Management Accounting

Management Accounting-Set 1
Management Accounting
Select The Blank

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

Question
Accounting is the art where transactions are …
Correct Answer
Summarized , Classified , Recorded
Your Answer
Summarized , Classified , Recorded
True/False
Question
The phrase ‘By Balance c/d.’ written on the credit side of the rent account, indicates credit balance for this account.
Correct Answer
False
Your Answer
False
Select The Blank

Question
The ________ variance is the difference between the actual variable overhead incurred and the standard variable
overhead charged to production.
Correct Answer
Total variable overhead
Your Answer
True/False
Question
Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts.
Correct Answer
True
Your Answer
True
Select The Blank

Question
The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax
considerations, statutory requirements etc.
Correct Answer
Accounting period
Your Answer
Accounting period
True/False
Question
Standard costs are used for external reporting.
Correct Answer
False
Your Answer
False
True/False
Question
It is said that the income statement represents wealth increase /decrease for the organisation.
Correct Answer
True
Multiple Choice Single Answer

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

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

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

Question
Techniques of management accounting include:
Correct Answer
Marginal costing , Budgetary control , Standard costing
Your Answer
Marginal costing , Cost control , Budgetary control , Standard costing
Match The Following

Question
Correct Answer
Your Answer
Profit and loss account
Commission received
Dividend paid
Manufacturing account
Work in Progress
Land & Building
Balance Sheet
Land & Building
Closing stock of finished goods
Trading account
Closing stock of finished goods
Work in Progress
True/False
Question
While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored.
Correct Answer
False
Your Answer
False

Question
If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional
profits, then following steps can be taken to achieve the target profit
Correct Answer
Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer
Increase the selling price , Increase the sales volume , Increase the selling efforts

Question
From the following, select intangible assets:
Correct Answer
Goodwill , Patents , Trade Marks
Your Answer
Patents , Trade Marks , Investments
True/False
Question
Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet.
Correct Answer
True
Your Answer
False

Question
Find the budget which is inadequate as a cost control technique :
Correct Answer
Fixed budget
Your Answer
Fixed budget
True/False
Question
Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices.
Correct Answer
True
Your Answer
True

Question
Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and closing stock Rs.1,47,750/-.
Calculate the Gross Profit.
Correct Answer
Rs.3,00,000/-
Your Answer
Rs.3,00,000/-
Select The Blank

Question
________ is an example of intangible asset.
Correct Answer
Goodwill
Your Answer
Land
True/False
Question
Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer
True
Your Answer
True
True/False
Question
Goods sent to the customers on approval basis should be treated as sales.
Correct Answer
False
Your Answer
False

Question
Features of Sunk cost are . . .
Correct Answer
Indicates historical cost , Not relevant in decision making process , Incurred in past
Your Answer
Indicates historical cost , Incurred in past , Relevant in decision making process
True/False
Question
Profitability statement indicates the amount of assets & liabilities.
Correct Answer
False
Your Answer
True
True/False
Question
A business is an activity carried out with the intention of earning the profit.
Correct Answer
True
Your Answer
True

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

Question
Correct Answer
Your Answer
Marginal costing , Cost control , Budgetary control
True/False
Question
The ideal budget period for a company engaged in generation and distribution of electricity is one year.
Correct Answer
False
Your Answer
False
Select The Blank

Question
The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the year.
Correct Answer
Depreciation
Your Answer
Depreciation
True/False
Question
According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of
cost of asset after deduction of the depreciation previously charged.
Correct Answer
True
Your Answer
True
Select The Blank

Question
Crane expenses should be apportioned on the basis of ________.
Correct Answer
Number of hours crane worked in the department
Your Answer
Number of hours crane worked in the department

Question
Essentials for effective implementation of budgetary control system are
Correct Answer
Commitment of top management , Clearly defined objectives , Continous budget education
Your Answer
Commitment of top management , Clearly defined objectives , Continous budget education

Question
Commission payable to General Manager is 10 % of the net profits. If the net profit before charging commission is
Rs.29,200/-, then what will be the amount of his net profit after commission?
Correct Answer
Rs.26,545.45
Select The Blank

Question
A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be followed.
Correct Answer
Budget
Your Answer
Budget
True/False
Question
A very wide scope of Management Accounting is the limitation by itself.
Correct Answer
True
Your Answer
True
Select The Blank

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

Question
The reporting method used in the costing system should be based on the principle of
Correct Answer
Management by exception
Your Answer
Management by objectives
True/False
Question
Balance sheet indicates the financial status of the business at given period.
Correct Answer
True
Your Answer
True

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

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

Question
Measurement of ________ gives an idea of the degree of mobility of labour.
Correct Answer
Labour turnover
Your Answer
Labour turnover

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

Question
Correct Answer
Your Answer
Total cost
Cost of finished goods
Cost of finished goods
Non operating income
Profit on sale of investment
Profit on sale of investment
Selling and distribution overheads
Advertisement expenses
Advertisement expenses
Factory overheads
Repair for factory building
Repair for factory building
True/False
Question
Control on purchase of material is exercised by the storekeeper.
Correct Answer
False
Question
A company wishes to earn a 15% profit margin on selling price when quoting for a job. Which of the following is the
profit margin of cost which will achieve the required profit margin ?
Correct Answer
0.1765
Select The Blank

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

Question Correct Answer Your Answer
Accounting Process of analyzing & interpretation
Process of analyzing & interpretation
Profitability statement
Indicates the amount of profit earned Indicates the amount of profit earned
Balance-sheet
Financial status Financial status

Book-Keeping Books of Accounts Books of Accounts
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-sheet

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

Question Labour cost indicates that labour cost which cannot be identified with the individual cost centre and is
incurred for those employees who are not engaged in the manufacturing process but only assist i
Correct Answer Remuneration
True/False
Question To take make or buy decision under the marginal costing , if purchase price of the product is less than its
variable cost it is advisable to go for manufacturing proposition.
Correct Answer False
Your Answer False
Select The Blank

Question Over absorption of overheads may take place due to the reasons like ________ overheads being less than
the ________ overheads
Correct Answer actual
Your Answer estimated
Correct Answer estimated
Your Answer actual
True/False
Question Income received in advance transfer to current liabilities
Correct Answer True
Your Answer True
Select The Blank

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

Question Fixed cost is the cost that tend to remain ________ irrespective of ________
Correct Answer constant
Your Answer constant
Correct Answer level of activity
Your Answer level of activity
True/False
Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True
Your Answer True

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

Question Management Accounting has a very ________ scope and it requires ________ organizational structure
Correct Answer wide
Your Answer wide
Correct Answer elaborate
Your Answer elaborate
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True

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

Question Important advantages of Uniform Costing can be said to be
Correct Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units can take
advantage of settled systems of better managed units
Your Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units can take
advantage of settled systems of better managed units

Question P/L A/C debit side includes
Correct Answer : salary , discount allowed , postage & telegram

Question Actual costs may be affected due to inefficient functioning such as
Correct Answer Abnormal expenses , In efficient use of labour , In efficient use of material
Your Answer Abnormal expenses , In efficient use of labour , In efficient use of material

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

Question Sales quantity may be forecasted after taking into consideration various factors such as
Correct Answer Analysis of past trends , Market research , Reports by salesmen
Your Answer Analysis of past trends , Market research , Reports by salesmen
True/False
Question For taking make or buy decision marginal costing technique provide useful assistance.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Your Answer False

Question It is an appropriate basis of apportionment of depreciation expenditure
Correct Answer value of assets
Your Answer value of assets
True/False
Question The variable costs are controllable at the lower level.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the expenditure & income from the business.
Your Answer False
Match The Following

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

Question A budget manual is a document setting out the ________ of the persons and ________ required for the
budget control.
Correct Answer Responsibilities
Your Answer Responsibilities
Correct Answer Forms and procedures
Your Answer Forms and procedures
True/False
Question Credit balances in all the Personal & Real accounts appear on asset side.
True/False
Question The process of accounting split into three steams i.e. financial, cost, management accounting.
Correct Answer True
Your Answer True

Question Omission of posting an amount in the ledger
Correct Answer Error of Omission
Your Answer Error of Omission
True/False
Question Non-operating / financial expenses are added while calculating net profit.
True/False
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer True

Question A Budget Manual may contain the following particulars
Correct Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer , Scope of
the Budget and area to be covered
Your Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer , Scope of the
Budget and area to be covered
Select The Blank

Question Semi ________ overheads are neither ________ nor variable in nature.
Correct Answer fixed
Correct Answer variable
True/False
Question Due to errors of principle the arithmetical accuracy of the trial balance does not get affected.
Correct Answer True
Your Answer True

Question Direct Cost includes
Correct Answer Direct material , Direct labour , Direct expenses
Your Answer Direct material , Direct labour , Direct expenses
Select The Blank

Question Financial Accounting protects the interest of outsiders . it considers ________ transaction and it is a
________ requirement
Correct Answer historical
Your Answer historical
Correct Answer legal
Your Answer legal
True/False
Question Bin Card is having all the information of item received and issued.
Select The Blank

Question Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of management
Correct Answer Cost control
Your Answer Cost control
Correct Answer Maximization of profits
Your Answer Maximization of profits
True/False
Question Accounting refers to the process of analyzing & interpreting the information already recorded in the books of
accounts.
Correct Answer True
Your Answer True

Question The material Requisition note contains
Correct Answer Number and date , Department demanding the material , Signature of the authority approving the
demand
Your Answer Number and date , Department demanding the material , Signature of the authority approving the
demand

Question Following error affect the trial balance
Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an
account in the ledger
Your Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an
account in the ledger
Select The Blank

Question Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________
level of the management
Correct Answer uncontrollable
Your Answer controllable
Correct Answer lower
Your Answer top
True/False
Question Budget is prepared for a fixed period of time.
Correct Answer True
Your Answer True

Question Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account
___________
Correct Answer 12750
Your Answer 12750

Question This is not the non monetary incentive.
Correct Answer Co-partnership
Your Answer Co-partnership

Question P/L A/C debit side includes
Correct Answer salary , discount allowed , postage & telegram
Your Answer salary , discount allowed , postage & telegram
Select The Blank

Question Along with financial accounting, ________ and ________ are the other streams of accounting
Correct Answer Cost Accounting
Your Answer Cost Accounting
Correct Answer Management Accounting
Your Answer Management Accounting
True/False
Question A very wide scope of Management Accounting is the limitation by itself.
Correct Answer True
Your Answer True

Question
The selection of the supplier may depend upon the following aspects:
Correct Answer
Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier
Your Answer
Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier

Question
Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that
the real worth of these loose tools is only Rs.30,000/-. What can be done to achieve the desired reduction in the net
book value of loose tools?
Correct Answer
By providing depreciation to the extent of Rs.15,000/-
Your Answer
By providing depreciation to the extent of Rs.15,000/-
True/False
Question
Overhead absorption rate will be different at different capacity levels.
Correct Answer
True
Your Answer
True
Select The Blank

Question
The budget that represents the funds investment for expansion, diversification, etc. is known as ________.
Correct Answer
Capital expenditure budget
Your Answer
Capital expenditure budget
Select The Blank

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

Question
The cost that indicates historical cost, which is incurred in past, is known as
Correct Answer
Sunk cost
Your Answer
Sunk cost
Select The Blank

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

Question
Factory cost of a product is Rs.335,000/-, if the selling overheads are charged @25% of factory cost, then the amount
of selling overheads should be Rs.________/-
Correct Answer
83750
Your Answer
83750
Select The Blank

Question
Uniform costing is not a separate method of ________.
Correct Answer
cost accounting
Your Answer
cost accounting

Question
Which of the following budgets may be termed as a long term budget?
Correct Answer
Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company
Your Answer
Capital expenditure budget , Research and Development expenditure budget

Question
The following figures relate to a company manufacturing a varied range of products : Year 2003 Total sales
Rs.22,23,000/- and total cost Rs.19,83,600/-. Year 2004 : Total sales Rs.24,51,000/- and Total cost Rs.21,43,200/-.
Assuming stability in prices, calculate the profit volume ratio
Correct Answer
0.3
Your Answer
0.3

Question
The cost of idle time incurred by employees that is considered normal for the production process should be charged to
:
Correct Answer
Factory overheads
Your Answer
Direct labour
Select The Blank

Question
Creche expenses may be appropriately approtioned on the basis of ________.
Correct Answer
Number of female workers
Your Answer
Number of female workers

Question
Opening stock of Rs.1,80,000/-, purchases Rs.8,00,000/-, freight inward Rs.35,000/-, closing stock Rs.2,00,000/-,
direct wages Rs.2,35,000/-. Calculate the prime cost.
Correct Answer
Rs.10,50,000/-
Your Answer
Rs.10,70,000/-

Question
Limitations of Management Accounting includes——————-
Correct Answer
Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure
Your Answer
Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure
Select The Blank

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

Question
Features of Financial Accounting includes—————–
Correct Answer
It is a legal requirement , It protects the interest of outsiders , It considers historical transactions
Your Answer
It is a legal requirement , It protects the interest of outsiders , It considers historical transactions

Question
Identify the budgets for which the production manager sould be held responsible :
Correct Answer
Production budget , Production overheads budget , Plant utilisation budget
Your Answer
Production budget , Production overheads budget , Plant utilisation budget

Question
A group of 10 men and 20 women workers were expected to produce 400 units of a product in an 8 hour day. The
standard hourly rate was fixed at Rs.25/- and Rs.15/-, respectively.Actually, a group of 15 men and 10 women workers
was deployed and paid for 8 hours a day at an hourly rate of Rs.22/- and Rs.18/-, respectively. Two hours were
wasted for the entire group due to power failure and only 300 units were produced. Calculate labour rate variance.
Correct Answer
Rs.120/- (Favourable)
Your Answer

Question
Correct Answer
Your Answer
Cost control , Budgetary control , Standard costing
True/False
Question
A grinding machine is an example of impersonal cost centre
Correct Answer
True
Your Answer
True
True/False
Question
Profitability statement indicates the amount of assets & liabilities.
Correct Answer
False
Your Answer
False

Question
Uniform costing system is useful in the following areas
Correct Answer
Classification of cost accounts
Your Answer
Preparing financial statements

Question
The features of multiplicity of key factors are as follows :
Correct Answer
More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique
Your Answer
More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique
True/False
Question
Balance sheet indicates the expenditure & income from the business.
Correct Answer
False
Your Answer
False
True/False
Question
Interim dividend paid by the company should be debited to the profit and loss appropriation account.
Correct Answer
True
Your Answer
True

Question
A materials requisition form normally contains the following aspects:
Correct Answer
Quantity requisitioned , Per unit material cost , Job number
Your Answer
Quantity requisitioned , Job number

Question
The production budget may be prepared in terms of :
Correct Answer
Units produced , Production cost , Material cost, labour cost and overheads
Your Answer
Units produced , Production cost , Material cost, labour cost and overheads

Question
Panna Ltd. temporarily has excess production capacity. The idle plant facilties can be used to manufacture a low-
margin item. The low-margin item should be produced if it can be sold for more than its:
Correct Answer
Variable costs
Your Answer
Variable costs

Question
If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional
profits, then following steps can be taken to achieve the target profit
Correct Answer
Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer
Increase the selling price , Increase the sales volume , Reduce cost of sales
True/False
Question
Receipts and payments method of cash budget is useful for preparing long term estimates.
Correct Answer
False
Your Answer
False

Question
Select the advantages of standard cost system.
Correct Answer
Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency
Your Answer
Provides reliable basis for budgeting , Facilitates delegation of authority
True/False
Question
The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted.
Correct Answer
False
Your Answer
False
Select The Blank

Question
In case of seasonal industry, the budget period may be taken as ________.
Correct Answer
One season
Your Answer
One season
True/False
Question
Lack of efficient control on various aspects related to raw-material increases the material cost component of the
finished product.
Correct Answer
True
Your Answer
True
True/False
Question
Due to compensating errors the arithmetical accuracy of the trial balance is affected.
Correct Answer
False
Your Answer
False

Question
Material price variance for a job is Rs.800/- (Favourable). Actual quantity of material used is 100 kg whereasthe
standard quantity of material is 120% of actual quantity. Actual price paid for the material is 80% of the standard price.
Calculate material cost variance.
Correct Answer
Rs.1,600/- (Favourable)
Your Answer
Select The Blank

Question
The process of recording the business transactions in a defined set of records is referred to as ________.
Correct Answer
Balance sheet
Your Answer
Profit and Loss Account
Match The Following

Question
Correct Answer
Your Answer
Daily Time sheets
Time spent by worker on job is recorded
Time spent by worker on job is recorded
Time Keeping Department
Recording of workers time
Recording of workers time
Time booking department
Jobwise booking of time.
Jobwise booking of time.
Time Recording Clock Method
Ticket number & clock card allotted to worker
Ticket number & clock card allotted to worker
True/False
Question
Purchased goods by paying Rs.35,000/-: In this case, the cash account should be debited.
Correct Answer
True
Your Answer
True
Select The Blank
Question
If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________.
Correct Answer
Bad debts
Your Answer
Bad debts
True/False
Question
Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer
True
Your Answer
True
Match The Following

Question
Correct Answer
Your Answer
Book-Keeping
Books of Accounts
Books of Accounts
Financial statement
Profitability statement & Balance-sheet
Profitability statement & Balance-sheet
Accounting
Profitability statement
Indicates the amount of profit earned
Indicates the amount of profit earned
Balance-sheet
Financial status
Financial status
True/False
Question
The problem of multiple key factors can be solved with the help of techniques like linear programming, operations
research, etc.
Correct Answer
True
Your Answer
True
Select The Blank

Question
The ________ books are preferred when the volume of transactions is very large.
Correct Answer
Subsidiary
Your Answer
Journal

Question
If you are required to enforce uniform costing system in your industry, how would you proceed ?
Correct Answer
Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Maintaining
secrecy of the data collected
Your Answer
Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Allowing free
access to all the units to the collected data
True/False
Question
All costs are controllable.
Correct Answer
False
Your Answer
False
Select The Blank

Question A ________ can be defined as a part of the organization for which separate budget can be
prepared and implemented.
Correct Answer Budget centre
Your Answer Budget centre

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

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

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

Question Judge the following narrative according to the criteria given : There are many
organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc.
Correct Answer The statement and the reason are both incorrect
Your Answer The statement and the reason are both correct

Question Management accounting is concerned with the following activities :-
Correct Answer Decision making , Safeguarding assets , Planning and controlling activities
Your Answer Decision making , Planning and controlling activities
Question A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/-
and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total
cost. What is the break even point for the company?
Correct Answer 68,182 units
Your Answer 68,182 units

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

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

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

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

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

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

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

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

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

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

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

Question The selection of the supplier may depend upon the following aspects:-
Correct Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the
supplier
Your Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the
supplier
Select The Blank

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

Question Expenditure on repairs may be ideally allocated on the basis of ________.
Correct Answer Cost of repairs spread over the working life of the machine
Your Answer Cost of repairs spread over the working life of the machine
Question Cost control procedure deals with :-
Correct Answer Establishment of plans , Comparison of actual and planed performance ,
Computation of variance
Your Answer Establishment of plans , Comparison of actual and planed performance , Computation
of variance
Select The Blank

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

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

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

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

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

Question Warehousing cost is an item of ________.
Correct Answer Distribution overheads
Your Answer Distribution overheads
Question Product costs under direct costing include:-
Correct Answer Prime cost and variable factory overheads
Your Answer Prime cost only
Select The Blank

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

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

Question Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is
Rs.180/- per unit. Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company has
a proposal that the sales staff may be paid a commission of 10% of sales instead of fixed salaries
totaling Rs.80,000/-. This action is expected to increase the sales by 10%. Compute the amount of
profit assuming the proposal is accepted?
Correct Answer Rs.177,000/-
Your Answer Rs.177,000/-
Select The Blank

Question Fixed overhead volume variance = Expenditure variance + Capacity variance + ________
variance.
Correct Answer Calendar
Your Answer Productivity
Select The Blank

Question The ________ ledger carries the individual accounts, whereas the general ledger records
the consolidated effect of the individual transactions.
Correct Answer Control
Your Answer Journal
True/False
Question The problem of multiple key factors can be solved with the help of techniques like linear
programming, operations research, etc.
Correct Answer True
Your Answer True

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

Advantageously applicable in similar industries Scope of uniform costing Process of uniform costing
Spirit of mutual trust Requisite for uniform costing Requisite for uniform costing
Avoids cut throat competition Advantage of uniform costing Advantage of uniform costing
Treatment given to research and development costs Fields covered by uniform costing Scope of
uniform costing
True/False
Correct Answer True
Your Answer True

True/False
Question Revenue expenditure indicates the amount of funds spent during a certain period with the
intention to receive the returns in future.
Your Answer True

Question The organization chart shows the following aspects :-
Correct Answer Functional responsibility of different functional managers , Delegation of authority to
various managers , Inter-functional relationships of these managers
Your Answer Delegation of authority to various managers , Inter-functional relationships of these
managers , Functional responsibility of different functional managers
Select The Blank

Question Crane expenses should be apportioned on the basis of ________.
Correct Answer Number of hours crane worked in the department
Your Answer Number of hours crane worked in the department
True/False
Question Predetermined rate of absorption of overheads helps in quick preparation of cost
estimates and quoting prices.
Correct Answer True
Your Answer True
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True
Question From the given information compute the total cost variance. Material cost variance -
Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -
Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/- (adverse).
Correct Answer Rs.24,050/- (Adverse)
Your Answer Rs.24,050/- (Adverse)
Select The Blank

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

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

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

Question The final result disclosed by trading account is the ________ profit earned by the
organization.
Correct Answer Gross
Your Answer Gross
True/False
Question While passing the journal entry, it is of utmost importance to ensure that the total of
amount debited is equal to the total of the amount credited.
Correct Answer True
Your Answer True

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

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

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

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

Question The selection of the supplier may depend upon the following aspects:-
Correct Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the
supplier
Your Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the
supplier
Select The Blank

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

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

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

Balance-sheet Financial status Financial status
Book-Keeping Books of Accounts Books of Accounts
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-sheet
Accounting Process of analyzing & interpretation Process of analyzing & interpretation
Profitability statement Indicates the amount of profit earned Indicates the amount of profit earned
True/False
Correct Answer True
Your Answer True

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

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

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

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

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

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

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

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

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

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

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

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

Closed the account with State Bank of India Henceforth, there shall be no difference in overdraft
balances Henceforth, there shall be no difference in overdraft balances
Debit side of bank book is overcast Overdraft as per bank book < Overdraft as per pass
book Overdraft as per bank book < Overdraft as per pass book
Interest on debentures directly credited by bank Overdraft as per bank book > Overdraft as per pass
book Overdraft as per bank book > Overdraft as per pass book
Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book = Overdraft as per pass
book Overdraft as per bank book = Overdraft as per pass book

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

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

Question In order to rectify the totaling mistake, wherein the sales return ledger was undercast by
Rs.2,000/-, the suspense account should be ________ with Rs.2,000/-
Correct Answer Credited
Your Answer Adjusted
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer True
True/False
Question Yield variance equal to zero indicates that the standard yield and actual yield are the
same.
Correct Answer True
Your Answer True
Select The Blank

Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of
safety will be Rs.________.
Correct Answer 100,000/-
Your Answer 100,000/-
True/False
Question Cheque received from a client on 28th September, 2004 must be entered in the bank book
only after it is credited in the pass book.
Your Answer False
True/False
Question In marginal costing, decisions are guided by profit rather than contribution margin.
Your Answer False

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

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

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

Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and
earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of
Rs.75,000/-. You are required to calculate the margin of safety for the first month.
Correct Answer Rs.300,000/-
Your Answer Rs.300,000/-
True/False
Question Budgetary control system provides a basis for establishment of the incentive systems.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is the process of analysis and interpretation of financial data
collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True
Select The Blank

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

Question Select the steps to be followed while preparing bank reconciliation statement :-
Correct Answer Compare the transactions in the bank book and the pass book , Check the totals
and the balancing of both the books , Confirm that the opening balances of both the books are tallying
Your Answer Compare the transactions in the bank book and the pass book , Check the totals and
the balancing of both the books , Confirm that the opening balances of both the books are tallying

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

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

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

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

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

Question The organization chart shows the following aspects :-
Correct Answer Functional responsibility of different functional managers , Delegation of authority to
Your Answer Functional responsibility of different functional managers , Delegation of authority to
Select The Blank

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

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

Question A trading concern will have only ________ overheads and selling overheads.
Correct Answer Administration
Your Answer Administration
True/False
Question P&L statement which is a period statement & relates to a certain period tells about results
of operations.
Correct Answer True
Your Answer True

Question Master budget provides a basis for computing effect of changes in :-
Correct Answer Product mix of the company , Sales volume , Production facilities
Your Answer Product mix of the company , Sales volume , Production facilities
Match The Following

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

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

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

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

Question Retirement from the service is an ________ cause of labour turnover.
Correct Answer Unavoidable
Your Answer Unavoidable
Question Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be
apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June,
2004 the machine operator has been paid for 5,670 hours.
Correct Answer Rs.29.98
Your Answer Rs.29.98

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

Question Non-trading income is disclosed on the credit side of ________ account.
Correct Answer Profit and loss
Your Answer Profit and loss appropriation
True/False
Question Depreciation can be defined as a permanent, continuous and gradual reduction in the
book value of a fixed asset.
Correct Answer True
Your Answer True

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

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

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

Question A lathe machine was purchased on 31st March, 2004 for Rs.65,000/-, however it was
installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of
depreciation charge for the said lathe machine for the year ended 31st March, 2004.
Correct Answer Nil
Your Answer Nil
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and balance
sheet.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True

Question While preparing sales budget the following factors must be considered :-
Correct Answer The number and types of products sold by the organization , Whether the
organization's market share is increasing or decreasing? , Details of seasonal fluctuations in sales
Your Answer The number and types of products sold by the organization , Whether the
organization's market share is increasing or decreasing? , Details of seasonal fluctuations in sales
True/False
Question The actual loss incurred by a company, due to fire, is the extent of difference between the
cost of goods destroyed and the amount of claim settled by the insurance company.
Correct Answer True
Your Answer True
True/False
Question The problem of multiple key factors can be solved with the help of techniques like linear
programming, operations research, etc.
Correct Answer True
Your Answer True

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

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

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

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

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

Management Accounting

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Management Accounting

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Management Accounting-Set 1

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Multiple Choice Multiple Answer

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Process of analyzing & interpretation

Financial status Financial status

Multiple Choice Single Answer

Your Answer Error of Commission

Multiple Choice Single Answer

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Match The Following

Select The Blank

Multiple Choice Single Answer

Multiple Choice Multiple Answer

Select The Blank

Correct Answer variable

Multiple Choice Multiple Answer

Select The Blank

Select The Blank

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Select The Blank

Multiple Choice Single Answer

Multiple Choice Single Answer