Management Accounting Solved MCQs

Management Accounting MCQs [set-29]
701. A document which provides for the detailed cost centre and cost unit
is _______.
A. Tender
B. Cost Sheet
C. Invoice
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D. Profit Statement
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Answer: B
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702. An indirect setup labor costs, costs of setup and equipment
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maintenance and costs of indirect material can be categorized as
A. Variable batch costs

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B. Fixed batch costs
C. Variable setup costs
D. Fixed setup costs
Answer: C
703. To establish an effective system of standard costing it is essential that

1) The technical process of operation should be prone to planning
2) The cost of the products should be given
3) The process or operating costs of products should be provided
4) The standard costing should be consistent with the technical procedure
of the production of the specific entity
A. A, B and C
B. A, C and D
C. B, C and D
D. D, C and A
Answer: B
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704. An officer responsible for financial operations of organization is
considered as
A. Chief financial officer
B. Chief manager
C. Chief line function
D. Chief staff function
Answer: A
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705. Which of the following are the assumptions of marginal costing?
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a
1) All the elements of cost can be divided into fixed and variable
components.
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2) Total fixed cost remains constant at all levels of output.
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3) Total variable costs vary in proportion to the volume of output.
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4) Per unit selling price remain unchanged at all levels of operating
activity.
A. A and B
B. B and C
C. A and D
D. A, B, C and D
Answer: D
706. Factory overhead is Rs 3,00,000 and direct material cost is Rs

5,00,000 What is the overhead rate under direct material cost method?
A. 25%
B. 30%
C. 60%
D. 75%
Answer: C

707. The cost per unit of a product manufactured in a factory amounts to
Rs 160 (75% variable) when the production is 10,000 units. When
production increases by 25%, the cost of production will be Rs per unit.
A. Rs 145
B. Rs 150
C. Rs 152
D. Rs 140
Answer: C
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708. In master budgeting, the cost drivers for manufacturing overhead
costs are a
q M
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A. Direct manufacturing labour-hours
B. Setup labour-hours
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C. Budgeted labour-hours
D. Both 1 and 2
Answer: D
709. Which of the following is incorrect about the statement of cash flows?
A. It provides information about the cash receipt and cash payments of an enterprise.
B. It reconciles ending cash balance with the balance as per bank statement.
C. It provides information about the operating, investing and financing activities.
D. It explains the deviation of cash from Earnings.
Answer: B
710. If break-even number of units are 120 units and the fixed cost is
$62000, then the contribution margin per unit will be
A. $74,400
B. $7,440,000

C. $516.67
D. $51,667
Answer: C
711. Cash flow example from an operating activity is
A. Purchase of Own Debenture
B. Sale of Fixed Assets
C. Interest Paid on Term-deposits by a Bank

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D. Issue of Equity Share Capital
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Answer: C
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712. During the month of December actual direct labour cost amounted to
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$39,550, the standard direct labour rate was $10 per hour and the direct
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labour rate variance amounted to $450 favourable. The actual direct labour
hours worked were:
A. 3,955 hours
B. 4,000 hours
C. 3,910 hours
D. 4,500 hours
Answer: B
713. Batch Costing is useful in determining:
A. Maximum Quantity of output
B. Minimum Quantity of output
C. Economic Batch Quantity
D. Profit of Batches
Answer: A

714. Overhead Cost is the total of
A. All Direct Cost
B. All Indirect Cost
C. All Specific Cost
D. All Indirect and Direct Cost
Answer: B
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715. Regal Industries is replacing a grinder purchased 5 years ago for
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$15,000 with a new one costing $25,000 cash. The original grinder is being
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depreciated on a straight-line basis over 15 years to a zero-salvage value.
a
Regal will sell this old equipment to a third party for $6,000 cash. The new
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equipment will be depreciated on a straight-line basis over 10 years to a
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zero-salvage value. Assuming a 40% marginal tax rate, Regal’s net cash
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investment at the time of purchase if the old grinder is sold and the new
one purchased is
A. $19000
B. $15000
C. $17400
D. $25000
Answer: C
716. The Moore Corporation is considering the acquisition of a new

machine. The machine can be purchased for $90000; it will cost $6000 to
transport to Moore’s plant and $9,000 to install. It is estimated that the
machine will last 10 years, and it is expected to have an estimated salvage
value of $5,000. Over its 10-year life, the machine is expected to produce
2,000 units per year, each with a selling price of $500 and combined
material and labour costs of $450 per unit. Federal tax regulations permit
machines of this type to be depreciated using the straight-line method
over 5 years with no estimated salvage value. Moore has a marginal tax
rate of 40%. What is the net cash flow for the tenth year of the project that
Moore Corporation should use in a capital budgeting analysis?

A. $100000
B. $91000
C. $68400
D. $63000
Answer: D
717. An annual report is issued by company to its :
A. Directors
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B. Auditors
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C. Shareholders
a
D. Management
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Answer: C
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718. Which of the following statement is correct ?
A. Assets = Liabilities + Shareholders funds
B. Assets = Total funds
C. Assets = Funds of outsiders
D. None of the above
Answer: A
719. The process of budgeting includes
A. Preparation of budget
B. Budget Control
C. Budget co-ordination
D. All of the above
Answer: D

720. The labour engaged in the making of a product is known as _______
A. Direct labour
B. Indirect labour
C. Temporary labour
Answer: A
721. Cash from Operations is equal to: o m

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A. Net Profit plus increase in outstanding Expensese
a
B. Net Profit plus increase in Debtors
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C. Net Profit plus increase in Stock
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D. Net Profit
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Answer: A
722. Margin of safety can be increased by
A. Decrease in setting price
B. Decline in volume of production
C. Reduction in fixed or the variable costs or both
Answer: C
723. When profit-volume ratio is 40 % and sales value Rs.10,000, the

variable costs will be :
A. Rs. 4,000
B. Rs. 6,000
C. Rs. 10,000
D. None of these
Answer: B

724. Determine B.E.P in units and amount if Units produced if Rs 10,000,
Fixed cost is Rs 40,000, Selling price is Rs 50 per unit and Variable cost us
Rs 30 per unit.
A. Rs 40 per unit, Rs 2,00,000
B. Rs 50 per unit, Rs 10,00,000
C. Rs 20 per unit, Rs 1,00,000
Answer: C
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e ratio is 60%, the profit will be :
725. When margin of safety is 20% andtP/V
a
A. 30%
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B. 33 1/3 % c
C. 12%
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D. None of these
Answer: C

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676. Profit-Volume ratio is also known as
A. Contribution ratio
B. Contribution/Sales ratio
C. Marginal Income percentage
D. All of the above

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Answer: D
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677. Which of the following statements are true?
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A. P/V Ratio can never be used to measure break-even point
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B. Higher the P/V ratio less will be the profit and vice versa
C. Concept of P/V ratio is also used to determine profit at a given volume of sales
D. All of the above
Answer: C
678. The P/V ratio can be improved by
A. Decreasing the selling price per unit
B. Increasing variable cost
C. Changing the sales mix
Answer: C
679. P/V ratio can be calculated on the basis of variable cost ratio as
A. 1 - Variable Cost Ratio
B. 1 + Variable Cost Ratio

C. 1/Variable Cost Ratio
Answer: A
680. Sales for desired profit is measured as
A. (Fixed cost + profit)/ (P/V Ratio)
B. (Fixed cost + profit) * (P/V Ratio)
C. (Fixed cost - profit)/ (P/V Ratio)

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Answer: A
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681. Margin of safety is equal to q M
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A. Actual sales – Sales at Breakeven point
B. Actual sales + Sales at Breakeven point
C. Actual sales x Sales at Breakeven point
D. Actual sales / Sales at Breakeven point
Answer: A
682. Angle of incidence is the angle at which
A. Total revenue line intersects the total cost line
B. Total cost line intersects the variable cost line
C. Variable cost line intersects fixed cost line
D. Fixed cost line intersects total revenue line
Answer: A
683. Direct material cost + direct labor cost + other variable costs is equal
to…
A. Contribution

B. Total cost
C. Marginal cost
D. Sales
Answer: A
684. The factor which limits the volume of output of different products of
an understanding at a particular point of time is known as…
A. Key factor
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B. BEP
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C. Contribution
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D. None
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Answer: A
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685. The break even chart helps the management in…
A. Forecasting costs and profits
B. Cost control
C. Long term planning and growth
D. All of the above
Answer: D
686. In management accounting, an emphasis and focus must be
A. Past oriented
B. Future oriented
C. Bank oriented
D. Communication oriented
Answer: B

687. In financial accounting, investors, banks, suppliers and government
agencies are classified as
A. External parties
B. Internal parties
C. Environmental parties
D. Transactional parties
Answer: A
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688. If the actual output is more than the budgeted output, volume
variance is
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a
A. Favourable
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B. Non-favourable c
C. No impact M
Answer: A
689. To get to labour efficiency variance, the formula to be applied is
A. Total standard labour cost of actual output - Total actual cost of actual output
B. (Standard rate per hour - Actual rate per hour) * Actual Hours
C. (Standard time - Actual time) * Standard rate per hour
D. Abnormal idle hours * Standard hourly rate
Answer: C
690. Which of the following is technique of financial statement analysis?
A. Common?size statement
B. Comparative statement
C. Trend analysis

D. All
Answer: D
691. For calculating trend percentages any year is selected as:
A. Current year
B. Previous year
C. Base year
D. None of these
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Answer: C
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a and those of 101 units is Rs. 5030
692. If total cost of 100 units is Rs 5000
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then increase of Rs. 30 in total costMis
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A. Marginal cost
B. Prime cost
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C. All Fixed overheads
Answer: A
A. In absorption costing, cost is divided into three major parts while in marginal costing cost is
divided into two main parts.
B. In absorption costing period is important and in marginal costing product is important.
C. Both a and b
Answer: C
694. In case of other enterprises cash flow arising from interest paid
should be classified as cash flow from ________ while dividends and
interest received should be stated as cash flow from ____.

A. Operating activities, financing activities
B. Financing activities, investing activities
C. Investing activities, operating activities
Answer: B
695. Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs

20,000.
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A. Rs 60,000
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B. Rs 70,000
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C. Rs 30,000
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Answer: C
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696. Which of the below is an Accounting Concept
A. Materiality
B. Separate Legal Entity
C. Consistency
D. Conservatism
Answer: B
697. The Carl Care Company established the following direct labour cost
standards for one unit of product Z:
•Standard hours: 1.5 hours
•Standard rate: $20 per hour
•Standard cost: $30 (1.5 hours @ $20 per hour)
During the month of July, 20,000 direct labour hours were worked, and
12,500 units of
product Z were manufactured. The total wages related to direct labour in
July were
$405,000. The direct labour rate variance for July was:

A. $5,000 unfavourable
B. $5,000 favourable
C. $30,000 favourable
D. $30,000 unfavourable
Answer: A
698. Which of the following is an example of Semi-Variable Costs
A. Salary
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B. Tax
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C. Telephone Expenses
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D. Office Expenses
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Answer: C
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699. Long Term Solvency is indicated by:
A. Current Ratio
B. Debt / Equity Ratio
C. Net Profit Ratio
D. Gross Profit Ratio
Answer: B
700. A department makes a product whose contribution per unit is £1,000,

and which takes 20 hours machine time. A component used in this product
with a marginal cost of £300 (taking 5 hours of machine time) could be
purchased from an external supplier. The department is working at full
capacity. What is the maximum price that the company may pay to buy the
component from an external supplier?
A. £550
B. £500
C. £575

D. £600
Answer: A
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651. Sales margin variance due to sales quantities is measured as
A. Standard profit - Revised standard profit
B. Revised standard profit - Budgeted profit
C. Standard profit + Revised standard profit
D. Revised standard profit + Budgeted profit

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Answer: B
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652. .Which of the following statements are true about labor idle time?
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A. Labour idle time variance is not caused by non-availability of raw material
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B. Labour idle time variance is measured as : Abnormal idle hours * Actual hourly rate
C. Labour idle time variance is always unfavorable or adverse
D. All of the above
Answer: C
653. The formula used for calculation of labor rate variance is
Answer: B
654. Idle time variance arises when
A. Only one grade of labour is used
B. Time is lost due to abnormal reasons

C. Both a and b
Answer: C
655. Material price, mix, usage and revised quantity variances are
measured on _______ basis, whereas material yield variance is measured
on _______ basis.
A. Output, Input
B. Output, Output
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C. Input, Output
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D. None of the above a
Answer: C
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656. Marginal cost is computed as M
A. Prime cost + All Variable overheads
B. Direct material + Direct labour + Direct Expenses + All variable overheads
C. Total costs – All fixed overheads
D. All of the above
Answer: A
657. Marginal costing is also known as Direct costing
A. Variable costing
B. Both a and b
C. None of the above
D. none
Answer: C

(a) Marginal costing is not an independent system of costing.

(b) In marginal costing all elements of cost are divided into fixed and
variable components.
(c) In marginal costing fixed costs are treated as product cost.
(d) Marginal costing is not a technique of cost analysis.
A. A and B
B. B and C
C. A and D
D. B and D
Answer: A
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659. While computation of profit in marginal
a
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A. Total marginal cost is deducted from total sales revenues
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B. Total marginal cost is added to total sales revenues
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C. Fixed cost is added to contribution
Answer: A
660. Under High and Low Point method, the output at two different levels
is compared with the amount of __________ incurred at these two points.
A. Total fixed costs
B. Total costs
C. Total fixed costs
Answer: B
661. Which of the following statements related to Contribution Analysis

are ture?
A. If contribution is zero, there is loss equal to fixed costs
B. If contribution is negative, loss is less than fixed costs

C. If contribution is positive and more than fixed cost there will be profit.
D. All of the above
Answer: A
662. When contribution is negative but less than fixed cost,
A. There is loss equal to fixed costs
B. There is loss more than fixed costs
C. There will be loss less than fixed costs

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D. All of above are false
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Answer: C
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663. When contribution is positive but equal to fixed cost,
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A. There is loss equal to fixed costs
B. There is loss more than fixed costs
C. There will be loss less than fixed costs
D. There will be neither profit not loss
Answer: D
664. Absorption costing is also known as
A. Historical costing
B. Total costing
C. Both a and b
Answer: C
665. In context of net operating profit, which of the following statements

are true?

A. If all costs are variable, the amount of profit obtained in marginal costing and absorption costing
will be same.
B. If the volume of sales and output is equal in a period, profit will be same in absorption costing
and marginal costing.
C. Both a and b
Answer: C
666. Under absorption costing, managerial decisions are based on

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A. Profit
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B. Contribution
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C. Profit volume ratio
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Answer: A M
667. Managers utilizes marginal costing for
A. Make or buy decision
B. Utilization of additional capacity
C. Determination of dumping price
D. All of the above
Answer: D
668. ___________ is not suitable where selling price is determined on the

basis of cost-plus method.
A. Absorption costing
B. Marginal costing
C. Both a and b
Answer: B

669. Which of the following are characteristics of B.E.P?
A. There is no loss and no profit to the firm.
B. Total revenue is equal to total cost.
C. Contribution is equal to fixed cost.
D. All of the above.
Answer: D
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670. Which of the following are limitations of break-even analysis?
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A. Static concept
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B. Capital employed is taken into account.
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C. Limitation of non-linear behaviour of costs
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D. Limitation of presence of perfect competition
Answer: A
671. Using equation method, Break-even point is calculated as
A. Sales = Variable expenses + Fixed expenses + Profit
B. Sales = Variable expenses + Fixed expenses - Profit
C. Sales = Variable expenses - Fixed expenses + Profit
Answer: A
672. Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and
fixed cost is Rs 5,000. What is break-even point?
A. 500 units
B. 1,000 units
C. 1,250 units
Answer: C

673. Contribution is also known as
A. Contribution margin
B. Net Margin
C. Both a and b
Answer: A
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674. Determine Contribution if Sales is Rs 1,50,000
.
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A. Rs 60,000
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B. Rs 70,000
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C. Rs 30,000
c
D. None of the above M
Answer: A
A. Contribution doesn’t include fixed cost whereas profit includes fixed cost.
B. Contribution is not based on the concept of marginal cost.
C. Contribution above breakeven point becomes profit.
D. All of the above
Answer: C

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626. The form of balance sheet is
A. Vertical
B. Horizontal
C. Horizontal and vertical
D. Horizontal or vertical
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Answer: D
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627. The term current asset doesn’t cover
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A. Car c
B. Debtors
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C. Stock
D. Prepaid expenses
Answer: A
628. A budgeting process which demands each manager to justify his

entire budget in detail from beginning is
A. Functional budget
B. Master budget
C. Zero base budgeting
Answer: C
629. Match the columns

(i) Activity Ratio -------------------- i) (Actual hours worked / Budgeted hours) *
100
(ii) Capacity Ratio ------------------ ii) (Standard hours of actual production /

Actual hours worked) * 100
(iii) Efficiency Ratio ----------------- iii) (Standard hours for actual output /
Budgeted hours) * 100
A. A-ii, B-iii, C-i
B. A-i, B-ii, C-iii
C. A-iii, B-i, C-ii
Answer: C
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630. While preparing sales budget, which of the following factors are
considered?
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A. Non-operational factors
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B. Environmental factors
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C. Both a and b M
Answer: B
631. _______ provides an estimate of the capital amount that may be

required for buying fixed assets needed for meeting production
requirements.
A. Production budget
B. Cash budget
C. Capital expenditure budget
Answer: B
632. Plant utilization budget and Manufacturing overhead budgets are

types of
A. Production budget

B. Sales budget
C. Cost budget
Answer: C
633. _______ is designed after assessment of the volume of output to be

produced during budget period.
A. Cost budget
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B. Sales budget
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C. Production budget
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Answer: A
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634. ________ is the first step of budgetary system and all other budgets
depends on it.
A. Cost budget
B. Sales budget
C. Production budget
Answer: B
635. _______also known as subsidiary budgets.
A. Master budget
B. Functional budget
C. Cost budget
Answer: B
636. _________ is stated as a budget which is made to change as per the

levels of activity attained.
A. Fixed budget
B. Flexible budget
C. Both a and b
Answer: B
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637. _______ is prepared for single level of activity and single set of
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A. Fixed budget
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B. Flexible budget a
C. Both a and b q M
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Answer: A
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638. The process of budgeting helps in the control of
A. Cost of production
B. Liquidity
C. Capital Expenditure
D. All of the above
Answer: D
639. Which of the following statements are not true about budget,
budgeting & budgetary control?
A. Budgetary control works on the basis of best option
B. Budget is one of the important mediums of communication
C. Budgeting develops the quality of objectivity in planning
Answer: D

640. Which of the following statements are true about responsibility
accounting?
A. Responsibility accounting results in inter-departmental conflicts
B. In responsibility center more focus is paid on products, processes or jobs
C. No focus is paid on controlling costs
Answer: A
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641. In profit center revenue represents a monetary measure of output
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emanating from a profit center in a given period irrespective whether
A. The revenue is realized or not

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B. The output is sold or not c
C. Both a and b
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Answer: C
642. Contribution margin center is also known as
A. Expense center
B. Profit center
C. Investment center
D. (All of the above
Answer: B
643. Which of the following is responsibility center?
A. Expense center
B. Profit center
C. Investment center

D. All of the above
Answer: D
644. The responsibility centers, for control purposes, may be classified

into _____ types.
A. Five
B. Three
C. Four
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Answer: B
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645. The area of focus on responsibility center is
c
A. Quantum of sales
B. Quantum of production
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C. Optimum utilization of resources
D. All of the above
Answer: C
646. In responsibility cost accounting the costs in focus are
A. Controllable costs
B. Uncontrollable costs
C. Both a and b
Answer: A
647. The term standard cost refers to the:
A. average unit cost of product produced in the previous period
B. budgeted unit cost of product produced in a particular period

C. average unit cost of product produced by other companies
D. average unit cost of product produced in the current period
Answer: B
648. The sub-variance of material usage variance, known as Material mix

variance is measured as
A. Total standard cost - Total actual cost
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B. Standard cost of revised standard mix - Standard cost of actual mix
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C. Standard unit price - Actual unit price) * Actual quantity used
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D. Standard quantity - Actual quantity) * Unit standard price
a
Answer: B
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649. Volume variance arises when
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A. There is rise in overhead rate per hour
B. There is decline in overhead rate per hour
C. There is decrease or increase in actual output compared to the budgeted output
Answer: C
650. The corrective actions after the analysis of variances has to be taken
by
A. Cost accountant
B. Management
C. Both a and b
Answer: B

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601. The objectives of Cash Flow Statement are (i) Analysis of cash
position
(ii) Short-term cash planning
(iii) Evaluation of liquidity
(iv) Comparison of operating Performance
A. Both A and B
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B. Both A and C
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C. Both B and D
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D. A, B, C, D
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Answer: D
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602. Cash Flow Statement is based upon
A. Cash basis of accounting
B. Accrual basis of accounting
C. Credit basis of accounting
Answer: A
603. As per Accounting Standard-3, Cash Flow is classified into
A. Operating activities and investing activities
B. Investing activities and financing activities
C. Operating activities and financing activities
D. Operating activities, financing activities and investing activities
Answer: D

604. Which of the following is not a cash outflow?
A. Increase in Prepaid expenses
B. Increase in debtors
C. Increase in stock
D. Increase in creditors
Answer: D
605. Which of the following is not a cash inflow? o m

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A. Decrease in debtors
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B. Issue of shares
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C. Decrease in creditors
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D. Sale of fixed assets
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Answer: C
606. When a fixed asset is bought as hire purchase, interest element is

classified under ______ and loan element is classified under________.
A. Operating activities, financing activities
B. Financing activities, investing activities
C. Investing activities, operating activities
Answer: B
607. In the case of financial enterprises, the cash flow resulting from
interest and dividend received and interest paid should be classified as
cash flow from
A. Operating activities
B. Financing activities
C. Investing activities

Answer: A
608. As per AS-3, Cash Flow Statement is mandatory for

(a) All enterprises
(b) Companies listed on a stock exchange
(c) Companies with a turnover of more than Rs 50 crores
A. Both A and B
B. Both A and C
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C. Both C and B
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Answer: C
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609. Cash outflow on purchases is calculated by
A. Purchases + Opening Creditors + Opening B/P – Closing Creditors - Closing B/P
B. Purchases + Opening Creditors - Closing Creditors + Closing B/P
C. Purchases - Opening Creditors - Opening B/P + Closing Creditors + Closing B/P
Answer: A
610. While preparing Cash Flow Statement, non-cash items and non-
operating items are not required to be adjusted under________
A. Indirect method
B. Direct method
C. Both a and b
Answer: B
611. Cash Flow Statement is prepared from

A. Profit and loss account
B. Balance Sheet
C. Additional Information
D. All of the above
Answer: D
612. When the concept of ratio is defined in respected to the items shown
in the financial statements, it is termed as
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A. Accounting ratio
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B. Financial ratio
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C. Costing ratio
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Answer: A
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613. Profit for the objective of calculating a ratio may be taken as
A. Profit before tax but after interest
B. Profit before interest and tax
C. Profit after interest and tax
D. All of the above
Answer: D
614. Which of the following falls under Profitability ratios?

(a) General Profitability ratios
(b) Overall Profitability ratios
(c) Comprehensive Profitability ratios
A. A and B
B. A and C
C. B and C
Answer: A

615. Gross Profit ratio is also termed as
A. Gross Profit Margin
B. Gross Margin to net sales
C. Both a and b
D. All of the above
Answer: C
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616. Operating ratio is calculated by
.c
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A. (Operating Cost/Gross sales)*100
a
B. (Operating Cost/Gross sales)*100
q M
C. (Operating cost/Net sales)*100
c
Answer: C
617. Which of the following is expenses ratio?

(a) Administrative expenses ratio
(b) Selling and Distribution expenses ratio
(c) Factory expenses ratio
(d) Finance Expenses ratio
A. A, B and D
B. A, C and D
C. A, B and C
D. A, B , C, D
Answer: D
618. Return on equity capital is calculated on basis of:
A. Funds of equity shareholders
B. Equity capital only

C. Either a or b
Answer: C
619. Turnover ratios are also known as
A. Activity ratios
B. Performance ratios
C. Both a and b
o m
.c
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Answer: C
a
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620. Debtors Turnover ratio is also known as
(a) Receivables turnover ratio c
(b) Debtors velocity M
(c) Stock velocity
(d) Payable turnover ratio
A. A and B
B. A and C
C. B and C
D. C and D
Answer: A
621. Liquid assets is determined by
A. Current assets-stock-Prepaid expenses
B. Current assets +stock+ prepaid expenses
C. Current assets +Prepaid expenses
Answer: A

622. Comparison of financial statements highlights the trend of the
_________ of the business.
A. Financial position
B. Performance
C. Profitability
D. All of the above
Answer: D
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623. Analysis of any financial Statement comprises .c
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A. Balance sheet a
B. P&L Account
q M
c
C. Trading account
D. All of the above

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Answer: D
624. Which of the following are techniques, tools or methods of analysis

and interpretation of financial statements?
A. Ratio Analysis
B. Average Analysis
C. Trend Analysis
D. All of the above
Answer: D
625. Interpretation of accounts is the
A. Art and science of translating the figures
B. To know financial strengths and weaknesses of a business
C. To know the causes for the prevailing performance of business

D. All of the above
Answer: D
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a
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576. _________ Accounting becomes a source of information for

Management Accounting.
A. Financial
B. Cost
C. Both (A) and (B)

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.c
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Answer: A
a
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577. Profit and Loss Account debit side includes
c
A. Salary M
B. Discount allowed
C. Postage & telegram
D. All of the above
Answer: D
578. The following is (are) the indirect labour cost(s)
A. Wages paid to storekeeper
B. Salary of works manager
C. Wages paid to gatekeeper
D. All of the above
Answer: D
579. The term management accounting was first coined in
A. 1960

B. 1950
C. 1945
D. 1955
Answer: B
580. Management accounting is

(i) Subjective
(ii) Objective
A. Only (i)
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B. Only (ii)
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C. Both (i) and (ii) a
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Answer: A c
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581. The management accounting can be stated an extension of
(i) Cost Accounting
(ii) Financial Accounting
(iii) Responsibility Accounting
A. Both (i) and (ii)
B. Both (i) and (iii)
C. Both (ii) and (iii)
D. (i), (ii), (iii)
Answer: D
582. Which of the following is true about management accounting?

(i) Management accounting is associated with presentation of accounting
data.
(ii) Management accounting is extremely sensitive to investors needs.
A. Only (i)
B. Only (ii)

C. Both (i) and (ii)
Answer: A
583. Which of the following are tools of management accounting?

(i) Decision accounting
(ii) Standard costing
(iii) Budgetary control
(iv) Human Resources Accounting
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A. (i), (ii) and (iii)
.c
B. (i), (iii) and (iv)
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C. (i),(ii) and (iii)
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D. (i), (ii), (iii), (iv)
c
Answer: C
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584. Management accounting is related with
(i) The problem of choice making
(ii) Recording of transactions
(iii) Cause and effect relationships
A. (i) and (ii)
B. (ii) and (iii)
C. (i) and (iii)
D. All are false
Answer: C
585. Who coined the concept of management accounting?
A. R.N Anthony
B. James H. Bliss
C. J. Batty
D. American Accounting Association
Answer: B
586. Which of the following statements are false about management
accounting?
(i) Management accounting is concerned with historical events.
(ii) Management accounting is related only with such instances which can
be expressed in monetary terms.
(iii) Management accounting is a part of Financial Management
(iv) Management accounting information can be disclosed to outsiders.
A. (i), (ii) and (iii)
B. (i), (iii) and (iv)

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C. (i),(ii) and (iii) .c
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D. (i), (ii), (iii), (iv)
a
Answer: C
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587. Management accounting deals with
A. Quantitative information
B. Qualitative information
C. Both a and b
Answer: C
588. The definition ‘Management Accounting is the presentation of

accounting information in such a way as to assist management in the
creation of policy and the day-to-day operation of an undertaking.’
A. Anglo-American Council on Productivity
B. AICPA
C. Robert N. Anthony
D. All of the above
Answer: A

589. The prime function of accounting is to:
A. record economic data
B. provide the informational basis for action
C. classify and record business transactions
D. attain non-economic goals.
Answer: B
590. The basic function of management accounting is to: o m

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A. record all business transactions
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a
B. interpret the financial data
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C. assist the management in performing its functions effectively

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Answer: C
591. Management accounting involves
A. Preparation of financial statements
B. Analysis and interpretation of data
C. Recording of transactions
Answer: B
592. Management accounting provides invaluable services to management

in performing:
A. All management functions
B. Coordination functions
C. Controlling functions
D. Directing function
Answer: A

593. Cost accounting mainly helps the management in:
A. Earning extra profits
B. Providing information to the management for decision-making.
C. Fixing process of the products.
D. Selling products
Answer: B
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594. Variable cost per unit:
.c
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A. Remains fixed
a
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B. Fluctuates with the volume of production
q
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C. Varies in sympathy with ‘the volume of sales.

Answer: B
595. If the activity level increases 10%, total variable costs will
A. remain the same
B. increase by more than 10%
C. decrease by less than 10%
D. increase by10%
Answer: A
596. Opportunity cost helps in:
A. Ascertainment of cost
B. Controlling cost
C. Making managerial decisions
D. Fixing selling price
Answer: C

597. Conversion cost is the sum total of:
A. Direct material cost and direct wages cost
B. Direct wages, direct expenses and factory overheads
C. Indirect wages and factory overheads
D. Indirect wages , direct wages & factory overheads
Answer: C
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598. Fixed cost per unit increases when:
.c
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A. Production volume decreases
a
B. Production volume increases
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C. Variable cost per unit decreases
c
Answer: D
599. Cost behaviour analysis is a study of how a firm's costs
A. relate to competitors' costs
B. relate to general price level changes
C. respond to changes in activity levels within the company
D. respond to changes in the gross national product
Answer: C
600. Cash Flow Statement is also known as
A. Statement of Changes in Financial Position on Cash basis
B. Statement accounting for variation in cash
C. Both a and b
Answer: C

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501. For preparing an effective budget it needs accounting information

which is
A. Structured around the past data need of the management
B. Structured around the line communication needs of the management
C. Structured around financial needs of the management

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D. Structured around the planning and control needs of the management
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Answer: D
a
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502. Long period budgets are prepared under
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A. Receipts and payment method M
B. Balance sheet method
C. Adjusted profit and loss method
D. Receipts and payments, balance sheet method
Answer: D
503. A budget specifies the operations to be performed during the next

year is called __________
A. Operation budget
B. Responsibility budget
C. Activity budget
D. Flexible budget
Answer: C
504. The branch of accounting which primarily deals with processing and
presenting accounting data fro internal use is ________________

A. Cost accounting
B. Financial accounting
C. Management accounting
D. Inflation accounting
Answer: C
505. The term management accounting was used in
A. 1950
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B. 1939
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C. 1910
a
D. 1947
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Answer: A
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506. Management accounting is also known as _______________
A. Price level accounting
B. Historical accounting
C. Decision accounting
D. None of these
Answer: C
507. Which of the following is not a technique of management accounting
A. Budgetary control
B. Standard costing
C. Marginal costing
D. Process costing
Answer: D

508. Management accounting is helpful in increasing _______________
A. Performance
B. Profitability
C. Efficiency
D. Production
Answer: C
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509. Management accounting has a ___________ scope than cost
accounting .c
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A. Wider a
B. Narrower
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C. Smaller
D. None of these
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Answer: A
510. Management accounting helps in ___________ data
A. Analysis
B. Interpretation
C. Analysis and interpretation
D. None of these
Answer: C
511. Management accounting provides alternative choices for managerial

___________
A. Decisions
B. Policies
C. Uses

D. None of these
Answer: A
512. Publication of management accounting statements are

______________
A. Compulsory
B. Not optional
C. Optional
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D. None of these
.c
Answer: B
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513. Management accounting deals only with that information which is
useful to the ___________ c
A. Accountant
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B. Owners
C. Management
D. All of the above
Answer: C
514. The prime function of management accounting is to

-------------------------------
A. Interpret financial data
B. Assist the management in performing its functions
C. Record business transaction
D. None of these
Answer: B
515. Management accounting relates to ________

A. Recording of accounting data
B. Recording of costing data
C. Presentation of accounting data
D. None of these
Answer: C
516. Management accounting analyses accounting data with the help of

-------------------------
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A. Auditors
.c
B. Statutory forms
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C. Tools and techniques
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D. None of these
c
Answer: C
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517. Management accounting and cost accounting functions are
--------------------------
A. Neutral in effect
B. Complementary in nature
C. Contradictory in nature
D. None of these
Answer: B
518. Management accounting provides valuable services to management

in performing ____
A. Coordinating functions
B. Controlling functions
C. Planning functions
D. All managerial functions
Answer: D

519. Management accounting and financial accounting differ in that
management accounting information is prepared
A. following prescribed rules
B. using whatever methods, the company finds beneficial.
C. for shareholders.
D. to summarize the whole company with little detail.
Answer: B
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520. Management accounting is the branch of accounting concerned with
t
reporting to
a
A. internal managers.
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B. shareholders. c
C. the government
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D. bankers.
Answer: B
521. The use of management accounting is
A. Optional
B. Compulsory
C. Legally obligatory
D. Compulsory to some and optional to others
Answer: A
522. The management accounting can be stated an extension of A) Cost

Accounting B) Financial Accounting C) Responsibility Accounting
A. Both A and B
B. Both A and C c)

C. Both B and C
D. A,
Answer: D
523. Which of the following is true about management accounting? A)

Management accounting is associated with presentation of accounting
data. B) Management accounting is extremely sensitive to investors
needs.
A. Only A
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B. Only B
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C. Both A and B
a
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Answer: A
c
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524. Which of the following are tools of management accounting?
A) Decision accounting
B) Standard costing
C) Budgetary control
D) Human Resources Accounting
A. A, B and D
B. A, C and D
C. A, B and C
D. A, B , C, D
Answer: C
525. Management accounting is related with

A) The problem of choice making
B) Recording of transactions
C) Cause and effect relationships
A. A and B
B. B and C

C. A and C
D. All are false
Answer: C
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526. Management accountancy is a structure for
A. Costing
B. Accounting
C. Decision making
D. Management
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Answer: C
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527. The prime function of financial accounting is to
q
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A. Classify and Record the economic data
B. To achieve non-economic goals

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C. Provide information for control
D. None of the above.
Answer: A
528. If net profit is ? 50,000 after writing off goodwill ? 10,000 then the
Cash Flow from operating activities will be:
A. ? 60,000
B. ? 40,000
C. ? 50,000
D. ? 30,000
Answer: A

529. Net Profit during the year ? 1,00,000
Debtors in the beginning the year of ? 30,000
Debtors at the end of the year ? 36,000
What is the amount of Cash From Operating Activities?
A. ? 30,000
B. ? 94,000
C. ? 1,06,000
D. ? 1,66,000
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Answer: B
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530. Net Profit during the year ? 30,000
Creditors in the beginning ? 24,000
Creditors at the end ? 16,000 q
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c operating activities?
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What is the amount of cash from
A. ? 30,000
B. ? 34,000
C. ? 22,000
D. ? 40,000
Answer: C
531. Financing Activities bring changes in
A. Size and composition of owner equities
B. Borrowing of the enterprise
C. Both a and b
Answer: C
532. For year 2018 Equity Share Capital is Rs 3,00,000 Preference Share
Capital is Rs.1,00,000,10% debentures is Rs.2,00,000 and Share premium
is Rs.30,000. For year 2019 Equity Share Capital is Rs 4,00,000 Preference

Share Capital is Rs.60,000 10% debentures is Rs.1,00,000 and Share
premium is 40,000. Also given, Dividend paid on shares Rs 15,000 and
Interest paid on debentures Rs. 20,000. Determine net cash flow from
financing activities.
A. Inflow of Rs 65,000
B. Outflow of Rs 65,000
C. Inflow of Rs 56,000
D. Outflow of Rs 56000
Answer: B
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533. Which of the following falls under Profitability Ratios?
A) General Profitability ratios a
B) Overall Profitability ratios
C) Comprehensive Profitability q
M
c ratios
A. A and B M
B. A and C
C. B and C
Answer: A
534. While calculating Gross Profit Ratio,
A. Closing stock is deducted from cost of goods sold
B. Closing stock is added to cost of goods sold
C. Closing stock is ignored
Answer: A
535. Gross Profit Ratio is calculated by
A. (Gross Profit/Gross sales)*100

B. (Gross Profit/Net sales)*100
C. (Net Profit/Gross sales)*100
Answer: B
536. Given Sales is Rs.2,40,000 and Gross Profit is 60,000, the Gross Profit
Ratio is
A. 24%
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B. 25%
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C. 40%
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D. 44%%
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Answer: B
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537. If selling price is fixed 25% above the cost, the Gross Profit Ratio is
A. 13%
B. 28%
C. 26%
D. 20%
Answer: D
538. Determine Stock Turnover Ratio if, Opening stock is Rs 31,000,

Closing stock is Rs 29,000, Sales is Rs 3,20,000 and Gross profit ratio is
25% on sales.
A. 12 times
B. 11 times
C. 8 times
D. 10 times
Answer: C

539. Which of the following is not included in quick assets?
A. Debtors
B. Stock
C. Cash at bank
D. Cash in hand
Answer: B
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540. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs
60,000. Determine value of stock. .c
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A. Rs 54,000 a
B. Rs 60,000
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C. Rs 1, 62,000

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Answer: A
541. A Current Ratio of Less than One means
A. Current Liabilities < Current Assets,
B. Fixed Assets > Current Assets,
C. Current Assets < Current Liabilities,
D. Share Capital > Current Assets.
Answer: C
542. A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit
of Rs. 2,00,000 and Expenses of Rs. 1,00,000. What is the Net Profit Ratio?
A. 20%
B. 50%
C. 10%

D. 40%
Answer: C
543. A Company has a material standard of 1 kg. per unit of output. Each
kg. has a standard price of Rs.25 per kg. Company paid Rs.1,27,500 for
5000 kg., which they used to produce 4,700 units. What is the direct
material price variance?
A. Rs.2,500 unfavourable
B. Rs.2,600 favourable
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C. Rs.12,600 unfavourable
.c
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D. Rs.10,000 unfavourable
a
Answer: A
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544. Company has a material standard of 1.1 kg. per unit of output. Each
kg. has a standard price of Rs.25 per. Company paid Rs.1,18,800? for 5,100
kg. which they used to produce 4,900 units. What is the direct materials
quantity variance?
A. Rs.7,250 favourable
C. Rs.7,250 unfavourable
Answer: A
545. (A Company has a standard of 1 direct labor hour per unit at Rs.12 per
hour. 3,850 labor hours costing Rs.46,970 were used to produce 4,000
units.) Company’s labor price variance is
A. Rs.770 favourable
B. Rs.770 unfavourable
C. Rs.1,030 favourable
Answer: B

546. (A Company has a standard of 1 direct labor hour per unit at Rs.12 per
hour. 3,850 labor hours costing Rs.46,970 were used to produce 4,000
units.) Company’s labor quantity variance is
A. Rs.1,830 unfavourable
Answer: C
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a were used to produce 4,000
547. (A Company has a standard of 1 direct
hour. 3,850 labor hours costing Rs.46,970
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units.) Company’s total labor variance
c
A. Rs.770 unfavourable
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B. Rs.800 unfavourable
D. Rs.1,930 favourable
Answer: D
548. Material cost variances is measured as
A. Total standard cost - Total actual cost
B. Standard cost of revised standard mix - Standard cost of actual mix
C. (Standard unit price - Actual unit price) * Actual quantity used
D. (Standard quantity - Actual quantity) * Unit standard price
Answer: A
549. When the actual cost is less than the standard cost, the difference is
termed as
A. Favourable variance

B. Adverse variance
C. Both a and b
Answer: A
550. The formula to estimate Labour Mix variance is
o m
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C. (Revised standard time - Actual time) * Standard rate
te
a
Answer: B
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551. Given standard time per unit is 80 hours, standard time per hour @ Rs
1 per hour, actual time per unit is 90 hours and actual rate per hour @ Rs
1.10 per hour. Determine labour cost variance, labour rate variance and
labour efficiency variance.
A. Rs 11, Rs 22 and Rs 10 all unfavorable
B. Rs 19, Rs 9 and Rs 10 all favorable

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C. Rs 19, Rs 9 and Rs 10 all unfavorable
te
D. Rs 11, Rs 22 and Rs 10 all favorable a
Answer: C
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c
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552. The formula used for calculation of labour rate variance is
Answer: B
553. The data related to Production of T are for material X standard data
and actual data are 40 kgs @ Rs 10 and 55 kgs @ Rs 9, respectively. The
standard data and actual data for material Y are 50 kgs @ Rs 5 and 35 kgs
@ Rs 7. Determine material usage variance.
A. Rs 75 favorable
B. Rs 75 unfavorable
C. Rs 90 unfavorable
D. Rs 90 favorable
Answer: B

554. Material yield variance arises when
A. Actual output > Standard output
B. Actual output < Standard output
C. Both a and b
Answer: C
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555. While calculating material mix variance, if revised standard quantity is
greater than actual quantity, the variance is .c
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A. Unfavorable a
B. Favorable
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C. Neither favorable nor unfavorable
Answer: B
556. To produce Product A 2 kg of material X at Rs 10 per kg is required .

During February 800 units of Product, A were produced. Actual price paid
for material X is Rs 9 per kg and total cost Rs 15,300. Determine material
cost variance.
A. Rs 700 favorable
B. Rs 700 unfavorable
C. Inadequate data
Answer: A
557. In a manufacturing firm, the standard quantity of material was set at

10 kg and standard price was fixed at Rs. 2 per kg. The actual quantity
consumed was 12 kg and the actual price paid was Rs 1.90 per kg.
Determine material usage variance.

A. Rs 4 favorable
B. Rs 4 unfavorable
C. Rs 2.80 unfavorable
D. Rs 1.20 favorable
Answer: B
558. Marginal Cost is the aggregate of all
A. Fixed overheads
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B. Variable Costs
.c
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C. Contribution Costs
a
D. Work Cost
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Answer: B
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559. The other name of Marginal Costing is…
A. Direct Costing
B. Variable Costing
C. Incremental Costing
D. All of the above
Answer: D
560. While making make or buy decision under marginal costing, external
purchase price of the articles must be compared with its
A. Fixed Cost
B. Total Cost
C. Variable Cost
D. Prime Cost.
Answer: C

561. Shut down cost is:
A. Avoidable Fixed Cost
B. Unavoidable Fixed Cost
C. Avoidable Variable Cost
D. Unavoidable Variable Cost
Answer: B
562. Profit volume ratio can be improved by o m

.c
A. Reducing variable cost
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a
B. Reducing the selling price
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C. Increasing the fixed cost
c
D. Increasing the key factor
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Answer: A
563. When Profit is Rs.5000 and P/V ratio is 20%, Margin of Safety is---------
A. 10000
B. 25000
C. 30000
D. 50000
Answer: B
564. When selling price of product A is Rs.25 and product B is Rs. 20 and
respective variable cost is Rs. 23 and Rs.16. The fixed cost is Rs.750,
which of the following sales mix of product A and product B should be
adopted to maximize the profit.
A. 250 units of A & 250 units of B
B. 500 units of B only
C. 400 units of A & 100 units of B

D. 150 units of A & 350 units of B
Answer: D
565. The breakdown of cost of a component of a company is Material

Rs.275, Labour Rs. 175 ,other Variable costs Rs.50 and Depreciation
Rs.125. At what price the product should be available in the market so that
company should buy from the market.
A. Rs. 575
B. Rs. 600
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C. Rs.500
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D. None
a
Answer: D
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566. Costs Which ------------between different alternatives are to be ignored.
A. Are differential costs
B. Are incremental costs
C. Are constant costs
D. Are relevant costs
Answer: C
567. When selling price is Rs.200 Per unit, Variable Cost Rs.150 per unit
and Fixed Cost is Rs.50000 at which capacity level the cost per unit would
be minimum.
A. 50%
B. 60%
C. 75%
D. 85%
Answer: D

568. The profit volume ratio (P/V Ratio)
A. 15%
B. 20%
C. 25%
D. 30%
Answer: B
569. The Break-Even Point sales are o m

.c
A. Rs.2000000
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a
B. Rs.2500000
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C. Rs.3000000
c
D. Rs. 4000000
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Answer: C
570. The Variable Cost in 2018 are
A. Rs.2800000
B. Rs.3000000
C. Rs.3200000
D. Rs.3400000
Answer: C
571. The Fixed Cost are
A. Rs.200000
B. Rs.300000
C. Rs.400000
D. Rs.500000
Answer: B

572. If projected sales in the year 2020 to be Rs.6500000 find out the
corresponding profit
A. Rs. 700000
B. Rs. 800000
C. Rs. 900000
D. Rs.1000000
Answer: D
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573. Balance sheet indicates the financial status of the business ____.
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A. For a day a
B. For a month
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C. For a year
D. At given period
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Answer: D
574. __do not give the returns during the same period during which they
are paid for
A. Intangible assets
B. Fixed assets
C. Both (A) and (B)
Answer: B
575. Following is (are) called the element(s) of Cost
A. Material
B. Labour
C. Expenses

D. All of the above
Answer: D
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476. 20,000 equity shares of Rs.10 each issued at 10% premium , cash is
Rs-------------------
A. Rs.2,00,000
B. Rs.2,10,000
C. Rs.2,15,000
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D. Rs.2,20,000
.c
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Answer: D
a
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477. Preliminary expenses written off is--------
c
A. Cash transaction M
B. Non-cash transaction
C. Credit transaction
Answer: B
478. Investment costing Rs.50,000 at the loss of Rs.3,000 cash outflow in

investing activity is --------
A. Rs.53,000
B. Rs.50,000
C. Rs.47,000
D. Rs.48,000
Answer: C
479. Cash from operations is equal to------------------
A. net profit after tax

B. net profit plus increase in current asset
C. net profit plus decrease in current liabilities
D. net profit plus non-cash expenses plus decrease in current assets.
Answer: D
480. Increase in the amount of bills receivable results in--------------
A. decrease in cash
B. increase in cash
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C. no change in cash
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D. none of these
a
Answer: A
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481. Increase in the amount of bills payable results in----------
A. Decrease in cash
B. Increase in cash
C. No change in cash
D. None of these
Answer: B
482. Which of the following is not an inflow of cash
A. Sale of fixed asset
B. Issue of debentures for cash
C. Funds from operation
D. Acquisition of assets
Answer: D
483. Dividend paid under AS- 3 is----------

A. Cash flow from financing activity
B. Cash flow from operating activity
C. Cash flow from investing activity
D. None of these
Answer: C
484. Cash flows include
A. Cash payments only

o m
B. Cash receipts only
.c
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C. Cash receipts and payments
a
D. Cash and noncash incomes and expenses.
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Answer: C
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485. Cash flow statement is based on----------
A. Cash basis of accounting
B. Accounting equation
C. Accrual basis of accounting
D. None of these
Answer: A
486. Proposed dividend is classified as-----------
A. Investing activity
B. Financing activity
C. Operating activity
D. Cash equivalent
Answer: C

487. Profit on sale of machinery comes under------------
D. None of these
Answer: C
488. Sale of patent is classified under--------- o m

.c
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a
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c
D. None of these
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Answer: A
489. Rent received by a company (whose main business is real estate) is

classified as
D. Cash equivalent
Answer: C
490. AS-3 is related to
A. Cash flow statement
B. Funds flow statement
C. Balance sheet
D. Income statements
Answer: A

491. The information to prepare a flexible budget includes:
A. Total fixed cost, total variable cost
B. Total fixed cost, total variable cost and capacity base
C. Unit fixed cost and unit variable cost
D. Total fixed cost, variable cost per unit, several levels of activity
Answer: D
492. The scarce factor of production is knowno

m
.c as
e
A. Key factor
at
B. Linking factor
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C. Critical factor
c
D. All of the above M
Answer: A
493. Which of the following is a budget designed to furnish budgeted

costs for any level of activity attained
A. Fixed budget
B. Flexible budget
C. Master budget
D. Production budget
Answer: B
494. Flexible budgets are useful for
A. Planning purpose only
B. Planning, performance evaluation and feedback control
C. Control of performance only
D. Nothing at all
Answer: B

495. The budget that summarize future plans for acquisition of plant
facilities and equipment is the
A. Cash budget
B. Sales budget
C. Capital expenditure budget
Answer: C
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496. A report comparing actual results with the budget figure is called a
t
___________
a
A. Budget report
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B. Budget performance report c
C. Flexible budget report
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Answer: A
497. Profit plan(or budget) is a
A. Long term financial plan
B. Short term financial plan
C. Long term non financial plan
D. Short term non financial plan
Answer: B
498. The objectives, procedures, organizational structure and authority

and responsibility in writing about a budget is shown in
A. Budget manual
B. Budget plans

C. Budget titles
Answer: A
499. Which budget is prepared after the preparation of all functional

budgets
A. Flexible budget
B. Cash budget
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C. Master budget
.c
D. Production budget
te
a
Answer: C
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cfor the functions of the budget committee
500. The overall responsibility
lies on the _____________M
A. Chief accountant
B. Financial executive or controller
C. Budget director or budget officer
D. Top management
Answer: C

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426. Fund flow refers to change in-----
A. Working capital
B. Fixed capital
C. Current capital
D. Increase in working capital

o m
.c
Answer: A
te
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427. Depreciation is sometimes treated as -------of funds
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A. Outflow c
B. Use
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C. Source
D. No change
Answer: C
428. Salary outstanding is----- of funds
A. Source
B. Inflow
C. Application
D. No change
Answer: C
429. Any gain on sale of non-current asset should be ----- from the net
profit for determining funds from operation
A. Deducted

B. Added
C. Increased
D. None of these
Answer: A
430. Asset sold on credit is---- of funds
A. Application
B. Uses
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C. Source
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D. Decrease
a
Answer: C
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431. Furniture sold for cash -----funds flow
A. Increases
B. Decreases
C. Deducted
D. None of these
Answer: A
432. Goodwill is a ---------------------transaction
A. Current
B. Noncurrent
C. Fixed
D. None of these
Answer: B
433. When one account is current and another a non-current It results

in--------------------

A. Flow of fund
B. Increase of fund
C. Decrease of fund
D. None of these
Answer: A
434. To arrive at funds from operation ,non-cash expenses must be added

to----------
o m
A. Net profit
.c
B. Gross profit
te
a
C. Operating profit
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D. None of these
c
Answer: A
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435. Fund flow statement is accompanied by a schedule
of-----------------------------
A. Changes in working capital
B. Flow of funds
C. Increase in fund
D. Decrease in fund
Answer: A
436. Goods purchased on credit-----------inflow of funds
A. Does not result
B. Does result
C. Change
D. None of these
Answer: A

437. ----------account is prepared to know funds from operation
A. Profit & Loss appropriation account
B. Profit and loss account
C. Trading account
D. Profit & Loss adjustment account
Answer: D
o m
438. Increases in current liabilities --------------working capital
.c
A. Increase
te
a
B. Decreases
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C. Added
c
D. None of these
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Answer: B
439. Increase in current assets-------------working capital
A. Increases
B. Decreases
C. Deducts
D. Reduces
Answer: A
440. Decrease in current liabilities --------------------working capital
A. Increases
B. Decrease
C. Deducts
D. Reduces
Answer: A

441. Net increase in working capital results in----------------of funds
A. source
B. Inflow
C. no change
D. application
Answer: D
o m
442. Net decrease in working capital results in --------------------of funds
.c
A. Source
te
a
B. Application
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C. No change
c
D. None of these
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Answer: B
443. -------------------means transfer of economic value of firm from one asset

or equity to another.
A. Flow of funds
B. Uses of fund
C. Inflow of funds
D. Application of funds
Answer: A
444. Funds from operations are --------------of funds
A. Application
B. Uses
C. Sources
D. No change
Answer: C

445. In the fund flow statement, depreciation is----------------
A. Deducted from net profit
B. Added to net profit
C. Sources of working capital
D. Ignored
Answer: B
o m
c
446. Which of the following is non-current asset
.
e
A. Goodwill
at
B. Debtors
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C. Stock
c
D. Prepaid rent M
Answer: A
447. Which of the following will affect the flow of fund
A. a transaction affecting current and non-current accounts
B. a transaction affecting both non-current accounts
C. a transaction affecting both current accounts
D. both a) and b)
Answer: A
448. Which of the following is an application of fund
A. Sale of plant
B. Issue of shares
C. Purchase of funds
D. Payment of creditors
Answer: C

449. Current assets are Rs.6,00,000 current liabilities are Rs.3,00,000 the
debtors realized Rs.40,000, the impact on net working capital would
be-------------------------
A. No change in working capital
B. Decrease of working capital by Rs.80,000
C. Increase of working capital by Rs.40,000
D. None of these
Answer: A
o m
.c
te not result in the application
a will be
450. Gross profit are Rs.50,000 and expenses
of funds are Rs.10000 funds from operation
q M
A. Rs.60000
c
B. Rs.50000 M
C. Rs. 40000
D. Rs. 30000
Answer: A

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301. Internal report use for _______________ .
A. Share holders
B. Government
C. Managerial personnel
D. Creditors
o m
.c
Answer: C
te
a
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302. External report use for _______________ .
q
A. Top level management c
B. Middle level management
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C. Lower level management
D. Shareholders
Answer: D
303. From following which is not a routine report ?
A. Production report
B. Sales report
C. Investigation
D. Administration report
Answer: C
304. _______ is devoted to providing information for external users.
A. Management accounting
B. Financial accounting

C. Internal accounting
D. Cost accounting
Answer: B
305. Financial accounting is primarily concerned with providing financial

reports to all of the following EXCEPT
A. creditors such as banks and other financial institutions.
B. creditors such as suppliers.
o m
C. shareholders of the company.
.c
D. management of the firm.
te
a
Answer: D
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306. Management accountingcand financial accounting differ in that
M
management accounting information is prepared
A. following prescribed rules.
B. using whatever methods the company finds beneficial.
C. for shareholders.
D. to summarize the whole company with little detail.
Answer: B
307. The primary objective of management accounting is
A. to provide shareholders and potential investors with useful information for decision making.
B. to provide banks and other creditors with information useful in making credit decisions.
C. to provide management with information useful for planning and control of operations.
D. to provide the relevant taxation authorities with information about taxable income.
Answer: C

308. Management accounting is the branch of accounting concerned with
reporting to
A. internal managers.
B. shareholders.
C. the government.
D. bankers.
Answer: A
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309. Management accounting reports are prepared .c
te
a
A. to meet the needs of decision makers within the firm.
B. whenever shareholders request them.

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C. according to guidelines prepared by the shares and Financial Services Authority.
D. according to financial accounting standards.
Answer: A
310. Cost accounting
A. is concerned with assigning costs to various cost objects.
B. attempts to satisfy the costing objectives of both financial accounting and management
accounting.
C. provides cost information that supports planning, controlling, and decision making.
D. All of the above descriptions are true.
Answer: D
311. Which of the following costing activities is associated with the

financial accounting system?
A. determining the cost of a department
B. determining the cost of goods sold for financial statements
C. preparing budgets

D. determining the cost of a customer
Answer: B
312. Which of the following activities is NOT associated with the financial
accounting information system?
A. reporting on the cost of quality
B. reporting to the shareholders
C. preparing reports for the tax authorities
o m
D. preparing a statement of cash flows
.c
Answer: A
te
a
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313. Which of the following cost management tools supports the firm's
c
concentration on the delivery of value to the customer?
A. service industry growth

M
B. global competition
C. preparing an earnings report for external reporting
D. value-chain analysis
Answer: D
314. Factors that have led to a global market for manufacturing and
service firms are
A. improved transportation and communications systems.
B. improved telemarketing and communications.
C. improved distribution and transportation systems.
D. None of these factors have contributed.
Answer: A
315. Which of the following activities is NOT significant to the

advancement of information technology?

A. enterprise resource planning software
B. emergence of electronic commerce
C. theory of constraints
D. decision support systems
Answer: C
316. Software that has integrated system capability using real time data is
A. enterprise resource planning software.

o m
B. on-line analytic programs.
.c
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C. computer-assisted engineering software.
a
D. none of the above.
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Answer: A
c
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317. Automation of the manufacturing environment is associated with
increases in
A. inventory.
B. capacity.
C. processing time.
D. none of these.
Answer: B
318. Total quality management emphasizes
A. zero defects.
B. continual improvement.
C. elimination of waste.
D. all of the above.
Answer: D

319. Which of the following emerging themes in cost accounting deals
with managers striving to create an environment that will enable workers
to manufacture perfect (zero-defect) products?
A. advances in information technology
B. time as a competitive element
C. global competition
D. total quality management
Answer: D
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320. Competitive advantage is established
a
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A. providing more customer products than competitors.
q
c
B. providing better quality than competitors.
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C. providing greater customer value for less cost than competitors.
D. providing greater efficiencies than competitors.
Answer: C
321. Improvement in time performance is most likely NOT enhanced by
A. redesign of products.
B. adding processes in production.
C. eliminating waste.
D. eliminating nonvalue-added activities.
Answer: B
322. Which of the following statements is NOT true about world-class

firms?
A. World-class firms are firms that are poor in customer support.
B. World-class firms know their market and their products.
C. World-class firms strive continually to improve product design, manufacture, and delivery.

D. World-class firms can compete with the best of the best in a global environment.
Answer: A
323. Monitoring the number of defects produced is an example of the

management function of
A. planning.
B. control.
C. decision making.
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D. both a and c.
.c
Answer: B
te
a
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324. Performance reports are accounting reports that compare
c
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A. planned data with actual data.
B. audited data with actual data.
C. managers' bonuses with performance ratings by supervisors.
D. actual data with industry standards.
Answer: A
325. Which of the following statements correctly distinguishes between

financial and management accounting?
A. Management accounting reports on the whole organization.
B. Financial accounting is oriented toward the future.
C. Financial accounting is primarily concerned with providing information for internal users.
D. Management accounting is oriented more toward the planning and control
Answer: D

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451. Which of the following is a non-current liability
A. Mortgage loan
B. Bank balance
C. Outstanding salary
D. None of these
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.c
Answer: A
te
a
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452. Current liabilities are equals to-------------------------------
q
A. Working capital +current assets c
B. Working capital-current assets
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C. Current assets-working capital
D. Current asset + working capital
Answer: C
453. Inflow of fund does not take place due to----------------
A. Funds from operation
B. Increase in capital
C. Increase in working capital
D. Sale of fixed asset
Answer: B
454. Increase in working capital is-----------------------
A. Source of fund
B. Application of fund

C. Funds from operation
D. Loss from operation
Answer: B
455. Salaries Rs.20000,depreciation for the period is Rs.30000 other

operating expenses are Rs.9000, net loss for the period is Rs.5000 fund
generated from operation is------------------
A. Rs.25000
B. Rs.15000
o m
.c
C. Rs.35000
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D. Rs.14000 a
Answer: A
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456. Stock at the end results in-----------------------
A. Application of fund
B. Source of fund
C. Inflow of fund
D. None of these
Answer: B
457. Depreciation is a source of fund-------------------
A. Yes
B. No
C. Both yes or no
D. None of these
Answer: A
458. Stock in the beginning results in-----------

A. Application of funds
B. Source of fund
C. Inflow of fund
D. None of these
Answer: A
459. Which of the following does not affect the fund flow statement
A. Issue of shares
o m
B. Borrowing
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C. Repayment of loan
a
D. Payment to creditors
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Answer: D
c
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460. Which of the following does not affect working capital---------
A. Bank overdraft
B. Debenture
C. Cash
D. Bank
Answer: B
461. Proposed dividend is a--------
A. Current liability
B. Current asset
C. Noncurrent liability
D. Expense
Answer: A
462. Cash flow statement is prepared by taking the ------------- balance of

cash
A. Opening balance
B. Closing balance
C. Monthly balance
D. Others
Answer: A
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463. Decrease in a creditor is a---------------- of cash
o
A. Inflow
.c
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B. No flow of cash
a
C. Outflow
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D. None of these
c
Answer: C M
464. Goodwill written off is-----------to the net profit made during the year
for calculating the cash from operation
A. Added back
B. Deducted
C. Decreased
D. None of these
Answer: A
465. Provision for tax is shown as a part of-----------activity
A. financing
B. investing
C. operating
D. others
Answer: C

466. Purchase of fixed asset is classified as------activity
A. financing
B. investing
C. operating
D. others
Answer: B
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467. Purchase of building by issue of debenture is a---------item and it is
ignored in cash flow statement .c
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A. cash a
B. non-cash
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c
C. non-operating
D. current
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Answer: B
468. Cash flow statement is based on past records, so it is---------in nature
A. historical
B. future item
C. past
D. none of these
Answer: A
469. Cash equivalent are usually of short term but highly -----------------
investments
A. liquid
B. Fixed
C. Changed

D. None of these
Answer: A
470. Cash flow statements (based on AS-3) should be prepared and

presented under------------------method.
A. Direct
B. Indirect
C. Permanence
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D. None of these
.c
Answer: B
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a
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471. Income tax paid should be shown separately as the cash flows
from----------- activities. c
A. Financing
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B. Investing
C. Operating
D. Others
Answer: C
472. Buy back of shares is shown under-----------------------
A. operating activities
B. investing activities
C. financing activities
D. none of these
Answer: C
473. Increase in prepaid expenses--------------------cash
A. Increases

B. Added
C. Decreases
D. None of these
Answer: C
474. Dividend paid are classified under-------------------activities
A. Financing
B. Investing
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C. Operating
.c
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D. Others
a
Answer: A
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c
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475. Cash payment suppliers of goods and services are shown
under-------------.
A. Operating
B. Financing
C. Investing
Answer: A

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401. Coverage of fixed assets by shareholder’s equity is a good tests

of----------------
A. solvency
B. liquidity
C. Activity
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D. profitability
.c
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Answer: A
a
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402. Net worth refers to owner’s--------------------------
c
A. Equity M
B. Solvency
C. Liability
D. None of these
Answer: A
403. Ratio to assess the short term debt paying capacity of a firm is----------
A. Debt equity ratio
B. Propriety ratio
C. Liquid ratio
D. Solvency ratios
Answer: C
404. The ratio which is used to ascertain the soundness of the long term
financial position is------------
A. Debt equity ratio

B. Liquidity ratio
C. Activity ratio
D. Gross profit ratio
Answer: A
405. If the current assets and working capital of a company are rs.80,000
and rs.50000 then current liability will be-------------
A. Rs.1,00,000
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B. Rs.1,30,000
.c
C. Rs.70000
te
a
D. Rs.30000
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Answer: D
c
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406. The ratio which is a good indicator to maintain the correct selling
price and efficiency of trading activity is------
A. Net profit ratio
B. Gross profit ratio
C. Current ratio
D. Liquid ratios
Answer: B
407. Return on investment is a----------------
A. Profit and loss account ratio
B. Balance sheet ratio
C. Combined ratio
D. Position statement ratio
Answer: C

408. Debtors turnover ratio also known as----------
A. Payable turnover
B. Receivable turnover ratio
C. Creators turnover ratio
D. Debtors velocity
Answer: B
o m
409. The operating profit and net sale of a firm are rs.2,00,000 and
.
rs.10,00,000 respectively then operating ratio will bec
te
A. 20% a
B. 5%
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c
C. 50%
D. 20%
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Answer: A
410. The ratio which indicates how quickly debtors are converted into cash
is---------
A. Receivable turnover ratio
B. Inventory turnover ratio
C. Working capital turnover ratio
D. Creditors turnover ratio
Answer: A
411. Net capital employed is equal to ---------------
A. Total assets minus liabilities
B. Fixed asset plus net working capital
C. Total asset minus long-term liabilities

D. Total assets
Answer: B
412. Ratio of net profit before interest and tax to sales

is------------------------------
A. Solvency ratio
B. Capital gearing
C. Operating profit ratio
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D. None of these
.c
Answer: C
te
a
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413. Lower stock turnover ratio indicates-------------------------------
c
A. Solvency position
B. Monopoly situation
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C. Over investment in inventory
D. None of these
Answer: C
414. Collection of book debts-----
A. Has no effect on current ratio
B. Has decreased in current ratio
C. Has increased in current ratio
D. None of these
Answer: A
415. Debt equity ratio is a--------------------------------------
A. Profitability ratio
B. Turnover ratio

C. Short term solvency ratio
D. Long term solvency ratio
Answer: D
416. Market price per share divided by earnings per share is-------
A. Price earning ratio
B. Return on equity
C. Market test ratio

o m
D. Book value per share
.c
te
Answer: A
a
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417. Solvency ratio indicates-----------------
c
A. Credit worthiness M
B. Activity
C. Profitability
D. None of these
Answer: A
418. Current ratio shows-----
A. The change in gross profit
B. The working capital position
C. The liquidity of assets
D. The change in net profit
Answer: B
419. Current ratio is 4:1, the amount of current liabilities is Rs.12000 the
amount of working capital is-----
A. Rs.48,000

B. Rs.36000
C. Rs.30000
D. Rs.60000
Answer: A
420. Stock turnover ratio is used to determine -----------------------of an

enterprise
A. Profitability
o m
B. Liquidity& solvency
.c
C. Efficiency
te
a
D. Growth
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Answer: C
c
M
421. Working capital is expressed as------
A. Current asset-fixed asset
B. Fixed assets-current liabilities
C. Current assets-current liabilities
D. None of these
Answer: C
422. Dividend yield is an example for------ratio
A. Solvency
B. Liquidity
C. Market strength
D. Net worth
Answer: C
423. Debtors turnover ratio is used to calculate------

A. efficiency
B. solvency
C. liquidity
D. profitability
Answer: A
424. Rol measures-----
A. Profitability in relation to investment

o m
B. Profitability in relation to sales
.c
te
C. Operating efficiency
a
D. Long term solvency
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Answer: A
c
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425. Debtors turnover ratio measures----------
A. Short term solvency
B. Operating efficiency
C. Long term solvency
D. Credit policy
Answer: D

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376. The ratio that highlight the end result of business activities are known
as ---------------- ratios
A. Liquidity
B. Leverage
C. Activity
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D. Profitability
.c
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Answer: D
a
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377. The efficiency of the management can be measured with the help of
------------------ c
A. Activity ratio
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B. Leverage ratio
C. Liquidity ratio
D. Profitability ratio
Answer: A
378. The ratio of current asset to current liability is known as --------------
A. Liquid ratio
B. Current ratio
C. Absolute liquid ratio
D. Turn over ratio
Answer: B
379. The asset, the amount of which can be realized within a period of one
year are known as ----------------

A. Current liability
B. Current asset
C. Liquid liability
D. Fixed asset
Answer: B
380. The ideal current ratio is -------------
A. 2:1
o m
B. 1:1
.c
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C. 1:2
a
D. 1:3
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Answer: A
c
M
381. The ratio which shows the relationship between borrowed funds and
owners capital is ---------------
A. Proprietary ratio
B. Debt equity ratio
C. Capital gearing ratio
D. Fixed asset ratio
Answer: B
382. Proprietary ratio measures the relationship between share holder

fund and ------------------
A. Total asset
B. Fixed asset
C. Current asset
D. Fictious asset
Answer: A

383. The relationship between total outside liabilities and total assets can
be indicated through ------------
A. Fixed asset ratio
B. Solvency ratio
C. Fixed asset turn over ratio
D. Proprietary ratio
Answer: B
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.c
384. Debt service ratio is also known as --------------
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A. Interest coverage ratio a
B. Dividend payout ratio
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c
C. Solvency ratio
D. Debtors turn over ratio

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Answer: A
385. Debt equity ratio is an example of ---------------- ratios
A. Balance sheet ratio
B. Profit & loss account ratio
C. Mixed ratio
D. Liquidity ratio
Answer: A
386. Income tax payable come under ------------------
A. Long term liability
B. Long term fund
C. Current liability
D. Other liabilities
Answer: C

387. Stock and prepaid expanses are not included in ----------------
A. Current asset
B. Fixed asset
C. Current liability
D. Quick asset
Answer: D
m
o is considered
c
388. In a sound business, acid test ratio -------------------
.
satisfactory
e
at
A. 1:2
q M
B. 2:1
c
C. 1:1
D. 0.5:1
M
Answer: C
389. Cost of good sold+operating expanses=-------------------------
A. Total cost
B. Cost of product
C. Cost of sales
D. Operating cost
Answer: D
390. Example of activity ratios ------------------------
A. Gross profit ratio
B. Net profit ratio
C. Operating ratio
D. Stock turn over ratio
Answer: D

391. Example of leverage ratio
A. Debtors velocity
B. Stock turnover ratio
C. Current ratio
D. Solvency ratio
Answer: D
o m
c
392. Current ratio is an example of --------------------
.
e
A. Leverage ratio
at
B. Liquidity ratio
q M
C. Activity ratio
c
D. Turnover ratio M
Answer: B
393. Stock turn over ratio is an example of -------------------
A. Liquidity ratio
B. Leverage ratio
C. Profitability ratios
D. Activity ratios
Answer: D
394. Ratio analysis is a study of relationship among various ---------------

factors in a business
A. Operational
B. Official
C. Financial
D. Others
Answer: C

395. Liquidity ratios measure the --------- solvency of a firm
A. Long term
B. Short term
C. Average
D. Others
Answer: B
m
o of a concern is
c
396. By computing current ratio ---------------- solvency
.
assessed
e
at
A. Short term
q M
B. Long term
c
C. Liquidity
D. Profitability
M
Answer: A
397. ---------------- ratio studies the firm’s ability to meet its long term
financial position
A. Liquidity ratio
B. Profitability
C. Activity
D. Leverage
Answer: D
398. Satisfactory level of debt equity ratio is --------------------
A. 1:1
B. 3:1
C. 2:1

D. 1:2
Answer: C
399. Operating ratio establishes the relationship between --------------- and

net sales
A. Cost of goods sold
B. Cost of sales
C. Cost of production
o m
D. Operating cost
.c
Answer: D
te
a
q M
400. For dividend yield ratio -------------- price of the equity shares is taken
into consideration c
A. Market
M
B. Cash
C. Cost
Answer: A

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c
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351. ----------- helps to disclose financial position
A. Trial Balance
B. Profit and Loss Account
C. Balance sheet
D. Income Statement
o m
.c
Answer: C
te
a
352. Disclose accounting information
q M
A. Balance sheet c
B. Trading account
M
C. Profit and Loss Account
D. Financial statements
Answer: D
353. Afford full diagnosis of the profitability and financial position
A. Preparation of Profit and Loss Account
B. Balance Sheet
C. Final Accounts
D. Analysis of financial statements
Answer: D
354. Study of the trend of the same items of two or more balance sheets
A. Common size Profit and Loss A/C
B. Common size balance sheet

C. Comparative Income statement
D. Comparative Balance Sheet
Answer: D
355. Expressed as a percentage of each asset to total
A. Common size P/L A/C
B. Common size Balance Sheet
C. Comparative Income Statement

o m
D. Trend analysis
.c
te
Answer: B
a
q M
356. Ratios of different items for various periods are calculated and
compared c
A. Common size
M
B. Comparative
C. Trend analysis
D. Ratio analysis
Answer: D
357. Yard stick which measures relationship between two variables
A. Financial statements
B. Ratio
C. Fund Flow analysis
D. Cash flow analysis
Answer: B

358. The ratio which depicts the relationship between two items, one of
which is drawn from the Balance Sheet and the other from the revenue
account
A. Current ratio
B. Equity Ratio
C. Net Profit ratio
D. Debtors Turn over Ratio
Answer: D
o m
. c
t e
359. The ratio of liquid asset to current liabilities
a
A. Quick ratio
q M
B. Current ratio c
C. Absolute liquid ratio M
D. Combined ratio
Answer: A
360. Equity includes --------------
A. Equity share capital
B. Equity share capital + Preference share capital+-fictitious asset
C. Equity capital + Preference share capital + reserves And surplus-fictious asset
D. Equity capital + Preference share capital
Answer: C
361. The ratio which shows the relationship b/w share holder’s fund and
total assets
A. Debit equity ratio
B. Proprietary ratio
C. Solvency ratio

D. Fixed asset
Answer: B
362. Long term solvency of a firm can be measured by
A. Current ratio
B. Net profit ratio
C. Gross profit ratio
D. Debt equity ratio

o m
Answer: D
.c
t e
a between fixed asset to share
363. The ratio that shows the relationship
holders fund
q M
c
M
A. Fixed asset to net worth
B. Fixed asset ratio
C. Fixed assets turn over ratio
D. Net worth ratio
Answer: A
364. The index of efficiency and profitability of the business
A. Operating ratio
B. Operating profit ratio
C. Expense ratio
D. Net profit ratio
Answer: D
365. The ratio that includes whether investment in inventory is efficiently

used or not
A. Inventory turnover ratio

B. Working capital turn over ratio
C. Fixed asset turn over ratio
D. Activity ratio
Answer: A
366. Comparison and interpretation of ratio is known as ---------------------
A. Fund flow analysis
B. Cash flow analysis

o m
C. Ratio analysis
.c
te
D. Trend analysis
a
Answer: C
q M
c
M
367. Powerful tool for analyzing financial statement is ----------
A. Trend analysis
B. Ratio analysis
C. Analysis
D. Interpretation
Answer: B
368. The relationship between two amount or variables is measured with

the help of ------------
A. Ratio
B. Trend
C. Comparative
D. Common size
Answer: A
369. The main aim of the ratio analysis is to help the ----------of the firm

A. Owners
B. Officials
C. Departments
D. Management
Answer: D
370. Ratios help the management in evolving market strategies through

-----------
o m
A. Inter firm comparison
.c
B. Intra firm comparison
te
a
C. Ratios
q M
c
Answer: A
M
371. Ratios may be used as a measure of -------------
A. Efficiency
B. Solvency
C. Profitability
Answer: A
372. An example of Balance Sheet ratio is ---------------
A. Net profit ratio
B. Inventory turn over ratio
C. Current ratio
D. Fixed asset turn over ratio
Answer: C

373. Income statement ratios are also called -----------
A. Operating ratio
B. Liquidity ratio
C. Activity ratio
D. Trend ratio
Answer: A
o m
374. Leverage ratios are also known as -------------- ratios
.c
A. Short term solvency ratios
te
a
B. Long term solvency ratios
q M
C. Solvency ratio
c
D. Liquidity ratio
M
Answer: B
375. The ratios that shows the capacity of the business unit to meet its
short term obligation out of its short term resources is known as --------------
A. Solvency ratio
B. Leverage ratio
C. Liquidity ratio
D. Trend Ratio
Answer: C

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326. Setting the company's profit targets for the upcoming year is an
example of the management function of
A. planning.
B. control.
C. variance analysis.
o m
D. internal auditing.
.c
te
Answer: A
a
327. The planning process includes q M
c
A. setting objectives. M
B. identifying means of achieving the objectives.
C. making decisions.
Answer: D
328. Management accounting is concerned with which kind of decision?
A. product costing and pricing
B. continuous operational improvement
C. financial control
D. all of the above
Answer: D
329. Management accounting:
A. provides a framework to evaluate information in light of an organization's goals.

B. provides relevant information to managers.
C. provides relevant information to meet specific needs of persons inside the organization.
D. all of the above
Answer: D
330. Management accounting is primarily concerned with:
A. providing investors with useful information for valuing securities.
o m
B. providing creditors information on the status of their loans.
.c
C. providing managers with relevant information to help achieve organizational goals.
te
a
D. providing the relevant taxation authorities with information to determine the amount of taxes
owed.
Answer: C
q M
c
M
331. Vertical analysis is made to review and analyze the financial
statements of -----------------accounting period.
A. One
B. Two
C. Three
D. Four
Answer: A
332. Comparison of financial variables of a firm over a period of time is

known as--------------
A. Comparative
B. Common-size
C. Trend analysis
Answer: C

333. Interpretation requires analysis and ----------------------------------
A. Comparison
B. Determination
C. Decision Making
D. Conclusion
Answer: A
o m
334. The process of deriving conclusions from the analysis is commonly
termed as ---------------- .c
te
A. Analysis a
B. Conclusion
q M
c
C. Comparison
D. Interpretation
M
Answer: D
335. Common size Income Statement present the various items as a

percentage of ----------------
A. Sales
B. Credit sales
C. Cash sales
Answer: A
336. External analysis is based on ------------- financial statements
A. Annual
B. Published
C. Prepared

D. Previous
Answer: B
337. Financial Statements provide a summary of --------------------------
A. Accounts
B. Assets
C. Liabilities
D. Expenses
o m
Answer: A
.c
t e
338. When financial statements for a a
number of years are reviewed and
q M---------------------
analyzed, the analysis is known as
c
A. Vertical Analysis
B. Internal analysis
M
C. Horizontal analysis
D. External analysis
Answer: C
339. When ratios are calculated from the financial statements of one year,
it is known as ---------------------
A. Horizontal analysis
B. Vertical analysis
C. Internal Analysis
D. External analysis
Answer: B
340. Horizontal analysis is also known as -----------------------
A. Static analysis

B. Structural analysis
C. Dynamic analysis
D. None of these
Answer: C
341. Trend analysis is significant for
A. Forecasting and budgeting
B. Profit planning
o m
C. Capital rationing
.c
te
a
Answer: A
q M
c
M
342. In trend percentage the base year is ----------------------------
A. The first year
B. Last year
C. Any year
D. Second year
Answer: A
343. Comparative statements are a form of ---------------------------
A. Horizontal analysis
B. Vertical analysis
C. Parallel analysis
Answer: A
344. The term financial analysis include both --------- and interpretation

A. Comparison
B. Analysis
C. Conclusion
D. Constructions
Answer: B
345. Vertical analysis is also known as ------------------
A. Dynamic analysis
o m
B. Static analysis
.c
te
C. External analysis
a
D. Internal analysis
q M
Answer: B
c
M
346. The statement prepared to disclose accounting information are
known as-----
A. Comparative statements
B. Common size statements
C. Financial statements
Answer: C
347. ------------- gives a diagnosis of the profitability and financial position
A. Analysis of financial statements
B. Preparation of financial statements
C. Construction of statements
Answer: A

348. ------------------------ helps in drawing inferences of conclusions
A. Analysis
B. Interpretation
C. Comparison
Answer: B
o m
349. ---------------- establishes the relationship of different individual items
which same common items .c
te
A. Common size statements a
B. Comparative statements
q M
c
C. Trend analysis
D. Comparative Income Statement

M
Answer: A
350. Under ------------------------ each item of expenses taken as a percentage

on net sales
A. Comparative income statement
B. Comparative balance sheet
C. Common size Balance sheet
D. Common size Income Statement
Answer: D

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201. Quick assets do not include I)Prepaid Expense II)Advance Tax

III)Marketable securities IV)Inventory
A. Only I,II and IV
B. Only III
C. All I,II,III,IV
o m
D. Only II and III
.c
te
Answer: A
a
q M
202. If debt equity ratio exceeds ,it indicates risky position.
c
A. 1:1 M
B. 2:1
C. 1:2
D. 3:1
Answer: B
203. Which of these is false?
A. Working Capital=Current Assets-Current Liabilities
B. CL=CA-Working capital
C. Current Liabilities=Workin g capital -CA
D. Current Assets=Working capital+CL
Answer: C
204. If average T/R are 1,00,000 ,Closing T/R are 3 times that of opening
T/R .What is Closing T/R?
A. 200000

B. 75000
C. 150000
D. 50000
Answer: C
205. A firm that issues stocks and bonds to raise funds results in in
cashflow.
A. Decreased Cash
o m
B. Increased Cash
.c
C. Increased Equity
te
a
D. Increased Liabilities
q M
Answer: C
c
M
206. Which are not Investing activity? I)Receipts from sale of fixed asset
II)Interest received III)Dividend paid IV)Cash Payment to acquire share of
other Companies
A. Only II and III
B. Only III and IV
C. Only III
D. All are not investing activities
Answer: C
207. Which of the following is not the objective of budgetary control?

I)Control II)Danger of rigidity III)Motivation IV)Based on estimates
A. Only II
B. Only II and IV
C. Only II,III and IV
D. All I,II,III and IV
Answer: B

208. Which statement is true.I)Fixed budget assumes Changing business
conditions. II)Flexible budget is prepared for only one level of activity.
A. None is true
B. Both are true
C. Only I
D. Only II
Answer: A
o m
.c
209. The wages due from Mar 20 ,Apr 20 and May 20 are Rs8000,Rs9000
te
and Rs 10,000 respectively.There is delay in payment of wages of 2
a
months.What will be the wages paid in May 20 in the Cash Budget.
q M
A. Rs 9000
c
B. Rs 8000
M
C. Rs 10000
D. Rs 27000
Answer: B
210. Which of the following is/are the responsibilty centres.I)Cost centre

II)Investment Centre III)Profit center IV)Revenue Centre
A. All
B. Only I,II and III
C. Only I and IV
D. Only II,III and IV
Answer: A
211. Labour Efficiency Variance is the sum total of I)Labour Mix variance
II)Labour Cost Variance III)Idle time Variance IV)Labour yield variance
A. Only I and IV

B. All
C. Only II and III
D. Only I,III and IV
Answer: D
212. Total Actual material is 1250 Kg.The Standard qty of Material A=800Kg
and B=400Kg.What is the revised Std qty of A and B respectively.
A. 825kg,425Kg
o m
B. 950Kg,300Kg
.c
C. 833Kg,417Kg
te
a
D. 750Kg,500Kg
q M
Answer: C
c
M
213. SH=800 Hours,AR=Rs 7 ,SR=6,AH=750 Hours.Calculate labour rate
variance(LRV).
A. 750 A
B. 300 F
C. 300 A
D. 750 F
Answer: A
214. Yr 2019 :sales 1,20,000 and Profit8,000 ;Yr 2020:Sales 1,40,000 an

profit 13,000.Calculate P/v ratio.
A. 25%
B. 40%
C. 30%
D. 35%
Answer: A

215. Calculate Break Even Point in units if Fixed cost is 15,000 ,SP=15 and
VC=12
A. 1000 units
B. 1250 units
C. 1500 units
D. 5000 units
Answer: D
o m
.c
216. Actual Sales=40,000 and Break Even Point =25,000.Calculate Margin
of safety(MOS).
te
a
A. 65000
q M
B. 15000 c
C. 40000 M
D. 25000
Answer: B
217. What are the sales required to earn a profit of 12,000 if Fixed cost are
22,000 and P/V ratio is 25%.
A. 136000
B. 40000
C. 8500
D. 2500
Answer: A
218. Actual Sales=80,000,P/V ratio=20% and Fixed cost=10,000.Calculate

Profit.
A. 16000
B. 3000

C. 5000
D. 6000
Answer: D
219. The cost that tends to remain constant irrespective of the level of
activity is called _______.
A. Variable cost
B. Fixed cost
o m
C. Total cost
.c
D. All of the above
te
a
Answer: B
q M
220. Cost Accounting restrictc
itself with _______ transactions.
A. Financial
M
B. Spot
C. Historical
D. Administrative
Answer: C
221. Following is (are) the method(s) of measuring labour turnover.
A. Replacement Method
B. Separation Method
C. Flux Method
D. All of the above
Answer: D
222. Following is (are) the example(s) of semi-variable overheads.
A. Maintenance cost

B. Electricity
C. Health and Accident Insurance
D. All of the above
Answer: D
223. _________ indicates the financial status of the business at given

period.
A. Balance sheet
o m
B. Accounting ledger
.c
C. General ledger
te
a
D. All of the above
q M
Answer: A
c
M
224. In Cash budget, Non operating cash inflow include(s)
A. Receipt of loan/borrowings
B. Issue of shares
C. Sale of fixed assets
D. All of the above
Answer: D
225. Sales Budget is a forecast expressed in -
A. Quantity
B. Money
C. Both (a) and (b)
Answer: C

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276. Which of the following matter is relevant with cash receipts and
disbursement method of preparing Cash Budget ?
A. While determining the cash payments, it is necessary to estimate the credit sales.
B. While estimating cash receipts, it is not necessary to estimate the figure of credit sales.
o m
C. Debtors Ratio is used to estimate the timings when cash collections would be obtained from
credit sales.
.c
te
D. While estimating the total amount of cash payment for purchases, it is necessary to decide
a
from which suppliers materials are to be purchased.
Answer: C
q M
c
277. Budget period depends upon - M
A. The type of budget
B. The nature of business
C. The length of trade cycles
D. All of the above
Answer: D
278. Usually the production budget is stated in terms of -
A. Money
B. Quantity
C. Both (a) and (b)
D. None
Answer: C
279. Recording of actual performance is -

A. An advantage of budgetary control
B. A step in budgetary control
C. A limitation of budgetary control
Answer: B
280. Budgetary control system helps the management to eliminate -
A. Undercapitalization
o m
B. Overcapitalization
.c
te
C. Both (a) and (b)
a
D. None
q M
Answer: C
c
M
281. Budgetary control facilitates easy introduction of the -
A. Marginal costing
B. Ratio analysis
C. Standard costing
D. Subjective matter
Answer: C
282. Budgetary control system acts as a friend, philosopher and guide to

the -
A. Management
B. Share holders
C. Creditors
D. Employees
Answer: A

283. Budgetary control system defines the objectives and policies of the -
A. Production department
B. Finance department
C. Marketing department
Answer: D
o m
284. A budget is tool which helps the management in planning and control
of - .c
te
A. All business activities a
B. Production activities
q M
c
C. Purchase activities
D. Sales activities
M
Answer: A
285. In responsibility centre, the output is called as -
A. Revenue
B. Cost
C. Both (a) and (b)
D. None
Answer: A
286. If the responsibility centre gets more revenue from output, then it is
called -
A. Investment centre
B. Cost centre
C. Profit centre

D. Expense centre
Answer: C
287. Cost Unit is defined as -
A. Unit of quantity of product, service or time in relation to which costs may be ascertained or
expressed
B. A location, person or an item of equipment or a group of these for which costs are ascertained
and used for cost control.
o m
C. Centres having the responsibility of generating and maximising profits
.c
D. Centres concerned with earning an adequate return on investment
te
Answer: A
a
q M
288. Fixed cost is a cost -
c
M
A. Which changes in total in proportion to changes in output
B. Which is partly fixed and partly variable in relation to output
C. Which do not change in total during a given period despise changes in output
D. Which remains same for each unit of output
Answer: C
289. Uncontrollable costs are the costs which be influenced by the action
of a specified member of an undertaking. -
A. can not
B. can
C. may or may not
D. must
Answer: A
290. Element/s of Cost of a product are -
A. Material only

B. Labour only
C. Expenses only
D. Material, Labour and expenses
Answer: D
291. Overhead refers to -
A. Direct or Prime Cost
B. All Indirect costs

o m
C. Only Factory indirect costs
.c
te
D. Only indirect expenses
a
Answer: B
q M
c
M
292. Which of the following is not a method of cost absorption?
A. Percentage of direct material cost
B. Machine hour rate
C. Labour hour rate
D. Repeated distribution method
Answer: D
293. A Local Authority is preparing cash Budget for its refuse disposal
department. Which of the following items would not be included in the
cash budget?
A. Capital cost of a new collection vehicle
B. Depreciation of the machinery
C. Operatives wages
D. Fuel for the collection Vehicles
Answer: B
294. Which of the following characteristics does NOT pertain to

management accounting?
A. Provides information and estimates about future activity
B. Generates specific-purpose financial statements and reports
C. Provides financial and operating data multidisciplinary in scope
D. Has externally imposed standards
Answer: D
cost for any level of activity is known as - o m

295. A budget which is prepared in a manner so as to give the budgeted
.c
A. Master budget
te
B. Zero base budget a
C. Functional budget q M
c
D. Flexible budget
Answer: D
M
296. ___________ is a summary of all functional budgets in a capsule form.
A. Functional Budget
B. Master Budget
C. Long Period Budget
D. Flexible Budget
Answer: B
297. When the sales increase from Rs. 40,000 to Rs. 60,000 and profit
increases by Rs. 5,000, the P/V ratio is -
A. 20%
B. 30%
C. 25%
D. 40%
Answer: C

298. From following which is not a principle of good reporting ?
A. Simplicity
B. Accountability
C. Promptness
D. Accuracy
Answer: B
m
oprepare ?
c
299. From day to day operation which report is
.
e
A. Routine
at
B. Special
q M
C. Investigative
c
D. External M
Answer: A
300. Any special event happen into the business then which report is
prepared ?
A. Routine
B. Special
C. External
D. Control
Answer: B

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q M
c
M

251. The subdivision of responsibility centre is -
A. Expense centre
B. Profit centre
C. Investment centre
D. All of the above

o m
.c
Answer: D
te
a
M
252. The accounting department in an organization is -
q
A. Investment centre c
B. Expense centre
M
C. Profit centre
D. All of the above
Answer: A
253. What is the main advantage of responsibility accounting ?
A. Improves performance
B. It fixes responsibility
C. Helpful in decision making
D. All of the above
Answer: D
254. The responsibility accounting is a system by which the responsibility

is assigned to the concerned persons -
A. To increase sales

B. To control cash
C. To increase production
D. All of the above
Answer: B
255. The contribution of accounting department in an organization -
A. Cannot be measured in monetary terms
B. Can be measured in monetary terms

o m
C. May or may not be measured in monetary terms
.c
te
a
Answer: A
q M
c
M
256. According to responsibility accounting, the entire organization is
divided into various -
A. Business centre
B. Profit centre
C. Responsibility centre
Answer: C
257. It may not be ______ to measure exactly the output of service

departments in an organization.
A. Feasible
B. Necessary
C. Either (a) or (b)
D. None of these
Answer: C

258. Internal transfer of process at profit _________ of the company.
A. Will not increase the asset
B. Will increase the asset
C. Can’t say
D. Inadequate information
Answer: A
o m
259. The success of budgetary control system depends upon the willing
cooperation of ….… .c
te
A. Shareholders a
B. Management
q M
c
C. Creditors
M
D. All the functional areas of management
Answer: D
260. A key factor is one which restricts ……
A. The volume of production
B. The volume of sales
C. The volume of purchase
D. All of the above
Answer: A
261. The classification of fixed and variable cost is useful for the
preparation of ……
A. Master budget
B. Flexible budget
C. Cash budget

D. Capital budget
Answer: B
262. In ‘make or buy’ decision, it is profitable to buy from outside only

when the supplier’s price is below the firm’s own ___________.
A. Fixed Cost
B. Variable Cost
C. Total Cost
o m
D. Prime Cost
.c
Answer: B
te
a
q M
263. __________ is a detailed budget of cash receipts and cash
c
expenditure incorporating both revenue and capital items.
A. Cash Budget
M
B. Capital Expenditure Budget
C. Sales Budget
D. Overhead Budget
Answer: A
264. Sunk costs are __________.
A. Relevant for decision making
B. Not relevant for decision making
C. Cost to be incurred in future
D. Future costs
Answer: B
265. Abnormal cost is the cost ___________.
A. Cost normally incurred at a given level of output

B. Cost not normally incurred at a given level of output
C. Cost which is charged to customer
D. Cost which is included in the cost of the product
Answer: B
266. Responsibility Centre can be categorised into ___________.
A. Cost Centres only
B. Profit Centres only

o m
C. Investment Centres only
.c
te
D. All of the above
a
Answer: D
q M
c
M
267. A profit centre is a centre ___________.
A. Where the manager has the responsibility of generating and maximising profits
B. Which is concerned with earning an adequate Return on Investment
C. Both (a) and (b)
D. Which manages cost
Answer: A
268. Management Accounting is and financial accounting differ in that

management accounting information is prepared –
A. Following prescribed rules
B. Using whatever methods the company finds beneficial
C. For shareholders
D. To summarize the whole company with little detail
Answer: B
269. Purpose of Management Accounting is to –

A. Past orientation
B. Help banks make decisions
C. Help managers make decisions
D. Help investors make decisions
Answer: C
270. Management Accounting is the branch of accounting concerned with

reporting to –
o m
A. Internal Managers
.c
B. Shareholders
te
a
C. The Government
q M
D. Bankers
c
Answer: A
M
271. Which of the following does NOT describe management accounting?
A. Evaluation of segments or products within the firm
B. Emphasis on the future
C. Externally focused
D. Detailed information
Answer: C
272. Management accounting reports are prepared
A. To meet the needs of decision makers within the firm
B. Whenever shareholders request them
C. According to guidelines prepared by the shares and Financial Services Authority
D. According to financial accounting standards
Answer: A

273. Management accounting is primarily concerned with -
A. Providing investors with useful information for valuing securities.
B. Providing creditors information on the status of their loans.
C. Providing managers with relevant information to help achieve organizational goals.
D. Providing the relevant taxation authorities with information to determine the amount
Answer: C
274. Which matters are taken into consideration while preparingo m

production budget ? .c
te
a
A. The estimate of the number of units to be produced during the budget period.
q M
B. Estimate of number of units to be sold.
c
M
C. Policy regarding the wage fixation for labourers.
D. Policy regarding the selection of suppliers from whom materials would be purchased.
Answer: A
275. Which of the following matter is to be taken into account which

preparing Material Purchase Budget ?
A. The supplier from whom materials are to be purchased.
B. The procedure of storing and preserving materials after they are received.
C. The prices at which receipts and issues of materials are to be recorded in stores ledger.
D. The maximum and minimum quantities of materials to be purchased.
Answer: D

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226. Following is used as tool for Cost Control
A. Marginal cost
B. Historical cost
C. Standard cost
D. All of the above

o m
.c
Answer: C
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a
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227. Management accounting assists the management
q
A. Only in control c
B. Only in direction
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C. Only in planning
D. In planning, direction and control
Answer: D
228. Management accounting is deals with -
A. Quantitative Information
B. Qualitative Information
C. Both (a) and (b)
Answer: C
229. Which of the following is an advantage of standard costing?
A. Measuring efficiency
B. Facilitates cost control

C. Determination of variance
D. All of the above
Answer: D
230. Which of the following is not a functional budget?
A. Labour budget
B. Cash budget
C. Materials budget
o m
D. Expenses budget
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Answer: A
a
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231. Which is the mostly likely purpose of budgeting?
c
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A. Planning and control of an organization's income and expenditure
B. Preparation of a five-year business plan
C. Company valuation
D. Assess the non-financial performance of an organization
Answer: A
232. __________ Accounting becomes a source of information for

Management Accounting.
A. Financial
B. Cost
C. Both (a) and (b)
Answer: C
233. Calculate the production budget from the following data: sales 89,350
units; opening inventory 23,864 units; closing inventory 33,156 units.

A. 80,058 units
B. 1,46,370 units
C. 32,320 units
D. 98,642 units
Answer: D
234. Fixed budget is useless for comparison when the level of activity -
A. Increases
o m
B. Fluctuates both ways
.c
te
C. Decreases
a
D. Constant
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Answer: B
c
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235. The budget committee consists of -
A. Managers
B. Budget officers
C. Creditors
Answer: B
236. A budget centre is -
A. Department or part of the department
B. Meeting place for budget committee
C. Office of the budget officer
Answer: A

237. The main objective of budgetary control is -
A. To define the goal of the firm
B. To coordinate different departments
C. To plan to achieve its goals
D. All of the above
Answer: C
238. Production budget is - o m

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A. Dependent on purchase budget
te
a
B. Dependent on sales budget
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C. Dependent on cash budget
c
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Answer: B
239. Sales budget shows the sales details as -
A. Month wise
B. Product wise
C. Area wise
D. All of the above
Answer: D
240. An example of long period budget is -
A. R & D budget
B. Master budget
C. Sales budget
D. Personnel budget
Answer: A

241. The budgets are classified on the basis of -
A. Time
B. Function
C. Flexibility
D. All of the above
Answer: D
242. Budget relating to the key factor is prepared - o m

.c
A. After other budgets
te
a
B. With other budgets
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C. Before other budgets
c
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Answer: C
243. Key factor is also known as -
A. Limiting factor
B. Governing factor
C. Principal factor
D. All of the above
Answer: D
244. In responsibility accounting system -
A. Budgets are prepared
B. Actual performance is recorded
C. The performance is reported
D. All of the above
Answer: D

245. The responsibility accounting emphasizes the performance of -
A. System
B. Men
C. Both (a) and (b)
D. None of these
Answer: B
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246. The responsibility accounting is also called -
.c
A. Profitability accounting
te
a
B. Activity accounting
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C. Both (a) and (b)
c
D. None of these
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Answer: C
247. The responsibility accounting is the part of -
A. Financial accounting
B. Management accounting
C. Mechanized accounting
D. None of these
Answer: B
248. The responsibility accounting is a controlling tool for -
A. Top?level management
B. Lower level management
C. Middle level management
D. None of these
Answer: A

249. Which of the following system emphasizes on cost control ?
A. Cost accounting
B. Responsibility accounting
C. Financial accounting
D. None of these
Answer: B
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250. The responsibility centres come under the responsibility of -
.c
A. Cost accountants
te
a
B. Management accountant
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C. Responsibility managers
c
D. Auditor
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Answer: C

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176. Which items are added in Current year profit to get Net profit before
tax.I)Interim dividend II)Provision for tax III)Refund of tax IV)Transfer to
reserves
A. All
B. Only III
o m
C. Only II and IV
.c
D. Only I,II and IV
te
a
Answer: D
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c
177. Which are financing activities?I)Issue of shares II)Interest Paid
M of debentures
III)Dividend paid IV)Redemption
A. All
B. Only I,II and IV
C. Only I and IV
Answer: B
178. Which of the following is not the objective of budgetary control?

I)Control
II)Danger of rigidity
III)Motivation
IV)Based on estimates
A. Only II
B. Only II and IV
C. Only II,III and IV
D. All I,II,III and IV
Answer: B

179. Which of the following is the limitation of Zero based
budgeting.I)Resist new ideas II)Control on expenditure III)Requires proper
training IV)Conflicts
A. All
B. Only I and IV
C. Only III and IV
Answer: D
o m
.c
e Rs 50,000 at 10,000 units of
180. The fixed administration expensestare
a cost at 8000 units?
production.What will be the per unit fixed
q M
A. Rs 5 per unit
c
B. Rs 8.33 M
C. Rs 6.25 per unit
D. Rs 10
Answer: C
181. Labour Efficiency Variance is the sum total of I)Labour Mix variance
II)Labour Cost Variance III)Idle time Variance IV)Labour yield variance
A. Only I and IV
B. All
C. Only II and III
Answer: D
182. Total Actual material is 1250 Kg.The Standard qty of Material A=800Kg
and B=400Kg.What is the revised Std qty of A and B respectively.
A. 825kg,425Kg

B. 950Kg,300Kg
C. 833Kg,417Kg
D. 750Kg,500Kg
Answer: C
183. AQ=2500Kg ,SP=Rs 2.5,SQ=2400Kg,AP=Rs 3 .Calculate Material Cost

variance.
A. 1500 F
o m
B. 1500 A
.c
C. 950 F
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D. 950 A
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Answer: B
c
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184. BE point=40,000 ,Fixed Cost=15,000.Calculate P/V ratio.
A. 3.75%
B. 0.38%
C. 26.66%
D. 37.50%
Answer: D
185. Calculate Break Even Point in units if Fixed cost is 15,000 ,SP=15 and
VC=12
A. 1000 units
B. 1250 units
C. 1500 units
D. 5000 units
Answer: D
186. Calculate Profit if Mos=40%,P/v ratio=50% and Actual

Sales=10,00,000.
A. 900000
B. 500000
C. 200000
D. 400000
Answer: C
Percentage) respectively. o m
187. Variable cost ratio =80% and Mos=40%.Calculate P/V ratio and BEP(in
.c
A. 60%,60%
te
B. 20%,60% a
C. 60%,20% q M
c
D. 20%,20%
Answer: B
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188. At Break even point,Contribution is equal to .
A. Profit
B. Variable Cost
C. Fixed Cost
D. Selling Price
Answer: C
189. Which statement is true.I)Fixed budget assumes Changing business

conditions. II)Flexible budget is prepared for only one level of activity.
A. None is true
B. Both are true
C. Only I
D. Only II
Answer: A

190. Fixed cost=8000,Profit=5600 .Calculate Contribution.
A. 8000
B. 2400
C. 13600
D. 5600
Answer: C
m
o 20 are Rs8000,Rs9000
c
191. The wages due from Mar 20 ,Apr 20 and May
. payment of wages of 2
e
and Rs 10,000 respectively.There is delay in
months.What will be the wages paid in tMay
a
A. Rs 9000
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B. Rs 8000 c
C. Rs 10000
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D. Rs 27000
Answer: B
192. Type of accounting which specialises in providing information about

detailed cost of products?
A. Cost Accounting
B. Management Accounting
C. Financial Management
D. Financial Accounting
Answer: A
193. What is included in scope of management accounting? I)Internal

Control II)Budgeting III)Reporting to management IV)Office Services
A. Only II,III,IV
B. ALL I,II,III,IV

C. Only II and IV
D. Only I,II,IV
Answer: B
194. Which of the following is the basis of difference between Financial

and Management Accounting?
A. Publication and Audit
B. Periodic v/s Continuos reporting
o m
C. Statutory Requirements
.c
D. All of the above
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a
Answer: D
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c Cost accounting?I)Cost Ascertainment
195. What are the objectives of
II)Cost Control M
A. Only I
B. Both I & II
C. Only II
D. None of the Above
Answer: B
196. The status of management accountant is at what level as compared to

cost accountant?
A. Lower
B. Equal
C. Higher
D. No status at all
Answer: C
197. Which statement is true.I)Financial accounts are prepared according

to Accounting Standards. II)Management Accounting reports are also
prepared according to accounting standard.
A. Only II
B. Both I and II
C. Only I
D. None is true
Answer: C
o m
198. What indicate the relationship of different items of a financial
.c
statement with some common item by expressing each item as a
percentage of the common item.
te
a
A. Comparative Statements
q M
B. Ratio
c
C. Common size Statements M
Answer: C
199. Which is not the limitation of financial analysis?I)Effect of personal

Bias II)Identify Trend III)Judge Efficiency IV)Different accounting policies
A. Only I
B. Only II and III
C. Only II , III and IV
D. Only I and IV
Answer: B
200. Given inventory of 24,000, other current assets of 12,000 and current
liabilities of 20,000, the acid test (quick ratio) will be:
A. 1.8 :1
B. 0.6 :1

C. 1.2:1
D. 1.6 :1
Answer: B
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Chapter: Budgetary Control
151. Revision of budgets is…
A. unnecessary
B. can’t determine
o m
C. necessary
.c
D. inadequate data
te
a
Answer: C
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c will…
152. Frequent revision of budgets
M
A. affects its reliability
B. increase the accuracy
C. both
D. subjective matter
Answer: A
153. Usually the production budget is stated in terms of…
A. money
B. quantity
C. both
D. none
Answer: C
154. Budget period is the…
A. period of budget committee

B. period of budget centres
C. period for which a budget is prepared
D. period of budget officer
Answer: C
155. Budget period depends upon…
A. the type of budget
B. the nature of business

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C. the length of trade cycles
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D. all of these
a
Answer: D
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156. A key factor is one which restricts…
A. the volume of production
B. the volume of sales
C. the volume of purchase
D. all of the above
Answer: A
157. Plant utilization budget and Manufacturing overhead budgets are

types of
A. production budget
B. sales budget
C. cost budget
D. none of the above
Answer: A

158. A budgeting process which demands each manager to justify his
entire budget in detail from beginning is
A. functional budget
B. master budget
C. zero base budgeting
Answer: C
o m
.c
159. Budgetary control system facilitates centralized control with…
te
A. decentralized activity a
B. centralized activity
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c
C. both
D. none
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Answer: C
Chapter: more mcqs
160. R&D budget and Capital expenditure budget are examples of
A. short-term budget
B. current budget
C. long-term budget
Answer: C
161. The scare factors is also known as
A. key factor
B. abnormal factor
C. linking factor

Answer: A
162. In Management accounting,emphasis and focus should be
A. future oriented
B. past oriented
C. communication oriented
D. bank oriented
o m
Answer: A
.c
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163. What are the characteristics of management accounting?
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A. Decision Making
c
B. Internal Use M
C. Optional
D. All of the above
Answer: D
164. The management accounting can be stated an extension of I)Cost

Accounting II)Financial Accounting
A. Only I
B. Only II
C. Both I and II
Answer: C
165. Management accounting assists the management
A. Only in control
B. Only in decision making

C. Only in planning
D. In planning, decision making and control
Answer: D
166. Which of the following is not the limitation of Management

Accounting?I)Developing Stage II)Resistance from Staff III)Lack of wide
knowledge IV)Decision Making
A. Only I,II,III
B. Both I & IV
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C. Only IV
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D. Only I a
Answer: C
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167. Data in management accounting is derived from
A. Cost Accounting
B. Financial Accounting
C. Other Sources
D. All of the above
Answer: D
168. Financial accounting is the art of .I)Classifying II)Interpreting

III)Recording IV)Summarising .Write Correct sequence.
A. III,IV,II,I
B. III,I,IV,II
C. III,I,II,IV
D. III,IV,I,II
Answer: B
169. Which statement is true.I)Cost records are compulsory in all

industries. II)Management accounting records are compulsory by law.
A. Both are False
B. Only II
C. Both I and II
D. Only I
Answer: A
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170. Which technique used for figures of two or more periods are placed
side by side to facilitate easy and meaningful comparisons?
.c
A. Comparative Statements
te
B. Common size Statements a
C. Trend q M
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D. None
Answer: A
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171. Total Assets in 2018 10 lac(Negative );in 2019 15 Lac (Positive).What
is the Percentage change?
A. 150%
B. 100%
C. 250%
D. 50%
Answer: C
172. What is treated as the base in common size P& L statement.
A. RFO
B. Other Incomes
C. Total Income
D. Profit before tax
Answer: A

173. Working capital=45,000 ,Total Debt=1,00,000 , LT debt=70,000, what is
value of Current assets?
A. 30000
B. 15000
C. 25000
D. 75000
Answer: D
o m
.c
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174. If Inventory turnover ratio=5 times,what is avg age if inventory?
t
a
A. 73 days
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B. 80 days
c
C. 70 days
D. 69 days
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Answer: A
175. What is formula of Capital employed? I)Shareholder's Funds+Non

Current Liabilities II)Total Assets-Current Liabilities III)Non Current Assets-
Working capital IV)Total Assets-Total Liabilities
A. Only III and IV
B. Only I,II and III
C. All I,II,III,IV
D. Only I and II
Answer: D

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Chapter: working capital
126. What are people who buy or sell in the market to make profits called?
A. hedgers
B. speculators
o m
C. arbitrageurs
.c
te
a
Answer: B
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127. Which of the following isca technique that helps the exporter to sell
Mor financial institution without recourse?
the receivables to any bank
A. forfeiting
B. leading & lagging
C. derivatives
D. netting
Answer: A
128. Money market financial services not include:
A. bill discounting
B. merchant banking
C. leasing
D. securitization
Answer: B
129. Factoring involves:

A. providing short term loan
B. providing long term loan
C. financing of export receivables
D. management of receivables of borrower
Answer: D
130. The tools of treasury management does not include:
A. foreign exchange management

o m
B. cash management
.c
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C. receivable management
a
D. risk management
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Answer: D
c
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131. Under which type of bank borrowing can a borrower obtain credit
from a bank against its bills?
A. letter of credit
B. cash
C. purchase or discounting of bills
D. working capital loan
Answer: C
132. The factors that affect dividend policy are:
A. tax consideration
B. privatization
C. foreign investment
D. working cash flow
Answer: A

133. To financial analysts, "working capital" means the same thing as
__________.
A. total assets
B. fixed assets
C. current assets
D. current assets minus current liabilities.
Answer: C
o m
.c
134. Which of the following would be consistent with an aggressive
approach to financing working capital?
te
a
M
A. financing short-term needs with short-term funds.
q
c
B. financing permanent inventory buildup with long-term debt.
M
C. financing seasonal needs with short-term funds.
D. financing some long-term needs with short-term funds.
Answer: D
135. Which of the following would be consistent with a conservative

approach to financing working capital?
B. financing short-term needs with long-term debt.
C. financing seasonal needs with short-term funds.
Answer: B
136. -Which of the following would be consistent with a hedging (maturity

matching) approach to financing working capital?
B. financing short-term needs with long-term debt.

C. financing seasonal needs with long-term funds.
Answer: A
137. The amount of current assets that varies with seasonal requirements
is referred to as __________ working capital.
A. permanent
B. net
o m
C. temporary
.c
D. gross
te
a
Answer: C
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Chapter: Budgetary Control
M
138. A budget is a plan of action expressed in…
A. financial terms
B. non?financial terms
C. both
Answer: C
139. Budget is prepared for a…
A. indefinite period
B. definite period
C. period of one year
D. six months
Answer: B
140. A budget is tool which helps the management in planning and control

of…
A. all business activities
B. production activities
C. purchase activities
D. sales activities
Answer: A
the… o m
141. Budgetary control system acts as a friend, philosopher and guide to
.c
A. management
te
B. share holders a
C. creditors q M
c
D. employees
Answer: A
M
142. Budgetary control system defines the objectives and policies of the…
A. production department
B. finance department
C. marketing department
D. all
Answer: D
143. Budgetary control facilitates easy introduction of the…
A. marginal costing
B. ratio analysis
C. standard costing
Answer: C

144. Budgetary control helps the management in…
A. obtaining bank credit
B. issue of shares
C. getting grants from government
D. all of these
Answer: A
o m
145. Budgetary control system helps the management to eliminate…
.c
A. undercapitalization
te
a
B. overcapitalization
q M
C. both
c
M
Answer: C
146. Budgetary control provides a basis for…
A. bonus shares
B. rights shares
C. remuneration plans
D. none
Answer: C
147. Budgetary control helps to introduce a suitable incentive and

remuneration based on…
A. changes in government policies
B. inflationary conditions
C. both
D. none
Answer: B

148. The success of budgetary control system depends upon the willing
cooperation of…
A. shareholders
B. management
C. creditors
D. all the functional areas of management
Answer: D
o m
.c
149. Recording of actual performance is….
te
a
A. an advantage of budgetary control
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B. a step in budgetary control
c
M
C. a limitation of budgetary control
D. none
Answer: B
Chapter: more mcqs
150. Budgetary control __________ replace management in

decision?making.
A. can
B. cannot
C. sometimes
D. inadequate data
Answer: B

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101. The Funds required by way of permanent working capital should be

provided by __________.
A. indigenous banks
B. commercial banks o m
.c
C. rbi
te
D. proprietors a
Answer: D
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102. Service and Financial concerns may have _____.
A. longest operating cycle
B. shortest operating cycle
C. manufacturing phase
D. none of these
Answer: B
103. _____ is that minimum amount which should always be present in the
business to carry out the activities without a break.
A. net working capital
B. gross working capital
C. permanent working capital
D. temporary working capital
Answer: C
104. Working capital over and above the fixed working capital would be

termed as _______.
A. temporary working capital
B. permanent working capital
C. net working capital
D. gross working capital
Answer: A
capital. o m
105. __________ denotes a situation of too much or excessive working
.c
A. gross working capital
te
B. redundant working capital a
C. permanent working capital q M
c
D. temporary working capital
Answer: B
M
106. _________ being the life blood of a business requires to be
maintained in reasonably adequate quantity to run business successfully.
A. working capital
B. proper documents
C. assets
D. petty cash
Answer: A
107. According to ________ working capital refers to the company’s total

investment in current assets.
A. net concept
B. gross concept
C. equal concept

D. accounting concept
Answer: B
108. According to ________ working capital refers to the difference

between current assets and current liabilities.
A. equal concept
B. accounting concept
C. net concept
o m
D. gross concept
.c
Answer: C
te
a
q M
109. The funds required for running an organisation are generally called as
____________. c
A. overdraft
M
B. cash credit
C. working capital
D. operating profit
Answer: C
110. The __________ is required to ensure circulation of operating cycle.
A. regular working capital
B. fixed working capital
C. reserve working capital
D. variable working capital
Answer: A
111. ________ is the excess amount over the requirement for regular
working capital.

A. variable working capital
B. fixed working capital
D. regular working capital
Answer: C
112. The working capital required to meet the seasonal need of the
business is called _______.
o m
A. fixed working capital
.c
B. variable working capital
te
a
C. special working capital
q M
D. seasonal working capital
c
Answer: D
M
113. ___________ is required to meet special exigencies such as
launching of extensive marketing campaigns for conducting research.
A. seasonal working capital
B. special working capital
D. regular working capital
Answer: B
114. The statement of changes in financial position prepared to determine

only the sources and uses of working capital between two dates of
balance sheet is known as __________.
A. cash flow statement
B. memorandum balance sheet
C. fund flow statement
D. profit and loss account
Answer: C

115. What are the aspects of working capital management?
A. inventory management
B. receivable management
C. cash management
D. all of the above
Answer: D
m
o to balance cash inflows
c
116. _________ function includes a firm’s attempts
.
and outflows.
e
at
A. finance
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B. liquidity
c
C. investment
D. dividend
M
Answer: B
117. Firms which are capital intensive rely on _________.
A. equity
B. short term debt
C. debt
D. retained earnings
Answer: C
118. Hirer is entitled to claim ___________.
A. depreciation
B. salvage value
C. hp payments
D. none of above
Answer: A

119. Which of the following is not an advantages of trade credit?
A. easy availability
B. flexibility
C. informality
D. buyout financing
Answer: D
m
o relevance?
c
120. Which of the following are theories for dividend
.
e
A. walter’s model
at
B. mm approach
q M
C. game theory
c
D. market value theory M
Answer: A
121. What is not a form of dividend?
A. cash dividends
B. bonus shares(stock dividend)
C. share split
D. split reverse
Answer: D
122. The percentage of earnings paid as dividends is called __________.
A. dividend policy
B. payout ration
C. cash dividends
D. reverse split
Answer: B

123. What are the various methods of estimating cash?
A. receipts and payment method
B. adjusted profit & loss method
C. balance sheet method
D. all of the above
Answer: D
m
olevel of risk, the
c
124. The art of managing, within the acceptable
. is called _________.
e
consolidated funds optimally and profitably
at
A. integrated treasury
q M
B. treasury management
c
C. merchant banking

M
Answer: B
125. What are the different types of underlying assets?
A. stocks
B. bonds
C. currency
D. stock indices
Answer: D

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Chapter: Analysis & interpretation of financial statement
76. Operating ratio is calculated by
A. (operating cost/gross sales) *100
B. (operating cost/gross sales) *100
o m
C. (operating cost/net sales) *100
.c
te
a
Answer: A
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77. The financial decision making that relates to current assets or short
term asset is known as __________________.
A. working capital
B. non-working capital
C. venture capital
D. all of the above
Answer: A
78. In what order should current assets be present on a statement of

financial position?
A. cash, bank, trade receivables, inventories
B. trade receivables, bank, cash, inventories
C. inventories, cash, bank, trade receivables
D. inventories, trade receivables, bank, cash
Answer: D

79. If value of opening inventories increases, what happens to the value of
gross profit?
A. decreases
B. increases
C. stays the same
D. gets closer to net profit
Answer: A
o m
80. What does the statement of comprehensive income show?.c
te
a
A. the liquidity position of a business at a point in time
q M
B. the value of assets bought by a business over a period point in time
c
M
C. the profit or loss made by a business over a period of time
D. the value of a business at a point in time
Answer: C
81. Depreciation is applied to non-current assets in the statement of

financial position in order to
A. show a profitability valuation of the non-current assets
B. show a true and fair value of the non-current assets
C. show how the non-current assets are affected by inflation
D. show what the non-current assets could make if leased out
Answer: B
82. What would be the most likely impact on trade receivables days if
invoice discounting was offered to and accepted by a large customer of a
business?
A. trade receivables days would no longer exist
B. trade receivables days would reduce

C. trade receivables days would increase
D. trade receivable days would not be affected
Answer: B
83. ___________in accounting, is when the costs to acquire an asset are

expensed over the life of that asset rather than in the period it was
incurred?
A. purchasing.
B. capitalization.
o m
.c
C. selling.
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D. financing a
Answer: B
q M
c
M
84. Capitalization is the sum of a corporation’s stock, long term debts
&________?
A. liquid liability
B. retained earnings
C. fixed asset.
D. short term debts.
Answer: B
85. __________ is a situation in which actual profits of a company are not

sufficient enough to pay interest on debentures, on loans and pay
dividends on shares over a period of time?
A. under capitalization
B. over capitalization
C. market capitalization
Answer: B

86. Asset structure = _________+__________.
A. current asset+fixed asset
B. tangible asset+fixed asset
C. fixed asset+current asset
D. intangible asset+current asset
Answer: C
o m
87. In finance, "working capital" means the same thing as __________.
.c
A. total assets.
te
a
B. fixed assets.
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C. current assets.
c
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D. current assets minus current liabilities.
Answer: C
88. In deciding the appropriate level of current assets for the firm,
management is confronted
with
_____________.
A. a trade-off between profitability and risk.
B. a trade-off between liquidity and marketability.
C. a trade-off between equity and debt.
D. a trade-off between current assets and profitability.
Answer: A
89. Permanent working capital ___________.
A. varies with seasonal needs.
B. includes fixed assets.
C. is the amount of current assets required to meet a firm\s long-term minimum needs.

D. includes accounts payable.
Answer: C
90. Net working capital refers to ___________.
A. total assets minus fixed assets.
B. current assets minus current liabilities.
C. current assets minus inventories.
D. current assets.
o m
Answer: B
.c
te
a capital" means the same thing as
91. To financial analysts, "gross working
________.
q M
c
A. fixed assets.
B. current assets.
M
C. working capital.
D. cost of capital.
Answer: B
92. An example of fixed asset is________.
A. live stock.
B. value stock.
C. income stock.
Answer: A
93. Which one of the following is not the determinant of the working
capital?
A. size of the firm

B. operating cycle
C. terms of credit
D. competitors
Answer: D
94. Permanent working capital ___
A. will vary at all times
B. will vary with volumes

o m
C. fixed at all times
.c
te
D. fluctuates according to the season
a
Answer: C
q M
c
M
95. Which one of the following is not a method to find working capital
requirement?
A. percent of sales method
B. working capital components method
C. operating cycle method
D. physical method
Answer: D
96. The Capital used for meeting routine and repetitive expenses of day to
day business operations is called____.
A. reserve capital
B. working capital
C. fixed capital
D. regular capital
Answer: B

97. Gross working capital represents __________.
A. total current liabilities
B. the excess of current assets over current liabilities
C. total current assets
D. total liquid assets
Answer: C
o m
98. Net working capital is the excess of current assets over ________.
.c
A. current liabilities
te
a
B. long term liabilities
q M
C. contingent liabilities
c
D. fixed liabilities
M
Answer: A
99. A positive (net) working capital will arise when current assets exceed
_________.
A. fixed liabilities
B. contingent liabilities
C. long term liabilities
D. current liabilities
Answer: D
100. The net working capital, being the difference between current assets
and current liabilities is a _______.
A. misleading concept
B. quantitative concept
C. qualitative concept

Answer: C
o m
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51. The dividend is related to the market value of shares in .
A. interest cover ratio.
B. fixed dividend cover ratio.
o m
C. debt service coverage ratio.
.c
D. dividend yield ratio.
te
a
Answer: D
q M
c as .
52. Turnover ratio is also known
A. activity ratios.
M
B. solvency ratios.
C. liquidity ratios.
D. profitability ratios.
Answer: A
53. Inventory or stock turnover ratio is also called .
A. stock velocity ratio.
B. debtors velocity ratio.
C. creditors velocity ratio.
D. working capital turnover ratio.
Answer: A
54. Which ratio is calculated to ascertain the efficiency of inventory

management in terms of capital investment?

A. stock velocity ratio.
Answer: A
55. The ratio which measures the relationship between the cost of goods
sold and the amount of average inventory is
o m
A. stock turnover ratio.
.c
te
a
q M
c
Answer: A
M
56. Sales – Gross Profit = .
A. net profit.
B. administrative expenses.
C. cost of production.
D. cost of goods sold.
Answer: D
57. Opening stock + purchases + direct expenses – closing stock =
A. net profit.
B. cost of production
C. administrative expenses.
D. cost of goods sold
Answer: D

58. Debtors turnover ratio is also called .
D. working capital turnover ratio
Answer: B
59. Creditors turnover ratio is also called . o m

.c
te
a
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C. accounts payables ratio.
c
M
Answer: C
60. Which of the following shows details and results of the company's
profitrelated activities for a period of time?
A. balance sheet
B. income statement
C. statement of cash flows
D. statement of financial position
Answer: B
61. Which of the following financial statements is also known as a

statement of financial position?
A. balance sheet
B. statement of cash flows
C. income statement

Answer: A
62. A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit
of Rs. 2,00,000 and Expenses of Rs.1,00,000. What is the Net Profit Ratio?
A. 20%,
B. 50%,
C. 10%,
o m
D. 40%
.c
Answer: A
te
a
q M
63. Which technique used for figures of two or more periods are placed
c
side by side to facilitate easy and meaningful comparisons?
A. comparative statement
M
B. common?size statement
C. trend analysis
D. none
Answer: A
64. Which of the following are techniques, tools or methods of analysis

and interpretation of financial statements?
A. ratio analysis
B. average analysis
C. trend analysis
D. all of the above
Answer: D
65. Which of the following is NOT a key ratio in the prediction of

bankruptcy as developed by Edward Altman?

A. debt to equity
B. current ratio
C. retained earnings as a percent of total assets
D. total assets
Answer: A
66. _______________ ratios measure the ability of a firm to earn an

adequate return on sales, total assets and invested capital.
o m
A. asset utilization
.c
B. liquidity
te
a
C. profitability
q M
D. debt utilization
c
Answer: C
M
67. The ________ ratios help determines the degree of financial risk and
earnings volatility present in a firm.
A. profitability
B. asset utilization
C. liquidity
D. none of the above.
Answer: C
68. __________ analysis is the process of studying a series of ratios for a

company and/or industry over time.
A. dupont
B. trend
C. common size
D. all of the above
Answer: C

69. The ideal level of current ratio is
A. 4:2
B. 2:1
C. both a and b
Answer: B
o m
70. The most precise test of liquidity is
.c
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A. quick ratio
a
B. current ratio
q M
C. absolute liquid ratio
c
D. none of the above M
Answer: C
71. Debt-equity ratio is a sub-part of
A. short-term solvency ratio
B. long-term solvency ratio
C. debtors turnover ratio
Answer: A
72. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs
60,000. Determine value of stock.
A. rs 54,000
B. rs 60,000
C. rs 1, 62,000
Answer: C

73. Funds flow statements are prepared so as to
A. to identify the changes in working capital
B. to identify reasons behind change in working capital
C. to know the item-wise outflow of funds during given period
D. all of the above
Answer: D
o m
74. Net Profit ratio is calculated by
.c
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A. (gross profit/gross sales) *100
a
B. (gross profit/net sales) *100
q M
C. (net profit/net sales) *100
c
D. none of the above M
Answer: C
75. If sales is Rs 5, 00,000 and net profit is Rs 1, 20,000 Net Profit ratio is
A. 24%
B. 41%
C. 60%
Answer: A

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726. Which of the following costs is not relevant when considering the
closure of a department within a factory?
A. Variable overheads
B. Direct materials
C. Fixed overheads
o m
D. Direct labour
.c
te
Answer: C
a
727. A Cost Unit is _____________ q M
c
A. The cost per machine hour M
B. The Cost per labour hour
C. A unit of production in relation to which costs are ascertained
D. A measure of work Output in a standard hour
Answer: C
728. Factory Overheads are also called :
A. Sundry Overhead
B. Works Overhead
C. Extra Overhead
D. Total Overhead
Answer: B
729. Expenditure over and above prime cost is known as ________.
A. overhead

B. factory cost
C. cost of sales
D. cost of production
Answer: A
730. If the actual price input is $700, the budgeted price of input is $400
and the actual quantity of input are 50 units, then the price variance will be
A. $15,000
o m
B. $13,000
.c
C. $11,000
te
a
D. $9,000
q M
Answer: A
c
M
731. Return on capital employed shows the ________ of a firm.
A. Profitability
B. Overall efficiency
C. Both
Answer: C
732. A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are ?2,00,000

and Inventory is ?1,80,000. Current Ratio will be :
A. 0.9 : 1
B. 1.9 : 1
C. 1.4 : 1
D. 2.4 : 1
Answer: D
733. Total revenue from operations ?27,00,000; Credit revenue from

operations ?18,00,000; Opening Debtors ?3,20,000; Closing Debtors
?4,00,000; Provision for Doubtful Debts ?60,000. Trade Receivables
Turnover Ratio will be :
A. 7.5 times
B. 9 times
C. 6 times
D. 5 times
Answer: D
o m
.c
734. In a product mix decision, which is the most important factor to
consider to try to maximise profit?
te
a
A. Product unit selling price
q M
c
B. Contribution per unit of a scarce resource used to make the product
M
C. Contribution per unit of the product
D. Variable cost per unit of the product
Answer: B
735. If the contribution margin per unit is $700 per unit and the break-even
per unit is $40, then the fixed cost would be
A. $35,000
B. $28,000
C. $17,500
D. $82,000
Answer: B
736. The budget which commonly takes the form of budgeted Profit and
Loss Account and Balance Sheet is
A. Cash Budget
B. Fixed Budget

C. Master Budget
D. Flexible Budget
Answer: C
737. Which of the following is not likely to be a reason of unfavourable

direct labour efficiency variance?
A. Increase in direct materials prices
B. Frequent break downs during production process
o m
C. Lack of proper supervision
.c
D. Use of old, outdated or faulty equipment
te
a
Answer: A
q M
738. What is main componentcof operating expenses?
A. Selling expenses
M
B. Distribution expenses
C. Production expenses
D. None
Answer: D
739. Comprehensive Machine Hour Rate includes :
A. Machine Operators Wages
B. Managing Directors Salary
C. Income Tax
D. Office rent
Answer: A
740. The purpose of financial accounting is to provide information for

________.

A. fixing prices
B. controlling cost
C. locating factors leading to wastages and losses
D. assessing the profitability and financial position of the firm
Answer: D
741. XYZ factory working for 50 hours per week employs hundred workers
on a job work. The standard output is 200 units per gang hour and
m
standard rate is Rs 1 per hour. During a week in June, five employees were
o
c
paid @ Rs 1.20 per hour and ten employees were paid @ 80 paise per
.
e
hour. Rest of the employees were paid @ standard hour rate. The actual
t
a
number of units produced was 10,200. Determine labour cost variance
A. Rs 100 favourable
q M
c
B. Rs 150 unfavourable
C. Rs 150 favourable
M
D. Rs 100 unfavourable
Answer: C

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Chapter: more mcqs
1. Fixed assets are Rs 5,00,000 , Current assets are Rs 3,00,000, Current

liabilities are Rs 1,00,000. There is no investment. Capital employed will be
:
A. rs 8,00,000
o m
B. rs 7,00,000
.c
te
C. rs 9,00,000
a
D. rs 6,00,000
q M
Answer: B
c
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2. Current liabilities include creditors Rs 2,00,000, Bills payable Rs 1,00,00
Expenses payable Rs 50,000 Bank Overdraft Rs 2,00,000. Quick liabilites
will be :
A. rs 3,50,000
B. rs 3,00,000
C. rs 2,50,000
D. rs 2,00,000
Answer: A
3. Fixed assets include premises Rs 10,00,000, Machinery Rs 5,00,000

Furniture Rs 2,00,000 Vehicles Rs 3,00,000 Live stock Rs 1,00,000 Goodwill
Rs 2,00,000, Patents & Copy rights Rs 1,50,000, Underwriting commission
Rs 50,000 Fixed tangible immovable asset will be :
A. rs 10,00,000
B. rs 20,00,000
C. rs 3,00,000

D. rs1,50,000
Answer: A
4. Kumar Ltd. reported net sales Rs 9,00,000, Rs 9,90,000 and Rs 10,80,000

in the year 2013, 2014 and 2015. If 2013 is the base year what is the trend
% for 2015?
A. 1.2
B. 0.75
C. 0.8
o m
.c
D. 0.9
te
Answer: A a
q M
5. Total current assets are Rsc30,000, Rs 54,000 and Rs 66,000 in 2013,
M
2014 and 2015 respectively. If 2013 is the base year what is the % increase
from 2013 to 2015?
A. 1.2
B. 1.25
C. 0.6
D. 0.5
Answer: A
6. Cost of goods sold for a company is Rs 30,00,000, Rs 24,00,000 and Rs

18,00,000 for 2015, 2014 and 2013 respectively. If 2013 is the base year the
percentage increase in cost of goods sold from 2013 to 2015 is
A. 0.6667
B. 0.7
C. 0.5
D. 0.45
Answer: A

7. Gauri Ltd has a debt equity of 3:2 and total assets turnover is 2. If NP
ratio is 10%. The ROE is
A. 0.4
B. 0.5
C. 0.35
D. 0.2
Answer: B
o m
.c
8. ABC Ltd has total assets turnover ratio and total assets to Net worth are
te
1.75 and 2 respectively. If NP ratio is 10% the ROE will be :
a
A. 0.2
q M
B. 0.35 c
C. 0.4 M
D. 0.6
Answer: B
9. Current Assets are Rs 5,00,000 and Current liabilities are Rs 2,00,000.

The Current ratio is
A. 1.5
B. 1.75
C. 2.5
D. 3.20,
Answer: C
10. WIP is Rs 14,000, COGS is Rs 1,50,000, 360 days in a year WIP

Turnover period is :
A. 30 days
B. 40 days

C. 34 days
D. 45 days
Answer: C
11. S Ltd has a plan to produce 52,000 units for the year 2020-21 selling
price is Rs 1,000 per unit. Credit allowed to customers is 8 weeks. One
year consists of 52 weeks. The debtors value is
A. rs 40,00,000
B. rs 80,00,000
o m
.c
C. rs 70,00,000
te
D. rs 60,00,000 a
Answer: B
q M
c
M
12. K Ltd has decided to produce and sell 5,000 units during the year 2020-
21. S.P. is Rs 200 per unit. 70% of sales will be on credit and credit period
wil be 6 weeks. One year consists of 50 weeks. The debtors will be :
A. rs 70,000
B. rs 80,000
C. rs 84,000
D. rs 95,000
Answer: C
Chapter: Introduction
13. ………………………Accounting is concerned with measurement of the

cost and value of people for the organization.
A. financial accounting
B. management accounting
C. corporate accounting
D. human resource accounting
Answer: D

14. The important objective of …………………..accounting is to organize
the accumulated financial data into meaningful information.
Answer: A
o m
.c
e
15. ……………………..accounting is the adoption and analysis of
t
accounting
a
information and its diagnosis and explanation in such a way so as to
assist the
q M
decision -makers. c
M
Answer: B
16. Planning is that function of ……………………..which requires an

efficient system of decision – making.
A. finance
B. management
C. h.r
D. administration.
Answer: B
17. …………………..costs are pre-determined targets adainst which actual

results are evaluated.

A. marginal
B. standard
C. actual
D. budgeted
Answer: B
18. Financial Accounting data is primarily meant for …………………
A. external users
o m
B. internal users
.c
te
C. employees
a
D. bank
q M
Answer: A
c
M
19. Cost Accountant should report to the ……………management.
A. top
B. middle.
C. administration
D. lower
Answer: A
20. The transaction which increase working capital are ………….. of funds
A. sources
B. application
C. utilization
D. diversion
Answer: A

21. Management accounting begins where………………. accounting ends.
C. cost accounting
Answer: C
o m
.c
te
22. Stock is considered as a liquid asset as anytime it can be converted
into cash immediately.
a
A. yes
q M
c
B. no
C. only yes
M
Answer: B
23. . Return on properties funds is also known as.
A. return on net worth
B. return on shareholders fun
C. return on the shareholders investment
D. all the above
Answer: D
24. What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net
goods sold is Rs 2,00,000 & sales return is Rs10,000 ?
A. 13 %
B. 28%

C. 26%
D. 20%
Answer: D
25. Which of the following is not included in current assets.
A. debtors
B. stock
C. cash at bank
o m
D. cash in hand
.c
te
Answer: B
a
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Chapter: more mcqs
26. Liquidity ratios are expressed in
A. pure ratio form
B. percentage
o m
C. rate or time
.c
te
a
Answer: A
q M
c
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27. Working capital turnover ratio can be determined by :
A. ( gross profit / working capital )
B. ( cost of goods sold / net sales )
C. ( cost of goods sold / working capital)
Answer: A
28. Determine Working capital turnover ratio if, Current asset is Rs

1,50,000, current liability is Rs 1,00,000 & cost of goods sold is Rs
3,00,000.
A. 5 times
B. 6 times
C. 3 times
D. 1.5 times
Answer: B

29. The ratio analysis is helpful to management in taking several
decisions, but as a mechanical substitute for judgement and thinking, it is
worse than useless.
A. true
B. false
C. may be false
D. both a and b
Answer: A
o m
.c
30. Profit for the objective of calculatinge
a t a ratio may be taken as
M
A. profit before tax but after interest
q
B. profit before interest &taxc
M
C. profit after interest & tax
D. all the above
Answer: D
31. If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is
A. 24%
B. 416%
C. 60%
Answer: A
32. General profitability ratios are based on
A. investment
B. sales
C. a & b

Answer: B
33. The ratios which reveal the final result of the managerial policies and
performance is .
A. turnover ratios.
B. profitability ratios.
C. short term solvency ratio.
o m
D. long term solvency ratio.
.c
Answer: B
te
a
34. Return on investment is a .
q M
c
A. turnover ratios.
B. short term solvency ratio.

M
C. profitability ratios.
Answer: C
35. Net profit ratio is a .
A. turnover ratio.
B. long term solvency ratio.
C. short term solvency ratio
D. profitability ratio.
Answer: D
36. Stock turnover ratio is a .
A. turnover ratio.
B. profitability ratio.

C. short term solvency ratio.
Answer: A
37. Current ratio is a
A. short-term solvency ratio.
B. long-term solvency ratio.
C. profitability ratio.
o m
D. turnover ratio.
.c
te
Answer: A
a
38. Proprietary ratio is a . q M
c
A. short-term solvency ratio. M
D. turnover ratio.
Answer: B
39. Fixed assets ratio is a
D. turnover ratio.
Answer: B
40. Fixed assets turnover ratio is a

D. turnover ratio.
Answer: D
41. The ratio which measures the profit in relation to capital employed is
known as
A. return on investment.
o m
B. gross profit ratio.
.c
C. operating ratio.
te
a
D. operating profit ratio.
q M
Answer: A
c
M
42. The ratio which determines the profitability from the shareholder’s
point of view is .
C. return on shareholders funds.
D. operating profit ratio.
Answer: C
43. Return on equity is also called
C. return on shareholders funds.
D. return on net worth.
Answer: D

44. Preliminary expenses is an example of
A. fixed assets.
B. current assets.
C. fictitious assets.
D. current liabilities.
Answer: C
45. Prepaid expenses is an example of . o m

.c
A. fixed assets.
te
a
B. current assets.
q M
C. fictitious assets.
c
D. current liabilities.
M
Answer: B
46. The ratio which is calculated to measure the productivity of total

assets is
A. return on equity.
B. return on share holders funds.
C. return on total assets.
D. return on equity share holders’ funds.
Answer: C
47. The ratio which shows the proportion of profits retained in the
business out of the current year’s profits is
A. retained earnings ratio.
B. pay out ratio
C. earnings per share.

D. price earnings ratio.
Answer: A
48. The ratio which indicates earnings per share reflected by the market
price is .
A. retained earnings ratio.
B. pay out ratio.
C. earnings per share.
o m
D. price earnings ratio.
.c
Answer: D
te
a
q M
49. The ratio establishes the relationship between profit before interest
c
and tax and fixed interest charges is .

M
Answer: A
50. The ratio shows the preference dividend as a proportion of profit

available for shareholders is
Answer: B

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Management Accounting Solved MCQs

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Management Accounting MCQs [set-29]

A. Variable batch costs

C. Variable setup costs

D. Fixed setup costs

703. To establish an effective system of standard costing it is essential that

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A. Chief financial officer

C. Chief line function

D. Chief staff function

706. Factory overhead is Rs 3,00,000 and direct material cost is Rs

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C. It provides information about the operating, investing and financing activities.

D. It explains the deviation of cash from Earnings.

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711. Cash flow example from an operating activity is

A. Purchase of Own Debenture

B. Sale of Fixed Assets

C. Interest Paid on Term-deposits by a Bank

713. Batch Costing is useful in determining:

A. Maximum Quantity of output

B. Minimum Quantity of output

C. Economic Batch Quantity

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A. All Direct Cost

B. All Indirect Cost

C. All Specific Cost

D. All Indirect and Direct Cost

716. The Moore Corporation is considering the acquisition of a new

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717. An annual report is issued by company to its :

A. Assets = Liabilities + Shareholders funds

B. Assets = Total funds

C. Assets = Funds of outsiders

D. None of the above

719. The process of budgeting includes

D. All of the above

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D. None of the above

721. Cash from Operations is equal to: o m

722. Margin of safety can be increased by

A. Decrease in setting price

B. Decline in volume of production

C. Reduction in fixed or the variable costs or both

D. None of the above

723. When profit-volume ratio is 40 % and sales value Rs.10,000, the

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A. Rs 40 per unit, Rs 2,00,000

B. Rs 50 per unit, Rs 10,00,000

C. Rs 20 per unit, Rs 1,00,000

D. None of the above

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676. Profit-Volume ratio is also known as

C. Marginal Income percentage

D. All of the above

D. All of the above

678. The P/V ratio can be improved by

A. Decreasing the selling price per unit

B. Increasing variable cost

C. Changing the sales mix

D. None of the above

A. 1 - Variable Cost Ratio

B. 1 + Variable Cost Ratio