You are on page 1of 30


Financial And Management Accounting

MB 0041
_ Unit-1
Financial Accounting-An Introduction
Q1: To make a sound decision business decision business enterprise needs .
a) Books
b) Accounting information
c) Assets
d) All of these
Q2: Accounting is perhaps one of the oldest ..
a) Book keeping
b) Method
c) Structured management information system
d) None of these
Q3: Accounting as an information system is concerned with ..
a) Identification
b) Measurement
c) Both a & b
d) None of these
Q4: Accounting as a discipline was introduced to have & record of
business transaction
a) Books, goods
b) Permanent, systematic
c) Both a & b
d) Keeping, business
Q5: are the terms used in science of financial accounting
a) Book keeping
b) Accounting
c) Accountancy
d) All of these
Q6: Accounting is termed as language of
a) Business
b) Books
c) Accounts

d) None of these

Q7: . Refers to systematic knowledge of accounting

a) Business
b) Accountancy
c) Identification
Q8: .. Is first step of accounting process?
a) Identification
b) Measuring
c) Transaction

d) Measuring

d) None of these

Q9: .. Is transfer of money or goods or services from one person or account?

a) Business
b) Measuring
c) Transaction
d) Identification
Q10: In accounting process, the value of business transactions and events
should be expressed in terms of money
a) Measuring
b) Recording
c) Analyzing
d) None of these
Q11: Recording deals with recording transaction and events in the
a) Ledgers
b) Books of original entry
c) Trial balance
d) All of these

Q12: accounting process involves the preparation of financial statements

a) Summarizing
b) Classification
c) Recording
d) All of these
Q13: In the accounting information system, processing consist of
1) Accounting concepts, conventions and principle
2) Business transaction
3) Law and regulation
4) Classification and interpretation
a) 1, 2, 3
b) 1, 3, 4
c) 3, 4, 1

d) All of these

Q14: Which of the following statement are true?

1) Accounting measures the financial performance of business
2) Accounting is not a tool for effective planning
3) Accounting facilitates in reporting the results to internal user
a) 1, 2, 3
b) 1, 2, 3
c) only 1
d) 1 & 2 only
Q15: . Years financial performance becomes the bases for future predictions
and estimation
a) Current
b) Previous
c) Base
d) None of these
Q16: adopt principles of accounting for recording
a) Accounting
b) Book keeping
c) Business

d) All of these

Q17: Certain restrictions imposed by user or lenders are known as

a) Covenants
b) Proprietor
c) Both a & b
d) None of these
Q18: are keen to know about the general health of organization in terms of
stability and profitability
a) Management
b) Regulations
c) Employees
d) Investor
Q19: . Are main lenders?
a) Banks
b) Financial institutions
Q20: .. Follows book keeping
a) Accounting
b) Business

c) Debentures
c) Organization

d) All of these
d) All of these

Q21: In nature of job is non-routine but

a) Book keeping, clerical
b) Accounting, analytical
c) Accounting, analytical
d) None of these
Q22: Book keeping is performed by and Accounting is performed by
a) Accounts-executive, accountant
b) Accountant, accounts-executive
c) Both a & b
d) None of these

Q23: .. Is one where there is no cash inflow or outflow but adjustment is made in
records only?
a) Transaction
b) Capital
c) Paper transaction
d) Cash transaction
Q24: In case of company. Capital is collected by .
a) People
b) Issue of shares
c) Sales
Q25: Capital is for business
a) Liability
b) Cash

d) All of these

c) Income

d) Asset

Q26: Cash and Marketable investments are

a) Fixed asset
b) Current asset
c) Liquid asset
Q27: Match the following
1) Stock
2) Marketable investment
3) Plant and machinery
4) Bills payable
a) 1-B, 2-C, 3-D, 4-A
d) None of these

d) Both b & c

A) current liability
B) current asset
C) liquid asset
D) fixed asset
b) 1-D, 2-B, 3-A, 4-C
c) 1-C, 2-B, 3-A, 4-D

Q28: Goods account is divided into .. Heads

a) 5
b) 4
c) 6
Q29: Match the correct one
1) Purchase returns
2) Sales return
a) 1-B, 2-A
b) 1-A, 2-B

A) Return inward
B) Return outward
c) 1-B, 2-B

Q30: Inventory includes .

1) Raw material
2) Purchases
4) Sales
5) Stock of finished goods
a) 1, 3, 4
b) 1, 2, 3
c) 1, 3, 5
Q31: . Is an account book
A) Ledger
b) Journal

c) Book keeping

d) 7

d) 1-A, 2-A
3) Stock of work in progress
d) All of these
d) All of these

Q32: Is a record of a transaction made in any books of account?

a) Narration
b) Entry
c) Posting
d) none of these
Q33: Match the following
1) Posting
2) Voucher
3) Narration
4) Trial balance

A) a worksheet listing all accounts

B) written document in support of a financial statement
C) the process of entering in the ledger the information
Already recorded in journal
D) a brief explanation of journal entry

a) 1-C, 2-B, 3-D, 4-A

d) None of these

b) 1-B, 2-C, 3-D, 4-A

c) 1-D, 2-B, 3-A,4-C

Q34: Balance sheet is also known as .

a) Statement of financial position
b) Profit & loss a/c
c) Statement of financial condition
d) Both a & b
Q35: .. Can be discounted with banks
a) Bills receivable
b) Bills payable
d) None of these

c) Both a & b

Answer (Unit-1)
1) b
15) a
22) a
29) a

2) c
9) c
16) b
23) c
30) d

3) c
4) b
5) d
10) a
11) b
12) a
17) a
18) c
19) d
24) b
25) a
26) c
31) a
32) b
33) a

6) a
13) b
20) a
27) a
34) d

7) b
14) c
21) b
28) c

_ Unit-2
Accounting Concepts, Principles, Bases and Policies
Q36: Accounting is based on .
1) Books
2) Postulates
a) 1, 2
b) 2, 3, 1

3) Concepts
c) 2, 3, 4

4) Policies
d) All of these

Q37: Accounting are basically the rules of action adopted by accountants

a) Policies
b) Principles
c) Concepts
d) Conventions
Q38: The principles are doctrines associated with ..
a) Theory
b) Procedure
c) Current prices of accounting
d) All of these
Q39: The principles may be
1) Concepts
2) Policies
3) Convention
4) Accounts
a) 1 & 3
b) 2 & 3
c) 3 & 4
d) 1 & 2
Q40: .. Is one which is adopted by management relevant to situation?
a) Convention
b) Policy
c) Concepts
d) All of these
Q41: . Are those custom and tradition which guide the accountants?

a) Policies
b) Principles
c) Conventions
Q42: Give the full form of GAAP
a) Generally Accepted Accounting Principles
b) Generally Accounting Accepted Principles
c) Generally Accounts Accountant Principles
d) None of these
Q43: ICAI established
a) SAB
b) BAS
c) ASB

d) None of these

d) None of these

Q44: Accounting standard board was established in ..

a) 1977
b) 1956
c) 1877
d) 1856
Q45: There are accounting standards
a) 23
b) 30
c) 32
d) 20
Q46: .. Enables the business to segregate the transaction of the company from
private transaction of the proprietor
a) Business Entity Concept
b) Money Measurement Concept
c) Accrual Concept
d) None of these
Q47: Which of the following are the cases which are not valid in going concern concept?
1) When the govt. declares a company sick
2) When an enterprise was not set up for particular purpose
a) Only 1
b) Only 2
c) Both a & b
d) None of these
Q48: Yes/ No
An event or transaction that cannot be expressed in money terms can be accounted in the
books of account.
Q49: The time interval of usually one year is called ..
a) Accounting year
b) Calendar year
c) None of these
Q50: There are .. Basic principles
a) 6
b) 3
c) 10

d) 7

Q51: Yes/ No
Unrealized revenue should not be taken into consideration for determining the profit.
Q52: Expenses are different from
a) Incomes
b) Payments
c) Revenue

d) None of these

Q53: Revenue earned during a period is compared with . Incurred to earn that
a) Cost
b) Income
c) Expenditure
d) All of these

Q54: . Is called as cost principle

a) Principle of historical cost
c) Principle of full disclosure

b) Principle of expense
d) None of these

Q55: Total liabilities are equal to the

a) Obligations
b) Total of assets

c) Supplier

d) Raw material

Q56: If the cost is more than the benefit than that principle should be modified, this is
called ..
a) Modifying principle
b) Double aspect principle
c) Principle of full disclosure
d) None of these
Q57: .. Is required to help comparison of financial data from one period to
a) Accounts
b) Consistency
c) Both a & b
d) None of these
Q58: adhere to certain laws, customs, usage and business environment in
which it operates
a) Disclosure
b) Considerations
c) Standards
d) All of these
Q59: . Facilitates more disclosure of financial information
a) Accounting standard
b) Considerations
c) Disclosure
d) None of these
Q60: IFRS was framed by ..
a) ASB
b) SAB


d) None of these

Q61: The objective of financial statement is to provide information about the

a) Financial position
b) Performance
c) Changes in the financial position
d) All of these
Q62: . Are a fact and it is inevitable
a) Uncertainties
b) Materiality

c) Consistency

d) None of these

Q63: The basic purpose of accounting standard is to harmonize the ..

a) Accounting policies
b) Practices
c) All of these
d) None of these
Q64: ASB was constituted on .
a) 21 April 1997
b) 22 May 1977

c) 21 May 1977

Answer (Unit-2)

d) None of these

43) c
50) c
57) b
64) a

37) b
44) a
51) yes

38) d
45) c
52) b
59) a

39) a
46) a
53) c
60) c

40) b
47) a
54) a
61) d

41) c
48) No
55) b
62) a

42) a
49) a
56) a
63) c

_ Unit-3
Double Entry Accounting
Q65: There are . Processes in accounting trait
a) 7
b) 8
c) 6
d) 4
Q66: .. Is a business activity involving transfer of money or moneys worth?
a) Accounts
b) Transaction
c) Unit
d) All of these
Q67: Every liability is represented by .
a) Asset
b) Capital
c) Both a & b

d) None of these

Q68: Creditors, debtors, bank account relate to .

a) Real a/c
b) Personal a/c
c) Nominal a/c

d) None of these

Q69: a/cs relate to things that can be touched, felt, physically measurable
a) Tangible real
b) Intangible real
c) Tangible personal
d) Intangible personal
Q70: Goodwill, patent rights are assets
a) Intangible
b) Tangible
c) Real

d) Nominal

Q71: .. Accounts are also known as impersonal accounts

a) Real accounts
b) Nominal a/c
c) Personal a/c

d) All of these

Q72: . Consist of various types of expenses or losses & incomes or gain

a) Personal a/c
b) Nominal a/c
c) Real accounts
d) All of these
Q73: Match the account with their appropriate example
1) Expense a/c
A) Long term loan, debentures
2) Capital a/c
B) Sales a/c, Royalty received a/c
3) Revenue a/c
C) Purchases a/c, loss by fire a/c
4) Liabilities a/c
D) Drawings a/c
a) 1-C, 2-D, 3-B, 4-A
b) 1-B, 2-C, 3-A, 4-D
c) 1-a, 2-B, 3-C, 4-D
d) None of these
Q74: According to modern approach which of the following accounts are related ...

1) Real a/c
a)1, 2, 3

2) Asset A/c
b) 2, 3,4

3) Expenses a/c
c) 1, 5, 4

Q75: Complete the following

Owners equity =
a) Liabilities
b) Capital

4) Revenue a/c
d) None of these

c) Assets

5) Nominal a/c

d) All of these

Q76: Asset-Liability-Proprietor equity = ..

a) Zero
b) one
c) -1
d) None of these
Q77: . Is a sequential order in which the accounting process flows?
a) Accounts
b) Accounting trial
c) Books
d) None of these
Q78: Every transaction has .
a) Dual effect
b) Accounts
c) Book keeping

d) All of these

Answer (Unit-3)

65) b
73) a

66) b
74) b

67) a
75) c

68) b
76) a

69) a
77) b

70) a 71) b
78) a

72) b

_ Unit-4
Secondary Books
Q79: If goods are returned than .. Will be sent
a) Debit note
b) Credit note
c) Both a & b
Q80: A debit note is a document prepared by .
a) Seller
b) Purchaser
c) Business

d) Nome of these
d) All of these

Q81: Credit notes are issued to the whole . Are issued by the customer
a) Customer, debit note
b) Supplier, debit note
c) All of these
d) None of these
Q82: Sales return book is also known as ..
a) Return outward book
b) Return inward book
d) None of these

c) Purchase book

Q83: is a document in writing and promising to pay a certain sum of money

a) Accounting
b) Journal
c) Bills of exchange
d) All of these

Q84: The businessman maintains a journal/subsidiary book containing the details of the
a) B/R
b) Books
c) A/Cs
d) All the above
Q85: The business person receives . The bill amount on discounting
a) 80%
b) 90%
c) 70%
d) 50%
Q86: is an important subsidiary book?
a) Cash book
b) Journal
c) Ledger

d) Trial balance

Q87: In the cash book on the left hand side .. Are recorded
a) Payments
b) Receipts
c) Ledgers
d) All of these
Q88: .. Is a book of original entry?
a) Ledgers
b) Journal
c) Trial balance

d) None of these

Q89: when once the transactions are recorded in the journal, than posting is made to
a) Ledgers
b) Journal
c) Trial balance
d) All of these
Q90: Purchase book is also called ..
a) Sales journal
b) Purchases return book
d) All of these
Q91: For prompt payment .. Is allowed
a) Cash discount
b) Trade discount

c) Purchases Journal

c) Discounting

Q92: . Is a Quantity bought, trade practices?

a) Cash discount
b) Trade discount
c) Both a & b
Q93: Cash purchases are recorded in ..
a) Purchase book
b) Cash book

c) Purchases a/c

d) All of these
d) None of these
b) All of these

Q94: .. Is allowed to promote the sales while . Is allowed to encourage early

or prompt payment
a) Trade discount, cash discount
b) Cash discount, trade discount
c) Trade discount in both
d) Cash discount in both
Q95: .. Discount varies with the period
a) Trade
b) Cash
c) Both a & b

d) None of these

Q96: Cash book containing cash and bank columns is known as . Columns cash
a) 2
b) 1
c) 3
d) None of these
Q97: In cash book discount column on Dr. Side represents .

a) Discount received

b) Discount allowed

c) Both

d) None of these

Q98: To indicate contra entry . Is mentioned against the entry

a) L.F
b) J.F
c) C
d) Heading
Q99: Stationary, postage, stamps, refreshments etc are .
a) Asset
b) Petty expenses
c) liabilities

d) All of these

Answer (Unit-4)
79) a
86) a
93) b

80) b
87) b
94) a

81) a
88) b
95) b

82) b
89) a
96) a

83) c
90) c
97) b

84) a
91) a
98) c

85) b
92) b
99) b

Trial Balance
Q100: Is a statement containing the various ledgers a/c balances?
a) Trial balance
b) Ledgers
c) A/cs
d) All of these
Q101: Say yes/no
Is a trial balance a part of books of account
Q102: . Is drawn as a separate statement and this becomes the source document
for preparing financial statement
a) Journal
b) Ledgers
c) Trial balance
d) All of these
Q103: in .. Method of trial balance, the total balance, the totals of debits and credits
of every account are shown
a) Total
b) Balancing
c) WDV
d) Straight line
Q104: If the debit side is greater than the credit side the difference is termed as
a) Credit balance
b) Debit balance
c) Both of these
d) None of these

Q105: In opening journal entries the difference being credited to ..

a) Asset a/c
b) Liabilities a/c
c) Capital a/c
d) All of these
Q106: In opening journal entry all assets should be and liabilities should
a) Dr, Cr
b) Cr, Dr
c) Dr, Dr
d) Cr, Cr
Q107: State true or false
1) All expenses and income accounts are closed by transferring them to the
respective revenue accounts
2) The accounts of assets and liabilities will not be closed
a) 1-F, 2-F
b) 1-T, 2-F
c) 1-T, 2-T
d) 1-F, 2-T
Q108: Salaries paid during the year are closed by transferring entry, what will be the
a) P & L a/c Dr
b) Salaries a/c Dr
To Salaries a/c
To P & L a/c
c) Salaries a/c Dr
To Closing a/c

d) None of these

Q109: When the balance of one account is transferred to another account than ..
Entry is made
a) Adjusting
b) Transferring
c) Compound
d) Closing
Q110: A .. Entry is made when two or more accounts are involved in a transaction
a) Compound
b) Journal
c) Ledger
d) compensatory
Q111: Paid Rs 980 to bharat in full settlement of his a/c of rs 1000
A) What is journal entry
a) Cash a/c Dr
b) Bharat a/c Dr
To Bharat a/c
To Discount received a/c
To Cash a/c
b) Bharat A/c Dr
d) None of these
To Cash a/c
B) State which entry is this transaction involved
a) Compound Entry
b) Adjusting entry
d) Opening entry

c) Closing entry

Q112: The errors may be committed at various stages than choose which one is the stage
1) Journalizing
2) Balancing
3) Casting
4) Posting
a) 1, 2
b) 1, 3, 4
c) 1, 4, 2
d) All of these

From the above question, rearrange the various stages when errors can commit according
to the trail
a) 1, 4, 3, 2
b) 2, 3, 4, 1
c) 3, 1, 2, 4
d) 4, 3, 2, 1
Q113: The total amount of difference in the trial balance is transferred to a
a) Difference a/c
b) Suspense a/c
c) Ledger a/c
d) All of these
Q114: Which of the following errors are not disclosed by trial balance except .
a) Error of omission
b) Error of commission
c) Compensating errors
d) Posting a wrong amount
Answer (Unit-5)
100) a
101) No
107) c
108) a
112) (A) d (B) a

102) c
109) b
113) b

103) a
110) a
114) d

104) b
111) (A) c

105) c
(B) a

106) a

Final Accounts
Q115: The balance sheet of company should be presented in accordance with Part 1 of
of companies act
a) Schedule 4
b) Schedule 6
c) Schedule 5
d) None of these
Q116: .. A/c shows the results of business operations during the given period
a) Journal
b) Trading a/c
c) P & L a/c
d) Balance sheet
Q117: What is the full form of GAAP?
a) Generally Accepted Accounting Principles
b) Generally Accounting Accepted Principles
c) Generally Accounts Accepted Principles
d) None of these
Q118: The extent to which the amount belongs to the current year but payable in the
current year is called ..
a) Prepaid expenses
b) Outstanding income
c) O/s expense
d) None of these
Q119: Prepaid expenses form an ..
a) Asset
b) Liability
c) Equity
Q120: Accrued income is also called as

d) All of these

a) O/s expense
d) All of these

b) Prepaid expenses

c) Outstanding income

Q121: O/s income account is a . a/c and it represent ..

a) Personal a/c, asset
b) Real a/c, asset
c) Nominal a/c, Liability
d) None of these
Q122: Depreciation is .. For the organization
a) Income
b) Goodwill
c) Loss

d) Expense

Q123: Depreciation a/c should be . And the concerned asset a/c should be

a) Dr, Cr
b) Cr, Dr
c) Dr, Dr
d) Cr, Cr
Q124: . Method of depreciation is most popular
a) Simple
b) Reducing
c) Both a & b

d) None of these

Q125: Match the following with appropriate one:

1) Fixed installment method
A) Written down value method
2) Reducing balance method
B) Straight line method
a) 1-B, 2-A
b) 1-A, 2-B
c) 1-A, 2-A
d) None of these
Q126: Bad debts form . To the business and reduce the amount of .
a) Expenses, creditors
b) Loss, asset
c) Loss, debtors
d) All of these
Q127: Bad debts a/c should be and debtors a/c should be .
a) Dr, Cr
b) Cr, Dr
c) Cr, Cr
d) Dr, Dr
Q128: If bad debts are shown outside the trial balance than it means they were.
a) Not identified after the preparation of trial balance
b) Identified after the preparation of trial balance
c) Identified before the preparation of trial balance
d) None of these
Q129: Provision for bad debts is a .. To be incurred in future
a) Liability
b) Expense
c) Asset
d) All of these
Q130: Provision for body debts is a running a/c. Is it true or false?
Q131: Stock includes
1) Raw material
2) Production
3) Semi finished goods
a) 1, 3, 2
b) 1, 3, 4
c) 1, 4
d) All of these
Q132: In the balance sheet, closing stock appears as
a) Liability
b) Equity
c) Cash

4) Finished goods

d) Asset

Q133: Discount on creditors is

a) Income
b) Expense

c) Revenue

Q134: . Means buying and selling

a) Income
b) Expense
c) Trade

d) All of these
d) All of these

Q135: Any capital receipts or capital payments are not considered while preparing P & L
a/c. True/ False
Q136: . Is that part of equity and preference share capital which has been actually
issued by company for cash?
a) Issued capital
b) Subscribed capital
c) Share capital
d) All of these
Q137: The companies act ..
a) 1957
b) 1856

c) 1956

d) 1857

Answer (Unit-6)
115) b
120) c
126) c
132) d

116) c
121) a
127) a
133) a

117) a
122) c
128) b
134) c

118) c
123) a
129) a
135) True

119) a
124) b
130) True
136) a

125) a
131) b
137) c

Introduction To Management Accounting
Q138: The origins of modern management accounting can be traced to
a) 18th Century
b) 19th Century
c) 17th century
d) None of these
Q139: A good management accounting system may not guarantee competitive success if
the firm does not have good ..
1) Efficient operating process
2) Effective market
3) Sales activities
4) Products
a) 1, 2
b) 3, 4
c) 4, 1
d) All o f these
Q140: . Is the presentation of accounting information in such a way as to assist
management in the creation of policy and in the day to day operations of an undertaking?
a) Managerial accounting
b) Management accounting
c) Accountancy
d) All of these
Q141: Firms use . To make important product features and product mix decisions

a) Cost information
d) None of these

b) Accounts information

c) Both

Q142: The accounting people are expected to do things that are much more .
a) Strategic
b) Forward looking
c) Both a & b
d) None of these
Q143: Management accounting framework must concentrated on .
1) getting rid of routine work
2) Reporting actual and planned performance
3) Fixing organizational responsibilities
a) 1, 2
b) 2 only
c) 2 & 3
d) All of these
Q144: Management accounting functions said to include ..
1) Collecting
2) Processing
3) Interpreting
4) Presenting
a) 1, 2
b) 2, 3
c) 3, 4
d) All of these
Q145: .. Increases the efficiency of an organization
a) Coordination
b) Controlling
c) Planning

d) All of these

Q146: . Means methodical classification of data given in the financial statement

a) Statement
b) Analysis
c) Finance
d) All of these
Q147: .. Explains the meaning and significance of the data
a) Interpretation
b) Analysis
c) Methodical classification
Q148: .. Identifies the source and application of cash
a) Fund flow statement
b) Cash flow statement
d) All of these

d) None of these

c) Balance sheet

Q149: .. Is an important tool for management accountant?

a) Fund flow analysis
b) Cash flow analysis
c) Cash flow statement
d) Fund flow statement
Q150: aims at assessing the cost of product, process or operation under standard
operating conditions
a) Costing
b) Standard costing
c) Marginal costing
d) All of these
Q151: . Is an organized method of providing each manager with all the data which
he needs for decision?
a) Management reporting system
b) Budgetary control
c) Standard costing
d) All of these
Q152: . Is a framework for integrating measures derived from strategy?
a) Management reporting system
b) Balanced score card
c) Budgetary control
d) Standard costing

Q153: The real power of the balance score card is when it is transferred from a
measurement system to a management system. Yes or No
Q154: What is the full form of CVBU?
a) Central vehicles business unit
b) Commercial vehicles business unit
c) Commercial van business unit
d) None of these
Q155: . Is the one of worlds top truck manufacturers?
d) None of these
Q156: Within 2 years of implementation, CVBU has begun to show improvement of
.. Growth in India
a) 50%
b) 40%
c) 30%
d) 20%
Q157: The scorecard incorporates..


d) Both b & c

Q158: State full form of:

a) Safety, Quality, Delivery, Cost, Morale
b) Secure, Quantity, Debts, Cost, Management
c) Security, Quality, Delivery, Cost, Morale
d) None of these

Value, Margin, Cost, Delivery, Rate
Volume, market share, Customer satisfaction, Dealer Satisfaction and Receivables
None of these
Only a

Q159: is a performance measure


c) Value added concept

d) All of these

Q160: Value added statement is based on

a) Enterprise theory
b) Entity theory
c) Business theory
Q161: .. Is still in its evolutionary stage
a) Financial accounting
b) Cost accounting
d) None of these
Q162: focuses on historical data
a) Financial data
b) Cost data

d) All of these

c) Management accounting

c) Management data

d) All of these

Answer (Unit-7)
138) b
144) d
150) b
156) b
161) c

139) d
145) a
151) a
157) d
162) a

140) b
146) b
152) b
158) (A) a

141) a
147) a
153) yes
(B) b

142) c
148) b
154) b
159) c

143) d
149) a
155) a
160) a

Financial Statement Analysis
Q163: is separation or breaking up of anything into its elements or component
a) Ratio analysis
b) Financial analysis
c) Management analysis
d) All of these
Q164: Comparing the ratios to industry averages to show how the company compares to
firms of the same size in its industry. This process is known as
a) Trend analysis
b) Cross sectional analysis
c) Both a & b
d) None of these
Q165: Which of the following are types of ratios?
1) Liquidity
2) Integrated
3) Solvency
4) Super quick ratio
5) Current ratio
a) 1, 4, 5
b) 2, 3, 5
c) 1, 2, 3
d) All of these
Q166: Match the following
A) Current ratio
B) Quick ratio
C) Super quick ratio

D) Cash flow operating ratio

a) A-4, B-3, C-1, D-2
d) None of these

1) Cash & Marketable Securities

Current Liabilities
2) Cash flow from operations
Current Liabilities
3) Current assets-(stock & prepaid Exp)
Current Liabilities
4) Current assets
Current Liabilities

b) A-2, B-3, C-1, D-4

c) A-1, B-2, C-3, D-4

\Q167: For public utility companies such as BSNL, MTNL current ratio is usually very
low as they required fewer current assets. True/False
Q168: Acid test ratio is also known as ..
1) Current ratio
2) Liquid ratio
3) Quick ratio
a) 1, 2
b) 2 only
c) 3 only
d) 2 & 3
Q169: Given
Current ratio is 2.5 and working capital is 1, 80,000
A) Calculate Current assets
a) Rs 2, 00,000
b) RS 1, 20.000
c) Rs 3, 00,000

d) 1, 00,000

B) Calculate Current Liabilities

a) Rs 3, 00,000
b) RS 1, 20.000

d) None of these

c) Rs 1, 80,000

Q170: Given
Current ratio 1.5:1; Quick ratio1:1; and current liabilities Rs 50,000. Calculate
A) Current Assets
a) 55,000
b) 75,000
c) 50,000
d) 25,000
B) Quick Assets
a) 50,000
b) 75,000

c) 25,000

d) 55,000

C) Inventory
a) 50,000

c) 25,000

d) 55,000

b) 75,000

Q171: Which of the following are examples of capital structure ratio?

1) Debt- equity ratio
2) Debt- asset ratio
3) Interest coverage ratio
4) Equity- asset ratio
Q172: .. Ratio shows the relationship between borrowed funds and owners
a) Debt-equity ratio
b) Debt- asset ratio
c) Equity ratio
d) None of these
Q173: The debt capital is .. To equity capital
a) Higher
b) Lower
c) Cheaper

d) Expensive

Q174: In proprietary ratio % shows much dependence on external sources

a) 60%
b) 70%
c) 50%
d) 65%
Q175: Match the column
A) Equity > Loan capital =
1) under capitalization
B) Equity < Loan capital =
2) over capitalization
a) A-1, B-2
b) A-2, B-1
c) A-2, B-2

d) None of these

Q176: Which of the following are examples of coverage ratio?

1) Interest coverage
4) Total coverage
a) 1, 2
b) 3 only

2) Dividend coverage
c) 1, 2, 4

3) Debt-equity ratio
d) All of these

Q177: Ranjandas Ltd provides the following information

Cash sales Rs 8, 00,000; Credit sales Rs 10, 00,000; COGS Rs 15, 80,000; Return inward
Rs 20,000; From this information calculate
A) Net Sales
a) 15, 80,000
b) 17, 80,000
c) 10, 00,000
d) 20, 00,000
B) Gross Profit
a) 2, 00,000
b) 3, 00,000
C) Gross Profit Ratio
a) 10.2%
b) 12.2%
a) 88.8%

D) Ratio of COGS
b) 11.2%

c) 20,000

d) 8, 00,000

c) 11.2%

d) None of these

c) 10.2%

d) 12.2%

Q178: Total sales of a firm Rs 5, 00,000 of which the credit sales are Rs 3, 65,000;
Sundry debtors and Bills receivable are Rs 50,000 and 2,000 respectively. From the
above information Calculate
A) Debtors Turnover Ratio
a) 6.02%
b) 11.2%
c) 7.02%
d) None of these
B) Debtors Velocity
a) 52 days
b) 20 days

c) 25 days

d) 35 days

Q179: Total purchases Rs 1,00,000; Cash Purchases Rs 20,000; Discount provision on

creditors Rs 1,000; Purchases return Rs 2,000; Creditors at close Rs 30,000; Bills payable
at close Rs 25,000. From the above information calculate
A) Credit purchase
a) 58,000
b) 78,000
c) 38,000
d) 28,000
B) Creditors Turnover Ratio
a) 2042
b) 1.42
C) Creditors Velocity
a) 257 days
b) 57 days

c) 3.42
c) 200 days

d) .42
d) None of these

Q180: The earning power of firm is portrayed in

a) Ratio analysis
b) Du Pont chart
c) Financial analysis
d) None of these
Q181: Capital structure of M/S NDW and M/S GDF Ltd are as follows

Equity share capital

6% Preference share capital
7% Debentures
Reserve & Surplus
a) .25
a) .25

19, 00,000
3, 00,000

6, 00,000
4, 00,000
2, 00,000
2, 00,000

2, 00,000

A) Calculate Capital Gearing Ratio of NDW

b) .15
c) .75
d) .35
B) Calculate Capital Gearing Ratio Of GDF
b) .15
c) .75
d) None of these

Q182: Ratios are only means to an end. True/ False

Q183: Given
Cash in hand Rs 3,000; Cash at bank Rs 65,000; B/R Rs 10,000; Stock Rs 1, 20,000;
Debtors Rs 80,000; Prepaid expenses Rs 2,000; Creditors Rs 1, 20,000; B/P Rs 20,000
From information Calculate
A) Current Ratio
a) 1:2
b) 2:1
c) 3:1
d) 1:1
B) Acid test ratio
a) 1:1
b) 2:1

c) 1.14:1

d) 1:2

Answer (Unit-8)
163) a
164) b
165) c
166) a
169 (A) c (B) b
170) (A) b (B) a
(C) c
173) c
174) a
175) b
176) c
(D) a
178) (A) c (B) a
179) (A) a (B) b
181) (A) a (B) b
182) True
183) (A) b (B) c

167) True
171) 3
177) (A) b
(C) a

168) d
172) a
(B) a
(C) c
180) b

Funds Flow Analysis
Q184: The term Fund refers to ..
a) Cash
b) Cash equivalent

c) Working capital

d) All of these

Q185: .. Statement does not form a part of financial statement?

a) Fund flow statement
b) Cash flow statement
c) Financial statement
d) All of these
Q186: An increase or decrease in working capital means ..

a) Funds

b) Flow of funds

c) Inflow of funds

d) All of these

Q187: . Refers to the firms investment in current assets

a) Net Working capital
b) Working capital
c) Gross working capital
d) All of these
Q188: .. Is that obligation which has to satisfy within a year?
a) Current assets
b) Current Liabilities
c) Liquid liabilities

d) All of these

Q189: . Refers to all those obligation other than current liabilities that are likely to
mature after one year period
a) Non Current liabilities b) Current liabilities
c) Current asset
d) All of these
Q190: are those expenses which could be written off during the period of their
a) Current asset
b) Fictitious asset
c) Current liabilities
d) None of these
Q191: when a transaction results in increase of funds it is terms as .
a) Source of fund
b) Application of fund
c) Assets
d) Liabilities
Q192: Provision for taxation can be treated as
a) Current liability
b) Non current liability
c) Current asset

d) Both a & b

Q193: Which of the following are the items that are to be deducted from net profit?
1) Dividend received
2) Retransfer of excess provisions
3) Non trading charges
4) Appreciation in fixed assets
a) 1, 2
b) 1, 4
c) 1, 2, 4
d) All of these
Answer (Unit-9)
184) d
190) b

185) a
191) a

186) b
192) d

187) c
193) c

188) b

189) a

Cash Flow Analysis
Q194: statement shows the item resulting in cash inflows and cash outflows
a) Fund flow statement
b) Cash flow statement
c) Balance sheet
d) All of these
Q195: Cash flow statement is also known as
a) Statement accounting for variations in cash
b) Where got where gone statement
c) Both a & b

d) None of these
Q196: Cash flow statement is further divided into ..
a) Cash flow from operating activities
b) Cash flow from investing activities
c) Cash flow from financing activities
d) All of these
Q197: .. Is the principal revenue producing activities of the enterprise?
a) Operating activities
b) Investing activities
c) Financing activities
d) All of these
Q198: is based on ledger principles
a) Cash flow statement
b) Fund flow statement
d) All of these

c) Balance sheet

Q199: .. Is based on accrual basis?

a) Fund flow statement
b) Cash flow statement
d) All of these

c) Balance sheet

Q200: An increase in current liability of decrease in a current asset will result in

increased in.
a) Liability
b) Asset
c) Cash position
d) All of these
Q201: In . Net effect of receipts and disbursement are recorded
a) Fund flow statement
b) Cash flow statement
c) Balance sheet
d) All of these
194) a
200) c

195) c
201) a

Answer (Unit-10)
196) d
197) a

198) b

199) a

Understanding Cost
Q202: . Is the process of determining the cost of doing something?
a) CFS
b) FFS
c) Costing
d) All of these
Q203: Costing includes Of ascertaining cost
a) Technique
b) Processes
c) Accounting

d) Both a & b

Q204: is defined as reduction in firms equity other than from withdrawals of

capital for which no compensating value has been received
a) Expenses
b) Loss
c) Expenses
d) All of these
Q205: Costing helps to determine ..
a) Expenditure
b) Product cost

c) Deferred cost

d) All of these

Q206: Costing refers to the technique and processes of determining costs of product
.. Rendered
a) Manufactured
b) Service
c) Alignment
d) Both a & b
Q207: The method of costing depends on the nature of
1) Product
2) Production method
3) Specific business condition
4) Service
a) 1, 2
b) 1, 2, 3
c) 2, 4
d) All of these
Q208: In service industry . Technique is used
a) Job costing
b) Batch costing
c) Process costing

d) Contract costing

Q209) is used in business concerns where production is carried out as per specific
order or customer specification
a) Job costing
b) Batch costing
c) Contract costing
d) All of these
Q210: Which of following are types of job costing?
1) Batch costing
2) Unit costing
3) Contract costing
a) 1, 2
b) 1, 2, 3
c) 1, 3, 4
d) All of these
Q211: Match the column
A) Unit costing
B) Operating costing
C) Operation costing
D) Composite costing
a) A-2, B-3, C-4, D-1
c) A-3, B-2, C-1, D-4

4) Composite costing

1) Manufacture of aero planes

2) Sugar Industry
3) Passenger mile
4) the professional basket balls are covered with
Genuine leather where as scholastic leathers are
Covered with imitation leather
b) A-1, B-2, C-3, D-4
d) None of these

Q212: . Refers to section of business to which costs can be charged?

a) Cost unit
b) Cost centre
c) Costing
d) All of these
Q213: Which of the following are cost techniques ..
1) Historical costing
2) Standard costing
3) Direct expenses
4) Uniform costing
a) 1, 2
b) 2, 3
c) 1, 2, 4
d) All of these
Q214: Foremen, shop clerks, helpers etc are examples of ..
a) Indirect Labor
b) Indirect expenses
c) Indirect materials
Q215: Heat, Light, maintenance etc are examples of
a) Direct expenses
b) Indirect expenses
c) Indirect labour
Q216: Which of following are others name of fixed cost?

d) All of these
d) Indirect material

1) Standby cost

2) Capacity cost

3) Period cost

Q217: Which of following is classification of fixed cost?

1) Committed cost
2) Step cost
3) Period cost
a) 1, 2, 4
b) 1, 4
c) 1, 3, 2
d) All of these

4) All of these
4) Managed cost

Q218: If the factory is shut down . Costs are eliminated

a) Fixed
b) Variable
c) Semi variable
d) All of these
Q219: . Costs are made up of fixed and variable element?
a) Product cost
b) Period cost
c) Mixed cost

d) Opportunity cost

Q220: cost is also refers to minimum fixed cost which is incurred in the event of
a) Shut down cost
b) Imputed cost
c) Relevant cost
d) Period cost
Q221: . Is cost that has already been incurred?
a) Relevant cost
b) Sunk cost
c) Period cost

d) Mixed cost

Q222: . Is the benefit cost by rejecting the best competing alternative to the one
a) Shut down cost
b) Mixed cost
c) Opportunity cost
d) Product cost
Q223: Which of the following are cost which are grouped into direct or indirect?
1) Prime cost
2) Labour overheads
3) Factory cost
4) Office cost
a) 1, 3, 4
b) 1, 2
c) 1, 4
d) All of these
Q224: By adding selling & distribution expenses to cost of production one can get
a) Prime cost
b) Factory cost
c) Total cost
d) Office cost
Q225: Cost sheet is a statement prepared to show the different components of the
a) Total cost
b) Prime cost
c) Factory cost
d) All of these
Q226: From the following:
Direct materials Rs 2, 00,000, Factory expenses Rs 1, 20,000, Office expenses Rs 90,000,
Total sales Rs 6, 50,000, Prime cost Rs 4, 10,000, 10% of output is in stock
A) Calculate Prime cost
a) 4, 10,000
b) 1, 20,000
c) 6, 50,000
d) 2, 00,000
a) 4, 10,000

Calculate cost of production
b) 6, 50,000
c) 6, 20,000

a) 6, 20,000

C) Calculate closing stock of finished goods

b) 62,000
c) 2, 10,000
d) None of these

d) None of these

a) Profit Rs 92,000

Calculate balancing figure

b) Profit Rs 62,000
c) Loss Rs 92,000

d) Loss Rs 62,000

Q227: Given
Opening stock of raw materials Rs 10,000, Closing stock of raw materials Rs 15,000
Expenses on purchases Rs 5000, Direct wages Rs 50,000, Prime cost Rs 1, 00,000
From this information Calculate cost of raw material purchased
a) 50,000
b) 20,000
c) 40,000
d) None of these

Answer (Unit-11)
202) c
203) d
208) c
209) a
214) a
215) b
220) a
221) b
226) (A) a (B) c (C) c

204) b
210) b
216) 4
222) c
(D) a

205) b
211) a
223) a

206) d
212) b
218) b
224) c

207) b
213) c
219) c
225) a

Marginal Costing and Break Even Analysis
Q228: . Analysis show the relationship among unit sales price, variable cost, sales
volume, sales mix and fixed cost
a) Marginal cost
b) Cost volume profit
c) Volume output
d) None of these
Q229: Marginal costing is also known as ..
a) Marginal costing
b) B.E.P. analysis
c) b only

d) None of these

Q230: The technique of marginal costing is based on the distinction between .

a) Product costs
b) Period costs
c) Both a & b
d) None of these
Q231: costs are regarded as the cost of the product while .. Cost is treated as
period cost
a) Semi-variable, variable
b) Fixed cost, variable cost
c) Variable cost, fixed cost
d) None of these
Q232: costing is known as full costing
a) Absorption costing
b) Marginal costing
d) None of these

c) Variable costing

Q233: Fixed costs are recovered from .

a) Variable cost
b) Contribution
c) Absorption costing

d) All of these

Q234: Stock of wok in progress and finished goods are valued at .

a) Marginal cost
b) Variable cost
c) Fixed cost
d) None of these
Q235: The marginal cost of producing a unit declines as output
a) Decreases
b) Increase
c) Both a & b
d) None of these
Q236: The activities that cause costs to be incurred are called
a) Marginal cost
b) Cost drivers
c) Both a & b
d) None of these
Q237: Contribution is also termed as ..
a) Contribution margin
b) Gross margin

c) Both a & b

Q238: State the full form of ..

a) Cost Volume Profit
b) Cost Variable Profit
d) None of these
a) Big Enterprise Profit
d) None of these

b) Break Even Profit

d) a only

c) Change in Variable Profit

c) Big Even Profit

Q239: . Is a graphic or visual presentation of the relationship between costs,

volume and profit?
a) CVP
c) BEP
d) All of these
Q240: .. Expresses the relationship between contribution and sales
a) P/V ratio
b) CVP ratio
c) BEP ratio
d) None of these
Q241: Given
Selling price per unit is Rs. 25, Variable cost per unit Rs 20, and fixed cost Rs 3, 05,000
for the output of 80,000units. From this information calculate:
A) Contribution per unit
a) Rs 25
b) Rs 5
c) Rs 20
d) None of these
B) Profit
a) 85000

b) 95000

c) 305000

d) 80000

Q242: Calculate the profit earned for the data given:

Fixed cost 500000, variable cost Rs 10 per unit, selling price Rs 15 per unit, Output
150000 units
a) 2, 50,000
b) 1, 50,000
c) 3, 00,000
d) 1, 30,000

Q243: Find the fixed cost. If sales are 2, 00,000, Variable cost Rs 40,000 and profit Rs
a) 2, 50,000
b) 1, 50,000
c) 1, 30,000
d) None of these
Q244: If the marginal cost is 24,000 and sales is 60,000 than calculate:
a) 50%
b) 60%
c) 40%
d) 20%
B) Contribution
a) 26,000
b) 16,000

c) 36,000

d) None of these

Q245: From the following calculate MCSR

a) 30%

Period 1
b) 20%

Period 2
c) 10%

d) 15%

Q246: Calculate the sales if marginal cost is 24,000 & MCSR is 20%
a) Rs 3,000
b) Rs 2,000
c) Rs 1000
d) Rs 5,000
Q247: Given
50,000 units per annum
Selling price Rs 6 per unit
Prime cost Rs 6 per unit
Variable overheads Rs 1 per unit
Fixed cost
Rs 75,000 per annum
From the above calculate
a) Rs 2, 25,000
b) Rs 1, 25,000
a) Rs 25,000
b) Rs 75,000

c) Rs 1, 00,000
c) Rs 35,000

d) Rs 50,000
d) Rs 65,000

NOTE: Try all illustrations and problems

228) b
234) a
239) c
244) (A) b

229) a
235) b
240) a
(B) c

Answer (Unit-12)
230) c
231) c
236) b
237) c
241) (A) b (B) b
245) b
246) a

232) a
233) b
238) (A) a (B) b
242) a
243) c
247) (A) a (B) b

Decision Involving Alternative Choices

Q248: .. Is process of estimating the consequences of alternative actions that a

decision maker may take?
a) Different analysis
b) Marginal analysis
c) B.E.P. analysis
d) None of these
Q249: Fixing price for the product, selling a suitable product mix, diversification of the
product relates to .
a) Long term decision
b) Short term decision
c) Both a & b
d) None of these
Q250: Decision making is the process of evaluating two or more alternatives leading to a
final choice known as ..
a) Alternative choice decision
b) Short term decision
c) Long term decision
d) None of these
Q251: .. Cost which would change as a result of decision
a) Decision cost
b) Relevant costs
c) Opportunity cost
Q252: costs are irrelevant in decision making
a) Incremental cost
b) Opportunity cost
c) Relevant costs
Q253: Avoidable costs are also known as .
a) Discretionary costs
b) Relevant costs
d) Opportunity cost

d) None of these
d) None of these

c) Sunk costs

Q254: When a company with unused production capacity consider the alternatives than
. Decisions arise?
a) Alternative choice decision
b) Make or buy decision
c) All of these
d) a only
NOTE: Try all illustrations and problems
248) a
254) b

249) b

Answer (Unit-13)
250) a
251) b

252) c

253) a

Budgetary Control
Q255: Budgeting requires a deeper understanding of the .. Of environment in which
the business concern operates
a) Decision making
b) Economic system
c) Economic services
d) None of these

Q256: Budgets are not actual but are estimated. True/False

Q257: Budgeting is a . Planning
a) Backward
b) Decision

c) Forward

d) All of these

Q258: Which of the following essential features of budgetary control?

2) Business policies defined
3) Forecasting
4) Preparation of budgets
5) Fixed budget
a) 1, 2
b) 3, 4
c) 4, 1
d) 2, 4
Q259: .. Are foundations of budgets?
a) Business policies
b) Business forecasts
d) All of these

c) Budget committee

Q260: Rearrange the steps in budgetary control

1) Forecast combinations
2) Preparation of forecast
3) Formulation of policies
4) Preparation of budgets
a) 3, 2, 4, 1
b) 1, 2, 3, 4
c) 4, 3, 2, 1

d) None of these

Q261: . Budget is also known as static budget

a) Flexible
b) Fixed
c) Functional

d) None of these

Q262: Functional budgets are also known as

a) Subsidiary budgets
b) Flexible Budgets
c) Fixed budget

d) None of these

Q263: budgets may very in number from business to business

a) Flexible
b) Functional
c) Fixed
d) None of these
NOTE: Try all illustrations
Answer (Unit-14)
255) b
261) c

256) True
262) a

257) c
263) b

258) a

259) b

260) a

Standard costing
Q264: .. Is a very important system of cost control?
a) Standard costing
b) Marginal costing
c) a only
Q265: Standard costing is focused on the method of

d) All of these

a) Marginal costing

b) Cost control

c) Financial control

Q266: Standard costing is mainly applied to

a) Products
b) Processes
c) Cost
Q267: Budget is projection of .
a) Final accounts
b) Cash book

d) None of these

d) a & b

c) Subsidiary book

Q268: are projections of only cost accounts

a) Cost accounts
b) Final accounts
c) Budget

d) None of these
d) None of these

Q269: .. Are the aggregate of indirect materials, indirect labor and indirect
a) Labor
b) Overhead
c) Allowance
d) All of these
Q270: . Means the deviation of the actual from the standard
a) Budgeting
b) Labor
c) Costing
d) Variance
Q271: variances arises when the rate of output is known
a) Material yield
b) Material price
c) Labor yield

d) Labor price

NOTE: Learn all formulas and try all illustrations

264) a
270) d

265) c
271) a

Answer (Unit-15)
266) d
267) a

268) a

269) b