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Management Accounting - A11

1. Choose the correct answer.
Benefits available from revenue expenditure are received in the :-
a) Same year
b) Next year
c) Future year
d) Previous year
Ans. A
2. Bank reconciliation statement must be prepared before the preparation of profit and
loss account and balance sheet.
a) true
b) false
Ans. A
3. Choose the correct answer.
Uniform costing system is useful in the following areas :-
a) Classification of cost accounts
b) Preparing financial statements
c) Completing statutory audit
d) Getting loans
Ans. A
4. Re-order level for materials is determined considering maximum consumption and
maximum delivery period.
a) true
b) false
Ans. A
5. Profit volume ratio is also known as ______________________________.
Contribution to cost ratio; Cost to contribution ratio;
Sales to contribution ratio; Contribution to sales ratio
Ans. Contribution to sales ratio
6. Choose all that apply
Management Accounting is :-
a)____ Designed particularly for internal use
b)____ Helpful in estimating the future along with past period
c)____ Useful in furnishing the necessary information to the management
d)____ A legal requirement.
Ans. A,b,c
7. Choose the correct answer.
A textile mill has two production departments, spinning and weaving and two service
departments, S and R. Variable cots of operating the two service departments, their
output and quantum of service rendered to other department is as follows : Department
S : Service rendered to spinning department - 30%, weaving department - 20% and
department R - 50%; variable cost Rs.120,000/- and output -1,000 tons. Department R
: Service rendered to spinning department - 25%, weaving department - 35% and
department S - 40%; variable cost Rs.260,000/- and output - 2,000 tons. Calculate the
total cost of service received by spinning and weaving departments.
a) Spinning department -Rs.196,000/-; Weaving department -Rs.184,000/-
b) Spinning department -Rs.148,000/-; Weaving department -Rs.169,000/-
c) Spinning department -Rs.169,000/-; Weaving department -Rs.148,000/-
d) Spinning department -Rs.184,000/-; Weaving department -Rs.196,000/-
Ans. D
8. Choose the correct answer.
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).
a) Rs.32,850/- (Adverse)
b) Rs.32,850/- (Favourable)
c) Rs.24,050/- (Adverse)
d) Rs.24,050/- (Favourable)
Ans. C
9. The final result disclosed by trading account is the ___________ profit earned by the
Gross; Net; Marginal; Incremental
Ans. Gross
10. Measurement of _______________ gives an idea of the degree of mobility of labour.
Labour cost; Labour turnover; Idle time; Standard time
Ans. Labour turnover
11. Choose all that apply
Select the accounts to be disclosed on the assets side of the Balance sheet :-
a)____ Furniture
b)____ Loan to Bank of U.S.A.
c)____ Loan from Bank of America
d)____ Land & building
Ans. A,b,d
12. Choose all that apply
The management of Horngreen Ltd. is deciding whether to continue working at loss
or to temporarily shut down the factory. State the qualitative aspects that must be
considered before arriving at a decision :-
a)____ Loss of trained personnel
b)____ Loss of regular customers
c)____ Expenditure required to restart the factory
d)____ Expenditure relating to expanding the business
Ans. A,b,c
13. A ______________________ can be defined as a part of the organization for which
separate budget can be prepared and implemented.
Responsibility centre; Budget centre; Cost centre; Profit centre
Ans. Budget centre
14. Choose the correct answer.
Journal is popularly known as 'Book of :-
a) Original Entry
b) Secondary Entry
c) Rectification Entry
d) Adjustment Entry
Ans. A
15. 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/-
Appended; Adjusted; Debited; Credited
Ans. Credited
16. Match the following
1. Bank Book (1) 1. Maintained by the trader/ businessman
2. Pass Book (4) 2. Issued by the Bank
3. Bank reconciliation (6) 3. Issued by the organization
4. Advise stating dividend (2) 4. Maintained by the Bank
collected on your behalf
5. Maintained by the Government
6. Prepared by the organization
17. Match the following
1. Contribution - Fixed cost (6) 1. Contribution
2. Total cost + Profit (4) 2. Variable cost
3. Fixed cost + Variable cost (5) 3. Semi-variable cost
4. Total cost - Fixed cost (2) 4. Sales
5. Total cost
6. Profit
18. Choose the correct answer.
A manufacturer is producing alloy for which standard mix is 25% copper and 75%
iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of
input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at
Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of
a) Rs.200,000/-
b) Rs.150,000/-
c) Rs.350,000/-
d) Rs.180,000/-
Ans. c
19. Choose all that apply
Cost control procedure deals with :-
a)____ Establishment of plans
b)____ Computation of profit
c)____ Comparison of actual and planed performance
d)____ Computation of variance
Ans. A,c,d
20. In calculation of total sales margin variance, the ____________ cost of sales is
deducted from the actual sales revenue.
Standard; Planned; Scheduled; Actual
Ans. Standard
21. Choose the correct answer.
The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for
the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's
remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004.
a) Rs.75,980/-
b) Rs.75,981/-
c) Rs.63,980/-
d) Rs.51,981/-
Ans. B
22. Choose the correct answer.
Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has
actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/-
per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1.
Calculate total earning of the worker as per Bedeaux Point System.
a) Rs.120/-
b) Rs.160/-
c) Rs.180/-
d) Rs.200/-
Ans. c
23. Profitability statement indicates the amount of assets & liabilities.
a) true
b) false
Ans. B
24. Choose all that apply
Actual costs determined on the basis of costing records maintained have following
limitations :-
a)____ No practical utility from control point of view
b)____ No practical utility for price fixation
c)____ Expensive
d)____ Very difficult to understand
Ans. A,b,c
25. Depreciation under Reducing Balance Method is calculated as (Number of units *
Rate of depreciation per unit).
a) true
b) false
Ans. B
26. Choose all that apply
Features of convention of conservation are :-
a)____ Anticipates all future losses and expenses
b)____ Ignores all future incomes and profits, unless they are actually realized
c)____ Applicable to valuation of current assets
d)____ Applicable to valuation of non-current asset
Ans. A,b,c
27. Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the
level of efficiency is between __________________.
90% to 100%; 80% to 100%; 70% to 90%; 50% to 75%
Ans. 90% to 100%
28. Choose all that apply
Which of the following aspects are mainly responsible for difficulty in application of
Uniform costing system?
a)____ Capital investment
b)____ Plant size
c)____ Location
d)____ Loans taken
Ans. A,b,c
29. Choose all that apply
Merits of break even point analysis are as follows:-
a)____ Useful diagnostic tool.
b)____ Used for analyzing the risk implication of alternative actions.
c)____ Used to graphically represent complicated data.
d)____ Useful in the long run.
Ans. A,b,c
30. The ___________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Control; Journal; Main; Original
Ans. Control
31. Overhead absorption rate will be different at different capacity levels.
a) true
b) false
Ans. A
?32. Choose the correct answer.
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?
a) Rs.35/- per unit
b) Rs.32/- per unit
c) Rs.30/- per unit
d) Rs.28/- per unit
33. Accounting is an art of recording, classifying & summarizing in a significant manner.
a) true
b) false
Ans. A
34. In case the standards are too difficult to achieve, they will provide additional
incentive for improvement.
a) true
b) false
Ans. B
35. Balance sheet indicates the expenditure & income from the business.
a) true
b) false
Ans. B
36. Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
a) true
b) false
Ans. A
37. Choose the correct answer.
Which document is a part of the perpetual inventory system?
a) Bin card
b) Purchase order
c) Material requisition note
d) Goods received note
Ans. A
38. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry
would affect __________________________.
P's A/c and Q's A/c; Cash A/c and P's A/c; P's A/c; Q's A/c
Ans. P's A/c and Q's A/c
39. Choose all that apply
Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account
a)____ Ram is a creditor
b)____ Ram is an employee
c)____ Rs.10,000/- has been paid to Ram
d)____ The payment is made by cheque
Ans. A,c,d
40. According to the standard costing principles, only adverse variance must be further
a) true
b) false
Ans. B
41. Fixed expenses will move up by jumps if the output exceeds the capacity.
a) true
b) false
Ans. A
42. The Balance Sheet method of cash budget ignores any excess or shortage of cash
during the budget period.
a) true
b) false
Ans. A
43. If the firm is operating with zero margin of safety, decline of even a single unit in
sales will result in ___________________.
Net profit; Loss; Gross profit; Contribution
Ans. Loss
44. If the physical stock is less than the stock as per the stores ledger, such shortage
should be treated as an issue of material.
a) true
b) false
Ans. A
45. The closing stocks should ___________________ the cost of the goods which sent on
approval basis.
Be increased by; Exclude; Be decreased by; Not get affected by
Ans. Be increased by
46. Choose the correct answer.
Hourly wage rate is Rs.25/- and the time allowed for a job is 15 hours. Harry
completed the job in 12 hours. Calculate the effective hourly earnings for Harry under
Halsey Plan.
a) Rs.25/-
b) Rs.30/-
c) Rs.28.12
d) Rs.33.12
Ans. C
47. Choose all that apply
Features of Taylor's differential piece rate system are as follows :-
a)____ Strong incentive to inefficient and new workers.
b)____ Minimal clerical work is involved in calculating the wages
c)____ Helps in building up an efficient labour force
d)____ Strong incentive to efficient and ambitious workers.
Ans. B,c,d
?48. Choose the correct answer.
The details regarding a food product manufactured by ABC Co. for the last one week
are as follows : Standard cost (for one unit) : direct material -10 units @ Rs.1.50;
direct wages - 5 hours @ Rs.8/-; production overheads -5 hours @ Rs.10/-. Actual
(for whole activity) : direct materials -Rs.6,435/-; direct wages -Rs.16,324/-. Analysis
of variances : direct materials price variance -Rs.585/- (Adverse); direct material
usage variance -Rs.375/- (Favourable); direct wages rate variance -Rs.636/-
(Favourable); direct wages efficiency variance -Rs.360/- (Adverse); production
overheads expenditure variance -Rs.400/- (Favourable) and production overheads
volume variance -Rs.750/- (Favourable). You are required to calculate the amount of
production overheads incurred.
a) Rs.16,900/-
b) Rs.19,600/-
c) Rs.20,750/-
d) Rs.17,250/-
49. The process of accounting split into three steams i.e. financial, cost, management
a) true
b) false
Ans. A
50. Choose all that apply
The productive causes of idle time are :-
a)____ Instructions are not clearly given
b)____ Power failures
c)____ Machine breakdown
d)____ Excess machine capacity
Ans.a b c
51. 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
a) true
b) false
Ans. A

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