Management Accounting - A29

Question Depreciation, interest and property tax continue even when the operations are discontinued.
Correct Answer True

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

Question The key factor determines the :
Correct Answer Level of activity , Capacity utilization , Level of sales

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

Question Which of the following is a correct definition of the key factor?
Correct Answer The factor which limits the activites of the undertaking

Question The integrated form of all functional budgets is known as :
Correct Answer Master budget

Question For the month of November, a firm has budgeted sales of 20,000 units of X at a price of Rs.10/- and sale of 30,000 untis of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales quantity variance.
Correct Answer Sales volume variance -Rs.120,000/- (Favourable) , Sales mix variance -Rs.44,000/- (Favourable) , Sales Quantity variance-Rs.76,000/- (Favourable)

Question ________ variance represents the over or under utilisation of pland and machinery.
Correct Answer Capacity

Question The following data relates to the month of October : Actual variable overheads Rs.60,000/-; budgeted variable overheads Rs.80,000/-; actual output 900 units; budgeted output 1,000 units; standard time for one unit - 2 hours. Calculate variable overhead efficiency variance.
Correct Answer Rs.4,000/- (Favourable)

Question Which of the following operations would normally be carried out first when preparing a master budget?
Correct Answer Determining the budget period

Question Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________ .
Correct Answer Income Tax Act, 1961

Question Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows : X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance.
Correct Answer Rs.100/- (Favourable)

Question Select the examples of functional budgets:
Correct Answer Sales budget , Production budget , Research and development budget

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

Question KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003, assuming there were no additions or disposals during the year?
Correct Answer Rs.100,000/-

Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable.
Correct Answer True

Question An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________
Correct Answer P's A/c and Q's A/c

Question Budgetary control system provides a basis for establishment of the incentive systems.
Correct Answer True

Question A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity.
Correct Answer True

Question A low margin of safety indicates ________ fixed overheads.
Correct Answer higher

Question Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory.
Correct Answer less than 10

Question The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company.
Correct Answer Rs.34,408.09

Question Price based on Uniform Costing may be taken to be reliable and representative of the whole industry.
Correct Answer True

Question The budget manual must contain statement regarding:
Correct Answer Objectives of the orgainsation

Question Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to:
Correct Answer Balance as per bank book > Balance as per pass book

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

Question Since the pass book and the bank book record the ________ transactions, the bank balance as per these books should be equal.
Correct Answer Same

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

Question Cost Accounting is a legal requirement.
Correct Answer False

Question Cash account can have a credit balance.
Correct Answer False

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

Question Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole.
Correct Answer False

Question The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half - 37,500 units. The production pattern of the company is based on 80% of the sales of the current six months and 20% of the budgeted sales of the next six months. Calcu
Correct Answer 1st half -31,500 units; 2nd half - 30,000 units

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

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

Question Cost Accounting and Management Accounting are similar to each other in many respects.
Correct Answer True

Question The reports generated by financial accounting are meant for the use by management for effective decisions.
Correct Answer True

Question Token or disc method is a related to the system of ________.
Correct Answer Time-keeping

Question Cost Accounting may be considered to be a part of management Accounting.
Correct Answer True

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

Question It is said that marginal costs are used primarily in guiding decisions that are yet to be made.
Correct Answer True

Question Management Accounting is not at all a legal requirement
Correct 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

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

Question The method of remuneration under which the workers are given in share in profits of the organization, at a specified percentage, along-with their wages, is known as ________ method.
Correct Answer Profit-sharing

Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account.
Correct Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/-

Question Quantify the increase in profit on account of following errors : (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses.
Correct Answer Rs.43,200/-

Question The analysis which is also referred as 'what if' analysis is known as________.
Correct Answer Cost volume profit analysis

Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Correct Answer False

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

Question The varinace that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance.
Correct Answer Sales margin volume

Question Depreciation is caused by use factor, obsolescence and ________.
Correct Answer Time factor

Question Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit)
Correct Answer False

Question All cash sales are recorded in the sales register.
Correct Answer False

Match The Following
Question Correct Answer

Transport facilities to employees Preventive cost of labour turnover

Relationship between supervisor and worker Avoidable cause of labour turnover

Dismissal of employee Unavoidable cause of labour turnover

Increased spoilage and defectives Replacement cost of labour turnover

Question Indirect material cost is an integral part of finished goods.
Correct Answer False

Question Select the various methods adopted for treatment of under or over absorbed overheads
Correct Answer Use of supplementary rates , Carrying over the amount to remaining period , Writing off to the Costing Profit and Loss Account

Question It is difficult to apply Uniform costing system for an industry which has labour intensive companies as well as capital intensive companies, because :
Correct Answer The cost structure is different

Match The Following
Question Correct Answer

Normal Standards Anticipated to be achieved in future

Basic Standards Established for a longer period of time

Current Standards Established for a shorter period of time

Expected Standards Anticipated to be achieved in the budget period

True/False
Question Trading account is an important account which will be used to analyze how successful and how efficiently the firm runs its business.
Correct Answer True

Question Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet.
Correct Answer Long term liabilities

Question 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.
Correct Answer Rs.75,981/-

Question The components of the selling and distribution cost budget are :
Correct Answer Distribution expenses , Publicity expenditure , Salary of sales-office workers

Question Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000
Correct Answer Ram is a creditor , Rs.10,000/- has been paid to Ram , The payment is made by cheque

Question A written order sent to inform the purchasing department of a need for materials is called a ________.
Correct Answer Purchase requisition note

Question The overheads apportioned to three production departments A, B and C and two service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of 4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2. Ascertain the total overheads of each production department.
Correct Answer A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/-

Question Re-order quantity may be measured as :
Correct Answer Maximum stock level - re-order level + (minimum usage X minimum re-order period)

Question If the total amount on the ________ side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance.
Correct Answer Debit

Question An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe.
Correct Answer suspense

Question The final result disclosed by trading account is the ________profit earned by the organization.
Correct Answer Gross

Question Number of days inventory is held can be calculated by dividing number of days in a year by ________.
Correct Answer Inventory turnover ratio

Match The Following
Question Correct Answer

Total cost Cost of finished goods

Non operating income Profit on sale of investment

Selling and distribution overheads Advertisement expenses

Factory overheads Repair for factory building

Question The amount of profit which is retained by the organisation is transferred to 'Reserves and Surplus' in the balance sheet.
Correct Answer True

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

Question Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units.
Correct Answer 66.9 days

Question Material mix and material yield variance can be calculated even when only one raw material is used for production.
Correct Answer False

Question A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate System.
Correct Answer P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80

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

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

Question Select the correct formulae for calculating break even point.
Correct Answer Fixed cost / (Selling price per unit - Variable cost per unit) , [Fixed cost / Marginal contribution] X Sales , [Fixed cost / (Fixed cost + Net Profit)] X Sales

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

Question The lowest profit volume ratio can be ________%.
Correct Answer 0

Question Trading account is used to analyse how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin.
Correct Answer True

Question Calculate the earnings of workers Monica and Sonica under Taylor's differential piece rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30 seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above standard. Monica produces 900 units per day and Sonica produces 1,100 units per day.
Correct Answer Monica -Rs.72/-; Sonica - Rs.132/-

Question The factors that influence determination of budget period are :
Correct Answer Type of budget, viz. Sales or capital expenditure budget , General economic conditions , Trade cycle of business

Question Uniform costing system can be successfully implemented in any industry only when :
Correct Answer Information is freely supplied by all the units , Well organised sector is ready to share the technological improvements , Information furnished by the units is complete and correct

Question In marginal costing, under and over absorption of fixed overheads is bound to arise.
Correct Answer False

Question Trade Discount refers to the discount . . .
Correct Answer received on purchases

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

Question Cool-wind Ltd., manufactures fans, which at sold at Rs.400 pre piece. The cost of sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle by 39% of present gross profit. With the above information, you are required to determine the future selling price, if the present rate of gross profit is to be maintained.
Correct Answer Rs.452/-

Question Credit balance in interest account indicates income for the organisation.
Correct Answer True

Question Money Measurement Concept__________________
Correct Answer Only those transactions and facts expressed in terms of money , This Concept imposes severe restrictions on the kind of information available from financial statements , Due to several restrictions it becomes drawback of financial accounting

Question A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10% on building. The total amount of capital comes to Rs. __________
Correct Answer 11500

Question The periodical total of sales book was cash short by Rs. 5000 for rectifying the same, which A/C to be debited
Correct Answer Suspense A/C

Question Following errors do not affect the trial balance
Correct Answer Error of Principle , Error of Omission , Error of Commission

Question A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account
Correct Answer False

Match The Following
Question Correct Answer

Opportunity Cost Cost can be controlled

Differential Cost Historical Cost

Sunk Cost Cannot be controlled

Controllable Cost Increase or Decrease in cost

Uncontrollable Cost Return or yield

Question Indirect material cost assist the manufacturing process is an integral part of finish goods.
Correct Answer False

Question Dividend received is a Non-operating Income.
Correct Answer True

Question A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2
Correct Answer 14,59,200

Question Factory overheads are termed as
Correct Answer Production overheads , Works overheads , Manufacturing overheads

Question The aims of perpetual inventory system are as follows
Correct Answer Maintaining Bin cards , Maintaining store ledger , Continuous verification of physical stock

Question These are the features of variable overheads
Correct Answer vary directly in proportion to volume of output. , per unit cost remains the same , total overheads may increase or decrease as per volume of output.

Question The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet.
Correct Answer True

Question If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is 500 kg then what will be the quantity of production
Correct Answer 4,500 kg

Question The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time.
Correct Answer Idle

Question Budgeted profit and loss account and budgeted balance sheet are also known as ________.
Correct Answer Master budget

Question Differential cost analysis is incorporated in the cost books.
Correct Answer False

Question The process of recording attendance time of the workers is known as time booking.
Correct Answer False

Question Factory light, telephone expenses are examples of ________ expenses.
Correct Answer Indirect

Question For successful implementation of uniform costing system, it is very essential to devise ________, containing recommended cost accounting plan and procedures.
Correct Answer cost manual

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

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

Question Profit = Profit volume ratio X Margin of safety
Correct Answer True

Question 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.
Correct Answer Loss of trained personnel , Loss of regular customers , Expenditure required to restart the factory

Question Locate the error and its features in the following -
Correct Answer Compensating errors , Trial balance will not be affected , Trial balance will be affected

Question Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction?
Correct Answer Maintenance of machine account

Multiple Choice Multiple Answer
Question Which of the formulae can be used to calculate profit volume ratio :-
Correct Answer Change in contribution / Change in sales , 1 - (Change in variable cost / Change in sales) , (Fixed cost + Profit) / Sales

Multiple Choice Multiple Answer
Question International Motors manufactures crankshafts for jeeps and trucks. They have furnished the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct.
Correct Answer Cost per crankshaft for jeep is Rs.445.45 , Cost per crankshaft for truck is Rs.805.66 , General expenses should be apportioned on direct labour ratio

Multiple Choice Single Answer
Question The direct material usage budget and direct material purchase budget differ because of which of the following?
Correct Answer A planned change in the level of material stock

Multiple Choice Multiple Answer
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

Multiple Choice Multiple Answer
Question Select the accounts to be disclosed on the liability side of the Balance sheet :-
Correct Answer Loan , Outstanding expenses , Creditors

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

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

Select The Blank
Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization.
Correct Answer Net

True/False
Question Receipts and payments method of cash budget is useful for preparing long term estimates.
Correct Answer False

Multiple Choice Single Answer
Question The Asian Industries specialises in the manufacture of small capacity motors. The cost structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per annum. THe sale price of the motor is Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order to break-even.
Correct Answer 6,000 motors

True/False
Question The purpose of profit and loss account is to brign together information which relates to gross profit and the expenses for running the business.
Correct Answer True

True/False
Question If the storage cost of inventory increases, then the economic order quantity also increases.
Correct Answer False

Multiple Choice Single Answer
Question The reporting method used in the costing system should be based on the principle of
Correct Answer Management by exception

Multiple Choice Single Answer
Question XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased to offset 20% reduction in selling price, so that the existing profit remains intact.
Correct Answer 0.6

Multiple Choice Single Answer
Question A company manufactures and sells four products, viz. A, B, C and D. The details are as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%, Product D-18%; Incremental rupee sale for each Rupee spent on advertisement:-Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product D-Rs.10/-. Amount of advertisement available is only Rs.5,000/-.
Correct Answer Product B

True/False
Question Match
Correct Answer True

Multiple Choice Single Answer
Question An analysis of the time card of a worker on a machine shows that of the total 48 hours, he worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You are required to calculate the earnings of the worker.
Correct Answer Rs.500/-

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

Multiple Choice Single Answer
Question The standard derpartmental overhead rate is Rs.15/- per hour. Based on the following details, work out the activity level at which the overhead rate has been pre-determined. Activity level : 600 hours; overhead allowance Rs.12,000/-. Activity level : 800 hours; overhead allowance Rs.14,400/-. Activity
Correct Answer 1,600 hours

True/False
Question The total of the direct costs are termed as overheads.
Correct Answer False

Multiple Choice Single Answer
Question Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as 6170 rectifying the transaction the creditor A/C is to be debited amount to Rs
Correct Answer 540

True/False
Question Market price may be treated as latest purchase price, realisable price or replacement price
Correct Answer True

True/False
Question Office and administration overheads consists of all overhead costs incurred from procurement of material till the stage of selling the final product.
Correct Answer False

True/False
Question Sold goods to Ajay on credit Rs 10,000/- Ajay account to be credited
Correct Answer False

True/False
Question Goods lost by fire firstly transfers to Trading Account credit side & corresponding amount is debited to P&L account.
Correct Answer True

Multiple Choice Multiple Answer
Question A manufacturer uses 200 units of component every month and he buys them entirely from outside supplier. The order placing and receiving cost is Rs. 100 and annual carrying cost is Rs. 12. Calculate Ec
Correct Answer 200 units

Select The Blank
Question Due to compensating errors the ________ accuracy of the trial balance ________ affected
Correct Answer arithmetical
Correct Answer doesnot

Select The Blank
Question Preventive costs of labour turnover are ________ and ________ .
Correct Answer welfare activities
Correct Answer medical services

Multiple Choice Multiple Answer
Question Basic three steps in Standard Costing are
Correct Answer Setting standards , Comparing actuals with standards , Measurement of variance

True/False
Question If the excess quantity is already billed in the invoice, it will be approved and paid. If not Debit note may be issued to the supplier for amending the amount.
Correct Answer False

Multiple Choice Single Answer
Question A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 rectification of the suspense accounted debited to Rs
Correct Answer 500

Multiple Choice Single Answer
Question Depreciation charged on land & building, first debited to Profit & Loss A/C. and then to be ---------------------
Correct Answer Deducted from land & building

Select The Blank
Question One of the limitations of the budgetory control is that it ________.
Correct Answer is an expensive affair

Multiple Choice Multiple Answer
Question Features of real account are . . .
Correct Answer Mainly deals with items which are having physical , Consists of some intangible assets , examples include - Lane, Building, Vehicles

Select The Blank
Question A trading concern will have only ________ overheads and selling overheads.
Correct Answer administration

Select The Blank
Question ________ is an example of intangible asset.
Correct Answer Goodwill

Multiple Choice Single Answer
Question Uniform costing system is useful in the following areas
Correct Answer Classification of cost accounts

Multiple Choice Single Answer
Question Mr.X has Rs.200,000/- invested in his business firm. He wants a 15% return on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 60% of sales, his fixed costs are Rs.80,000/- per year. Mr.X estimates that even if he closed the doors of his business, he would incur Rs.25,000/- as expenses per year. At what sales would he be better off by locking his business up.
Correct Answer Rs.62,500/-

Multiple Choice Single Answer
Question The budgeted level of activity of the production department of Style India Ltd. is 5,000 hours per period. From the given information find the cost for 3,500 hours per period. Indirect wages Re.0.40 per hour;
Correct Answer Rs.2,480/-

Select The Blank
Question Normally, the planning for dividend payments and interest payments is based on the ________ budget.
Correct Answer Cash

Multiple Choice Single Answer
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

Select The Blank
Question Generally, all real accounts will have a ________ balance
Correct Answer Debit

Multiple Choice Single Answer
Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth

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

True/False
Question Fixed expenses will move up by jumps if the output exceeds the capacity.
Correct Answer True

Multiple Choice Single Answer
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/-

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

Match The Following
Question Correct Answer

Tool-room expenses Direct labour hours

Power Horse power of machine

Stores department Number of material requisitions

Boiler house Cubic feet of steam supplied

Multiple Choice Single Answer
Question The following data is extracted from the books of a manufacturing concern for the year 2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of 10% in the fixed expenses.
Correct Answer Rs.275,000/-

True/False
Question Bank charges debited in the pass book represent clerical mistake on the part of the bank employees.
Correct Answer False

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

Match The Following
Question Correct Answer

Dividend paid Profit and loss appropriation account

Freight inwards Manufacturing account

Sales Trading account

Freight outwards Profit and loss account

Multiple Choice Single Answer
Question The credit sales are as follows : February Rs.180,00,000/-, March Rs.192,00,000/- and April Rs.108,00,000/-. 50% of credit sales are realised in the month following the sale, 30% in the second month following the sale and the balance in the third month f
Correct Answer Rs.15,000,000/-

Multiple Choice Multiple Answer
Question The disadvantages of supplementary overhead rates are:
Correct Answer It can be determined only after the end of the accounting period , Defeats the basic concept of normal cost , Involves lot of clerical activity

Select The Blank
Question In the scheme of cost-________-profit analysis, an attempt is made to measure the variations of cost with volume.
Correct Answer volume

Select The Blank
Question The ________ is of immense help in guiding the companies to operate their accounts on uniform basis.
Correct Answer uniform cost manual

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

Multiple Choice Multiple Answer
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

Match The Following
Question Correct Answer

Emerson's efficiency bonus system
Actual hours X Hourly rate + Bonus percentage (Actual hours X Hourly rate)

Piece rate system Output X Wage rate per unit

Barth Premium system Hourly Rate X (square root of Standard Hours X Actual Hours)

Time rate system Attendance time X Hourly wage rate

Multiple Choice Single Answer
Question If the overhead expenditure to be absorbed is the foreman's salary, the most appropriate basis for absorption would be :
Correct Answer Direct labour hours

True/False
Question In case the standards are too difficult to achieve, they will provide additional incentive for improvement.
Correct Answer False

Multiple Choice Single Answer
Question Standard cost specification per unit of product : 20 labour hours per unit @ Rs.22/- per labour hour.Actual production and labour cost : Actual production 300 units; time used in production -5,500 hours; Idle time -600 hours; time paid for-6,100 hours, total wages paid -Rs.146,400/- . Compute Idle time variance.
Correct Answer Rs.13,200/- (Adverse)

Multiple Choice Single Answer
Question Details of budgeted and actual fixed overheads and output for the year 2004 are as follows : Budgeted fixed overheads -Rs.20,00,000/-; actual fixed overheads -Rs.21,50,000/-; budgeted output - 40,000 units and actual output- 45,000 units. Compute the per unit standard rate for fixed overheads.
Correct Answer Rs.50/-

Multiple Choice Single Answer
Question In considering a special order situation that will enable a company to make use of presently idle capacity, which of the following costs would be irrelevant?
Correct Answer Depreciation

True/False
Question Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of finished goods.
Correct Answer True

Multiple Choice Multiple Answer
Question The management of Dick Ltd. is deciding whether to buy component Y from the supplier, since the purchase cost is less than the manufacturing cost. State the non-financial aspects that must be considered before arriving at a decision.
Correct Answer Reliability regarding quality of the material supplied by the supplier , Alternative use of labour of engaged in manufacturing component Y , Regularity of material supplies from the supplier

True/False
Question In marginal costing, decisions are guided by profit rather than contribution margin.
Correct Answer False

Multiple Choice Single Answer
Question Select the factor which can prove to be a very crucial key factor in case of an oil refinary.
Correct Answer Supply of crude oil

Multiple Choice Multiple Answer
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

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

True/False
Question The difference between sales and margin of safety is equal to budgeted sales.
Correct Answer False

Select The Blank
Question A ________ note is prepared when excess material is returned to stores.
Correct Answer Material returned

Select The Blank
Question The systematic process of identifying and reporting variance is known as ________.
Correct Answer Variance analysis

Match The Following
Question Correct Answer

[( Actual sales - Break even sales) ]/ Actual sales Margin of safety as a percentage of actual sales

Fixed cost / Contribution margin ratio Break even point

Fixed cost - (Sales X Profit volume ratio) Profit

(Sales X Profit volume ratio) -Fixed cost Loss

True/False
Question Marginal costing rewards sales whereas absorption costing rewards production.
Correct Answer True

Select The Blank
Question Dividend received on amount invested in shares is an example of ________.
Correct Answer non-operating income

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

Select The Blank
Question Under-recovery of overheads implies that the profit will be________ to the extent of total under-recovered overheads.
Correct Answer Increased

Multiple Choice Single Answer
Question Judge the statement in italics based on the criteria given. On 31st March, 2004 Sita Enterprises sent goods worth Rs.30,000/- on approval basis to Mr.Ram. These goods should be included in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz.Sita Enterprise.
Correct Answer The statement and the reason both are correct

Multiple Choice Single Answer
Question Double entry system of accounting follows the principle of :
Correct Answer Every debit has corresponding credit

Multiple Choice Single Answer
Question Where, in the final statements of accounts, should we disclosed the closing balance of income received in advance?
Correct Answer Balance sheet - on the liability side

True/False
Question Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet.
Correct Answer True

True/False
Question In differential cost analysis, decisions are taken by comparing the incremental revenue with differential costs.
Correct Answer True

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

Select The Blank
Question A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit completed, this type of labour cost may be classified as ________ cost.
Correct Answer Semi-variable

Multiple Choice Single Answer
Question Following data has been extracted from the records of a manufacturing company whose level of operations varies during different months. Minimum activtity : 30,000 machine hours and manufacturing overeheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads.
Correct Answer Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour

Multiple Choice Single Answer
Question You been informed that the carrying cost and ordering cost with best order size of 1,200 units is Rs.6,000/-. Unit cost of material is Rs.50/-. Annual storage cost per unit is 10% of the unit price of material. Ordering cost is Rs.240/- per order. Ascertain annual material requirement, assuming that at economic order quantity the total storage cost is equal to the total ordering cost.
Correct Answer 15,000 units

Select The Blank
Question Graphically, fixed cost line will be ________ the 'x-axis'.
Correct Answer Parallel to

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

True/False
Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable.
Correct Answer True

Multiple Choice Single Answer
Question Over which of the following costs is the management likely to have least control?
Correct Answer Buildings insurance cost

Select The Blank
Question Loss of uninsured goods by fire was debited incorrectly to United India Assurance Company's account instead of debiting it to ________ account.
Correct Answer Goods lost by fire

Multiple Choice Single Answer
Question The given data pertains to the month of April : Budgeted : Fixed overheads Rs.10,000/-; output - 5,000 units; standard time for one unit - 4 hours. Actual : Fixed overheads -Rs.10,200/-; output - 5,200 units and actual hours worked - 20,100 hours. Calculate fixed overhead cost variance.
Correct Answer Rs.200/- (Favourable)

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/-

Multiple Choice Multiple Answer
Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account.
Correct Answer Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- , Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/-

Select The Blank
Question Adjustment entries always have ________ effects.
Correct Answer Two

Multiple Choice Single Answer
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 The various contents of a uniform cost manual are organization, cost accounting system and ________.
Correct Answer Presentation of information

Multiple Choice Multiple Answer
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

Multiple Choice Single Answer
Question In the trial balance prepared on 31st March, 2004, the insurance premium account had a debit balance of Rs.12,865/-. This amount is the premium of the policy which expired on 29th February, 2004. The policy has been renewed from 1st March, 2004 but the premium is not yet paid. Find the amount of insurance premium still payable as on 31st March, 2004.
Correct Answer Rs.1,169.55

True/False
Question All the properties owned by the business are collectively referred to as the assets of the business.
Correct Answer True

Multiple Choice Single Answer
Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry?
Correct Answer Uniform costing

True/False
Question Primary distribution is effected on the basis of service rendered to the service departments by the production departments.
Correct Answer False

Select The Blank
Question Creche expenses may be appropriately apportioned on the basis of ________.
Correct Answer Number of female workers

True/False
Question Debit Note is an intimation sent to person dealing with the business that his account is being credited for the purpose indicated therein.
Correct Answer False

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

Multiple Choice Single Answer
Question The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumption of X = 10 litres per unit of product. Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance.
Correct Answer Rs.5,000/- (Favourable)

Multiple Choice Multiple Answer
Question The suspense account has a debit balance of Rs.40,000/-. Select the transactions which are capable of nullifying this balance.
Correct Answer Conveyance expenses of Rs.25,000/- were posted on the wrong side of the account. , Purchased computer worth Rs.28,000/- was recorded in the ledger as , The total of the purchase book was cast short by Rs.44,000/-

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

Multiple Choice Single Answer
Question As on 31st March, 2004, it was decided to write off Rs.800/- of debtors as bad debts. Also, provision for bad and doubtful debts is to be made @ 5% and for discount on debtors @ 4%. Find the net amount of debtors to be disclosed in the balance sheet, if the total debtors before the aforesaid adjustments is Rs.98,623/-.
Correct Answer Rs.89,214.58

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

Multiple Choice Multiple Answer
Question The process of accounting has three streams of accounting ---------------,--------and ----------------------.
Correct Answer Financial Accounting , Cost Accounting , Management Accounting

Multiple Choice Single Answer
Question Select the information to be considered before installing a costing system :-
Correct Answer Labour intensity of the product

Multiple Choice Single Answer
Question The opening balance of cash account is Rs. 25,000/-, cash received from debtors Rs. 30,000/-, sold goods on cash basis amounting to Rs. 50,000/-, paid to creditors Rs. 20,000/-, purchase furniture Rs. 5000/-. What is the closing balance of the cash account?
Correct Answer Rs. 80,000

Multiple Choice Single Answer
Question The installation and operation of ___________ accounting requires a very elaborate organizational structure and large number of rules & regulations
Correct Answer Management