MANAGEMENT ACCOUNTING 1

Question Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an example
of_______
Correct Answer Error of Commission Your Answer Error of Commission

Question Labour cost indicates that labour cost which cannot be identified with the individual cost centre
and is incurred for those employees who are not engaged in the manufacturing process but only assist i
Correct Answer Remuneration Your Answer Indirect

Question Over absorption of overheads may take place due to the reasons like ________ overheads being
less than the ________ overheads
Correct Answer actual
Your Answer estimated
Correct Answer estimated
Your Answer actual

Question Bank reconciliation statement is the statement prepared to explain the ________ as to why the
bank balance as per ________ and bank balance as per bank book does not match
Correct Answer reasons
Your Answer reasons
Correct Answer pass book
Your Answer pass book

Question Fixed cost is the cost that tend to remain ________ irrespective of ________
Correct Answer constant
Your Answer constant
Correct Answer level of activity
Your Answer level of activity

Question If wages for the month of January, February and March are Rs.4,000, Rs.4,400 and Rs.4,600
respectively and if delay in payment of wages is ½ month , payment of wages for the month of February
is
Correct Answer 4,200 Your Answer 4,000

Question Management Accounting has a very ________ scope and it requires ________ organizational
structure
Correct Answer wide Your Answer wide
Correct Answer elaborate Your Answer elaborate

Question For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is 5,000
units and consumption is 3,20,000 units, what will be the quantum of raw material to be purchased
Correct Answer 3,15,000 Your Answer 3,15,000

Question Important advantages of Uniform Costing can be said to be

Correct Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units
can take advantage of settled systems of better managed units
Your Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units
can take advantage of settled systems of better managed units

Question P/L A/C debit side includes

Correct Answer salary , discount allowed , postage & telegram
Your Answer postage & telegram , salary , discount allowed

Question Actual costs may be affected due to inefficient functioning such as

Correct Answer Abnormal expenses , In efficient use of labour , In efficient use of material
Your Answer Abnormal expenses , In efficient use of labour , In efficient use of material

Question Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/-
per unit and standard hours are 15,000 and Actual hours are 13, 500.
Correct Answer Rs.4500/- ( Favorable )
Your Answer Rs.4500/- ( Favorable )

Question Sales quantity may be forecasted after taking into consideration various factors such as
Correct Answer Analysis of past trends , Market research , Reports by salesmen
Your Answer Analysis of past trends , Market research , Reports by salesmen
MANAGEMENT ACCOUNTING 2
Question It is an appropriate basis of apportionment of depreciation expenditure
Correct Answer value of assets Your Answer value of assets

Question A budget manual is a document setting out the ________ of the persons and ________ required
for the budget control.
Correct Answer Responsibilities
Your Answer Responsibilities
Correct Answer Forms and procedures
Your Answer Forms and procedures

Question Omission of posting an amount in the ledger

Correct Answer Error of Omission Your Answer Error of Omission

Question A Budget Manual may contain the following particulars

Correct Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer ,
Scope of the Budget and area to be covered
Your Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer ,
Scope of the Budget and area to be covered

Question Semi ________ overheads are neither ________ nor variable in nature.
Correct Answer fixed
Your Answer variable
Correct Answer variable
Your Answer fixed

Question Direct Cost includes

Correct Answer Direct material , Direct labour , Direct expenses
Your Answer Direct material , Direct labour , Direct expenses

Question Financial Accounting protects the interest of outsiders . it considers ________ transaction and it
is a ________ requirement
Correct Answer historical
Your Answer historical
Correct Answer legal
Your Answer legal

Question Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of
management
Correct Answer Cost control
Your Answer Cost control
Correct Answer Maximization of profits
Your Answer Maximization of profits

Question The material Requisition note contains

Correct Answer Number and date , Department demanding the material , Signature of the authority
approving the demand
Your Answer Number and date , Department demanding the material , Signature of the authority
approving the demand

Question Following error affect the trial balance

Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of
posting an account in the ledger
Your Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of
posting an account in the ledger

Question Fixed overheads normally arise as a result of policy and are largely ________ in nature at the
Question: ________ level of the management
Correct Answer uncontrollable
Your Answer controllable
Correct Answer lower
Your Answer top

Question Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear
on account ___________
Correct Answer 12750 Your Answer 12750
MANAGEMENT ACCOUNTING 3
Question This is not the non monetary incentive.
Correct Answer Co-partnership Your Answer Co-partnership

Question P/L A/C debit side includes

Correct Answer salary , discount allowed , postage & telegram
Your Answer salary , discount allowed , postage & telegram

Question Along with financial accounting, ________ and ________ are the other streams of accounting
Correct Answer Cost Accounting
Your Answer Cost Accounting
Correct Answer Management Accounting
Your Answer Management Accounting

Question Contents of Uniform Cost Manual are

Correct Answer Organization , Cost Accounting system , Presentation of information
Your Answer Organization , Cost Accounting system , Presentation of information

Question Uniform Costing Methods may be advantageously applied to . . .

Correct Answer Single organization having number of branches. , Number of companies in same
industry , Similar Industries such as cotton, jute etc.
Your Answer Single organization having number of branches. , Number of companies in same industry ,
Similar Industries such as cotton, jute etc.

Question The process of accounting has three streams of accounting ---------------,--------and

----------------------.
Correct Answer Financial Accounting , Cost Accounting , Management Accounting
Your Answer Financial Accounting , Cost Accounting , Management Accounting

Question Judge the statement according to the criteria given : ' The accounting period for XYZ Ltd. ends
on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th
January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be
recorded in the books of accounts in January,
Correct Answer The statement and its reason are both incorrect
Your Answer The statement is correct but its reason is incorrect

Question Features of money measurement concept are . . .

Correct Answer Only those transactions and facts are included expressed in terms of money are
considered , Imposes severe restrictions on the kind of information available from financial statements ,
Works as a major drawback of financial accounting
Your Answer Only those transactions and facts are included expressed in terms of money are
considered , Imposes severe restrictions on the kind of information available from financial statements ,
Works as a major drawback of financial accounting

Question The installation and operation of ___________ accounting requires a very elaborate
organizational structure and large number of rules & regulations
Correct Answer Management Your Answer Management

Question ________account can be defined as the record of all the transactions pertaining to a person,
asset, liability income or expenditure which have taken place in a specified period.
Correct Answer Ledger Your Answer Trading

Question Which of the following transactions should be excluded while preparing a cost sheet ?
Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit
Your Answer Sale of scrap material , Interest on loan , Bad debts

Marginal costing is found to be unsuccessful in the following situations :-

Correct Answer Impossible to distinguish costs into fixed and variable component. , With respect to
capital intensive industries where fixed costs are very large and hence cannot be ignored , With respect to
service industries where employee costs are very large and almost fixed in nature
Your Answer Impossible to distinguish costs into fixed and variable component. , With respect to capital
intensive industries where fixed costs are very large and hence cannot be ignored , With respect to service
industries where employee costs are very large and almost fixed in nature

Question Labour efficiency variance arises due to:

Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material
Your Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material
MANAGEMENT ACCOUNTING 4
Question The indirect material cost, indirect labour cost and indirect expenses cost, collectively are termed
as ________.
Correct Answer Overhead Your Answer Overhead

Question A person in charge of a ________ may be held responsible for its proper functioning and cost
control.
Correct Answer Cost centre Your Answer Cost centre

Question The organization chart shows the following aspects :

Correct Answer Functional responsibility of different functional managers , Delegation of authority to
various managers , Inter-functional relationships of these managers
Your Answer Functional responsibility of different functional managers , Delegation of authority to various
managers , Inter-functional relationships of these managers

Question Depreciation charged on office furniture on straight line basis is an example of ________.
Correct Answer Administration overheads Your Answer Administration overheads

Question Information as to the cost and profit / loss associated with the firm's operations is provided to
the ________ by Management accounting.
Correct Answer Management Your Answer Management

Question The main advantages of profit sharing are :

Correct Answer Employees try to increase productivity , Incentives are shared by all the employees ,
Augments emplyees' efficiency
Your Answer Employees try to increase productivity , Incentives are shared by all the employees ,
Augments emplyees' efficiency

________ Accounting assists the management in establishing the plans to attain the economic objectives
and take proper decisions for the attainment of its objectives.
Correct Answer Management Your Answer Management

Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure
on material cost?
Correct Answer The level of control of the used of material in the production cycle , The incorrect choice
of purchase order quantity , Failure to control the issue of materials from stores
Your Answer An increase in the maximum material inventory level , The incorrect choice of purchase
order quantity , Failure to control the issue of materials from stores

Question Management accounting is concerned with the following activities :

Correct Answer Decision making , Safeguarding assets , Planning and controlling activities
Your Answer Decision making , Safeguarding assets , Planning and controlling activities

Question Features of double entry accounting system are . . .

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

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 difference between sales and cost of sales is termed as ________.
Correct Answer Net Profit Your Answer Net Profit

Question The final result disclosed by trading account is the ________profit earned by the organization.
Correct Answer Gross Your Answer Gross

Question Select the accounts to be disclosed on the liability side of the Balance sheet.
Correct Answer Loan , Outstanding expenses , Creditors
Your Answer Loan , Outstanding expenses , Creditors

Question Which document facilitates estimating material cost of a particular job, before completion of that
job?
Correct Answer Bill of material
Your Answer Material requisition note
MANAGEMENT ACCOUNTING 5
Question Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account.
Calculate its impact on net profit.
Correct Answer The net profit will not be affected
Your Answer The net profit will not be affected

Question It is said that adoption of uniform costing creates customer confidence because . . .
Correct Answer Prices are reliable
Your Answer Prices are reliable

Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received
on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year
ended 31st March, 2004.
Correct Answer The net profit will not be affected
Your Answer The net profit will not be affected

Question Furniture account will always have a ________ balance.

Correct Answer Debit Your Answer Nil

Question Accounting is the art where transactions are …

Correct Answer Summarized , Classified , Recorded
Your Answer Summarized , Classified , Recorded

Question The ________ variance is the difference between the actual variable overhead incurred and the
standard variable overhead charged to production.
Correct Answer Total variable overhead
Your Answer Total variable overhead

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 Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his
annual salary is Rs.500,000/-, what amount should be charged as office overheads ?
Correct Answer Rs.300,000/- Your Answer Rs.200,000/-

Question The factors to be considered while preparing the direct materials budget are :
Correct Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved
for specific purposes
Your Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved for
specific purposes

Question In which of the following situations, the flexible budget should be preferred?
Correct Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels
of production activity
Your Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of
production activity

Question Techniques of management accounting include:

Correct Answer Marginal costing , Budgetary control , Standard costing
Your Answer Marginal costing , Cost control , Budgetary control , Standard costing
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 selling price , Increase the sales volume , Increase the selling efforts

Question From the following, select intangible assets:

Correct Answer Goodwill , Patents , Trade Marks
Your Answer Patents , Trade Marks , Investments

Question Find the budget which is inadequate as a cost control technique

Correct Answer Fixed budget
Your Answer Fixed budget

Question: Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and closing
stock Rs.1,47,750/-. Calculate the Gross Profit.
Correct Answer Rs.3,00,000/- Your Answer Rs.3,00,000/-
MANAGEMENT ACCOUNTING 6
Question: ________ is an example of intangible asset.
Correct Answer Goodwill
Your Answer Land

Features of Sunk cost are . . .

Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past
Your Answer Indicates historical cost , Incurred in past , Relevant in decision making process

Question Identify the steps involved in selecting the optimum product mix, when the limiting factor is
number of labour hours and sales demand.
Correct Answer For each product find the contribution per unit and per labour hour , Award ranks to each
of the products based on contribution per limiting factor , Priority is given to fulfill the market demand of
the product which gives maximum contribution per labour hour.
Your Answer For each product find the contribution per unit and per labour hour , Award ranks to each of
the products based on contribution per limiting factor , Priority is given to fulfill the market demand of the
product which gives maximum contribution per labour hour.

Question Techniques of management accounting include:

Correct Answer Marginal costing , Budgetary control , Standard costing
Your Answer Marginal costing , Cost control , Budgetary control

Question The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the
year.
Correct Answer Depreciation Your Answer Depreciation

Question Crane expenses should be apportioned on the basis of ________.

Correct Answer Number of hours crane worked in the department
Your Answer Number of hours crane worked in the department

Question Essentials for effective implementation of budgetary control system are

Correct Answer Commitment of top management , Clearly defined objectives , Continous budget education
Your Answer Commitment of top management , Clearly defined objectives , Continous budget education

Question 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?
Correct Answer Rs.26,545.45 Your Answer Rs.29,200/-

Question A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be
followed.
Correct Answer Budget Your Answer Budget

Question The combination in which different products are sold by a company is known as ________.
Correct Answer Sales mix Your Answer Sales mix

Question The reporting method used in the costing system should be based on the principle of
Correct Answer Management by exception
Your Answer Management by objectives

Question The wages paid to maintenance department workers who do repair work principally for
production departments but also on the vehicles in the distribuiton department shoud be charged as:
Correct Answer Service costs Your Answer Service costs

Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek
Enterprises. This payment should be treated as
Correct Answer Drawings Your Answer Capital

Question Measurement of ________ gives an idea of the degree of mobility of labour.

Correct Answer Labour turnover Your Answer Labour turnover

Question Net profit for the year before charging commission to the manager, is Rs.111,775/-. The
manager of the company is entitled to commission @ 8% on net profits after charging commission. Find
the amount of commission due to the manager.
Correct Answer Rs.8,279.63 Your Answer Rs.8,942/-

Question A company wishes to earn a 15% profit margin on selling price when quoting for a job. Which of
the following is the profit margin of cost which will achieve the required profit margin ?
Correct Answer 0.1765
MANAGEMENT ACCOUNTING 7
Your Answer 0.15

Question Economical use of labour, materials and facilities can achieved with the help of ________.
Correct Answer Budgetary control Your Answer Cost control

Question Going Concern Concept __________________

Correct Answer Indefinite longer period , Not likely to close down in shorter period , This affects the values
of asset and liabilities
Your Answer Indefinite longer period , Not likely to close down in shorter period , This affects the values of
asset and liabilities

Question Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to depreciation
2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs as per the reducing balance m
Correct Answer 20,000,18,000,16,200 Your Answer 20,000,18,000,16,200
Question Profit & Loss A/C credit side has
Correct Answer Gross profit , Commission received , Interested received
Your Answer Gross profit , Commission received , Interested received

Question Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per year. What
is the total amount of the capital
Correct Answer 1,10,000 Your Answer 90,000

Question This cost indicates historical cost which is incurred in past.

Correct Answer Sunk cost Your Answer Sunk cost

Question Labour cost is the cost of __________ paid to employees of the organization.
Correct Answer Remuneration Your Answer Remuneration

Question Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs,
35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost.
Correct Answer 10,50,000 Your Answer 10,50,000

Question For the proper interpretation and presentation of cost the overhead further classified as
Correct Answer Factory overheads , Office and administration overheads , Selling & distribution overhead
Your Answer Factory overheads , Office and administration overheads , Selling & distribution overhead

Question These are the features of fixed overheads

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

Question The cost that varies in direct proportion with the level of activity is called
Correct Answer variable cost Your Answer variable cost

Question Basic assumptions made by marginal costing are

Correct Answer per unit selling price remains constant at all the levels of activities. , whatever is produced
by the organisation is sold off. , per unit variable cost remain constant.
Your Answer per unit selling price remains constant at all the levels of activities. , whatever is produced by
the organisation is sold off. , per unit variable cost remain constant.

Question Calculate Volume Variance, If budgeted production is 20,000 units, actual production is 22,000
units and Standard rate per unit is Rs.1.5/-.
Correct Answer Rs.3,000/- ( Favorable ) Your Answer Rs.3,000/- ( Favorable )

Question Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/- per
unit and actual sales volume is 500 units.
Correct Answer Rs.200/- ( Favorable ) Your Answer Rs.200/- ( Favorable )

Question Standard Costs are used as tool for

Correct Answer Cost Control Your Answer Price fixation

Question Standard Costing specifically relates to the function of

Correct Answer Production Your Answer Production

Question Uniform Costing Methods may be advantageously applied

Correct Answer In single organization having number of branches. , Number of companies in same
industry. , Similar Industries such as cotton, jute etc.
Your Answer In single organization having number of branches. , Number of companies in same industry. ,
MANAGEMENT ACCOUNTING 8
Similar Industries such as cotton, jute etc.

Question The following factors affects the budgeted advertisement cost

Correct Answer Percentage of profits , Availability of funds , Competitors policy
Your Answer Percentage of profits , Availability of funds , Competitors policy

Question In Cash budget , Operating cash outflow includes

Correct Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries
Your Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries

Question Characteristics of budget can be said to be

Correct Answer It may be prepared in terms of quantity or money or both , It is prepared for a fixed
period of time , It spells out objectives to be attained
Your Answer It may be prepared in terms of quantity or money or both , It is prepared for a fixed period
of time , It spells out objectives to be attained

Question Like initial formation expenses, ________ and R & D are the examples of Deferred Revenue
Expenditure
Correct Answer Initial Advertisement
Your Answer Purchase of an asset
Correct Answer R & D
Your Answer

Question If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount
Correct Answer depreciation
Your Answer depreciation
Correct Answer overstated
Your Answer overstated

Question If ________ books are the books which record the transactions in the chronological order,
________ is the book where transactions of a similar nature are pooled together
Correct Answer subsidiary
Your Answer jornal
Correct Answer ledger
Your Answer ledger

Question While selecting source of supply ________ epartment may call for the ________ from the
prospective suppliers
Correct Answer purchase
Your Answer purchase
Correct Answer quotation
Your Answer quotation

Question Preventive costs of labour turnover refers to all the costs which may be incurred by the
organisation to keep workers happy and ________ them from ________ the job
Correct Answer discourage
Your Answer discourage
Correct Answer leaving
Your Answer leaving

Question 4.Under the differential time rate method the wages are paid at Rs. 1.50 per hour between
________ efficiency and Rs.1.25 per hour between ________ efficiency
Correct Answer 101% to 125 %
Your Answer 101% to 125 %
Correct Answer 80% to90%
Your Answer 80% to90%

Question Expenditure like general lighting are apportioned considering ________ as a base and
expenditure like depreciation are apportioned considering ________ as a base.
Correct Answer number of light points
Your Answer number of light points
Correct Answer value of assets
Your Answer value of assets

Question ________ and ________ are examples of element wise classification ofoverhead costs
Correct Answer Idirect material
Your Answer Idirect material
MANAGEMENT ACCOUNTING 9
Correct Answer indirect labour
Your Answer indirect labour

Question Break even point is a situation of no ________ no ________

Correct Answer profit
Your Answer profit
Correct Answer loss
Your Answer loss

Question A key factor is defined as the factor which, at a particular point of time or over a period will
________ the volume of ________
Correct Answer limit
Your Answer limit
Correct Answer output
Your Answer output

Question Income received in advance transfer to current liabilities

Correct Answer True Your Answer True

Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True Your Answer True

Question Accounting is an art of recording, classifying & summarizing in a significant manner.

Correct Answer True Your Answer True

Question For taking make or buy decision marginal costing technique provide useful assistance.
Correct Answer True Your Answer True

Question Profitability statement indicates the amount of assets & liabilities.

Correct Answer False Your Answer False

Question The variable costs are controllable at the lower level.

Correct Answer True Your Answer True

Question Balance sheet indicates the expenditure & income from the business.
Correct Answer False Your Answer False

Question Credit balances in all the Personal & Real accounts appear on asset side.
Correct Answer False Your Answer True

Question The process of accounting split into three steams i.e. financial, cost, management accounting.
Correct Answer True Your Answer True

Question Non-operating / financial expenses are added while calculating net profit.
Correct Answer False Your Answer True

Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True Your Answer True

Question Due to errors of principle the arithmetical accuracy of the trial balance does not get affected.
Correct Answer True Your Answer True

Question Bin Card is having all the information of item received and issued.
Correct Answer False Your Answer True

Question Accounting refers to the process of analyzing & interpreting the information already recorded in
the books of accounts.
Correct Answer True Your Answer True

Question Budget is prepared for a fixed period of time.

Correct Answer True Your Answer True

Question A very wide scope of Management Accounting is the limitation by itself.

Correct Answer True Your Answer True
MANAGEMENT ACCOUNTING 10
Question Financial statements are basically in two forms i.e. profitability statement and balance sheet.
Correct Answer True Your Answer True

Question Long term loan borrowed from financial institution comes under the heading of long term
liabilities.
Correct Answer True Your Answer True

In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities.
Correct Answer True
Your Answer True

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 False

Primary distribution is effected on the basis of service rendered to the service departments by the
production departments.
Correct Answer False Your Answer True

Debit Note is an intimation sent to person dealing with the business that his account is being credited for
the purpose indicated therein.
Correct Answer False Your Answer True

Question Financial Accounting discloses the financial performance & financial statements of the business
as a whole.
Correct Answer True Your Answer True

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

Question P&L statement which is a period statement & relates to a certain period tells about results of
operations.
Correct Answer True Your Answer 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

Danger level for inventory of materials means the safety stock of inventory.
Correct Answer False Your Answer True

The role of the budget committee may be taken as an advisory role to the Chief Executive.
Correct Answer True Your Answer True

Maintenance Department is a service cost centre.

Correct Answer True Your Answer True

Question Penalty paid for delay in payment to creditors represents uncontrollable cost.
Correct Answer False Your Answer False

Question Bank reconciliation statement must be prepared before the preparation of profit and loss account
and balance sheet.
Correct Answer True Your Answer False

Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting
prices.
Correct Answer True Your Answer True

Goods sent to the customers on approval basis should be treated as sales.

Correct Answer False Your Answer False

Question Profitability statement indicates the amount of assets & liabilities.

Correct Answer False Your Answer True
MANAGEMENT ACCOUNTING 11
Question The ideal budget period for a company engaged in generation and distribution of electricity is
one year.
Correct Answer False Your Answer False

Question According to Reducing Balance Method, the depreciation is provided at a predetermined

percentage on the balance of cost of asset after deduction of the depreciation previously charged.
Correct Answer True Your Answer True

Question Control on purchase of material is exercised by the storekeeper.

Correct Answer False Your Answer True

Question Financial Accounting discloses the financial performance & financial statements of the business
as a whole.
Correct Answer True Your Answer True

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

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

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

Question Financial accounting may deal with the ascertainment of cost & calculation of profitability of the
individual product.
Correct Answer False Your Answer False

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

Standard costs are used for external reporting.

Correct Answer False Your Answer False

It is said that the income statement represents wealth increase /decrease for the organisation.
Correct Answer True Your Answer 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

Question Financial Accounting primarily protects the interests of the outsiders dealing with organization in
various capacities.
Correct Answer True Your Answer True

Question Amount invested in purchasing Fixed Asset is a revenue expenditure.

Correct Answer False Your Answer True

Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True Your Answer True

Question Cheques issued but not yet presented – the balance as per the bank pass book will be higher.
Correct Answer True Your Answer False

Question Valuation of returns indicates the material returned by store department to production
department
Correct Answer False Your Answer False

Question The wage payment system should take into consideration the external obligations such as the
Minimum wages Act and the agreement entered into by the organization with the workers.
Correct Answer True Your Answer True
MANAGEMENT ACCOUNTING 12
Question A good wage payment system will punish the workers for the matters beyond the control of the
workers.
Correct Answer False Your Answer False

Question Under marginal costing technique only fixed costs are considered as relevant for decision
making.
Correct Answer False Your Answer False

Question Product mix refers to the proportion in which various products of a company can be sold.
Correct Answer True Your Answer True

Question Uniform Costing disturbs the healthy competition in the industry

Correct Answer False Your Answer True

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

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

Question Correct Answer Your Answer

Accounting Process of analyzing & interpretation Process of analyzing & interpretation
Profitability statement Indicates the amount of profit earned Indicates the amount of profit earned
Balance-sheet Financial status Financial status
Book-Keeping Books of Accounts Books of Accounts
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-sheet

Question Correct Answer Your Answer

Journal Book of original entry Book of original entry
Ledger Maintain all types of Accounts Maintain all types of Accounts
Assets All the properties owned by the business All the properties owned by the business
Liabilities All the amount owed by the business All the amount owed by the business
Drawing Withdrawn for personal use Withdrawn for personal use

Question Correct Answer Your Answer

Book-Keeping Books of Accounts Books of Accounts
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-sheet
Accounting Process of analyzing & interpretation Process of analyzing & interpretation
Profitability statement Indicates the amount of profit earned Indicates the amount of profit earned
Balance-sheet Financial status Financial status

Question Correct Answer Your Answer

Sunk Cost Historical Cost Historical Cost
Cost Centre Facilitate the fixation of responsibility Facilitate the fixation of responsibility
Cost Control Process of controlling costs of operations Process of controlling costs of operations
Differential Cost Increase or Decrease in cost Increase or Decrease in cost

Question Correct Answer Your Answer

Profit and loss account Commission received Dividend paid
Manufacturing account Work in Progress Land & Building
Balance Sheet Land & Building Closing stock of finished goods
Trading account Closing stock of finished goods Work in Progress

Question Correct Answer Your Answer

Total cost Cost of finished goods Cost of finished goods
Non operating income Profit on sale of investment Profit on sale of investment
Selling and distribution overheads Advertisement expenses Advertisement expenses
Factory overheads Repair for factory building Repair for factory building

Question Correct Answer Your Answer

Bills Payable Amount payable to supplier Amount payable to supplier
Bills Receivable Amount received from the customer Amount received from the customer
MANAGEMENT ACCOUNTING 13
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
Bad debts Amount not received from customer Amount not received from customer

Question Correct Answer Your Answer

Financial Accounting Systematic recording of business transactions Systematic recording of business
transactions
Cost Accounting Ascertainment of cost Ascertainment of cost
Management Accounting Analyzing & interpretation of financial data Analyzing & interpretation of
financial data
Accounting Art of interpreting & classifying business transaction Art of interpreting & classifying
business transaction
Book Keeping R ecording of business transactions Recording of business transactions