Management Accounting-Model Questions

1. End users of accounting function are :

a. Proprietors ,Government, Employees , Citizens

b. Regulators, Government, Employees , Citizens

c. Proprietor, Managers, Creditor, Prospective investors , Government, Employees , Citizens;

d. Shareholders, Government, Employees , Citizens

Answer- c

2. The term Conventions includes:

a. those customs or tradition which guide the accountant while preparing the accounting
statements as per legal provisions.

b. customs or traditions which guide the accountant while preparing the accounting statements .

c. those customs which guide the accountant preparing the accounting statements as per
accounting standards..

d. those customs which guide the accountant examining the accounting statements as per legal
provisions.

Answer- b

3. Ensuring compliance with Accounting Standards while preparing the financial statements is the
responsibility of:

a. The enterprise;

b. The Auditors;

c. The Government ;

d. The Institute of Chartered Accountants of India.

Answer- a

4. Transaction are classified into:

a. Relating to Persons, Properties and Assets and Income and Expenses;

b. Relating to Owners. Lenders, Borrowers and Customers;

c. Relating to records maintained :Journal, Ledger ,Trial Balance and Balance Sheet;
d. Relating to Owners and Stakeholders only;

Answer- a

5. Rent Account is:

a. Real account

b. Nominal account

c. Tangible A/c

d. Personal account

Answer- b

6. Cooperative Society Account is

a. Personal A/c

b. Tangible A/c

c. Real A/c

d. Asset A/c

Answer- a

7. Electricity Charges Account is

a. Real account

b. Nominal account

c. Tangible A/c

d. Personal account

Answer- b

8. Which one is the correct Journal entry when credit Sales made to Subodh :

a. Sales A/c is debited Subodh’s A/c is credited.

b. Debtor’s A/c is debited Sales A/c is credited.

c. Subodh’s A/c is debited Debtor’s A/c is credited.

d. Subodh’s A/c is debited Sales A/c is credited.

Answer- d

9. Which one is the correct Journal entry when Dividends paid in Cash :

a. Dividend A/c is debited Capital A/c is credited.

b. Cash A/c is debited Dividend A/c is credited.

c. Dividend A/c is debited Cash A/c is credited.

d. Dividend A/c is debited Bank A/c is credited.

Answer- c

10. Sales Journal is meant for recording:

a. All sales including fixed assets

b. All sales made in cash and credit

c. All sales made

d. All sales of goods on credit

Answer-d

11. A Bill Journal Could be defined as :

a. Meant for recording all bills received or issued by the business.

b. Meant for recording all bills of exchange or promissory notes received or issued by the business.

c. Meant for recording all bills of exchange or promissory notes received by the business.

d. Meant for recording all bills of exchange or promissory notes issued by the business.

Answer- b

12. The term Cash Journal is meant for :

a. Recording all cash transactions - receipts as well as payments.

b. Recording all transactions relating to cash assets purchase only.

c. Recording transactions relating to future receipts of cash only.

d. Recording all bills of exchange or promissory notes issued by the business in favour of creditors.

Answer- a
13. When a new set of books is started , the old accounts have to be brought forward at the beginning
of the year from last years books. The entry meant for recording these transactions are known as:

a. Adjustment Entries

b. Closing Entries

c. Opening Entries

d. Transfer Entries

Answer- c

14. Accounting Conventions imply

a. Certain fundamental accounting principles which have been sanctified by long usage.

b. Certain fundamental principles used in maintaining books of accounts.

c. Certain rules and regulations used in recording transactions

d. Certain procedures must be followed in recording transactions

Answer- a

15. Financial Statements are essentially interim reports because:

a. Exact numbers as appear in the assets and liabilities may not be reliable

b. The exact position can be known only when the business is closed down.

c. It is imprecise for the reason employees being human can make mistakes in preparation of the
documents.

d. Real picture of the business can only be known by the preparer of the accounts.

Answer- b

16. Traditional classification of ratio’s are:

a. Profit and loss Account Ratio’s, Composite Ratio’s and Liquidity Ratio’s.

b. Profit and Loss Account Ratio’s, Liquidity Ratio’s and Current Ratio

c. Profit and Loss Account Ratio’s, Balance Sheet Ratio’s and Composite Ratio’s.

d. Balance Sheet Ratio’s, Overall Profitability Ratio’s and Liquidity Ratio’s.

Answer- c
17. Net Operating profit is calculated as:

a. Net profit + Provision for Tax – Income from Investments + Interest on Debentures.

b. Net Profit + Provision for Tax – Depreciation

c. Gross Profit – Depreciation – Interest

d. Gross Profit – Income from Investment + Interest on Debentures.

Answer- a

18. External sources of cash could be

a. Issue of New Shares, short term borrowings

b. Raising long term loans, Sale of Assets

c. Purchase Plant on Differed Payment

d. All of the above

Answer- d

19. Elements of costs can broadly be categorized into:

a. Variable and Semi Variable

b. Variable and Fixed

c. Semi-variable, Variable and Fixed

d. None of the above

Answer- b

20. When you deduct sales at break-even point from total sales it is known as:

a. The Contribution Margin Ratio

b. Contribution

c. The Margin of Safety

d. Per Unit Contribution

Answer- c