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Management Accounting - A27

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Question The costs incurred for recruitment and training of new workers and the resulting losses wastages and reduced productivity due to the inefficiency and inexperience of new workers is referred to as the _______.
Correct Answer Replacement costs

Question The ideal standards are generally ________ in nature and the variances always shows _______ trends
Correct Answer theoretical
Correct Answer unfavorable

Question In process of establishing the standards, the following steps are involved
Correct Answer Study of technical details , Study of existing costing system , Decision about types of standards to be used.

Question The cost that tends to remain constant irrespective of the level of activity is called
Correct Answer fixed cost

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

Question Cost Accounting restrict itself with historical transactions
Correct Answer False

Question These are the methods of measuring labour turnover.
Correct Answer Replacement Method , Separation Method , Flux Method

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

Question In case of industries where capital investment is very high, budget should be prepared for a
Correct Answer Longer period

Question ________ and ________ are examples of semi- variable overheads.
Correct Answer Maintenance cost
Correct Answer electricity

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

Question __________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities like investors, suppliers, customers etc.
Correct Answer Financial

Question Purchased computers of Rs. 50,000 come under the heading of fixed asset
Correct Answer True

Question In Cash budget , Non operating cash inflow includes
Correct Answer Receipt of loan/borrowings , Issue of shares , Sale of fixed assets

Question Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 5000. The total amount transfer to advertisement account is Rs.____
Correct Answer 15,000

Question Convention of Materiality __________________
Correct Answer Only those transactions will be considered which have material impact on profitability , Insignificant transaction will be ignored , The cost of non-used should not be considered as the item of cost

Question Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed cost is Rs. 18,02000. Find out the BEP in units,
Correct Answer 53000

Question The opening balance of cash account is Rs. 25,000, cash received from debtors Rs. 30,000, sold goods amounted to Rs. 50,000, paid to creditors Rs. 20,000, purchase furniture Rs. 5000. What is the clos
Correct Answer 80,000

Question It is the cost of opportunity foregone.
Correct Answer Opportunity Cost

Question Under Gannt Task bonus system where the output is ________ payment is made as per minimum time rate, output is ________ payment is made as per time wages plus some increase in wage rates
Correct Answer below standard
Correct Answer at standard

Question Standard costing may not be useful for forecasting purposes
Correct Answer True

Question Factory overheads, administration overheads , selling and ________ overheads are the form of ________ classification of overheads
Correct Answer distribution
Correct Answer function wise

Question Amit sold Goods to Atul for Rs. 50,000 on cash & Rs. 50,000 on credit basis & allowed 10% discount on on the spot transaction. Cash Account debited to Rs. _____________
Correct Answer 45,000

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

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

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

Question The bank pass book or the bank statement is the extract of the account in the name of the business as it appears in the books the business.
Correct Answer False

Question Sales Budget is a forecast expressed in ________ and ________ terms.
Correct Answer quantity
Correct Answer Money

Question Due to compensating errors the arithmetical accuracy of the trial balance get affected.
Correct Answer False

Question The process of ________ can followed to decide the ________ of overheads to each budget center
Correct Answer Allocation & apportionment
Correct Answer Loading

Correct Answer The price of the latest available lot is considered first , If that lot is exhausted, the price of the 10% prior to that is considered , Physical issue of the material may not be made out of the said lot

Question Standard Costs are used as tool for
Correct Answer Cost Control

Question Variable costs are the controllable costs at the ________ level of the management whereas fixed costs can be controlled only on the ________ level of the management
Correct Answer Lower
Correct Answer Top

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

Question Bin Card Includes
Correct Answer Entries in receipt column on basis of goods received note or material returned note , Entries in issue column on basis of material requisition note , The balance quantity is calculated and recorded

Question classification of the overheads as fixed and variable ,facilitates the preparation of flexible budgets.
Correct Answer True

Question Under Merrick Differential Piece rate System of wage payment up to 83% of efficiency following rate is offered.
Correct Answer Normal

Question The following factors affects the budgeted advertisement cost
Correct Answer Percentage of profits , Availability of funds , Competitors policy

Question A bank reconciliation statement is prepared on a particular date.
Correct Answer True

Question Profit & Loss Account shows Gross Profit 13,000. Expenses incurred as Telephone charges 1500, Traveling expenses 3000, Salary paid 2000, discount allowed 500, depreciation 200. Calculate the net profi
Correct Answer 5800

Question Balance sheet liability side includes
Correct Answer Loan & advances , Outstanding expenses , Creditors

Question ________ and ________ are non monetary incentives
Correct Answer Safety services
Correct Answer education facility

Question Accounting period Concept________________
Correct Answer Longer life-span on business is divided into shorter segments , Each one being in the form of accounting period , Selection of accounting period may depend on various factors

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

Question These are the replacement costs of labour turnover.
Correct Answer cost of personnel administration , cost of selection and placement , increased spoilage and defectives

Question These are the replacement costs of labour turnover.
Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased spoilage and defectives

Question Depreciation
Correct Answer Amount charged on Fixed Assets.

Question The sales day book of October 1991 was overcast by Rs. 10,000, which A/C to be debited.
Correct Answer Sales A/C

Question The cost accountancy is defined as “ the application of costing principles,methods and techniques to the ________, art and practice of ________ ascertainment of the profitability and the presenta
Correct Answer science
Correct Answer cost control

Question A Co. having net sales Rs. 7,50,000, opening stock 1,14,375, purchases, 483,375 closing stock 1,47,750. Calculate the Gross Profit
Correct Answer 3,00,000

Question Standard Costing system facilitates ________ and ________ for each individual or department
Correct Answer Delegation of authority
Correct Answer Fixation of responsibility

Question Creditor
Correct Answer Supplier

Question The overhead is aggregate of
Correct Answer Indirect labour cost , Indirect material cost , Indirect Expenses

Question The wage payment system should take into consideration the external obligations such as the Minimum wages Act and the agreement entered into by the organization with the workers.
Correct Answer True

Question Bank Reconciliation statement is required in case of
Correct Answer difference between the bank balance as per the bank book and as per pass book

Question Trial balance is drawn on a particular date
Correct Answer True

Question Tallying of trial balance is conclusive evidence of the total accuracy of the books of account.
Correct Answer False

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

Question Sundry creditors transfer to asset side.
Correct Answer False

Question ___________ Accounting is the process of classifying and recording of the expenditure in a systematic manner with the intention of ascertaining the cost of cost centre with the intention of controllin
Correct Answer Cost

Question This is one of the avoidable cause of labour turnover.
Correct Answer Relationship with supervisors and workers

Question Non-Operating / Financial Incomes are deducted from operating profit while calculating Net profit.
Correct Answer False

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

Question Standard Costing specifically relates to the function of
Correct Answer Production

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

Question Credit note is an intimation send to person dealing with the business that his account being debited for the purpose indicated therein.
Correct Answer False

Question Debtors
Correct Answer Who owes money to the business

Question Fixed assets do not give the returns during the same period during which they are paid for
Correct Answer True

Question These are the special type of cost
Correct Answer Opportunity cost , Differential cost , Sunk cost

Question Discount received from the Creditors has been entered in the Creditors A/C but discount amount has not been credited, for rectifying such error which account to be debited.
Correct Answer Suspense A/C

Question Under this method of time keeping , each worker is allotted an identification number and a disc or token bearing that number.
Correct Answer Token or Disc Method

Question Under marginal costing semi variable costs are also classified in their individual components of fixed cost and variable cost.
Correct Answer True

Question Labour Rate Variance occurs due to
Correct Answer Change in wage structure , Use of different methods of payment , Wage difference

Question Break even point is a situation of no ________ no ________
Correct Answer profit
Correct Answer loss

Question It is an appropriate basis of apportionment of depreciation expenditure
Correct Answer value of assets

Question Wage rate standards takes into consideration the following factors
Correct Answer The system of wage payments , System for bonus payment , Grades of workers required

Question Replacement costs refer to all costs incurred for recruitment and training of new workers.
Correct Answer True

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

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

Question Ifidle time payment is abnormal , it should be classified as overheads.
Correct Answer False

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
Correct Answer pass book

Question Accounting to the matching principles of accounting, the ________ incurred during an accounting period are required to be match with ________ during that period
Correct Answer cost
Correct Answer revenues

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

Question Planning lays down the course of action to be taken in future. In case budgetary control, it is in the form of the ________ and in case of ________ costing, it is in the form of the standard cost
Correct Answer standard
Correct Answer budgets

Question Following are various forms of limiting factor
Correct Answer market , labour , machine availability

Question These are normal bases for primary apportionment of overheads.
Correct Answer value of assets , HP/KWh , number of light points

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

Question The situation of over absorption arises if the overheads absorbed are less than the actual overheads.
Correct Answer False

Question Depreciation can be defined as a permanent , continuous and gradual reduction in the book value of a fixed assets.
Correct Answer True

Question Balance sheet asset side includes
Correct Answer Furniture , Vehicle , Land & building

Question In case of the under or over absorption of the overheads arising out of the normal circumstances , they are written off to costing profit and loss account.
Correct Answer False

Question Due to errors of principle the arithmetical accuracy of the trial balance get affected.
Correct Answer False

Question Trading a/c credit side includes
Correct Answer sales , goods lost by fire , closing stock

Question variable cost is the cost that tend to ________ in direct proportion with ________
Correct Answer vary
Correct Answer level of activity

Question Preliminaries for establishing Standard costing system includes
Correct Answer Establishment of cost centers , Design of accounts , Establishment of standards

Question Bank of Maharashtra A/C is a personal A/C
Correct Answer True

Question Adverse labour time variance may be due to
Correct Answer Poor grade of labour , Defective plant & machinery , Poor quality of material

Question This is the best example of element wise classification of cost.
Correct Answer material

Question Highest in first out
Correct Answer This method assumes that the stock should always be shown at the minimum value

Question Standard price creates complications in accounting system and increase clerical work.
Correct Answer False

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

Question Trade Discount
Correct Answer Amount received on purchases

Question In a Balance-Sheet right hand side is a Asset side & left hand side is liability side
Correct Answer True

Question The stages of cost control involves
Correct Answer To plan the operation , Execute the plan & measuring the actual performance , Computing the variations between planned & actual performance

Question __________ Accounting becomes a source of information for Management Accounting.
Correct Answer Financial

Question The levels indicated on the Bin card enables the ________ department to keep a watch on the balance and replace the material as soon as it reached at ________ level.
Correct Answer Stores
Correct Answer Re-order level

Question Under Merrick Differential Piece rate System of wage payment above 100 % of efficiency following rate is offered.
Correct Answer 130% of normal piece rate

Question This is an example of semi variable overheads.
Correct Answer electricity

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

Question A Budget center may be in the form of
Correct Answer A product , A department , A branch of the company

Question Under absorption of overheads may take place due to the reasons like ________ overheads being more than the ________ overheads
Correct Answer actual
Correct Answer estimated

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

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

Question Replacement costs of labour turnover are ________ and ________
Correct Answer training
Correct Answer breakages of machine

Question When the balance in the ledger account of the previous year are entered the current year’s books, the balances are said to be bought forward.
Correct Answer True

Question Sales at 1,00,000 units are Rs. 1,00,000 , variable costs Rs. 40,000 and fixed cots is Rs.50,000. What is Break even point ?
Correct Answer Rs. 83,333

Question The material physically received is compared with material ordered as per the this order
Correct Answer Purchase order

Question Interest Received amounted to Rs. 10,000/- is to be transfer to ___
Correct Answer Profit & Loss A/C credit side Rs. 10,000

Question Under the daily ________ sheets method, each worker is provided with a daily time sheet on which time ________ by him on various jobs is expected to be mentioned
Correct Answer Time
Correct Answer Spent

Question Material Price Variance may occur due to
Correct Answer Change in price of material , Failure to take discounts , Weak purchase organization

Question Selling and distribution overheads includes
Correct Answer Indirect Material such as packing material, samples etc., , Indirect labour like salaries to sales personnel manager , Indirect expenses like warehouse charges, advertisement

Question Idle time is the time required to complete particular job.
Correct Answer False

Question All items which do not involve cash flow will be considered for while preparing Cash Budget.
Correct Answer False

Question The quantitative record of receipts, issues and closing balance of an item of material is called Bin-Card.
Correct Answer True

Question The amount of money that is paid for is classified as ________ and ________ for the purpose of accounting
Correct Answer Capital Expenditure
Correct Answer Revenue Expenditure

Question The material physically received compared with material order as per the purchase order may reveal the following forms of discrepancies
Correct Answer Quantity received in excess , Quantity received in short , Quantity received of different quality

Question Book keeping is clerical while accounting is managerial
Correct Answer True

Question ________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account
Correct Answer Like office rent,
Correct Answer Audit fees

Question Cash received from credit sales, Cash account to be credited.
Correct Answer False

Question The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost?
Correct Answer 37,86,000

Question Cost Accountancy is a science, art and practice of a cost Accountant.
Correct Answer Science indicates the possession and the application of relevant systematic knowledge. , Art indicates the skill and ability. , Practice indicates continuous effects on the part of cost accountant.

Question Under stocking may have following consequences
Correct Answer Payment for idle time to workers , Production hold ups resulting into disturbed delivery schedule , Eleventh hour purchase

Question Per unit cost of variable overheads may reduce as the volume of output increases but the total overheads remain constant.
Correct Answer False

Question A properly laid down system of Standard Costing helps in implementation of
Correct Answer Budgetary Control

Question Store ledger
Correct Answer Record of all receipts and issue transactions , Financial expressions of all transactions , Maintenance of Store ledges provides a second check

Question It is necessary to ignore key factors while taking decision by marginal costing technique.
Correct Answer False

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

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

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

Question Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting
Correct Answer True

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

Question Discount received from the creditor has been entered in the creditor's account but discount has not been credited; what type of error is this ________
Correct Answer Omission of posting an amount in the ledger

Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________
Correct Answer decrease in gross profit by Rs.2,020/-

Question The variable costs are controllable at the lower lever.
Correct Answer True

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

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

Question The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from a ascertain the cost, is known as . . .
Correct Answer Cost accounting

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

Question Examples of indirect material are
Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes

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

Question Contents of Uniform Cost Manual are
Correct Answer Organization , Cost Accounting system , Presentation of information

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

Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries.
Correct Answer False

Question The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions.
Correct Answer Control

Question Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be the amount of debtors that must be disclosed in the balance sheet?
Correct Answer Rs.53,750/-

Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed. The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the year ending 31st March, 2004.
Correct Answer The net profit will decrease by Rs.18,000/-

Question Annual sales were Rs.10,50,000/- and sales returned by customers amounted to Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount of incentive due to the salesmen.
Correct Answer Rs.30,660/-

Question Depreciation on assets is credited to the trading account.
Correct Answer False

Question Balance sheet is considered to be a part of the financial statements.
Correct Answer True

Question Long term loan borrowed from financial institution comes under the heading of long term liabilities.
Correct 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/-

Question Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the bank book.
Correct Answer Credited

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

Question A complete list of all material required, with quantities, for a particular job is given in the ________.
Correct Answer Bill of material

Question A producer is using certain tool item in productive process. Annual requirement is 20,000 units of the tool. Cost of ordering a lot is Rs.160/-. Per unit price of the tool is Rs.360/-. Annual interest cost is 10%, insurance cost is 0.5% of the average inventory in stores, and other storage expenses are Rs.2.20 per unit. Calculate annual ordering cost.
Correct Answer Rs.8,000/-

Question A written request sent to a supplier for specified goods at an agreed upon price is often called as :
Correct Answer Purchase order

Question Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product.
Correct Answer True

Question The perpetual inventory system enables management to ascertain stock without physical verification.
Correct Answer True

Question The main advantages of profit sharing are :
Correct Answer Employees try to increase productivity , Incentives are shared by all the employees , Augments emplyees' efficiency

Question It is the ________ method of measuring labour turnover which is a combination of separation method and replacement method.
Correct Answer Flux

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

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

Question Merits of break even point analysis are as follows:
Correct Answer Useful diagnostic tool. , Used for analysing the risk implication of alternative actions. , Used to graphically represent complicated data.

Question Annual fixed cost of a producer is Rs.500,000/-. The price of its product is Rs.60/- and per unit variable cost is Rs.40. In the next year his fixed cost commitments are expected to go up by 20%. By what percentage the break even point will go up in the next year.
Correct Answer 0.2

Question A firm earns profit when contribution is equal to fixed costs under variable costing.
Correct Answer False

Question Labour efficiency variance arises due to:
Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material

Question Actual costs determined on the basis of costing records maintained have following limitations :
Correct Answer No practical utility from control point of view , No practical utility for price fixation , Expensive

Question A standard that is never altered, after being established, is known as ________ standard.
Correct Answer Ideal

Question Standard costs are used for external reporting.
Correct Answer False

Match The Following
Question Correct Answer

Book-Keeping Books of Accounts

Financial statement Profitability statement & Balance-sheet

Accounting Process of analyzing & interpretation

Profitability statement Indicates the amount of profit earned

Balance-sheet Financial status

Match The Following
Question Correct Answer

Quality control dept control the quality of the product

Time booking dept jobwise booking of time

Personnel department Selection & training to workers

Time Keeping Department Recording of workers time

Cost accounting dept Accumulation & classification of cost data

Match The Following
Question Correct Answer

Lighting Number of light points

Rent Area

Power Hp/KW

Depreciation Value of assets

canteen expenses number of workers

Match The Following
Question Correct Answer

Goodwill Real A/c

Nominal Account Wages A/C

Capital A/C Personal A/C

Building A/C Real A/C

Salary A/C Nominal A/C

Match The Following
Question Correct Answer

Owner Businessman

Banker Financial Institution

Debtors Credit Transaction

Creditors Receive the money

Suppliers Sale the Goods

Match The Following
Question Correct Answer

Spirit of mutual trust Requisite for uniform costing

Avoids cut throat competition Advantage of uniform costing

Treatment given to research and development costs Fields covered by uniform costing

Advantageously applicable in similar industries Scope of uniform costing

Match The Following
Question Correct Answer

Deferred revenue expenditure Real account

Deferred revenue expenditure written off Nominal account

Loan Personal account

Drawings Proprietor's account

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

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

Question Income received in advance transfer to current liabilities
Correct 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

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

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

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

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

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 )

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

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

Question The variable costs are controllable at the lower level.
Correct Answer True

Match The Following
Question Correct Answer

Journal Book of original entry

Ledger Maintain all types of Accounts

Assets All the properties owned by the business

Liabilities All the amount owed by the business

Drawing Withdrawn for personal use

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

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

Question Omission of posting an amount in the ledger
Correct Answer Error of Omission

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

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

Question Direct Cost includes
Correct Answer Direct material , Direct labour , Direct expenses

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

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

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

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

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

Question Budget is prepared for a fixed period of time.
Correct Answer True

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

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

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

Question Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole.
Correct Answer False

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

Question Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors.
Correct Answer True

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

Match The Following
Question Correct Answer

Financial Accounting Systematic recording of business transactions

Cost Accounting Ascertainment of cost

Management Accounting Analyzing & interpretation of financial data

Accounting Art of interpreting & classifying business transaction

Book Keeping Recording of business transactions

Match The Following
Question Correct Answer

Bills Payable Amount payable to supplier

Bills Receivable Amount received from the customer

Trade Discount Not accounted for in the books of Accounts

Cash Discount Accounted for in the books of Accounts

Bad debts Amount not received from customer

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

Question Going Concern Concept __________________
Correct Answer Indefinite longer period , Not likely to close down in shorter period , This affects the values of asset and liabilities

Question Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to depreciation 2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs as per the reducing balance m
Correct Answer 20,000,18,000,16,200

Question Profit & Loss A/C credit side has
Correct Answer Gross profit , Commission received , Interested received

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

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

Question This cost indicates historical cost which is incurred in past.
Correct Answer Sunk cost

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

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

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

Question A good wage payment system will punish the workers for the matters beyond the control of the workers.
Correct Answer False

Question These are the features of fixed overheads
Correct Answer total cost remains the same , per unit cost may vary , not dependent on volume of output

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

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

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

Question Basic assumptions made by marginal costing are
Correct Answer per unit selling price remains constant at all the levels of activities. , whatever is produced by the organisation is sold off. , per unit variable cost remain constant.

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

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

Question Uniform Costing disturbs the healthy competition in the industry
Correct Answer False

Question Uniform Costing Methods may be advantageously applied
Correct Answer In single organization having number of branches. , Number of companies in same industry. , Similar Industries such as cotton, jute etc.

Question In Cash budget , Operating cash outflow includes
Correct Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries

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

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

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

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

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

Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value.
Correct Answer 0.75

Question Under time rate system a worker is paid on the basis of production achieved by him in a given time.
Correct Answer False

Question Which of the following costs is most likely to have a cost behaviour pattern described as ..a fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10
paise to 8 paise per unit at 2,000 units?
Correct Answer Wages payment which is fixed for a minimum output quantity after which a bonus per unit is paid which reduces when activity level exceeds 1,000 units

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

Question In case of defective material being returned by the stores department to the vendor, such material should be valued at the________.
Correct Answer Purchase price

Question Piece rate system is suitable when quality of goods produced is of extreme importance.
Correct Answer False

Question While preparing trial balance, the balance as per ________ book is considered as bank balance.
Correct Answer Bank

Question 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.
Correct Answer Rs.180/-

Question Contribution represents pool of resources available for meeting all costs other than ________.
Correct Answer Variable costs

Question Locate the steps involved in rectifying the errors in the books of accounts
Correct Answer Find the wrong entry passed , Find the correct entry to be passed , Find the entry that will resolve the mistake in the books

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

Question Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour cost and ________.
Correct Answer Direct labour cost of the product

Question Causes for adverse material price variance are:
Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges

Question The objectives of Uniform costing system are as follows :
Correct Answer To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of

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 organisation 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/-

Question If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can be stated as ________ sq.ft. tiles.
Correct Answer 300000

Question Category C items, as per the ABC analysis, usually refers to indirect material.
Correct Answer True

Question According to the standard costing principles, only adverse variance must be further investigated.
Correct Answer False

Question Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives.
Correct Answer Non-monetary

Match The Following
Question Correct Answer

Closed the account with State Bank of India
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

Interest on debentures directly credited by bank 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

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

Question The purchase account should be debited when an order is placed with the supplier of material.
Correct Answer False

Question The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of
30 days, no rebate is offered. The company purchase
Correct Answer October- NIL, November- Rs.26,750/-

Question The variance which measures the profit consequences of selling different products in proportions other than the standard, is known as ________ variance.
Correct Answer Sales margin mix

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

Question Select the non-monetary incentives
Correct Answer Health and safety services , Canteen facility, Loans at reduced rate of interest

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

Question In practical circumstances, the ________ are referred to as application of funds.
Correct Answer Assets

Question The composition of selling costs is given below : 1 salaries 4% of sales, travelling expenses 1.5% of sales, and sales office 2% of sales. Find the amount of selling overheads if the sales are
Correct Answer Rs.9,000/-

Match The Following
Question Correct Answer

Ledger Maintain all types of accounts

Audit Reviewing internal control system

Accounting Process of analyzing & interpretation

Journal Book of original entry

Question The document which lays down the cost accounting plans and procedures to be followed by the constituent units is known as ________.
Correct Answer uniform cost manual

Question The characteristics of a good wage system are :
Correct Answer Flexible , Economical to use , Easy to understand

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

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

Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages.
Correct Answer True

Question Marginal costing is found to be unsuccessful in the following situations :-
Correct Answer Impossible to distinguish costs into fixed and variable component. , With respect to capital intensive industries where fixed costs are very large and hence cannot be ignored , With respect to service industries where employee costs are very large and almost fixed in nature

Question Master budget provides a basis for computing effect of changes in :
Correct Answer product mix of the company , sales volume , production facilities

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

Question ________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting.
Correct Answer Talling
Correct Answer arithmetical

Question While calculating the minimum level, normal lead time is not necessary
Correct Answer False

Question To Increase the existing production capacity, additional capital expenditure is required.
Correct Answer True

Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2
Correct Answer Rs. 83.60

Question Cost-sheet may be prepared separately for each
Correct Answer Different Cost Centre

Question The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs. Calculate the depreciation according to straight line method
Correct Answer 10,000

Question To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________
Correct Answer Net effect
Correct Answer Balanced

Question In fixed overhead variance, the volume variance is further analyzed as
Correct Answer Variance Efficiency Variance , Capacity Variance , Calendar Variance

Question Accounts is a
Correct Answer Record of all transaction

Question Whatever is to be sold need not be produced.
Correct Answer True

Question Patents and Trade Marks Account is a Real Account.
Correct Answer True

Question Budget is prepared in terms of
Correct Answer Quantity and/or Money

Question Favorable variances need on investigation
Correct Answer False

Question Standard Costing may not be useful in
Correct Answer Small concerns , Industries having non-standardized products , Contract jobs

Question Standard costs are the targets to be attained by the actual performance.
Correct Answer Minimum

Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2
Correct Answer Rs. 75

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

Question Double Entry Accounting System__________________
Correct Answer Every business transactions have two elements , When business receives something, it has to pay something , Every debit has a corresponding credit

Question Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______
Correct Answer 750

Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage
Correct Answer 17%

Question When bank balance as per bank book is considered then following to be added.
Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank

Question As soon as the suspense account balance is wiped out , it may be assumed that all mistakes have been corrected.
Correct Answer False

Question Credit sale of Rs. 5000 to Bobby should be entered in the purchase book.
Correct Answer False

Question Manufacturing process involves study of
Correct Answer Designing the product , The quantity and quality , Material used

Question The Bin card and stores ledges do not match due to the following reasons:
Correct Answer Arithmetical errors in calculating , Non- posting a certain document , Posting a wrong Bin card

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