Previous Paper SCDL Management Accounting

Management Accounting-Set 10
Multiple Choice Multiple Answer

Question Master budget provides a basis for computing effect of changes in :-
Correct Answer Production facilities , Product mix of the company , Sales volume
Your Answer Production facilities , Product mix of the company , Sales volume
True/False
Question The bin card and stores ledger, being independent records, comparison of these two
records should be avoided.
Correct Answer False
Your Answer False
Multiple Choice Single Answer

Question Material price variance for a job is Rs.800/- (Favourable). Actual quantity of material
used is 100 kg where as the standard quantity of material is 120% of actual quantity. Actual price
paid for the material is 80% of the standard price. Calculate material cost variance.
Correct Answer Rs.1,600/- (Favourable)
Your Answer Rs.1,600/- (Favourable)
True/False
Question A very wide scope of Management Accounting is the limitation by itself.
Correct Answer True
Your Answer True
Select The Blank

Question The variance which denotes the variation in overhead recovery due to the budgeted
quantity of products being greater or less than actual production, is known as ________ variance.
Correct Answer Volume
Your Answer Volume
True/False
Question The greater the volume of production, the greater is the unit cost of production.
Your Answer True

Question Financial Accounting ______________
Correct Answer Designed to supply information for internal/ external uses. , Deals with the
transaction during specific period. , It is compulsory
Your Answer Designed to supply information for internal/ external uses. , Deals with the
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 Suspense account is closed automatically after rectification of all the errors.
Correct Answer True
Your Answer True

Question Management Accounting __________________.
Correct Answer Designed particularly for internal use only. , Looks forward in estimating the future
along with past period. , This furnishes the necessary information to management.
Your Answer Designed particularly for internal use only. , Looks forward in estimating the future
True/False
Question While preparing the labour cost budget, factors such as overtime working or night shift
working may be ignored.
Your Answer False
Select The Blank

Question Computation of gross wages, deductions and net wages payable is the function of the
________ department.
Correct Answer Personnel
Your Answer Personnel

Question Accounting is the art of ______________,____________ and ____________ in a
significant manner and in terms of money transactions and events which are of a financial character
and interpreting the res
Correct Answer Summarizing , Classifying , Recording
Your Answer Summarizing , Classifying , Recording
True/False
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer True
Match The Following

Question Correct Answer Your Answer
Liabilities All the amount owed by the business All the amount owed by the business
Drawing Withdrawn for personal use Withdrawn for personal use

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
Select The Blank

Question Excess direct labour wages will be disclosed by 'Direct labour ________ variance'.
Correct Answer Rate
Your Answer Usage
Select The Blank

Question Income Tax Act, recognize only one method of depreciation namely ________.
Correct Answer Written down value method
Your Answer Written down value method

Question Features of convention of conservation are :-
Correct Answer Anticipates all future losses and expenses , Ignores all future incomes and profits,
unless they are actually realized , Applicable to valuation of current assets
Your Answer Anticipates all future losses and expenses , Ignores all future incomes and profits,

Question Interest on bank loan, was paid till the quarter ending 30th September, 2003,
Rs.36,000/-. Find the amount to be debited to the profit and loss account for the year ending on 31st
March, 2004, assuming the loan is not yet repaid as on this date.
Correct Answer Rs.72,000/-
Your Answer Rs.72,000/-

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 While preparing sales budget the following factors must be considered :-
Correct Answer The number and types of products sold by the organization , Whether the
organization's market share is increasing or decreasing? , Details of seasonal fluctuations in sales
Your Answer The number and types of products sold by the organization , Whether the

Question Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts.
Find its correct impact.
Correct Answer The asset side of the balance sheet will increase by Rs.5,000/-
Your Answer The asset side of the balance sheet will increase by Rs.5,000/-

Question Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of
India. On 31st January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-;
Current account Rs.2,250/- (overdraft). It is found that a deposit of Rs.1,500/- made into the savings
account on 20th January, 2004 has been entered in the ledger in the of Current account. Find the
correct ledger balances of savings and current accounts.
Correct Answer Savings account-Rs.6,500/-, current account-Rs.3,750/- (overdraft)
Your Answer Savings account-Rs.5,000/-, current account-Rs.3,750/- (overdraft
Select The Blank

Question The short run financial plan which acts as a guide to achieve the predefined targets is
known as ________.
Correct Answer Budget
Your Answer Budget

Question A worker completes a job in a certain number of hours. The standard time allowed for
the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate, a bonus
of Rs.20/- under Halsey plan. Find out his total earnings under the Rowan plan.
Correct Answer Rs.84/-
Your Answer Rs.70/-

Question Selecting an appropriate method of valuation of inventory is important because :-
Correct Answer It influences the figure of gross profit
Your Answer It influences the figure of gross profit
True/False
Question Error of commission refer to a situation where a transaction is not recorded in the books
of account.
Your Answer False
True/False
Question All costs are controllable.
Your Answer False
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.
Correct Answer True
Your Answer True
Match The Following

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 Features of convention of materiality are :-
Correct Answer Transactions having material impact on profitability should be considered ,
Insignificant transactions will be ignored
Your Answer Transactions having material impact on profitability should be considered ,

Question The various areas in which uniform costing can be adopted are :-
Correct Answer Valuation of inventories , Charging of depreciation , Apportionment of overheads
Your Answer Valuation of inventories , Charging of depreciation , Apportionment of overheads

Question Following are the examples of service cost centre :-
Correct Answer Stores department , Transport department , Accounting department
Your Answer Stores department , Transport department , Accounting department
True/False
Question Receipts and payments method of cash budget is useful for preparing long term
estimates.
Your Answer False

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

Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit
of finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering
cost is Rs.120/- per order and the holding cost is 10% per annum. If the company places each order
for 2,000 units due to financial constraints, what is the extra annual cost?
Your Answer Rs.80/-
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
Your Answer True

Question The disadvantages of time rate system are :-
Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to
increase productivity
Your Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase
productivity
Select The Blank

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

Question ________ is an example of intangible asset.
Correct Answer Goodwill
Your Answer Goodwill
True/False
Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True
Your Answer True

Question Select the transactions which can be entered in the Journal proper :-
Correct Answer Opening entries , Closing entries , Rectification entries
Your Answer Opening entries , Closing entries , Rectification entries

Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one
product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual
break even point.
Correct Answer 80,000 units
Your Answer 80,000 units
Select The Blank

Question In case of seasonal industry, the budget period may be taken as ________.
Correct Answer One season
Your Answer One season
Select The Blank

Question The process of attributing proportions of items of costs amongst cost centres is called
________.
Correct Answer Cost apportionment
Your Answer Cost apportionment

Question Which system can assist in fixing a common selling price for the industry as a whole on
the basis of cost of production of all units belonging to that industry?
Correct Answer Uniform costing
Your Answer Uniform costing
Select The Blank

Question Angle formed by the intersection of total cost line and sales line is called angle of
________.
Correct Answer Incidence
Your Answer Incidence

Question Which of the following transactions fall within the definition of the 'standing instruction'?
Correct Answer Club membership subscription
Your Answer Club membership subscription

Question In a certain factory, three products are made from different materials by similar process.
For a typical period, production costs are as under : Product A : material used Rs.1,600/-; direct
labour cost Rs.1,200/-; overheads Rs.800/-. Product B : material used Rs.2,000/-; direct labour cost
Rs.1,000/-; overheads Rs.400/-. Product C : material used Rs.800/-; direct labour cost Rs.400/-;
overheads Rs.160/-. What is the basis used for charging the overheads to these products?
Correct Answer Percentage of direct material cost
Your Answer Percentage of prime cost

Question The statement, mainly applicable to company form of organization, which discloses the
manner in which the profit after tax is distributed is known as:
Correct Answer Profit & Loss Account Appropriation Account
Your Answer Profit & Loss Account Appropriation Account
True/False
Question Deferred revenue expenditure written off account is a real account.
Your Answer False

Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and
earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of
Rs.75,000/-. You are required to calculate the margin of safety for the first month.
True/False
Question Budgetary control system provides a basis for establishment of the incentive systems.
Correct Answer True
Your Answer True
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
Select The Blank

Question The cash flow format is used for preparing the cash budget by the ________ method.
Correct Answer Adjusted Profits/Losses
Your Answer Receipts and Payments

Question Select the steps to be followed while preparing bank reconciliation statement :-
Correct Answer Compare the transactions in the bank book and the pass book , Check the totals
and the balancing of both the books , Confirm that the opening balances of both the books are
tallying
Your Answer Compare the transactions in the bank book and the pass book , Check the totals
tallying
Question XYZ Ltd. is selling 50,000 units of a product at Rs.40/- per unit. Variable cost is Rs.25/-
per unit and fixed cost is Rs.200,000/-. The producer can increase sales volume by 20% by reducing
the price by 10%. Do you recommend reduction in price? What will be profit if this action in
undertaken?
Correct Answer No; Revised profit Rs.460,000/-
Your Answer No; Revised profit Rs.460,000/-
True/False
Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement
the Uniform costing system.
Your Answer True

Question The store-keeper should initiate action for the purchase of a material, when it reaches its
:-
Correct Answer Re-order level
Your Answer Re-order level

Question Cost control procedure deals with :-
Correct Answer Establishment of plans , Comparison of actual and planed performance ,
Computation of variance
Your Answer Establishment of plans , Computation of profit , Comparison of actual and planed
performance


Question State the features of these transactions : (i) Commission paid Rs.250/- was posted twice
to Commission account (ii) Rs.5,000/- representing goods sold to A, was posted to the credit to
commission received account (iii) Sold machine for Rs.8000/-, was credited to Sales account.
Correct Answer The debit side of the trial balance will be in excess by Rs.250/- , Involves an error
of principle , Involves an error of commission
Your Answer The debit side of the trial balance will be in excess by Rs.13,250/- , Involves an error

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
Select The Blank

Question The assets which are supposed to be used by the organization to do business, are
known as ________assets.
Correct Answer Fixed
Your Answer Fixed
Match The Following

Total cost - Fixed cost Variable cost Variable cost
Contribution - Fixed cost Profit Profit
Total cost + Profit Sales Sales
Fixed cost + Variable cost Total cost Total cost
Select The Blank

Question A trading concern will have only ________ overheads and selling overheads.
Correct Answer Administration
Your Answer Administration
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

Correct Answer Product mix of the company , Sales volume , Production facilities
Your Answer Product mix of the company , Sales volume , Production facilities
Match The Following

Labour hour method of absorption of overheads Not affected by output related remuneration
schemes Not affected by output related remuneration schemes
Percentage of direct material cost methods of absorption of overheads Useful when prices of
materials are fairly stable Useful when prices of materials are fairly stable
Percentage of direct labour cost methods of absorption of overheads Useful when ratio of skilled and
unskilled labour remains constant Useful when ratio of skilled and unskilled labour remains constant
Percentage of prime cost methods of absorption of overheads Useful when there are no wide
fluctuations in processing Useful when there are no wide fluctuations in processing

Question The objects of cost accountancy are :-
Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information
Your Answer To ascertain cost and profitability , Cost Control , Presentation of Information

Question Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is
Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a.,
what will be the amount of capital of each of the partners as on 31st March, 2004, assuming there
were no additions during this period? Also, state the treatment of this item in the Profit and loss
account.
Correct Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital
should be debited to the Profit and loss account
Your Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital should
be credited to the Profit and loss account

Question Features of convention of consistency are :-
Correct Answer The accounting policies and procedures should be followed consistently ,
Facilitates the comparison of financial statements , It facilitates comparison of financial statements
on period-to-period basis
Your Answer The accounting policies and procedures should be followed consistently , Facilitates
the comparison of financial statements , It facilitates comparison of financial statements on period-to-
period basis
Select The Blank

Question Retirement from the service is an ________ cause of labour turnover.
Correct Answer Unavoidable
Your Answer Unavoidable

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.29.98

Question Which of the following information is included in the goods received note?
Correct Answer Date of receipt of material , Quantity received , Description of goods
Your Answer Date of receipt of material , Quantity received , Description of goods
Select The Blank

Question Non-trading income is disclosed on the credit side of ________ account.
Correct Answer Profit and loss
Your Answer Profit and loss appropriation
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
Your Answer True

Question Which of the following is a valid classification of the salary paid to the foreman in charge
of the packing department?
Correct Answer Direct product cost
Your Answer Direct product cost
True/False
Question A journal entry is passed for trade discount, but no entry is passed for cash discount.
Your Answer False
Select The Blank

Question The capital intensive industry will have ________ angle of incidence.
Correct Answer Higher
Your Answer Higher

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

Question A lathe machine was purchased on 31st March, 2004 for Rs.65,000/-, however it was
installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of
depreciation charge for the said lathe machine for the year ended 31st March, 2004.
Correct Answer Nil
Your Answer Nil
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 The actual loss incurred by a company, due to fire, is the extent of difference between
the cost of goods destroyed and the amount of claim settled by the insurance company.
Correct Answer True
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
Your Answer True

Question The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank
pass book balance as on the same date was Rs.8,015/-. Select the transactions representing the
reasons for this difference.
Correct Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/-
, Bank interest not entered in the bank book Rs.90/-
Your Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/- ,
Bank interest not entered in the bank book Rs.90/-
Select The Blank

Question As per the provisions of Section 209 of ________, all the company form of organization
is legally required to follow the mercantile or accrual system of accounting.
Correct Answer The Companies Act, 1956
Your Answer The Companies Act, 1956
Select The Blank

________.
True/False
Question Financial Accounting discloses the financial performance & financial statements of the
business as a whole.
Correct Answer True
Your Answer True
Select The Blank

Question A standard that is never altered, after being established, is known as ________
standard.
Correct Answer Ideal
Your Answer Basic
Select The Blank

Question Copy of a firm's account in the bank's ledger is known as ________.
Correct Answer Bank statement
Your Answer Bank book
Select The Blank

Question Normally, the planning for dividend payments and interest payments is based on the
________ budget.
Correct Answer Cash
Your Answer Income
• True/False
Question Financial statements can be presented in two forms i.e. profitability statement and
balance sheet.
Correct Answer True
Your Answer True
Match The Following

Advantageously applicable in similar industries Scope of uniform costing Scope of uniform costing
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 Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer True

Question The productive causes of idle time are :-
Correct Answer Instructions are not clearly given , Power failures , Machine breakdown
Your Answer Instructions are not clearly given , Power failures , Machine breakdown

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 , Reduce cost of sales , Increase the selling efforts
True/False
Question Cash account can have a credit balance.
Your Answer False
Select The Blank

Question A low margin of safety indicates ________ fixed overheads.
Your Answer Higher

Question The reasons and objectives of budgets may be stated as :-
Correct Answer To aid the planning of annual operations , To communicate the organizational
plans to the different departments , To motivate the managers to strive for attainment of the
organizational goals
Your Answer To aid the planning of annual operations , To communicate the organizational plans
to the different departments , To motivate the managers to strive for attainment of the organizational
goals

Question The main advantages of profit sharing are :-
Correct Answer Employees try to increase productivity , Incentives are shared by all the
employees , Augments employees' efficiency
Your Answer Employees try to increase productivity , Incentives are shared by all the employees ,
Augments employees' efficiency
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Your Answer False
True/False
Question Balance sheet indicates the expenditure & income from the business.
Your Answer False
True/False
Correct Answer True
Your Answer True

Question The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the
adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the
adjustments which might have brought this change.
Correct Answer Accrued commission income of Rs.32,960/- was not entered in the books , Rent
for the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the
extent of Rs.30,160/- was wrongly transferred to Machinery account
Your Answer Accrued commission income of Rs.32,960/- was not entered in the books , Rent for
the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the
extent of Rs.30,160/- was wrongly transferred to Machinery account
Match The Following

Operating income Cash Sales Cash Sales
Non-Operating income Issue of shares Issue of shares
Plan of investment in fixed assets Capital Expenditure Budget Capital Expenditure Budget
Plan for surplus/shortage of cash Cash Budget Cash Budget

Question A producer has estimated annual requirement of a material as 72,000 units. Cost of
placing an order has been worked out as Rs.50/- per order and annual storage cost per unit of
material is Rs.5/-. Calculate total cost of holding the material.

Question The following figures relate to a company manufacturing a varied range of products :
Year 2003 Total sales Rs.22,23,000/- and total cost Rs.19,83,600/-. Year 2004 : Total sales
Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability in prices, calculate the profit
volume ratio :-
Correct Answer 0.3
Your Answer 0.3
Question Standard labour cost of producing 500 metre of cloth has been specified as 20 hours
work by skilled workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per
hour. For producing 500 metre cloth they worked for 30 hours each they were paid at the rate of
Rs.17/- per hour and Rs.10/- per hour, respectively. Calculate labour mix variance.
Correct Answer Rs.30/- (Adverse)
Your Answer Rs.60/- (Adverse)

Question An important feature of cost accounting is :
Correct Answer Focuses attention on the profitability of each product and service.
Your Answer Focuses attention on the profitability of each product and service.
Select The Blank

Question Purchase of national saving certificates by the company from its profits, should be
debited to ________ account.
Correct Answer Investments
Your Answer Investments
Select The Blank

Question ________ system of wage payment is a combination of Halsey system and Gantt
system.
Correct Answer Diemer
Your Answer Diemer

Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on
1st June, 2003, for a period of one year. The type of the fixed deposit is cumulative, i.e. interest shall
be received only on maturity. What treatment should be given in the books of accounts on 31st
March, 2004, the year ending date?
Correct Answer An entry for Rs.458.34, debiting interest accrued but not due account should be
passed
Your Answer An entry for Rs.458.34, debiting interest accrued but not due account should be
passed
True/False
Correct Answer True
Your Answer True

Question Select the factor which can prove to be a very crucial key factor in case of an oil refinery
:-
Correct Answer Supply of crude oil
Your Answer Supply of crude oil
Question A producer has a policy of fixing selling price at two-and-a-half times the variable cost.
He also wants to have a monthly break-even at sales of 20,000 units. Annual fixed cost is
Rs.18,00,000/-. What is the selling price per unit of the product?
Your Answer Rs.7.50
Select The Blank

Question Depreciation is caused by use factor, obsolescence and ________.
Correct Answer Time factor
Your Answer Time factor
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True


Question 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.
Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- ,
Labour yield variance is favourable
Your Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/-
True/False
Question Time rate system is suitable for workers of the maintenance department.
Correct Answer True
Your Answer True
Select The Blank

Question Uniform costing is not a separate method of ________.
Correct Answer Cost accounting
Your Answer Cost accounting
Select The Blank

Question The expenses relating to maintenance and creation of demand for the product should be
included in the ________budget.
Correct Answer Selling expenses
Your Answer Selling expenses
True/False
Question Overhead absorption rate will be different at different capacity levels.
Correct Answer True
Your Answer True

Question Which of the following aspects are mainly responsible for difficulty in application of
Uniform costing system?
Correct Answer Capital investment , Plant size , Location
Your Answer Capital investment , Plant size , Location

Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit
allowed 10% discount for on the spot transaction. What is the amount that should be debited to the
cash account?

Select The Blank

Question Furniture account will always have a ________ balance.
Correct Answer Debit
Your Answer Debit

Question Select the correct journal entry for the following transaction. "Received Rs.475/- from
M/s.Manohar & Co. in full settlement of Rs.500/-'.
Correct Answer Cash account…………....Dr. Rs.475/- Discount account ………..….Dr. Rs.25/- To
M/s. Manohar & Co. A/c Cr. Rs.475/-
Your Answer Cash account…………....Dr. Rs.475/- Discount account ………..….Dr. Rs.25/- To
Select The Blank

Question Depreciation charged on office furniture on straight line basis is an example of
________.
Correct Answer Administration overheads
Your Answer Administration overheads
Question Essentials for effective implementation of budgetary control system are :-
Correct Answer Commitment of top management , Clearly defined objectives , Continuous budget
education
Your Answer Commitment of top management , Clearly defined objectives , Continuous budget
education
True/False
Question The amount of profit which is retained by the organization is transferred to 'Reserves
and Surplus' in the balance sheet.
Correct Answer True
Your Answer True

Question Which document is a part of the perpetual inventory system?
Correct Answer Bin card
Your Answer Bin card
Select The Blank

Question ________ is any documentary evidence to justify that a particular transaction has taken
place.
Correct Answer Voucher
Your Answer Voucher
Select The Blank

Question Marginal costing is also known as ________.
Correct Answer Variable costing
Your Answer Variable costing
True/False
Question Penalty paid for delay in payment to creditors represents uncontrollable cost.
Your Answer False
Select The Blank

Question Indirect Cost is termed as ________.
Correct Answer Overhead
Your Answer Overhead

Question Pre-requisites of Uniform Costing are :-
Correct Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry
Your Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry
True/False
Question Credit balance in interest account indicates income for the organization.
Correct Answer True
Your Answer True
Select The Blank
Question A ________ can be defined as a part of the organization for which separate budget can
be prepared and implemented.
Correct Answer Budget centre
Your Answer Budget centre

Question The main objectives of determining overhead rates are :-
Correct Answer Helps in immediate compilation of costs , Helps application of overhead on an
equitable basis , Assists in calculating unit cost before starting production
Your Answer Helps in immediate compilation of costs , Helps application of overhead on an
equitable basis , Assists in calculating unit cost before starting production
True/False
Correct Answer True
Your Answer True
Select The Blank

Question Entry for dishonour of cheque appears only in the pass book, this entry should be
________ in the bank book.
Correct Answer Passed
Your Answer Adjusted
Select The Blank

Your Answer Higher

Question Judge the following narrative according to the criteria given : There are many
organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc.
Correct Answer The statement and the reason are both incorrect
Your Answer The statement and the reason are both correct
Question Management accounting is concerned with the following activities :-
Correct Answer Decision making , Safeguarding assets , Planning and controlling activities
Your Answer Decision making , Planning and controlling activities

Question 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?

Question Plant and equipment can become a key factor in the following circumstances :-
Correct Answer Limited capacity due to lack of capital , Insufficient capacity due to shortage of
space , Limited number of hours for which the plant can be used
Your Answer Limited capacity due to lack of capital , Insufficient number of workers to work in the
plant
True/False
Question One of the major drawback of the contribution approach to costing is that it ignores fixed
cost.
Correct Answer True
Your Answer True
True/False
Question Under ABC analysis, category A represents items with high volumes.
Your Answer True

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 Packing material lying in stores but reserved for specific purposes , Availability of
funds , Material in stores but reserved for specific purposes

Question If the overhead expenditure to be absorbed in the foreman's salary, the most appropriate
basis for absorption would be :-
Correct Answer Direct labour hours
Your Answer Direct labour hours
True/False
Question In differential cost analysis, decisions are taken by comparing the incremental revenue
with differential costs.
Correct Answer True
Your Answer True

Question Items credited to Trading Account are :-
Correct Answer Sales , Goods lost by fire , Closing stock
Your Answer Sales , Goods lost by fire , Closing stock

Question The objectives of cost accounting are :-
Correct Answer Cost control , Ascertainment of cost of each product , Assist in managerial
decision-making
Your Answer Cost control , Ascertainment of cost of each product , Assist in managerial decision-
making

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 At 60% capacity utilization the overhead recovery rate is Rs.35/- per unit. At 70%
capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production
attains 90% capacity utilization?
Correct Answer Rs.28/- per unit
Your Answer Rs.28/- per unit

Question Based on the journal entry given, identify what transaction has taken place? Suresh
Account………….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on behalf of creditor
Suresh)
Correct Answer Cash paid to Kailash should not be recovered from creditor Suresh
Your Answer Cash paid to Kailash should be recovered from creditor Suresh

Question Which of the following cost is also termed as Prime Cost ?
Correct Answer Direct cost
Your Answer Direct cost

Question Where, in the final statements of accounts, should we disclose the closing balance of
income received in advance?
Correct Answer Balance sheet - on the liability side
Your Answer Balance sheet - on the liability side
True/False
Question Factory rent is a direct cost to the factory as a whole but indirect to the production
departments.
Correct Answer True
Your Answer True
True/False
Your Answer False

Question For the given transaction find the wrong entry that has been passed in the books of
accounts, the correct entry that should have been passed and the rectification entry required to
rectify the mistake. "On 1st September, 2004 the total of the previous month's wages was debited to
'Manufacturing Wages Account". During the previous month, a new machine was installed, and the
firm's own employees had spent time thereon; the previous month's wages for all such employees
amounted to :-
Correct Answer Machinery A/c. . . Dr. Rs.14,100/- To Manufacturing Wages A/c Rs.14,100/- ,
Machinery A/c . . . Dr. Rs.14,100/- To Cash A/c Rs.14,100/- , Rs.14,100/- To Cash A/c Rs.14,100/-
Your Answer Machinery A/c. . . Dr. Rs.14,100/- To Manufacturing Wages A/c Rs.14,100/- ,
Machinery A/c . . . Dr. Rs.14,100/- To Cash A/c Rs.14,100/-
True/False
Correct Answer True
Your Answer True
True/False
Question Penalty paid for delay in payment to creditors represents uncontrollable cost.
Your Answer False

Question The selection of the supplier may depend upon the following aspects:-
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
Select The Blank

Question ________ variance arises when the mix of materials used in the production is different
from the predetermined standard mix of operation.
Correct Answer Materials mix
Your Answer Product mix
Select The Blank

Question Expenditure on repairs may be ideally allocated on the basis of ________.
Correct Answer Cost of repairs spread over the working life of the machine
Your Answer Cost of repairs spread over the working life of the machine

Your Answer Establishment of plans , Comparison of actual and planed performance ,
Select The Blank

Question Cash budget is extremely useful since it:-
Correct Answer Gives information about estimated cash inflows and outflows
Your Answer Gives information about estimated cash inflows and outflows
Select The Blank

Question Accounts representing expenses will have ________ balance.
Correct Answer Debit
Your Answer Debit
Match The Following

Operating income Cash Sales Cash Sales
Non-Operating income Issue of shares Issue of shares
Plan of investment in fixed assets Capital Expenditure Budget Capital Expenditure Budget
Plan for surplus/shortage of cash Cash Budget Cash Budget

Question These are the methods of measuring labour turnover :-
Correct Answer Replacement Method , Separation Method , Flux Method
Your Answer Replacement Method , Separation Method , Flux Method
True/False
Question Long term loan borrowed from financial institution comes under the heading of long term
liabilities.
Correct Answer True
Your Answer True
Select The Blank

Question Warehousing cost is an item of ________.
Correct Answer Distribution overheads
Your Answer Distribution overheads

Question Product costs under direct costing include:-
Correct Answer Prime cost and variable factory overheads
Your Answer Prime cost only
Select The Blank

Question If the standard contribution is less than the actual contribution, then ________ variance
arises.
Correct Answer Favourable
Your Answer Favourable

Question The factors which influence the selection of the method for absorption of overheads
are:-
Correct Answer Type of industry , Nature of products , Manufacturing process
Your Answer Type of industry , Nature of products , Manufacturing process

Question Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is
Rs.180/- per unit. Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company
has a proposal that the sales staff may be paid a commission of 10% of sales instead of fixed
salaries totaling Rs.80,000/-. This action is expected to increase the sales by 10%. Compute the
amount of profit assuming the proposal is accepted?
Select The Blank

Question Fixed overhead volume variance = Expenditure variance + Capacity variance +
________ variance.
Correct Answer Calendar
Your Answer Productivity
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 Journal
True/False
Correct Answer True
Your Answer True

Question Which of the following is most likely to be an allocated production overhead cost to the
finishing cost centre?
Correct Answer Salary of the finishing center's manager
Your Answer Power used by machines of finishing centre
Match The Following

Advantageously applicable in similar industries Scope of uniform costing Process of uniform costing
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 Scope of
uniform costing
True/False
Correct Answer True
Your Answer True
True/False
Question Revenue expenditure indicates the amount of funds spent during a certain period with
the intention to receive the returns in future.
Your Answer True

Your Answer Delegation of authority to various managers , Inter-functional relationships of these
managers , Functional responsibility of different functional managers
Select The Blank
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
True/False
Question Predetermined rate of absorption of overheads helps in quick preparation of cost
estimates and quoting prices.
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

Question From the given information compute the total cost variance. Material cost variance -
Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -
Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/- (adverse).
Correct Answer Rs.24,050/- (Adverse)
Your Answer Rs.24,050/- (Adverse)
Select The Blank

Question If the time booked as per the job cards is less than the attendance time it indicates
________ during which the worker has not done any work though he was present in the factory.
Correct Answer Idle time
Your Answer Idle time

Question The finance manager is responsible for which of the following budget?
Correct Answer Cash budget
Your Answer Cash budget
True/False
Correct Answer True
Your Answer True

Question From the following transactions find the value of closing stock on 4/10/04, 7/10/04 and
12/10/04 using the simple average method of issue pricing. 1/10/04 - Purchased 400 units @ Rs.5/-.
4/10/04 - Issued to production 120 units. 5/10/04 - Purchased 200 units @ Rs.6/-. 7/10/04 - Issued to
production 180 units. 11/10/04 - Purchased 100 units @ Rs.7/-. 12/10/04 - Issued to production 160
units.
Correct Answer 4/10/04 - 280 units @ Rs.1,400/- , 7/10/04 - 300 units @ Rs.1,610/- , 12/10/04 -
240 units @ Rs.1,350/-
Your Answer 12/10/04 - 240 units @ Rs.1,350/-
Select The Blank

Question The final result disclosed by trading account is the ________ profit earned by the
organization.
Correct Answer Gross
Your Answer Gross
True/False
Correct Answer True
Your Answer True

Question Identify the variable expenses :-
Correct Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by
hired carriers , Wages paid to casual workers
Your Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by
hired carriers , Wages paid to casual workers

Question Presentation of information to enable managerial decision making is one of the objects
of which of the following?
Correct Answer Cost Accounting
Your Answer Cost Accounting
Select The Blank

Question If it is given that the office expenses account includes Rs.10,000/- for purchase of
computer-table, the net profit will ________, after the necessary adjustment is done.
Correct Answer Increase
Your Answer Remain the same
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Your Answer False

Question A company produces 2.50 units of a product from one kg of raw material, which is
purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per order. The
incremental carrying cost of raw material is Re.0.50 per kg per month. In addition, the cost of
working capital finance on the investment in inventory of raw materials is Rs.9/- per kg per annum.
The annual production of the product is 100,000 units. Select the statements which are true for this
problem.
Correct Answer 20 orders should be placed in a year , Economic order quantity is 2,000 kg ,
Storage cost is Rs.15/- per kg
Your Answer Economic order quantity is 2,000 kg

Question The selection of the supplier may depend upon the following aspects:-
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
Select The Blank

known as ________.
Your Answer Budget

Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on
1st June, 2003, for a period of one year. The type of the fixed deposit is cumulative, i.e. interest shall
be received only on maturity. What treatment should be given in the books of accounts on 31st
March, 2004, the year ending date?
Correct Answer An entry for Rs.458.34, debiting interest accrued but not due account should be
passed
Your Answer An entry for Rs.458.34, debiting interest accrued but not due account should be
passed

Question Features of material usage variance are :-
Correct Answer Measures the difference between the quantity of materials actually used and that
should have been used. , Considers standard price X actual quantity , Considers standard price X
standard quantity
Your Answer Measures the difference between the quantity of materials actually used and that
should have been used. , Considers standard price X actual quantity , Considers standard price X
standard quantity
Match The Following


True/False
Correct Answer True
Your Answer True

Question Select the correct journal entry for the following transaction. "Received Rs.475/- from
M/s.Manohar & Co. in full settlement of Rs.500/-'.
Correct Answer Cash account…………....Dr. Rs.475/- Discount account ………..….Dr. Rs.25/- To
Your Answer Cash account…………....Dr. Rs.475/- Discount account ………..….Dr. Rs.25/- To
True/False
Question Balance sheet indicates the expenditure & income from the business.
Your Answer False

Question At 60% capacity utilization the overhead recovery rate is Rs.35/- per unit. At 70%
capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production
attains 90% capacity utilization?
Correct Answer Rs.28/- per unit
Your Answer Rs.28/- per unit

Question 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were
purchased from Y @ Rs.6/- per unit. The organization follows FIFO system of pricing of issues and
the above purchases have been recorded in stores ledger. 120 units have already been issued. 60
units received from X are defective and are therefore returned. Find the value of the material
returned to X.
Your Answer Rs.300/-
True/False
Question It is said that the income statement represents wealth increase /decrease for the
organization.
Correct Answer True
Your Answer True

Question When bank balance as per bank book is considered for preparing bank reconciliation
statement, then following items need to be added :-
Correct Answer Cheques issued but not presented , Direct deposit made by customer , Wrong
credits given by bank
Your Answer Cheques issued but not presented , Direct deposit made by customer , Wrong
credits given by bank

Question Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as
Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10% p.a.,
what should be the treatment of this interest in the profitability statement, assuming there were no
additions to capital during this period?
Correct Answer Profit and loss account should be debited with Rs.1,866.67
Your Answer Profit and loss account should be debited with Rs.1,866.67

Question Included in the trial balance is the sales promotion suspense account with a debit
balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its impact on profit
of the company.
Correct Answer The net profit will decrease by Rs.6,300/-
Your Answer The net profit will decrease by Rs.6,300/-

Question Select the items which may be classified as selling and distribution overheads :-
Correct Answer Delivery van expenses , Rent of finished goods warehouse , Sales research
expenses
Your Answer Delivery van expenses , Rent of finished goods warehouse , Sales research
expenses

Question Labour turnover means :-
Correct Answer Influx and exit of employees , Quantitative measurement of instability of working
force , Rate of change in the average working force
Your Answer Influx and exit of employees , Quantitative measurement of instability of working
force , Rate of change in the average working force
Select The Blank

Question One of the limitations of the budgetary control is that it ________.
Correct Answer Is an expensive affair
Your Answer Requires fixing of responsibilities


Question In practical circumstances, control ledgers may be maintained for the following
categories:-
Correct Answer Sundry debtors , Sundry creditors , Advance to Staff
Your Answer Sundry debtors , Sundry creditors , Advance to Staff
Select The Blank

Question Cost volume profit analysis focuses attention on the ________ effect of a particular
course of action.
Correct Answer Short run
Your Answer Short run
Match The Following

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
Interest on debentures directly credited by bank 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 Overdraft as per bank book = Overdraft as per pass book

Question Which of the following is usually prepared daily by employees for each job worked on?
Correct Answer Job card
Your Answer Job card

Question Benefits available from revenue expenditure are received in the :-
Correct Answer Same year
Your Answer Same year
True/False
Question Manufacturing overheads represents all costs incurred in the factory including direct
material cost and direct labour cost.
Your Answer False
Select The Blank

Question In order to rectify the totaling mistake, wherein the sales return ledger was undercast by
Rs.2,000/-, the suspense account should be ________ with Rs.2,000/-
Correct Answer Credited
Your Answer Adjusted
True/False
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
Select The Blank

Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of
safety will be Rs.________.
Correct Answer 100,000/-
Your Answer 100,000/-
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.
Your Answer False
True/False
Question In marginal costing, decisions are guided by profit rather than contribution margin.
Your Answer False
Correct Answer Production facilities , Product mix of the company , Sales volume
Your Answer Production facilities , Product mix of the company , Sales volume
True/False
Question The bin card and stores ledger, being independent records, comparison of these two
records should be avoided.
Your Answer False

Question Material price variance for a job is Rs.800/- (Favourable). Actual quantity of material
used is 100 kg where as the standard quantity of material is 120% of actual quantity. Actual price
paid for the material is 80% of the standard price. Calculate material cost variance.
Correct Answer Rs.1,600/- (Favourable)
Your Answer Rs.1,600/- (Favourable)
True/False
Question A very wide scope of Management Accounting is the limitation by itself.
Correct Answer True
Your Answer True
Select The Blank

Question The variance which denotes the variation in overhead recovery due to the budgeted
quantity of products being greater or less than actual production, is known as ________ variance.
Correct Answer Volume
Your Answer Volume
True/False
Your Answer True

Question Financial Accounting ______________
Correct Answer Designed to supply information for internal/ external uses. , Deals with the
Your Answer Designed to supply information for internal/ external uses. , Deals with the
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 Suspense account is closed automatically after rectification of all the errors.
Correct Answer True
Your Answer True

Question Management Accounting __________________.
Correct Answer Designed particularly for internal use only. , Looks forward in estimating the future
Your Answer Designed particularly for internal use only. , Looks forward in estimating the future
True/False
Question While preparing the labour cost budget, factors such as overtime working or night shift
working may be ignored.
Your Answer False
Select The Blank


Question Accounting is the art of ______________,____________ and ____________ in a
significant manner and in terms of money transactions and events which are of a financial character
and interpreting the res
Correct Answer Summarizing , Classifying , Recording
Your Answer Summarizing , Classifying , Recording
True/False
Correct Answer True
Your Answer True
Match The Following

Liabilities All the amount owed by the business All the amount owed by the business
Drawing Withdrawn for personal use Withdrawn for personal use
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
Select The Blank

Question Excess direct labour wages will be disclosed by 'Direct labour ________ variance'.
Correct Answer Rate
Your Answer Usage
Select The Blank

Question Income Tax Act, recognize only one method of depreciation namely ________.
Correct Answer Written down value method
Your Answer Written down value method


Question Interest on bank loan, was paid till the quarter ending 30th September, 2003,
Rs.36,000/-. Find the amount to be debited to the profit and loss account for the year ending on 31st
March, 2004, assuming the loan is not yet repaid as on this date.

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 Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of
India. On 31st January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-;
Current account Rs.2,250/- (overdraft). It is found that a deposit of Rs.1,500/- made into the savings
account on 20th January, 2004 has been entered in the ledger in the of Current account. Find the
correct ledger balances of savings and current accounts.
Correct Answer Savings account-Rs.6,500/-, current account-Rs.3,750/- (overdraft)
Your Answer Savings account-Rs.5,000/-, current account-Rs.3,750/- (overdraft
Select The Blank

known as ________.
Your Answer Budget

Question A worker completes a job in a certain number of hours. The standard time allowed for
the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate, a bonus
of Rs.20/- under Halsey plan. Find out his total earnings under the Rowan plan.
Your Answer Rs.70/-

True/False
Question Error of commission refer to a situation where a transaction is not recorded in the books
of account.
Your Answer False
True/False
Question All costs are controllable.
Your Answer False
True/False
Correct Answer True
Your Answer True
Match The Following


Question Features of convention of materiality are :-
Correct Answer Transactions having material impact on profitability should be considered ,
Your Answer Transactions having material impact on profitability should be considered ,

Question Following are the examples of service cost centre :-
Correct Answer Stores department , Transport department , Accounting department
Your Answer Stores department , Transport department , Accounting department
True/False
Question Receipts and payments method of cash budget is useful for preparing long term
estimates.
Your Answer False

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

Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit
of finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering
cost is Rs.120/- per order and the holding cost is 10% per annum. If the company places each order
for 2,000 units due to financial constraints, what is the extra annual cost?
Your Answer Rs.80/-
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
Your Answer True

Question The disadvantages of time rate system are :-
Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to
increase productivity
Your Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase
productivity
Select The Blank

________.
Select The Blank
Question ________ is an example of intangible asset.
Correct Answer Goodwill
Your Answer Goodwill
True/False
Correct Answer True
Your Answer True

Question Select the transactions which can be entered in the Journal proper :-
Correct Answer Opening entries , Closing entries , Rectification entries
Your Answer Opening entries , Closing entries , Rectification entries

Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one
product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual
break even point.
Select The Blank

Question In case of seasonal industry, the budget period may be taken as ________.
Correct Answer One season
Your Answer One season
Select The Blank

Question The process of attributing proportions of items of costs amongst cost centres is called
________.
Correct Answer Cost apportionment
Your Answer Cost apportionment

Question Which system can assist in fixing a common selling price for the industry as a whole on
the basis of cost of production of all units belonging to that industry?
Correct Answer Uniform costing
Your Answer Uniform costing
Select The Blank

Question Angle formed by the intersection of total cost line and sales line is called angle of
________.
Correct Answer Incidence
Your Answer Incidence
Question Which of the following transactions fall within the definition of the 'standing instruction'?
Correct Answer Club membership subscription
Your Answer Club membership subscription

Question In a certain factory, three products are made from different materials by similar process.
For a typical period, production costs are as under : Product A : material used Rs.1,600/-; direct
labour cost Rs.1,200/-; overheads Rs.800/-. Product B : material used Rs.2,000/-; direct labour cost
Rs.1,000/-; overheads Rs.400/-. Product C : material used Rs.800/-; direct labour cost Rs.400/-;
overheads Rs.160/-. What is the basis used for charging the overheads to these products?
Correct Answer Percentage of direct material cost
Your Answer Percentage of prime cost

Question The statement, mainly applicable to company form of organization, which discloses the
manner in which the profit after tax is distributed is known as:
Correct Answer Profit & Loss Account Appropriation Account
Your Answer Profit & Loss Account Appropriation Account
True/False
Question Deferred revenue expenditure written off account is a real account.
Your Answer False

Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and
earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of
Rs.75,000/-. You are required to calculate the margin of safety for the first month.
True/False
Question Budgetary control system provides a basis for establishment of the incentive systems.
Correct Answer True
Your Answer True
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
Select The Blank

Question The cash flow format is used for preparing the cash budget by the ________ method.
Correct Answer Adjusted Profits/Losses
Your Answer Receipts and Payments

Question Select the steps to be followed while preparing bank reconciliation statement :-
Correct Answer Compare the transactions in the bank book and the pass book , Check the totals
tallying
Your Answer Compare the transactions in the bank book and the pass book , Check the totals
tallying

Question XYZ Ltd. is selling 50,000 units of a product at Rs.40/- per unit. Variable cost is Rs.25/-
per unit and fixed cost is Rs.200,000/-. The producer can increase sales volume by 20% by reducing
the price by 10%. Do you recommend reduction in price? What will be profit if this action in
undertaken?
Correct Answer No; Revised profit Rs.460,000/-
Your Answer No; Revised profit Rs.460,000/-
True/False
Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement
the Uniform costing system.
Your Answer True

Question The store-keeper should initiate action for the purchase of a material, when it reaches its
:-
Correct Answer Re-order level
Your Answer Re-order level

Your Answer Establishment of plans , Computation of profit , Comparison of actual and planed
performance


Question State the features of these transactions : (i) Commission paid Rs.250/- was posted twice
to Commission account (ii) Rs.5,000/- representing goods sold to A, was posted to the credit to
commission received account (iii) Sold machine for Rs.8000/-, was credited to Sales account.
Correct Answer The debit side of the trial balance will be in excess by Rs.250/- , Involves an error
Your Answer The debit side of the trial balance will be in excess by Rs.13,250/- , Involves an error

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

Question The assets which are supposed to be used by the organization to do business, are
known as ________assets.
Correct Answer Fixed
Your Answer Fixed
Match The Following

Total cost - Fixed cost Variable cost Variable cost
Contribution - Fixed cost Profit Profit
Total cost + Profit Sales Sales
Fixed cost + Variable cost Total cost Total cost
Select The Blank

Question A trading concern will have only ________ overheads and selling overheads.
Correct Answer Administration
Your Answer Administration
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

Correct Answer Product mix of the company , Sales volume , Production facilities
Your Answer Product mix of the company , Sales volume , Production facilities
Match The Following

Labour hour method of absorption of overheads Not affected by output related remuneration
schemes Not affected by output related remuneration schemes
Percentage of direct material cost methods of absorption of overheads Useful when prices of
materials are fairly stable Useful when prices of materials are fairly stable
Percentage of direct labour cost methods of absorption of overheads Useful when ratio of skilled and
unskilled labour remains constant Useful when ratio of skilled and unskilled labour remains constant
Percentage of prime cost methods of absorption of overheads Useful when there are no wide
fluctuations in processing Useful when there are no wide fluctuations in processing

Question The objects of cost accountancy are :-
Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information
Your Answer To ascertain cost and profitability , Cost Control , Presentation of Information

Question Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is
Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a.,
what will be the amount of capital of each of the partners as on 31st March, 2004, assuming there
were no additions during this period? Also, state the treatment of this item in the Profit and loss
account.
Correct Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital
should be debited to the Profit and loss account
Your Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital should
be credited to the Profit and loss account

Question Features of convention of consistency are :-
Correct Answer The accounting policies and procedures should be followed consistently ,
Facilitates the comparison of financial statements , It facilitates comparison of financial statements
on period-to-period basis
Your Answer The accounting policies and procedures should be followed consistently , Facilitates
the comparison of financial statements , It facilitates comparison of financial statements on period-to-
period basis
Select The Blank

Question Retirement from the service is an ________ cause of labour turnover.
Correct Answer Unavoidable
Your Answer Unavoidable

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.
Your Answer Rs.29.98

Question Which of the following information is included in the goods received note?
Correct Answer Date of receipt of material , Quantity received , Description of goods
Your Answer Date of receipt of material , Quantity received , Description of goods
Select The Blank

Question Non-trading income is disclosed on the credit side of ________ account.
Correct Answer Profit and loss
Your Answer Profit and loss appropriation
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
Your Answer True

Question Which of the following is a valid classification of the salary paid to the foreman in charge
of the packing department?
Correct Answer Direct product cost
Your Answer Direct product cost
True/False
Question A journal entry is passed for trade discount, but no entry is passed for cash discount.
Your Answer False
Select The Blank

Your Answer Higher

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
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

Question A lathe machine was purchased on 31st March, 2004 for Rs.65,000/-, however it was
installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of
depreciation charge for the said lathe machine for the year ended 31st March, 2004.
Correct Answer Nil
Your Answer Nil
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 The actual loss incurred by a company, due to fire, is the extent of difference between
the cost of goods destroyed and the amount of claim settled by the insurance company.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True

Question The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank
pass book balance as on the same date was Rs.8,015/-. Select the transactions representing the
reasons for this difference.
Correct Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/-
, Bank interest not entered in the bank book Rs.90/-
Your Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/- ,
Bank interest not entered in the bank book Rs.90/-
Select The Blank

Question As per the provisions of Section 209 of ________, all the company form of organization
is legally required to follow the mercantile or accrual system of accounting.
Correct Answer The Companies Act, 1956
Your Answer The Companies Act, 1956
Select The Blank
________.
True/False
Question Financial Accounting discloses the financial performance & financial statements of the
business as a whole.
Correct Answer True
Your Answer True
Select The Blank

Question A standard that is never altered, after being established, is known as ________
standard.
Correct Answer Ideal
Your Answer Basic
Select The Blank

Question Copy of a firm's account in the bank's ledger is known as ________.
Correct Answer Bank statement
Your Answer Bank book
Select The Blank

Question Normally, the planning for dividend payments and interest payments is based on the
________ budget.
Correct Answer Cash
Your Answer Income

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Management Accounting-Set 10

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Multiple Choice Single Answer

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Match The Following

Drawing Withdrawn for personal use Withdrawn for personal use

Ledger Maintain all types of Accounts Maintain all types of Accounts

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Match The Following

Book-Keeping Books of Accounts Books of Accounts

Accounting Process of analyzing & interpretation Process of analyzing & interpretation

Balance-sheet Financial status Financial status

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Select The Blank

Match The Following

Total cost - Fixed cost Variable cost Variable cost

Contribution - Fixed cost Profit Profit

Total cost + Profit Sales Sales

Fixed cost + Variable cost Total cost Total cost

Select The Blank

Multiple Choice Multiple Answer

Match The Following

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