question Overhead absorption rate will be different at different capacity levels.
Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate
organizational structure
Your Answer Its wide scope , Possibility of intuitive decision , Requires elaborate
organizational structure
True/False
Question A grinding machine is an example of impersonal cost centre
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer More than one key factors , Refers to a complex situation , Can be
resolved by using linear programming technique
Your Answer More than one key factors , Refers to a complex situation , Can be
resolved by using linear programming technique
True/False
Question Balance sheet indicates the expenditure & income from the business.
True/False
Question Interim dividend paid by the company should be debited to the profit and
loss appropriation account.
Correct Answer True
Correct Answer Quantity requisitioned , Per unit material cost , Job number
Correct Answer Units produced , Production cost , Material cost, labour cost and
overheads
Your Answer Units produced , Production cost , Material cost, labour cost and
overheads
Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling
efforts
Your Answer Increase the selling price , Increase the sales volume , Reduce cost of
sales
True/False
Question Receipts and payments method of cash budget is useful for preparing
long term estimates.
Correct Answer False
Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority ,
Promotes economy and efficiency
Your Answer Provides reliable basis for budgeting , Facilitates delegation of authority
True/False
Question The sales mix variance highlights the fact that the actual mix of sales has
been in the same ratio as budgeted.
Correct Answer False
True/False
Question Lack of efficient control on various aspects related to raw-material
increases the material cost component of the finished product.
Correct Answer True
True/False
Question Due to compensating errors the arithmetical accuracy of the trial balance
is affected.
Correct Answer False
Daily Time sheets Time spent by worker on job Time spent by worker on job
is recorded is recorded
Time Keeping Department Recording of workers time Recording of workers time
Time Recording Clock Ticket number & clock card Ticket number & clock card
Method allotted to worker allotted to worker
True/False
Question Purchased goods by paying Rs.35,000/-: In this case, the cash account
should be debited.
Correct Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
True/False
Question The problem of multiple key factors can be solved with the help of
techniques like linear programming, operations research, etc.
Correct Answer True
True/False
Question All costs are controllable.
True/False
Question Factory overheads consist of all overhead costs incurred from
the stage of procurement of material till the production of finished
goods.
Correct Answer True
True/False
Question Manufacturing overheads represents all costs incurred in the
factory including direct material cost and direct labour cost.
Correct Answer False
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer To facilitate payment for time spend on the work premises
Your Answer To facilitate payment for time spend on the work premises
Correct Answer The factor which limits the activites of the undertaking
Your Answer The factor which the top management feel is important
True/False
Question Marginal costing is a technique of cost control.
True/False
Question Provision for discount on debtors account should be credited to
the Profit and Loss Account.
Correct Answer False
Your Answer True
True/False
Question The problem of multiple key factors can be solved with the help
of techniques like linear programming, operations research, etc.
Correct Answer True
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Correct Answer False
True/False
Question Absorption costing is more suitable for decision making than
marginal costing
Correct Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial,
cost, management accounting.
Correct Answer True
True/False
Question 1) Financial statements are basically in two forms i.e. profitability
statement and balance sheet.
Correct Answer True
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
Correct Answer More than one key factors , Refers to a complex situation , Can
be resolved by using linear programming technique
Your Answer More than one key factors , Refers to a complex situation , Can
be resolved by using linear programming technique
True/False
Question Bank charges debited in the pass book represent clerical
mistake on the part of the bank employees.
Correct Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Real A/C Debit what comes in, Debit what comes in,
Credit what goes out Credit what goes out
Trade Discount Not accounted for in the Not accounted for in the
books of Accounts books of Accounts
Cash Discount Accounted for in the Accounted for in the books
books of Accounts of Accounts
Rs.1 Personal A/C Debit the receiver, Credit Debit the receiver, Credit
the giver the giver
True/False
Question Depreciation, interest and property tax continue even when the
operations are discontinued.
Correct Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Indirect labour cost indicates that labour cost which cannot be identified
with the individual cost centre.
Correct Answer True
True/False
Question There is no need to open a suspense account if the trial balance does not
agree.
Correct Answer False
Correct Answer Change in price of material , Failure to take discounts , Weak purchase
organization
Your Answer Careless use of material , Change in price of material
Your Answer
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant
manner.
Correct Answer True
True/False
Question Profitability statement indicates the amount of assets & liabilities.
True/False
Question Debit the receiver & credit the giver is a rule of Real a/c.
True/False
Question 1) Financial statements are basically in two forms i.e. profitability
statement and balance sheet.
Correct Answer True
Correct Answer total cost remains the same , per unit cost may vary , not dependent on
volume of output
Your Answer total cost remains the same , per unit cost may vary , not dependent on
volume of output , per unit cost remains the same.
True/False
Question Head of the Department should sign the purchase requisition.
Correct Answer The price of the earliest available lot is considered first , If the lot is
exhausted, the price of the next available lot is considered , It is used for
issue of material
Your Answer The price of the earliest available lot is considered first , If the lot is
exhausted, the price of the next available lot is considered , Physical lots
of the material are kept separate , It is used for issue of material
True/False
Question Financial Accounting discloses the financial performance & financial
statements of the business as a whole.
Correct Answer True
True/False
Question The situation of over absorption arises if the overheads absorbed are less
than the actual overheads.
Correct Answer False
Your Answer Record of all transaction , Record of purchasing goods & services , Record
of selling goods & services
True/False
Question Due to errors of principle the arithmetical accuracy of the trial balance get
affected.
Correct Answer False
True/False
Question canteen facility to workers, health and safety services are examples of
monetary incentives.
Correct Answer False
Correct Answer The system of wage payments , System for bonus payment , Grades of
workers required
Your Answer The system of wage payments , System for bonus payment , Grades of
workers required
True/False
Question If actual cost is more than the standard cost then it is called favorable
variance.
Correct Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the information
already recorded in the books of accounts.
Correct Answer True
True/False
Question The aggregate of indirect material cost, indirect labour cost and indirect
expenses is termed as factory cost.
Correct Answer False
True/False
Question Malik started business by contributing cash Rs.50,000/- and his personal car worth
Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer False
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-
sheet
Profitability statement Indicates the amount of profit earned Indicates the amount of profit earned
True/False
Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms
belonging to the different industries.
Correct Answer False
Your Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer False
Your Answer False
True/False
Question Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True
Real A/C Debit what comes in, Credit what goes out Debit the receiver, Credit the giver
Trade Discount Not accounted for in the books of Accounts Not accounted for in the books of
Accounts
Cash Discount Accounted for in the books of Accounts Accounted for in the books of Accounts
Rs.1 Personal A/C Debit the receiver, Credit the giver Debit what comes in, Credit what goes out
True/False
Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True
Your Answer True
True/False
Question The effect of price reduction is always reduction in the margin of safety and also
reduction in the break even point.
Correct Answer False
Your Answer False
True/False
Question Price based on Uniform Costing may be taken to be reliable and representative of the
whole industry.
Correct Answer True
Your Answer False
True/False
Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to
give bonus to the employees.
Correct Answer False
Your Answer False
True/False
Question A fixed budget is useful only when the actual level of activity corresponds to
the budgeted level of activity.
Correct Answer True
Your Answer True
Question The operating profit as per cost statement may differ from the profit as per
Profit and Loss Account due to existence of
Correct Answer Depreciation on plant and machinery , Interest on loans taken from other ,
Interest on loans granted to others
Your Answer Depreciation on plant and machinery , Preliminary expenses written off
Question If the sales forecast is less than the past sales but the top management
insists upon a certain amount of additional profits, then following steps can be taken to
achieve the target profit
Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer Increase the sales volume , Reduce cost of sales , Increase the selling efforts
Question Any amount of profit earned in the past which is not distributed to the owner,
belongs to the creditors.
Correct Answer False
Your Answer True
Question Under time rate system a worker is paid on the basis of production achieved
by him in a given time.
Correct Answer False
Your Answer False
Question Budgeted profit and loss account and budgeted balance sheet are also known
as ________.
Correct Answer Master budget
Your Answer Master budget
Question Which of the following budgets may be termed as a long term budget?
Correct Answer Capital expenditure budget , Research and Development expenditure budget ,
Budget of a transportation company
Your Answer Capital expenditure budget , Research and Development expenditure budget ,
Budget of a transportation company
Question Piece rate systems are very useful in the following circumstances:
Correct Answer Units of output are measurable , Job is standardised , The flow of work is
regular
Your Answer Work delays are frequent , Job is standardised , The flow of work is regular
Question P&L statement which is a period statement & relates to a certain period tells
about results of operations.
Correct Answer True
Your Answer True
Liabilities All the amount owed by the business All the amount owed by the business
Assets All the properties owned by the business All the properties owned by the business
Question Judge the given statement according to the given criteria. Goods being real
account, when goods are lost by fire, the goods account should be debited because the
goods are not going out of the factory.
Correct Answer The statement is correct but the reason is incorrect
Your Answer The statement and the reason both are incorrect
Question Financial accounting may deal with the ascertainment of cost & calculation of
profitability of the individual product.
Correct Answer False
Your Answer False
Question Financial Accounting primarily protects the interests of the outsiders dealing
with organization in various capacities.
Correct Answer True
Your Answer False
Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which
account should be debited?
Correct Answer Investment account - Rs.170,000/-
Your Answer Investment account - Rs.170,000/-
Question The data for two materials P and Q is given below : Material P : opening stock
Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening
stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of
the given statements relevant to the data given are correct.
Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster
moving material , Consumption of material Q is Rs.860,000/-
Your Answer Inventory turnover period for material P is 40.5 days , Material Q is faster moving
material , Consumption of material Q is Rs.860,000/-
Question Cost Accounting is concerned with calculation of the profitability and state of
affairs of the organization as a whole.
Correct Answer False
Your Answer True
Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour
when the level of efficiency is between________.
Correct Answer 90% to 100%
Your Answer 90% to 100%
Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth
Your Answer Sell carpets
Question Direct labour hour rate method of absorption of overheads is suitable where
most of the production is done by using machines.
Correct Answer False
Your Answer True
Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter
of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004,
156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20
Correct Answer 153,000 units
Your Answer 136,000 units
Question The sales mix variance highlights the fact that the actual mix of sales has been
in the same ratio as budgeted.
Correct Answer False
Your Answer True
Question The selection of ________ may depend upon the various factors like
characteristics of the business organisation, tax considerations, statutory requirements
etc.
Correct Answer Accounting period
Your Answer Accounting period
Question Calculate the machine hour rate. The amount of overhead pertaining to June,
2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator.
During the month June, 2004 the machine operator has been paid for 5,670 hours.
Correct Answer Rs.29.98
Your Answer Rs.30/-
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages
and fair wages.
Correct Answer True
Your Answer True
Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of
sales value.
Correct Answer 0.75
Your Answer 0.75
Question Select the cost that indicates increased or decreased total cost due to the
increased or decreased volume of operations.
Correct Answer Differential cost
Your Answer Differential cost
Question 1) Financial statements are basically in two forms i.e. profitability statement
and balance sheet.
Correct Answer True
Your Answer True
Question The variance which measures the deviation of the rate actually paid to labour
as from the standard hourly rate is known as:
Correct Answer Labour rate variance
Your Answer Labour rate variance
Question If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal
contribution, ________ account should be debited in the books of accounts of the
business.
Correct Answer Drawings
Your Answer Capital
Question Uniform costing may lead to monopolistic conditions within the industry,
prices may be raised and customers may suffer.
Correct Answer True
Your Answer False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is
termed as factory cost.
Correct Answer False
Your Answer False
True/False
Question Budgetary control is one of the techniques of management accounting.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True
Your Answer False
True/False
Question In the ledger account only credit entries relating to a particular account are posted.
Correct Answer False
Your Answer False
Global Tender Any supplier from the global market can fill the tender Any supplier from the global
market can fill the tender
Single Tender Tender from only one supplier Tender from only one supplier
Limited Tender Tenders from reliable but few suppliers Tenders from reliable but few suppliers
Open Tender Any supplier from the local market can fill the tender Any supplier from the local
market can fill the tender
True/False
Question Fixed overhead variances may be calculated either on the basis of units of output or
on the basis of standard hours.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting discloses the financial performance & Financial status of the
business as a whole
Correct Answer True
Your Answer True
True/False
Question Cost Accounting is a legal requirement.
Correct Answer False
Your Answer False
True/False
Question Cash account can have a credit balance.
Correct Answer False
Your Answer True
True/False
Question Period cost is the cost assigned to the products.
Correct Answer False
Your Answer False
True/False
Question Book keeping is clerical while accounting is managerial
Correct Answer True
Your Answer True
True/False
Question Financial Statements which are generated as a result of the management accounting
report & financial performance of the organization as a whole.
Correct Answer False
Your Answer False
True/False
Question An entry in the stores ledger is required for transfer of material from one job to
another in the same department.
Correct Answer False
Your Answer False
True/False
Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement
the Uniform costing system.
Correct Answer False
Your Answer True
True/False
Question Bank reconciliation statement can be prepared on weekly basis.
Correct Answer True
Your Answer True
Select The Blank
Question The ________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Correct Answer Control
Your Answer Control
True/False
Question 1) Cost Accounting and Management Accounting are similar to each other in many
respects.
Correct Answer True
Your Answer True
True/False
Question The reports generated by financial accounting are meant for the use by management
for effective decisions.
Correct Answer True
Your Answer False
True/False
Question Cost Accounting may be considered to be a part of management Accounting.
Correct Answer True
Your Answer True
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are
yet to be made.
Correct Answer True
Your Answer True
True/False
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair
wages.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is not at all a legal requirement
Correct Answer True
Your Answer True
Plan of investment in fixed assets Capital Expenditure Budget Capital Expenditure Budget
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are yet to be
made.
Correct Answer True
Your Answer True
True/False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed
as Overheads.
Correct Answer True
Your Answer True
True/False
Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Correct Answer False
Your Answer False
True/False
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer True
True/False
Question While preparing the labour cost budget, factors such as overtime working or night
shift working may be ignored.
Correct Answer False
Your Answer False
True/False
Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to
give bonus to the employees.
Correct Answer False
Your Answer False
True/False
Question It is very easy to measure the portion of increased sales which is due to expenditure
incurred for advertisement of the product
Correct Answer False
Your Answer True
True/False
Question The role of the budget committee may be taken as an advisory role to the Chief
Executive.
Correct Answer True
Your Answer True
True/False
Question Depreciation under Reducing Balance Method is calculated as (Number of units *
Rate of depreciation per unit)
Correct Answer False
Your Answer False
True/False
Question All cash sales are recorded in the sales register.
Correct Answer False
Your Answer True
Transport facilities to employees Preventive cost of labour turnover Preventive cost of labour
turnover
Relationship between supervisor and worker Avoidable cause of labour turnover Avoidable cause
of labour turnover
Increased spoilage and defectives Replacement cost of labour turnover Replacement cost of
labour turnover
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer False
Your Answer True
True/False
Question Uniform costing may lead to monopolistic conditions within the industry, prices may
be raised and customers may suffer.
Correct Answer True
Your Answer True
True/False
Question Indirect material cost is an integral part of finished goods.
Correct Answer False
Your Answer False
True/False
Question Generally speaking income represents wealth increase and business success; higher
the income, lower will be the success of a business.
Correct Answer False
Your Answer False
True/False
Question Cost Accounting is concerned with calculation of the profitability and state of affairs of
the organization as a whole.
Correct Answer False
Your Answer False
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
Correct Answer True
Your Answer True
True/False
Question P&L statement which is a period statement & relates to a certain period tells about
results of operations.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting primarily protects the interests of the outsiders dealing with
organization in various capacities.
Correct Answer True
Your Answer True
Normal Standards Anticipated to be achieved in future Established for a longer period of time
Basic Standards Established for a longer period of time Once established can never be altered
Current Standards Established for a shorter period of time Established for a shorter period of time
True/False
Question Management Accounting is the process of analysis and interpretation of financial
data collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True
True/False
Question Trading account is an important account which will be used to analyse how
successful and how efficiently the firm runs its business.
Correct Answer True
Your Answer True
True/False
Question Financial accounting may deal with the ascertainment of cost & calculation of
profitability of the individual product.
Correct Answer False
Your Answer False
True/False
Question Financial Accounting discloses the financial performance & financial statements of
the business as a whole.
Correct Answer True
Your Answer True
Purchase budget Forecast of quantity and value of materials Forecast of quantity and value of
materials
Budget committee Analyses the performance of different budget centres Analyses the
performance of different budget centres
Cash budget Assists in predicting shortage of cash Assists in predicting shortage of cash
True/False
Question The labour cost which can be identified with the individual cost centre is known as the
Direct Labour Cost.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True
True/False
Question Variable cost + Profit = Sales
Correct Answer False
Your Answer False
True/False
Question Cash account can have a credit balance.
Correct Answer False
Your Answer False
True/False
Question Budgetary control is one of the techniques of management accounting.
Correct Answer True
Your Answer True
True/False
Question All personal expenses of the owner should be debited to the organisation's profit and
loss account.
Correct Answer False
Your Answer False
Factory overheads Repair for factory building Repair for factory building
True/False
Question The amount of profit which is retained by the organisation is transferred to 'Reserves
and Surplus' in the balance sheet.
Correct Answer True
Your Answer True
True/False
Question Yield variance equal to zero indicates that the standard yield and actual yield are the
same.
Correct Answer True
Your Answer True
True/False
Question Book keeping is clerical while accounting is managerial
Correct Answer True
Your Answer True
Spirit of mutual trust Requisite for uniform costing Requisite for uniform costing
Avoids cut throat competition Advantage of uniform costing Advantage of uniform costing
Treatment given to research and development costs Fields covered by uniform costing Fields
covered by uniform costing
True/False
Question Material mix and material yield variance can be calculated even when only one raw
material is used for production.
Correct Answer False
Your Answer False
True/False
Question Management Accounting is not at all a legal requirement
Correct Answer True
Your Answer True
True/False
Question Cost Accounting is a legal requirement.
Correct Answer False
Your Answer False
True/False
Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True
Your Answer True
True/False
Question Trading account is used to analyse how successfully and how efficiently the firm
runs, particularly with regards to the maintenance of the gross profit margin.
Correct Answer True
Your Answer True
True/False
Question Standard costing is always accompanied by a system of budgeting but budgetary
control may be operated in business where standard costing is impracticable.
Correct Answer True
Your Answer True
True/False
Question In marginal costing, under and over absorption of fixed overheads is bound to arise.
Correct Answer False
Your Answer True
True/False
Question New companies can adopt Uniform costing system as a ready-made system.
Correct Answer True
Your Answer False
True/False
Question Cost Accounting may be considered to be a part of management Accounting.
Correct Answer True
Your Answer True
True/False
Question 1) Cost Accounting and Management Accounting are similar to each other in many
respects.
Correct Answer True
Your Answer True
True/False
Question Credit balance in interest account indicates income for the organisation.
Correct Answer True
Your Answer True
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
True/False
Question Profitability statement indicates the amount of assets & liabilities.
True/False
Question Cost Accounting restrict itself with historical transactions
True/False
Question A very wide scope of Management Accounting is the limitation
by itself.
Correct Answer True
Correct Answer Every business transaction has two elements , When business
receives something, it has to pay something , Every debit has a
corresponding credit
Your Answer Every business transaction has two elements , When business
receives something, it has to pay something , Every debit has a
corresponding credit
True/False
Question Depreciation can be defined as a permanent, continuous and
gradual reduction in the book value of a fixed asset.
Correct Answer True
True/False
Question Penalty paid for delay in payment to creditors represents
uncontrollable cost.
Correct Answer False
Correct Answer Indicates the total cost of production during a given period ,
Indicates the unit cost of production during a given period , Helps
the management in fixing the selling price to be quoted for the
Your Answer Indicates the total cost of production during a given period ,
Indicates the unit cost of production during a given period , Helps
the management in fixing the selling price to be quoted for the ,
Helps the management in taking 'make' or 'buy' decision for the
True/False
Question Linking overhead to a cost unit is known as overhead absorption.
True/False
Question Manufacturing overheads represents all costs incurred in the
factory including direct material cost and direct labour cost.
Correct Answer False
True/False
Question New companies can adopt Uniform costing system as a ready-
made system.
Correct Answer True
True/False
Question Malik started business by contributing cash Rs.50,000/- and his
personal car worth Rs.25,000/-; thus his capital account should
be credited with Rs.75,000/-.
Correct Answer True
True/False
Question While passing the journal entry, it is of utmost importance to
ensure that the total of amount debited is equal to the total of the
amount credited.
True/False
Question The bin card and stores ledger, being independent records,
comparison of these two records should be avoided.
Correct Answer False
True/False
Question The cost of abnormal time may be recovered by inflating the
hourly labour rate.
Correct Answer True
Your Answer True
True/False
Question Amortisation of goodwill should be considered while preparing
cash budget.
Correct Answer False
a)
Fixed
cost / (Selling
b)
price per unit
- Variable
c) cost per unit)
d) [Fixed
cost /
Marginal
contribution]
X Sales
[Fixed
cost /
Marginal
contribution]
X Variable
cost
[Fixed
cost / (Fixed
cost + Net
Profit)] X
Sales
Select the transactions which can be entered in the
Journal proper.
a)
Opening
entries
b)
Closing
c) entries
d) Average
entries
Rectification
entries
Compound
journal entry
avoids
duplication of
effort.
True
False
Labour efficiency variance Rs.1,000/-
(favourable); labour mix variance Rs.260/-
(adverse) and labour rate variance Rs.300/-
(adverse). Compute labour cost variance
and labour yield variance.
a)
Labour
cost variance
b) -Rs.700/-
(Favourable)
c)
Labour
d) yield variance
-Rs.1,260/-
Labour
yield variance
is adverse
Labour
yield variance
is favourable
Commission payable
to General Manager is
10 % of the net profits.
If the net profit before
charging commission
is Rs.29,200/-, then
what will be the
amount of his net
profit after
commission?
a)
Rs.29,200/-
b) Rs.26,000/-
c) Rs.26,545.45
d) Rs.26,788.99
The credit
purchases are as
follows : July
Rs.80,000/- and
August Rs.140,000/ -.
Creditors are paid
either on a 'prompt
basis' (on the spot)
or 30 days basis. It
is estimated that
10% of the creditors
are in the prompt
category. Find the
amount paid to
a)
Rs.161,000/-
b) Rs.121,000/-
c) Rs.177,000/-
d) Rs.118,000/-
A company
budgets for a
production of
150,000 units. The
variable cost per
unit is Rs.14/- and
fixed cost is Rs.2/-
per unit. The
company fixes its
selling price to
fetch a profit of
15% on total cost.
What is the break
even point for the
company?
a)
68,182 units
b) 68,100 units
c) 61,182 units
d) 61,100 units
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
True/False
Question Error of commission refer to a situation where a transaction is
not recorded in the books of account.
Correct Answer False
Your Answer Quantity requisitioned , Per unit material cost , Job number
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Correct Answer False
True/False
Question Deferred revenue expenditure written off account is a real
account.
Correct Answer False
True/False
Question Balance sheet is considered to be a part of the financial
statements.
Correct Answer True
True/False
Question Profitability statement indicates the amount of assets &
liabilities.
Correct Answer False
True/False
Question Uniform costing system is a pre-requisite to an inter-firm
comparison of firms belonging to the different industries.
Correct Answer False
True/False
Question Error of commission refer to calculation errors, totaling errors,
errors in carrying forward etc.
Correct Answer True
Correct Answer Designed particularly for internal use , Helpful in estimating the
future along with past period , Useful in furnishing the necessary
information to the management
Your Answer Designed particularly for internal use , Helpful in estimating the
future along with past period , Useful in furnishing the necessary
information to the management
True/False
Question Malik started business by contributing cash Rs.50,000/- and his
personal car worth Rs.25,000/-; thus his capital account should
be credited with Rs.75,000/-.
Correct Answer True
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Under time rate system a worker is paid on the basis of
production achieved by him in a given time.
Correct Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
True/False
Question A business is an activity carried out with the
intention of earning the profit.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status
of the business at given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of
analyzing & interpreting the information
already recorded in the books of accounts.
Correct Answer True
Your Answer True
True/False
Question Accounting is an art of recording, classifying
& summarizing in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount
of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Real Accounts may also consist the
accounts of some intangible assets like
Goodwill Account
Correct Answer True
Your Answer True
True/False
Question The rate at which the depreciation is to be
calculated are also specified in the Income
Tax Act 1961.
Correct Answer True
Your Answer True
True/False
Question A bill of Rs. 500 for old furniture sold to Raj,
was entered in the sales day book
Correct Answer False
Your Answer True
True/False
Question Abnormal cost indicates that cost which is
normally incurred at a certain level of output
under normal circumstances.
Correct Answer False
Your Answer False
True/False
Question Indirect material cost assist the
manufacturing process is an integral part of
finish goods.
Correct Answer False
Your Answer True
True/False
Question Material cost is the first and probably the
most important element of cost.
Correct Answer True
Your Answer True
True/False
Question If the organisation follows the policy of
considering predetermined overhead
absorption rates, it may face the problem of
under or over absorption of overheads if the
actual overheads to be absorbed o
Correct Answer True
Your Answer True
True/False
Question Fixed cost is the cost that varies in direct
proportion with the level of activity or
volume of operations.
Correct Answer False
Your Answer False
True/False
Question The analysis of overhead variances is
different and the most complex task.
Correct Answer True
Your Answer True
True/False
Question Standard costing and Marginal Costing are
the best possible tools available to the
management for cost control
Correct Answer False
Your Answer False
True/False
Question Under some circumstances, it may be
advisable to sell at prices equal to or below
the marginal cost ignoring fixed cost.
Correct Answer True
Your Answer False
True/False
Question A business is an activity carried out with the
intention of earning the profit.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status
of the business at given period.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount
of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Standard costing is always accompanied
by a system of budgeting but budgetary
control may be operated in business where
standard costing is impracticable.
Correct Answer True
Your Answer False
True/False
Question Under time rate system a worker is paid on
the basis of production achieved by him in
a given time.
Correct Answer False
Your Answer False
True/False
Question Budgetary control system provides a basis
for establishment of the incentive systems.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording,
classifying & summarizing in a significant
manner.
Correct Answer True
Your Answer True
True/False
Question A fixed budget is useful only when the
actual level of activity corresponds to the
budgeted level of activity.
Correct Answer True
Your Answer True
True/False
Question Credit balances in all the Personal & Real
accounts appear on asset side.
Correct Answer False
Your Answer False
True/False
Question Price based on Uniform Costing may be
taken to be reliable and representative of
the whole industry.
Correct Answer True
Your Answer True
True/False
Question A pre-determined factory overhead rate
holds up product costing.
Correct Answer False
Your Answer False
True/False
Question Accounting refers to the process of
analyzing & interpreting the information
already recorded in the books of accounts.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Rent of Rs.7,500/- for the month of April
was received in March. Which account
should be credited in the books of accounts
for making an entry for receipt of the said
amount?
Correct Answer Rent received in advance account
Your Answer Rent received in advance account
True/False
Question Bank reconciliation statement can be
prepared on weekly basis.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount of assets &
liabilities.
Correct Answer False
Your Answer False
True/False
Question Maintenance Department is a service cost centre.
Correct Answer True
Your Answer True
True/False
Question 1) Financial statements are basically in two forms i.e.
profitability statement and balance sheet.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e.
financial, cost, management accounting.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting discloses the financial performance &
financial statements of the business as a whole.
Correct Answer True
Your Answer True
True/False
Question Variable cost + Profit = Sales
Correct Answer False
Your Answer False
True/False
Question P&L statement which is a period statement & relates to a
certain period tells about results of operations.
Correct Answer True
Your Answer True
True/False
Question Treating capital receipt as revenue income is an example of
errors of commission.
Correct Answer False
Your Answer True
True/False
Question For a manufacturing company, dividend received is a non-
operating income.
Correct Answer True
Your Answer False
True/False
Question Suspense account is closed automatically after rectification
of all the errors.
Correct Answer True
Your Answer False
True/False
Question Manufacturing overheads represents all costs incurred in the
factory including direct material cost and direct labour cost.
Correct Answer False
Your Answer True
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Correct Answer False
Your Answer True
True/False
Question The sum of indirect material cost, indirect labour cost and
indirect expenses is termed as Overheads.
Correct Answer True
Your Answer True
True/False
Question Error of commission refer to calculation errors, totaling
errors, errors in carrying forward etc.
Correct Answer True
Your Answer True
True/False
Question Cheque received from a client on 28th September, 2004 must
be entered in the bank book only after it is credited in the
pass book.
Correct Answer False
Your Answer False
True/False
Question Management Accounting is the process of analysis and
interpretation of financial data collected with help of
financial accounting and cost accounting
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting
the information already recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing
in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Management Accounting aims at enabling the management
to take the decisions about the future. It may consider future
data as well as non-financial factors.
Correct Answer True
Your Answer True
True/False
Question Sundry creditors transfer to asset side.
Correct Answer False
Your Answer False
True/False
Question A bank reconciliation statement is prepared on a particular
date.
Correct Answer True
Your Answer True
True/False
Question As soon as the suspense account balance is wiped out , it
may be assumed that all mistakes have been corrected.
Correct Answer False
Your Answer True
True/False
Question Credit sale of Rs. 5000 to Bobby should be entered in the
purchase book.
Correct Answer False
Your Answer False
True/False
Question Flux method is important method of wage payment.
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question The causes of idle time can be analysed as
Correct Answer Administrative causes , Productive causes , economic causes
Your Answer Administrative causes , Productive causes , economic causes
True/False
Question Fixed cost tends to vary with time rather than with level of
activity.
Correct Answer True
Your Answer True
True/False
Question Flexible budget is an effective tool for evaluation of
performance.
Correct Answer True
Your Answer True
True/False
Question Material Mix Variance occurs where only one raw material
is required
Correct Answer False
Your Answer False
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting
the information already recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing
in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Management Accounting aims at enabling the management
to take the decisions about the future. It may consider future
data as well as non-financial factors.
Correct Answer True
Your Answer True
True/False
Question Sundry creditors transfer to asset side.
Correct Answer False
Your Answer False
True/False
Question A bank reconciliation statement is prepared on a particular
date.
Correct Answer True
Your Answer True
True/False
Question As soon as the suspense account balance is wiped out , it
may be assumed that all mistakes have been corrected.
Correct Answer False
Your Answer True
True/False
Question Credit sale of Rs. 5000 to Bobby should be entered in the
purchase book.
Correct Answer False
Your Answer False
True/False
Question Flux method is important method of wage payment.
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question The causes of idle time can be analysed as
Correct Answer Administrative causes , Productive causes , economic causes
Your Answer Administrative causes , Productive causes , economic causes
True/False
Question Fixed cost tends to vary with time rather than with level of
activity.
Correct Answer True
Your Answer True
True/False
Question Flexible budget is an effective tool for evaluation of
performance.
Correct Answer True
Your Answer True
True/False
Question Material Mix Variance occurs where only one raw material
is required
Correct Answer False
Your Answer False
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
True/False
Question Cost Accounting restrict itself with historical transactions
True/False
Question A very wide scope of Management Accounting is the limitation
by itself.
Correct Answer True
True/False
Question In a Balance-Sheet right hand side is referred as assets side
and left hand side is referred as liabilities.
Correct Answer True
Correct Answer Consumable stores , Glue used in book binding , Nails used in
packing boxes
Your Answer Consumable stores , Nails used in packing boxes
True/False
Question Manufacturing overheads represents all costs incurred in the
factory including direct material cost and direct labour cost.
Correct Answer False
True/False
Question New companies can adopt Uniform costing system as a ready-
made system.
Correct Answer True
Your Answer Balance as per pass book < Balance as per bank book
True/False
Question Bank reconciliation statement is a systematic presentation of
errors made by the accountant.
Correct Answer False
True/False
Question Re-order level for materials is determined considering maximum
consumption and maximum delivery period.
Correct Answer True
True/False
Question Control on purchase of material is exercised by the storekeeper.
Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of
motivation to increase productivity
Your Answer Ignores the efficiency of workers , Lack of motivation to increase
productivity
True/False
Question The best way to reduce labour cost is to recruit cheap labour.
True/False
Question Under some circumstances, it may be advisable to sell at prices
equal to or below the marginal cost ignoring fixed cost.
Correct Answer True
Your Answer True
Increase in fixed cost will Increase in break even Increase in break even
lead to point point
Decrease in variable cost Increase in profit volume Increase in profit volume
will lead to ratio ratio
Decrease in selling price Decrease in contribution Decrease in loss
will lead to
Increase in contribution Increase in profits Decrease in break even
will lead to point
Correct Answer Geographical location of the supplier , Price quoted by the supplier ,
Goodwill of the supplier
Your Answer Geographical location of the supplier , Price quoted by the supplier ,
Goodwill of the supplier
True/False
Question Overhead absorption rate will be different at different capacity levels.
Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate
organizational structure
Yo ur Answer Its wide scope , Possibility of intuitive decision , Requires elaborate
organizational structure
True/False
Question A grinding machine is an example of impersonal cost centre
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer More than one key factors , Refers to a complex situation , Can be
resolved by using linear programming technique
Your Answer More than one key factors , Refers to a complex situation , Can be
resolved by using linear programming technique
True/False
Question Balance sheet indicates the expenditure & income from the business.
True/False
Question Interim dividend paid by the company should be debited to the profit and
loss appropriation account.
Correct Answer True
Correct Answer Quantity requisitioned , Per unit material cost , Job number
Correct Answer Units produced , Production cost , Material cost, labour cost and
overheads
Your Answer Units produced , Production cost , Material cost, labour cost and
overheads
True/False
Question Receipts and payments method of cash budget is useful for preparing
long term estimates.
Correct Answer False
Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority ,
Promotes economy and efficiency
Your Answer Provides reliable basis for budgeting , Facilitates delegation of authority
True/False
Question The sales mix variance highlights the fact that the actual mix of sales has
been in the same ratio as budgeted.
Correct Answer False
True/False
Question Lack of efficient control on various aspects related to raw-material
increases the material cost component of the finished product.
Correct Answer True
True/False
Question Due to compensating errors the arithmetical accuracy of the trial balance
is affected.
Correct Answer False
Daily Time sheets Time spent by worker on job Time spent by worker on job
is recorded is recorded
Time Keeping Department Recording of workers time Recording of workers time
Time Recording Clock Ticket number & clock card Ticket number & clock card
Method allotted to worker allotted to worker
True/False
Question Purchased goods by paying Rs.35,000/-: In this case, the cash account
should be debited.
Correct Answer True
Yo ur Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
True/False
Question The problem of multiple key factors can be solved with the help of
techniques like linear programming, operations research, etc.
Correct Answer True
True/False
Question All costs are controllable.
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Correct Answer False
True/False
Question The process of accounting split into three steams i.e. financial,
cost, management accounting.
Correct Answer True
Personal A/C Debit the receiver, Credit Debit the receiver, Credit
the giver the giver
Real A/C Debit what comes in, Debit what comes in,
Credit what goes out Credit what goes out
Nominal A/C Debit all the expenses, Debit all the expenses,
Credit all the incomes Credit all the incomes
Tangible assets Building, Machinery Building, Machinery
True/False
Question Purchased computers of Rs. 50,000 come under the heading of
fixed asset
Correct Answer True
True/False
Question Amount with drawn for personal purpose drawing A/C to be
debited.
Correct Answer True
True/False
Question Total of purchase register for the month of March is taken
50,000 instead of 55,000. Posting to individual A/C of supplier
total to correct amount is 55,000 but purchase account is
debited by Rs. 50,0
Correct Answer True
True/False
Question There is reverse relationship between the ordering cost and
carrying cost
Correct Answer True
True/False
Question Where overheads chargeable to the department are Rs. 5000/- ,
direct labour hours worked are 24000 then labour hour rate is
Re. 0.2083 labour hour.
Correct Answer True
True/False
Question The Budget key factor may be in the form of sales, raw material,
labour etc.
Correct Answer True
Your Answer
True/False
Question While calculating the minimum level, normal lead time is not
necessary
Correct Answer False
True/ False
Question To Increase the existing production capacity, additional capital
expenditure is required.
Correct Answer True
Your Answer True
True/False
Question Whatever is to be sold need not be produced.
True/False
Question Patents and Trade Marks Account is a Real Account.
True/False
Question Favorable variances need on investigation
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information
Your Answer To ascertain cost and profitability , Cost Control , Presentation of Information
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer Classifying labour cost according to jobs, processes, etc. , Preparation of different reports
based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be
reduced.
Your Answer Preparation of different reports based on direct, indirect labour cost, etc. , To focus on
areas where labour cost may be reduced. , Preparation of wage sheet and procedural
aspects of wage payment.
Correct Answer Designed particularly for internal use , Helpful in estimating the future along with past
period , Useful in furnishing the necessary information to the management
Your Answer Designed particularly for internal use , Helpful in estimating the future along with past
period , Useful in furnishing the necessary information to the management
True/False
Question Balance sheet indicates the expenditure & income from the business.
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
True/False
Question Match
True/False
Question Balance sheet indicates the financial status of the business at given period.
True/False
Question A business is an activity carried out with the intention of earning the profit.
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and balance
sheet.
Correct Answer True
True/False
Question Profitability statement indicates the amount of assets & liabilities.
True/False
Question Differential cost analysis is incorporated in the cost books.
True/False
Question The process of recording attendance time of the workers is known as time booking.
Correct Answer Information is freely supplied by all the units , Well organised sector is ready to share the
technological improvements , Information furnished by the units is complete and correct
Your Answer Information is freely supplied by all the units , Information furnished by the units is
complete and correct
True/False
Question Profit = Profit volume ratio X Margin of safety
True/False
Question Indirect material cost is an integral part of finished goods.
Correct Answer Compensating errors , Trial balance will not be affected , Trial balance will be affected
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
True/False
Question Margin of safety = Contribution / Profit volume ratio
True/False
Question Under time rate system a worker is paid on the basis of
production achieved by him in a given time.
Correct Answer False
Your Answer False
True/False
Question The phrase 'By Balance c/d.' written on the credit side of
the rent account, indicates credit balance for this account.
Correct Answer False
Your Answer False
True/False
Question Piece rate system is suitable when quality of goods
produced is of extreme importance.
Correct Answer False
Your Answer False
True/False
Question A firm earns profit when contribution is equal to fixed
costs under variable costing.
Correct Answer False
Your Answer False
Select The Blank
Question While preparing trial balance, the balance as per ________
book is considered as bank balance.
Correct Answer Bank
Your Answer Bank
True/False
Question Long term loan borrowed from financial institution comes
under the heading of long term liabilities.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the
business at given period.
Correct Answer True
Your Answer False
True/False
Question Profitability statement indicates the amount of assets &
liabilities.
Correct Answer False
Your Answer False
True/False
Question Category C items, as per the ABC analysis, usually refers
to indirect material.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Correct Answer False
Your Answer False
True/False
Question According to the standard costing principles, only adverse
variance must be further investigated.
Correct Answer False
Your Answer True
Closed the account with State Bank of India Henceforth, there shall be
no difference in overdraft balances Henceforth, there shall be no
difference in overdraft balances
Debit side of bank book is overcast Overdraft as per bank book <
Overdraft as per pass book Overdraft as per bank book < Overdraft as
per pass
book
Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book
= Overdraft as per pass book Henceforth, there shall be maximum
differences in overdraft balances
True/False
Question A business is an activity carried out with the intention
of earning the profit.
Correct Answer True
Your Answer True
True/False
Question The purchase account should be debited when an order is
placed with the supplier of material.
Correct Answer False
Your Answer False
True/False
Question Control on purchase of material is exercised by the
storekeeper.
Correct Answer False
Your Answer False
True/False
Question Uniform Costing simplifies the work of wage boards of
fixing minimum wages and fair wages.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing &
interpreting the information already recorded in the books of accounts.
Correct Answer True
Your Answer True
True/False
Question Accounting is an art of recording, classifying &
summarizing in a significant manner.
Correct Answer True
Your Answer True
CHAP MATERIAL COST
A = annual requirement
O = cost of placing an order
C = unit purchase price
i = carrying cost expenditure as a % of unit purchase price
2) No of orders = A
Order size
3) Carrying cost = (Order size) * (cost price) * (carrying cost in %)
2
4) Total cost = carrying cost + Ordering cost
5) Re-order level = Maximum lead time * Maximum usage
6) Maximum level = Reorder level + Reorder quantity – (Minimum Usage * Minimum
lead time )
7) Minimum level = Reorder level – (Normal lead time * Normal Usage)
8) Average level = (Max. level + Min. level)
2
Or
Safety stock + (Max. level or EOQ)
2
9) Danger level = Normal Usage * lead time for emergency purchases
B] Payment by Results
a) Straight Piece Rate System
b) Piece Rate with Guaranteed Time Rate
c) Differential Piece Rate System:
6) Diemer System –
It is a combination of Halsey System + Gantt System
2] Replacement Method:
No. of replacements * 100
Average no of workers
3] Flux Method:
No. of separations + No of replacements * 100
Average no of workers
True/False
Question A business is an activity carried out with the intention of earning the
profit.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at given
period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False
True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer False
Your Answer False
True/False
Question Financial Accounting primarily protects the interests of the outsiders
dealing with organization in various capacities.
Correct Answer True
Your Answer True
True/False
Question Patents and Trade Marks Account is a Real Account.
Correct Answer True
Your Answer False
Error of Principle Trial Balance does not get affected Wrong Posting
Compensating Error Wrong classification Trial Balance does not get affected
True/False
Question There is no need to open a suspense account if the trial balance does
not agree.
Correct Answer False
Your Answer False
True/False
Question A contractor’s bill for the extension of premises amounting to Rs.
2750 has been debited to building repair account
Correct Answer False
Your Answer False
True/False
Question Indirect material cost assist the manufacturing process is an integral
part of finish goods.
Correct Answer False
Your Answer True
True/False
Question Dividend received is a Non-operating Income.
Correct Answer True
Your Answer True
True/False
Question To take make or buy decision under the marginal costing , if purchase
price of the product is less than its variable cost it is advisable to go for
manufacturing proposition.
Correct Answer False
Your Answer False
True/False
Question The ultimate incorporation of all functional budgets takes the form of
budgeted Profit & Loss Account and Balance Sheet.
Correct Answer True
Your Answer True
True/False
Question Flexible budget is an effective tool for evaluation of performance.
Correct Answer True
Your Answer True
Question Bank 1
QUESTION BANK
(TOTAL MARKS: 100)
1. Explain the term Accounting. What are the different streams of accounting
? How are they related to each other ?
4. What do you mean by Financial Statements ? What are the limitations of the
Financial Statements ? Give the standard format of the Financial Statement
and explain each item appearing in the Financial Statement.
6. What do you mean by Elements of Cost ? How the cost is classified into
various elements of cost. Draft a standard format of a cost sheet for a
machine tool manufacturing company. Make the necessary assumptions.
11. With the help of a Simple Break Even Chart and Contribution Break Even
Chart, explain the significance and method of calculation of the following
terms–
_ Contribution
_ Profit Volume Ratio
_ Break Even Point
_ Margin of Safety
_ Angle of Incidence
13. What do you mean by Uniform Costing ? Explain the various areas covered
by Uniform Costing. Explain the prerequisites for the success of Uniform
Costing as a cost control technique.
Note : Even if the Question Bank consists of only theory questions, in the final
examination you can expect problems as well.
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question The danger level fixed below maximum level
Correct Answer False
Your Answer False
Straight Piece rate system The rate of payment is fixed per piece The rate of
payment is fixed per piece
Diemer system Halsey system & Gantt System Halsey system & Gantt System
Time rate System Worker is paid on the basis of time attended by him. Worker is
paid on the basis of time attended by him.
Payment by Result Workers are paid according to the production achieved by him
Workers are paid according to the production achieved by him
Differential Time rate Different hourly rates are fixed for different levels of
efficiency Different hourly rates are fixed for different levels of efficiency
True/False
Question (No. of unit * Rate of depreciation per unit ) this formula is used
for written down value method.
Correct Answer False
Your Answer False
True/False
Question Depreciation does not involve cash out flow
Correct Answer True
Your Answer True
True/False
Question The difference between standard cost and actual cost is termed as
Variance.
Correct Answer True
Your Answer True
True/False
Question Wage payment system should be properly tied up with quality control
procedures to ensure that the workers are paid only for good and quality
production.
Correct Answer True
Your Answer True
True/False
Question If the product is labour intensive, more stress may be necessary on
inventory control procedure.
Correct Answer False
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
Your Answer True
True/False
Question A good wage payment system will not punish the workers for the
matters beyond the control of the workers.
Correct Answer True
Your Answer True
True/False
Question Fixed assets do not give the returns during the same period during
which they are paid for
Correct Answer True
Your Answer True
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
Your Answer True
True/False
Question Amount with drawn for personal purpose drawing A/C to be debited.
Correct Answer True
Your Answer True
True/False
Question Under time rate system a worker is paid on the basis of production
achieved by him.
Correct Answer False
Your Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False
Liabilities All the amount owed by the business All the amount owed by the
business
Page 1
MA 7
Assets All the properties owned by the business All the properties owned by
the business
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Correct Answer False
Your Answer False
True/False
Question Generally speaking income represents wealth increase and
business success; higher the income, lower will be the success of a business.
Correct Answer False
Your Answer False
Page 2
MA 7
Multiple Choice Multiple Answer
Question Accounting is the art where transactions are …
Correct Answer Summarized , Classified , Recorded
Your Answer Summarized , Classified , Recorded
True/False
Question Error of commission refer to calculation errors, totaling errors,
errors in carrying forward etc.
Correct Answer True
Your Answer True
True/False
Question Profit and loss account indicates the profit earned as on a
particular date.
Correct Answer False
Your Answer True
True/False
Question Uniform costing system is a pre-requisite to an inter-firm
comparison of firms belonging to the different industries.
Correct Answer False
Your Answer False
True/False
Question The process of accounting split into three steams i.e. financial,
cost, management accounting.
Correct Answer True
Your Answer True
True/False
Question 1) Financial statements are basically in two forms i.e. profitability
statement and balance sheet.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at given
period.
Correct Answer True
Your Answer True
True/False
Question Cheque received from a client on 28th September, 2004 must be
entered in the bank book only after it is credited in the pass book.
Correct Answer False
Your Answer True
True/False
Question Time rate system is suitable for workers of the maintenance
department.
Correct Answer True
Your Answer True
Page 6
MA 7
Multiple Choice Single Answer
Question The overheads of a machine shop X should be apportioned using
which of the following basis?
Correct Answer Machine hours
Your Answer Machine hours
True/False
Question The perpetual inventory system enables management to ascertain
stock without physical verification.
Correct Answer True
Your Answer True
True/False
Question Long term loan borrowed from financial institution comes under
the heading of long term liabilities.
Correct Answer True
Your Answer True
True/False
Question Uniform Costing simplifies the work of wage boards of fixing
minimum wages and fair wages.
Correct Answer True
Your Answer True
True/False
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Your Answer True
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LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question Cost Accounting is concerned with calculation of the profitability
and state of affairs of the organization as a whole.
Correct Answer False
Your Answer False
True/False
Question The sum of indirect material cost, indirect labour cost and indirect
expenses is termed as Overheads.
Correct Answer True
Your Answer False
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True/False
Question Financial accounting may deal with the ascertainment of cost &
calculation of profitability of the individual product.
Correct Answer False
Your Answer False
True/False
Question Margin of safety = Contribution / Profit volume ratio
Correct Answer False
Your Answer False
True/False
Question A pre-determined factory overhead rate holds up product costing.
Correct Answer False
Your Answer False
True/False
Question Management Accounting aims at enabling the management to
take the decisions about the future. It may consider future data as well as
non-financial factors.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting primarily protects the interests of the
outsiders dealing with organization in various capacities.
Correct Answer True
Your Answer True
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True/False
Question Revenue expenditure indicates the amount of funds spent during a
certain period with the intention to receive the returns in future.
Correct Answer False
Your Answer True
True/False
Question Provision for discount on debtors account should be credited to the
Profit and Loss Account.
Correct Answer False
Your Answer False
True/False
Question The reports generated by financial accounting are meant for the
use by management for effective decisions.
Correct Answer True
Your Answer True
True/False
Question P&L statement which is a period statement & relates to a certain
period tells about results of operations.
Correct Answer True
Your Answer True
True/False
Question The process of recording attendance time of the workers is known
as time booking.
Correct Answer False
Your Answer False
True/False
Question Financial Accounting discloses the financial performance &
financial statements of the business as a whole.
Correct Answer True
Your Answer True
True/False
Question Larger the size of the purchase order, smaller will be the number
of orders required to be placed in a year.
Correct Answer True
Your Answer True
True/False
Question High time wages means necessarily high cost of production.
Correct Answer False
Your Answer True
True/False
Question Depreciation on assets is credited to the trading account.
Correct Answer False
Your Answer True
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Management Accounting Analyzing & interpretation of financial data
Analyzing & interpretation of financial data
True/False
Question Management Accounting is the process of analysis and
interpretation of financial data collected with help of financial accounting and
cost accounting
Correct Answer True
Your Answer True
True/False
Question Variable cost + Profit = Sales.
Correct Answer False
Your Answer False
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