Management Accounting - A23

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

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

Question Suspense account is closed automatically after rectification of all the errors.
Correct Answer True

Question Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost.
Correct Answer False

Question Generally all the liabilities will have ________balance.
Correct Answer Credit

Question If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ________.
Correct Answer Over-absorbed

Question Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004.
Correct Answer Rs.500/-

Question The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to handle this level of sales.
Correct Answer Production capacity

Question Following are the examples of service cost centre
Correct Answer Stores department , Transport department , Accounting department

Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads.
Correct Answer True

Question Pre-requisites of Uniform Costing are . . .
Correct Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry

Question You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres drum was as follows : To job X 200 litres; job Y 400 litres and job Z 320 litres. After these issues the drum was empty. Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z.
Correct Answer Loss due to spillage and evaporation - 30 litres. , Rate of charge per litre of petrol - Rs.30/-

Question Error of commission refer to calculation errors, totaling errors, errors in carrying forward etc.
Correct Answer True

Question Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the pass book.
Correct Answer False

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

Question The column which refers to the page number of the ledger is known as ________.
Correct Answer Ledger folio

Question The direct material useage budget and direct material purchase budget differ because of which of the following:
Correct Answer A planned change in the level of material stock

Question Loss is equal to fixed cost minus ________
Correct Answer Contribution

Question Profit = Contribution per unit X ________.
Correct Answer Margin of safety (units)

Question The different purposes served by standard costing technique are :
Correct Answer Cost control , Cost awareness , Performance appraisal

Question Error of commission refer to a situation where a transaction is not recorded in the books of account.
Correct Answer False

Question If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to :
Correct Answer Decrease for fixed costs and remain unchanged for variable costs

Question The variance which measures the difference between what is paid for a given quantity of materials and what should have been paid for, is known as ________ variance.
Correct Answer Direct material cost

Question Deferred revenue expenditure written off account is a real account.
Correct Answer False

Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation.
Correct Answer 0.17

Question The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in the ________.
Correct Answer short run

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

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

Question While preparing sales budget the following factors must be considered :
Correct Answer The number and types of products sold by the organisation , Whether the organisation's market share is increasing or decreasing? , Details of seasonal fluctuations in sales

Question Techniques of management accounting include:
Correct Answer Marginal costing , Budgetary control , Standard costing

Question Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system.
Correct Answer Capital investment , Plant size , Location

Question The expenses relating to maintenance and creation of demand for the product should be included in the ________budget
Correct Answer Selling expenses

Question Management Accounting is…
Correct Answer Designed particularly for internal use , Helpful in estimating the future along with past period , Useful in furnishing the necessary information to the management

Question Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-.
Correct Answer True

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

Question XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004?
Correct Answer Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55

Question The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost.
Correct Answer True

Question If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________.
Correct Answer Loss

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

Question The indirect material cost, indirect labour cost and indirect expenses cost, collectively are termed as ________.
Correct Answer Overhead

Question Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/- (adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour yield variance.
Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- , Labour yield variance is favourable

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

Question Correct Answer

Purchase budget Forecast of quantity and value of materials

Budget committee Analyses the performance of different budget centres

Cash budget Assists in predicting shortage of cash

Budget Objective is performance evaluation

Question As a part of the data presented in support of a proposal to icnrease the production of clock radios, the sales manager of Wittman Electronics reproted the total additional cost required for the proposed increased production level. The increase in total cost is known as :
Correct Answer Incremental cost

Question Business Entity Concept ______________.
Correct Answer Business is separated from the owner. , The accounting process carried out for the business , Separate legal entity

Question The danger level fixed below maximum level
Correct Answer False

Question Following example comes under service cost centre
Correct Answer Store department , Internal Transport department , Accounting/Costing department

Match The Following
Question Correct Answer

Straight Piece rate system The rate of payment is fixed per piece

Diemer system Halsey system & Gantt System

Time rate System Worker is paid on the basis of time attended by him

Payment by Result Workers are paid according to the production achieved by him

Differential Time rate Different hourly rates are fixed for different levels of efficiency

Question When bank balance as per pass book is considered then following to be added.
Correct Answer cheques deposited but not cleared , Interest debited by bank , bank charges debited by bank

Question (No. of unit * Rate of depreciation per unit ) this formula is used for written down value method.
Correct Answer False

Question Cash and---------------are the two systems of accounting.
Correct Answer Mercantile

Question This cost indicates increased or decreased cost due to the increased or decreased volume of operations.
Correct Answer Differential cost

Match The Following
Question Correct Answer

Fixed cost + variable cost Total cost

Total cost – fixed cost variable cost

sales- variable cost contribution

contribution – fixed cost profit

Total cost + profit Sales

Question Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered.
Correct Answer Rs. 1.40 per hour

Question Margin of safety are the sales beyond
Correct Answer break even point

Question Indirect Labour Cost
Correct Answer Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper

Question The difference between sales and factory/ works cost is termed as ________ the difference between sales and ________ termed as net profit
Correct Answer gross profit
Correct Answer cost of sales

Question For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.3.60/- per kg.
Correct Answer Rs.375/-( Adverse )

Question Labour Efficiency Standards are decided by considering following factors
Correct Answer Records of past performance, Time & Motion Study, Trial Runs

Question Depreciation does not involve cash out flow
Correct Answer True

Question The difference between standard cost and actual cost is termed as Variance.
Correct Answer True

Question Wage payment system should be properly tied up with quality control procedures to ensure that the workers are paid only for good and quality production.
Correct Answer True

Question In Cash budget Operating cash inflow includes
Correct Answer Cash Sales, Collection from Debtors, Interest/Dividend received

Question If the product is labour intensive, more stress may be necessary on inventory control procedure.
Correct Answer False

Question A good wage payment system will not punish the workers for the matters beyond the control of the workers.
Correct Answer True

Question The material issued to production department may be returned back to the stores because material issued in excess requirement and
Correct Answer Material issued is defective

Question Following are called the element of Cost
Correct Answer Material , Labour , Expenses

Question Amount with drawn for personal purpose drawing A/C to be debited.
Correct Answer True

Question Under the repeated distribution method the overheads of ________ department are distributed to other departments on agreed ________
Correct Answer service
Correct Answer percentage

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

Question Calculate Labour Rate Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and actual hours are 13, 500.
Correct Answer Rs.6750/- ( Adverse )

Question Benefits available from revenue expenditure are received in the :
Correct Answer Same year

Match The Following
Question Correct Answer

Cost Centre Facilitate the fixation of responsibility

Cost Control Process of controlling costs of operations

Differential Cost Increase or Decrease in cost

Sunk Cost Historical Cost

Question Financial Accounting is …
Correct Answer Designed to supply information to internal/ external users , Referred as 'Historical' form of accounting , Concerned with financial factors

Question The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as ________ system.
Correct Answer Uniform costing

Question The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change.
Correct Answer Accrued commission income of-Rs.32,960/- was not entered in the books , Rent for the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account

Question If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________.
Correct Answer Bad debts

Question Creditors as on 31st March, 2004 amount to Rs.15,225/-. Provision for discount from creditors is to made @ 5%. Find the impact of this provision on the net profit.
Correct Answer The net profit will increase by Rs.761.25

Question Under the Rowan plan bonus is a fixed percentage.
Correct Answer False

Question Margin of safety indicates ________ of operations.
Correct Answer Profitability

Question XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units (packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum price should it quote for this deal?
Correct Answer Rs.190/-

Question Period cost is the cost assigned to the products.
Correct Answer False

Question In calculation of total sales margin variance, the ________cost of sales is deducted from the actual sales revenue.
Correct Answer Standard

Question The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted.
Correct Answer False

Match The Following
Question Correct Answer

Personal A/C Debit the receiver, Credit the giver

Real A/C Debit what comes in, Credit what goes out

Nominal A/C Debit all the expenses, Credit all the incomes

Tangible assets Building, Machinery

In tangible assets Patents, Trade marks

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

Question Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to general expenses account for rectifying the error, which A/C to be debited
Correct Answer Drawing A/C

Question Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0
Correct Answer True

Question Office & Administration overhead includes
Correct Answer Salary , Rent & Taxes , Stationary & postage

Question There is reverse relationship between the ordering cost and carrying cost
Correct Answer True

Question Following points are taking into consideration for evaluation of receipts
Correct Answer The Price , The trade discount is to be deducted , Other amounts such as sales tax, excise duty, octroi duty

Question In EOQ, to express carrying cost as a percentage of the unit cost of purchases this is used in the formula-----------
Correct Answer i

Question Where overheads chargeable to the department are Rs. 5000/- , direct labour hours worked are 24000 then labour hour rate is Re. 0.2083 labour hour.
Correct Answer True

Question The selection of the base on which overheads should be apportioned depend on the following principles.
Correct Answer service or use basis , survey basis , ability to pay basis

Question The Budget key factor may be in the form of sales, raw material, labour etc.
Correct Answer True

Question For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.6/- per kg.
Correct Answer Rs.600/-( favorable )

Question Find out Labour Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours are 12,600.
Correct Answer Rs.900/- ( Adverse )

Question Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13, 500.
Correct Answer Rs.9,000/- ( favourable )

Question Calendar Variance arises only if there is abnormal increase or decrease in
Correct Answer Actual number of working days

Match The Follow
Question Correct Answer

Token or Disc Method Token number & identification number allotted to worker

Time Recording Clock Method Ticket number & clock card allotted to worker

Daily Time sheets Time spent by worker on job is recorded

Weekly Time sheets Record of time for all the jobs during the week is made

Hand Written method Attendance register

Question Rs.5000 paid as ________ to ________ should be debited to salary account
Correct Answer Mahesh
Correct Answer salary

Question Uncontrollable variances are
Correct Answer Strike , Change in customers demand , Devaluation of currency

Question Indirect labour cost indicates that labour cost which cannot be identified with the individual cost centre.
Correct Answer True

Question There is no need to open a suspense account if the trial balance does not agree.
Correct Answer False

Question Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C credited to Rs
Correct Answer 900

Question In financial statements P& L Accounts relates to a specific duration whereas ________ is for a given point of time
Correct Answer P& L Accounts
Correct Answer Balance sheet

Question Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the same. Following account to be credited
Correct Answer Suspense A/C

Question Bin Card is not an ________ record but only a ________ record.
Correct Answer Accounting
Correct Answer Quantitative

Question Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid . The outstanding salary is debited to Profit &Loss A/C. The second effect is --
Correct Answer Transfer to balance sheet liability side

Question Debit the receiver & credit the giver is a rule of Real a/c.
Correct Answer False

Question If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what will the amount of total factory overheads at 60% capacity
Correct Answer Rs.10,800/-

Match The Following
Question Correct Answer

Advance Not related in current year

Application Increase in Assets

Outstanding Amount still payable in current year

Prepaid Amount paid for next year

Drawing Amount of personal use

Question Head of the Department should sign the purchase requisition.
Correct Answer True

Question FIFO method
Correct Answer The price of the earliest available lot is considered first , If the lot is exhausted, the price of the next available lot is considered , It is used for issue of material

Question If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate will be,
Correct Answer Re. 4 per machine hour.

Question From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average inventory
Correct Answer 300

Question Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable.
Correct Answer Below 66.66%

Match The Following
Question Correct Answer

Discount received Suppliers

Outstanding expenses Liabilities

Depreciation Assets

Interest on capital Borrowed capital

Discount allowed Debtors

Question canteen facility to workers, health and safety services are examples of monetary incentives.
Correct Answer False

Question This is the process of recording attendance time of the workers.
Correct Answer Time keeping

Question If actual cost is more than the standard cost then it is called favorable variance.
Correct Answer False

Question The aggregate of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost.
Correct Answer False

Question Interest on drawings of partners should be credited to which account?
Correct Answer Profit and loss account

Question The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and the amount of claim settled by the insurance company.
Correct Answer True

Question Penalty paid for delay in payment to creditors represents uncontrollable cost.
Correct Answer False

Question Subsidiary books include:
Correct Answer Cash Book , Purchase Register , Sales Register

Question Balance sheet is a part of the ledger accounts maintained by the company.
Correct Answer False

Question Average stock = ________ + (Order size / 2)
Correct Answer Safety stock

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

Match The Follow
Question Correct Answer

Real A/C Debit what comes in, Credit what goes out

Trade Discount Not accounted for in the books of Accounts

Cash Discount Accounted for in the books of Accounts

Rs.1 Personal A/C Debit the receiver, Credit the giver

Question These are the preventive costs of labour turnover.
Correct Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities

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

Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of Rs.75,000/-. You are required to calculate the margin of safety for the first month.
Correct Answer Rs.300,000/-

Question Loss on account of goods lost due to earthquake should be debited to which account?
Correct Answer Profit and loss account

Match The Following
Question Correct Answer

Operating income Cash Sales

Non-Operating income Issue of shares

Plan of investment in fixed assets Capital Expenditure Budget

Plan for surplus/shortage of cash Cash Budget

Question Under the average cost method of valuing material issues, new issue price is determined after ________ issue.
Correct Answer Each

Question Narration must be mentioned in the ledger.
Correct Answer False

Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost.
Correct Answer False

Question The term ________ indicates expenditure incurred on or attributable to a given thing.
Correct Answer Cost

Question Items credited to Profit & Loss Account are…
Correct Answer Gross profit , Commission received , Interested received

Question Yield variance equal to zero indicates that the standard yield and actual yield are the same.
Correct Answer True

Question Balance sheet is statement of
Correct Answer All Assets and Properties

Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety will be Rs.________.
Correct Answer 100,000/-

Question Inventory holding cost comprises of :
Correct Answer Cost of insurance , Rent of store house , Salary of store keeper

Question Identify the steps involved in the process of decision making :
Correct Answer Determination of the problem , Ascertainment of alternative courses of action , Screening each alternative so as to select the best one

Question A low inventory turnover ratio should always be preferred.
Correct Answer False

Question The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as:
Correct Answer Labour rate variance

Question Following errors 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 ________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting
Correct Answer Management

Question Purchase day book for the month of April was under cast by Rs.1000/- which account should be credited ? ________
Correct Answer Suspense Account

Question Linking overhead to a cost unit is known as overhead absorption.
Correct Answer True

Question A factory received a carton containing two materials X and Y. The invoice relating to the materials discloses the following details : Material X - 400 kg @ Rs.10/- per kg. =Rs.4,000/-; Material Y - 600 kg @ Rs.15/- per kg.= Rs.9,000/-; Sales @ 5% =Rs.650/-; Insurance @ 1% =Rs.130/-; Freight and handling charges = Rs.220/-.
Correct Answer Material X -Rs.11.10; Material Y -Rs.16.68

Question An employee working under a bonus scheme saves 10 hours in a job for which the standard time is 60 hours. Calculate the wages payable to him, if incentive bonus of 10% on the hourly rate is payable when standard time (namely 100% efficiency) is achieved, and a further incentive bonus of 1% on hourly rate for each 1% in excess of that 100% efficiency is payable. Assume that the normal rate of payment is Rs.50/- per hour.
Correct Answer Rs.3,250/-

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

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

Question Tom company has sales of Rs.200,000/- with variable expenses of Rs.150,000/-, fixed expenses of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much would Tom have to increase its sales in order to achieve an operating income of 10% of sales?
Correct Answer Rs.200,000/-

Question Angle formed by the intersection of total cost line and sales line is called angle of ________.
Correct Answer Incidence

Question All costs are controllable.
Correct Answer False

Question In the adjustment entry passed for closing stock, the ________ account should be credited.
Correct Answer Trading

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

Question Warehousing cost is an item of ________
Correct Answer Distribution overheads

Question From the following, select current assets:
Correct Answer Sundry debtors , Stock , Pre paid expenses

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

Question Which cost is defined as an estimated cost, prepared in advance of production or supply, estimated within a prescribed set of working conditions?
Correct Answer Standard cost

Question Carriage charges paid for a new machine purchased if debited to carriage account would affect the ________
Correct Answer Machinery A/c and carriage A/c

Question Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction.
Correct Answer The gross profit will increase by Rs.6,450/-

Question Fundamentally, changes in price and changes in sales volume give rise to sales variances.
Correct Answer True

Question The ________ is responsible for material losses while in storage.
Correct Answer Store-keeper

Question A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not debited to traveling A/c. The trial balance will NOT agree.
Correct Answer True

Question Accounts representing expenses will have ________balance.
Correct Answer Debit

Question It is discovered that sales effected on 31st March, 2004 worth Rs.42,000/- has not been recorded in the books of accounts. Analyse the impact on the final statement of accounts.
Correct Answer The sundry debtors will increase by Rs.42,000/-

Question Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit.
Correct Answer The net profit will not be affected

Question New companies can adopt Uniform costing system as a ready-made system.
Correct Answer True

Question A journal entry is passed for trade discount, but no entry is passed for cash discount.
Correct Answer False

Question The assets which are suppoed to be used by the organisation to do business, are known as ________assets.
Correct Answer Fixed

Question The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is:
Correct Answer Re.0.98

Question The disadvantages of time rate system are :
Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase productivity

Question Which of the following is the most efficient use of the clock card?
Correct Answer To facilitate payment for time spend on the work premises

Question One of the main objection to the contribution approach of costing is that it ignores fixed cost.
Correct Answer True

Question If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________ the overdraft as per pass book.
Correct Answer Lesser than

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

Question The ideal budget period for a company engaged in generation and distribution of electricity is one year.
Correct Answer False

Question In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative assessment to be made of the two sectors.
Correct Answer uniform costing

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

Question It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the product
Correct Answer False

Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in :
Correct Answer Difference in the balance as per bank book and as per pass book

Question Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines.
Correct Answer False

Question A business's telephone bill should nromally be classified into which one of the following categories?
Correct Answer Semi-variable cost

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

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

Match The Following
Question Correct Answer

Error of Principle Trial Balance does not get affected

Error of Omission Transaction is totally omitted

Error of commission Wrong Posting

Compensating Error Wrong classification

Difference in trial balance Transferred to suspense account

Question The difference between sales and cost of sales is termed as ________.
Correct Answer Net Profit

Question ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives.
Correct Answer Management

Question The capacity utilised to installed capacity ratio is 80% for the company. The capacity utilisation ratio in respect of a machine for a particular month is 90%. The available working hours in a month are 200 hours. The break of idle time is as follows : Waiting for job - 5hours, breakdown - 4 hours and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the machine is Rs.8/-.
Correct Answer Rs.96/-

Question Semi variable expenses fluctuate in direct proportion to volume.
Correct Answer False

Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system.
Correct Answer False

Question From the following, select intangible assets:
Correct Answer Goodwill , Patents , Trade Marks

Question Select the accounts to be disclosed on the assets side of the Balance sheet.
Correct Answer Furniture , Loan to Bank of U.S.A. , Land & building

Question Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory.
Correct Answer The statement is correct but the reason is incorrect

Question The credit side of the sales book was overcast by Rs.2,000/-. As a result of this rectification, what of the given impacts is likely to happen?
Correct Answer The liability side of the balance sheet will increase by Rs.2,000/-

Question It is said that the income statement represents wealth increase /decrease for the organisation.
Correct Answer True

Question All personal expenses of the owner should be debited to the organisation's profit and loss account.
Correct Answer False

Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in :
Correct Answer Difference in the balance as per bank book and as per pass book

Question If the ordering cost ________s, then the economic order quantity will Increase.
Correct Answer Increase

Question ________ authorises the production department to issue requistion for materials.
Correct Answer Bill of material

Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit of finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering cost is Rs.120/- per order and the holding cost is 10% per annum. If the company places each order for 2,000 units due to financial constraints, what is the extra annual cost?
Correct Answer Rs.80/-

Question An entry in the stores ledger is required for transfer of material from one job to another in the same department.
Correct Answer False

Question The method which deals with ownership rights being given to workers is known as ________ method of remuneration.
Correct Answer Co-partnership

Question A firm of boiler-house engineers provides engineering services to large number of factories having boiler houses. The firm charges on the basis of number of hours its engineers have worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An engineer's annual remuneration comprises (for the year
Correct Answer Rs.182.29

Question Marginal costing is useful in the following areas :
Correct Answer Plant shut down decisions , Make or buy decisions , Profit planning

Question Cost volume profit analysis focuses attention on the ________ effect of a particular course of action.
Correct Answer short run

Question ABC Ltd. has a proposal of utilising a cheaper raw material which will increase the contribution from Rs.100/- per unit to Rs.125/- per unit. However, the use of cheaper raw material may result in decrease in sales by 10% (to 450 units only). Find the impact of using the cheaper raw material on the amount of contribution ( net increase or decrease in contribution).
Correct Answer Increase in contribution Rs.6,250/-


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

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

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

Question The role of the budget committee may be taken as an advisory role to the Chief Executive.
Correct Answer True

Question While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored.
Correct Answer False

Question The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance.
Correct Answer True

Question From the following data, determine the net profit if sales are 20% above the break even point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed overheads Rs.20,000/-
Correct Answer Rs.4,000/-

Match The Following
Question Correct Answer

Decrease in selling price will lead to Decrease in contribution

Increase in contribution will lead to Increase in profits

Increase in fixed cost will lead to Increase in break even point

Decrease in variable cost will lead to Increase in profit volume ratio

Question As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its market price as on the same day was Rs.66,584/-. Which value of closing stock should be considered in the final statement of accounts for the year ended on 30th September, 2004?
Correct Answer Rs.66,584/-

Question Marginal costing technique is useful in taking decisions relating to which of the following courses of action?
Correct Answer Decision to drop a product line , Decision to accept a special offer at price lower than the normal selling price , Decision regarding temporary shut-downs

Question In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities.
Correct Answer True

Question Profit and loss account indicates the profit earned as on a particular date.
Correct Answer False

Question The balance of the suspense account will ________ after all the errors are
Correct Answer become zero

Question The best way to reduce labour cost is to recruit cheap labour.
Correct Answer False

Question A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is the total amount of capital?
Correct Answer Rs. 12,000

Question Income Tax Act, recognise only one method of depreciation namely ________.
Correct Answer Written down value method

Question An adjustment relating to outstanding expenses will ________ the net profit.
Correct Answer Decrease

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

Question The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio?
Correct Answer 0.333

Question The selective ________ controls are intended to control the ________ to particular sectors without affecting the total credit, and also to change the composition of credit from undesirable to de
Correct Answer credit
Correct Answer credit flows

Question Journal is popularly known as 'Book of . . .
Correct Answer Original Entry

Question Presentation of information to enable managerial decision making' is one of the objects of which of the following
Correct Answer Cost Accounting

Question The principle of ________ is followed while preparing the financial statements.
Correct Answer Going concern

Match The Following
Question Correct Answer

Indirect Material Element wise classification

Administration overheads Function wise classification

Fixed overheads Variability wise classification

Abnormal overheads Normality wise classification

Question In India the gas industry and electricity industry, and ________ industry are examples of industries using the uniform costing system.
Correct Answer fertilizer

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

Question Non-trading income is disclosed on the credit side of ________ account.
Correct Answer Profit and loss

Question Goods returned to the suppliers from whom it was ________d is recorded in the Purchase return register.
Correct Answer Purchase

Question An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find the expenditure on account of advertisement.
Correct Answer Rs.49,248/-

Question Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The goods were not insured. Find the amont which should be debited to the profitability statement.
Correct Answer Rs.18,950/-

Question Generally speaking income represents wealth increase and business success; higher the income, lower will be the success of a business.
Correct Answer False

Question While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004?
Correct Answer Balance as per pass book < Balance as per bank book

Question Bank reconciliation statement is a systematic presentation of errors made by the accountant.
Correct Answer False

Question The stores department is a ________ department.
Correct Answer Service

Question The ________ is a perpetual inventory record.
Correct Answer Bin card

Question Selecting an appropriate method of valuation of inventory is important because :
Correct Answer It influences the figure of gross profit

Question Re-order level for materials is determined considering maximum consumption and maximum delivery period.
Correct Answer True

Question Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost.
Correct Answer True

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

Question Select the advantages of standard cost system.
Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency

Question Which variance is used to analyse the effect of change in the quantity of output from a given mix of inputs?
Correct Answer Materials yield variance

Question Judge the statement according to the criteria given : ' The accounting period for XYZ Ltd. ends on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be recorded in the books of accounts in January,
Correct Answer The statement and its reason are both incorrect

Question From the following select the examples of errors of commission -
Correct Answer Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- , Received cash from Sham, credited to Ram's account , Paid transport charges, credited to transport charges account

Question Expenditure on income-tax is an example of ________.
Correct Answer non-operating expenditure

Question Identify the items which are correctly classified.
Correct Answer Carriage inward - Factory overheads , Carriage outward - Selling and distribution overheads , Sales research expenses -Selling and distribution overheads

Question Select the items which may be classified as administration overheads.
Correct Answer Depreciation on office furniture , Director's remuneration , Telephone expenses

Question Overhead absorption is an exercise by which overhead is properly spread over production for the period.
Correct Answer True

Question Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry ?
Correct Answer Uniform costing

Question A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on computers to be charged for the year.
Correct Answer Rs.40,953.70

Question The amount of income for the current period which is not received during the current period, is called Accrued Income.
Correct Answer True

Question The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance as per pass book as on the same date is Rs.10,123.60. Select the transactions representing the reasons for this difference.
Correct Answer Interest credited by bank, not entered in the bank book, Rs.125.60 , Cheques dishonoured not entered in the bank book Rs.200/- , Debit side of the cash book is overcast by Rs.100/-

Question The principal functions of the cost accounting department are :
Correct Answer Classifying labour cost according to jobs, processes, etc. , Preparation of different reports based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be reduced.

Question Profit volume ratio is also known as ________.
Correct Answer Contribution to sales ratio

Question Margin of safety = Contribution / Profit volume ratio
Correct Answer False

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 A pre-determined factory overhead rate holds up product costing.
Correct Answer False

Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount?
Correct Answer Rent received in advance account

Question Bank reconciliation statement can be prepared on weekly basis.
Correct Answer True

Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account?
Correct Answer Rs.45,000/-
Question Financial Accounting ______________
Correct Answer Designed to supply information for internal/ external uses. , Deals with the transaction during specific period. , It is compulsory

Question Cost Accounting ______________.
Correct Answer Concerned with specific activities. , Classified according to their nature. , It deals with both i.e. past & present.

Question Features of double entry accounting system are . . .
Correct Answer Every business transaction has two elements , When business receives something, it has to pay something , Every debit has a corresponding credit

Question Features of a cost sheet are as follows
Correct Answer Indicates the total cost of production during a given period , Indicates the unit cost of production during a given period , Helps the management in fixing the selling price to be quoted for the

Question Depreciation charged on office furniture on straight line basis is an example of ________.
Correct Answer Administration overheads

Question If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business.
Correct Answer Drawings

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

Question A lathe machine was purhcased on 31st March, 2004 for Rs.65,000/-, however it was installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of depreciation charge for the said lathe machine for the year ended 31st March, 2004.
Correct Answer Nil

Question While passing the journal entry, it is of utmost importance to ensure that the total of amount debited is equal to the total of the amount credited.
Correct Answer True

Question The bin card and stores ledger, being independent records, comparison of these two records should be avoided.
Correct Answer False

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

Question The cost of abnormal time may be recovered by inflating the hourly labour rate.
Correct Answer True

Question ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/- and the variable costs are 60% of the selling price. In order to realize a profit of Rs.100,000/-, the selling price per unit would have to be :
Correct Answer Rs.6.25

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

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

True/False
Question Amortization of goodwill should be considered while preparing cash budget.
Correct Answer False

Question As cost centers facilitate the control function, in many cases, they are termed as . . .
Correct Answer Responsibility centers

Question Lata and Tara are partners of Latara & Co. As on 31st March, 2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual drawings amounted to Rs.18,000/-. If interest on drawings is charged @ 15% p.a., what is the amount of income for Latara & Co.?
Correct Answer Rs.6,450/-

Question Labour turnover rate is best defined as :
Correct Answer The number of leavers replaced divided by the average of employees on the payroll

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

Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year ended 31st March, 2004.
Correct Answer The net profit will not be affected

Question Interim dividend paid by the company should be debited to the profit and loss appropriation account.
Correct Answer True

Management Accounting - A22

Select The Blank
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

Question LAST IN FIRST OUT (LIFO)
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
costs

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
Rs.120,000/-.
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

Question Flux method is important method of wage payment.
Correct Answer False

Question The causes of idle time can be analysed as
Correct Answer Administrative causes , Productive causes , economic causes

Question If production overheads to be absorbed are Rs. 50000/- and labour hours worked are 100000 then the labour hour rate will be,
Correct Answer Re. 0.50 per labour hour.

Question Fixed cost tends to vary with time rather than with level of activity.
Correct Answer True

Question Limitations of marginal costing are
Correct Answer difficult for classification as fixed cost and variable cost. , does not provide any standard for the evaluation of performance. , it is useful technique only in the short run.

Question Flexible budget is an effective tool for evaluation of performance.
Correct Answer True

Question Material Mix Variance occurs where only one raw material is required
Correct Answer False

Question Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-.
Correct Answer Rs.1,500/-( Favorable )

Question Standard may not be necessarily useful for this purpose.
Correct Answer Forecasting

Question In Cash budget , Non-Operating cash outflow includesVarious kinds of over heads
Correct Answer Loan instalments , Taxes , Purchase of fixed assets.

Question During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg , what is the quantity of sales
Correct Answer 20,000 kg

Match The Following
Question Correct Answer

Ordering cost Associated with administrative efforts

Carrying cost Cost of holding the inventory

Total cost Ordering cost + carrying cost

Inventory control Maintain the inventory of any kind

E.O.Q Economic Ordering Quantity

Question Generally accounts of the assets will have ________ balance and liabilities will have ________ balance
Correct Answer debits
Correct Answer credits

Question Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book
Correct Answer debited
Correct Answer credited

Question After material is received from the supplier, quantity actually received is compared with quantity ________-and ________-if any, are taken up with the supplier
Correct Answer ordered
Correct Answer variation

Question Labour Turnover indicates ________ in labour force showing a highly increasing trend or highly ________ trend
Correct Answer change
Correct Answer decreasing

Question Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management
Correct Answer fixed
Correct Answer top

Question Bin card is maintained by ________ department whereas ________ is maintained by costing department.
Correct Answer Stores
Correct Answer Store ledger

Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False

Question Advance received from customers is ________ for the organisation.
Correct Answer A liability

Question The features of multiplicity of key factors are as follows :
Correct Answer More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique

Question Maintenance Department is a service cost centre.
Correct Answer True

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

Question The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the correct answers:
Correct Answer Sales Rs.128,000/- , Return on capital employed , Working capital Rs.32,000/-

Question Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations.
Correct Answer Differential cost

Question If the owner brings in personal calculator for office use, ________ account should be credited.
Correct Answer Capital

Question Variable cost + Profit = Sales
Correct Answer False

Question A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan.
Correct Answer Rs.9,333.33

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

Question Treating capital receipt as revenue income is an example of errors of commission.
Correct Answer False

Question Basic objective of Uniform Costing is . . .
Correct Answer comparison

Question Identify the causes due to which the cost of labour may be high:
Correct Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover

Question Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit and loss accounts for the year ending December 2003 are as follows : Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-. You are
Correct Answer Hero Ltd.

Question Features of Sunk cost are . . .
Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past

Question For a manufacturing company, dividend received is a non-operating income.
Correct Answer True

Question Features of purchase requisition slip are :
Correct Answer Raised when the stock of a raw material has fallen to the re-order level. , Indicates the type, quantity and quality of material required , The information about the price of material is excluded

Question Judge the sentence in italics according to criteria given below : " It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used."
Correct Answer The assertion and the reason are both correct

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

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