Management Accounting - A27

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

Management Accounting - A26

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

Question Indirect Cost is termed as ________.
Correct Answer Overhead

Question Interest on ________ is credited to Capital account.
Correct Answer Capital

Question The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point.
Correct Answer False

Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost?
Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores

Question Accounting is the art where transactions are …
Correct Answer Summarized , Classified , Recorded

Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees.
Correct Answer False

Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of
Correct Answer Depreciation on plant and machinery , Interest on loans taken from other , Interest on loans granted to others

Question Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors.
Correct Answer False

Question Management accounting is concerned with the following activities :
Correct Answer Decision making , Safeguarding assets , Planning and controlling activities

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

Question A grinding machine is an example of impersonal cost centre
Correct Answer True

Question Piece rate systems are very useful in the following circumstances:
Correct Answer Units of output are measurable , Job is standardised , The flow of work is regular

Question The process of recording the business transactions in a defined set of records is referred to as ________.
Correct Answer Balance sheet

Question A ________ inventory turnover period indicates efficient utilisation of material.
Correct Answer Low

Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited?
Correct Answer Investment account - Rs.170,000/-

Question The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct.
Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster moving material , Consumption of material Q is Rs.860,000/-

Question Overhead absorption rate will be different at different capacity levels.
Correct Answer True

Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________.
Correct Answer 90% to 100%

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

Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20
Correct Answer 153,000 units

Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc.
Correct Answer Accounting period

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

Question Product costs under direct costing include:
Correct Answer Prime cost and variable factory overheads

Question Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer.
Correct Answer True

Question Items debited to Profit & Loss Account are…
Correct Answer Salary , Discount allowed , Postage & telegram

Question Select the entries which need to be rectified
Correct Answer Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) , Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased) , Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for)

Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book.
Correct Answer Rs.128/- (overdraft)

Question Identify the fixed expenses from the following.
Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,etc. , Salary paid to factory supervisor

Question Budgetary control is one of the techniques of management accounting.
Correct Answer True

Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True

Question In the ledger account only credit entries relating to a particular account are posted.
Correct Answer False

Match The Following
Question Correct Answer

Global Tender Any supplier from the global market can fill the tender

Single Tender Tender from only one supplier

Limited Tender Tenders from reliable but few suppliers

Open Tender Any supplier from the local market can fill the tender

Question Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours.
Correct Answer True

Question Features of Taylor's differential piece rate system are as follows :
Correct Answer Minima clerical work is involved in calculating the wages , Helps in building up an efficient labour force , Strong incentive to efficient and ambitious workers.

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

Question Cost Accounting is a legal requirement.
Correct Answer False

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

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

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

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

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

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

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

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

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

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

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

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

Question Management Accounting is not at all a legal requirement
Correct Answer True

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

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

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

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

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

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

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

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

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

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

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

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

Match The Following
Question Correct Answer

Transport facilities to employees Preventive cost of labour turnover

Relationship between supervisor and worker Avoidable cause of labour turnover

Dismissal of employee Unavoidable cause of labour turnover

Increased spoilage and defectives Replacement cost of labour turnover

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

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

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

Match The Following
Question Correct Answer

Normal Standards Anticipated to be achieved in future

Basic Standards Established for a longer period of time

Current Standards Established for a shorter period of time

Expected Standards Anticipated to be achieved in the budget period

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

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

Question The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004.
Correct Answer Rs.75,981/-

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

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

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

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

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

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

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

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

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

Match The Following
Question Correct Answer

Total cost Cost of finished goods

Non operating income Profit on sale of investment

Selling and distribution overheads Advertisement expenses

Factory overheads Repair for factory building

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

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

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

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

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

Question A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total cost. What is the break even point for the company?
Correct Answer 68,182 units

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Match The Following
Question Correct Answer

Opportunity Cost Cost can be controlled

Differential Cost Historical Cost

Sunk Cost Cannot be controlled

Controllable Cost Increase or Decrease in cost

Uncontrollable Cost Return or yield

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Question The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision.
Correct Answer Loss of trained personnel , Loss of regular customers , Expenditure required to restart the factory

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

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

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

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

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

Multiple Choice Multiple Answer
Question Plant and equipment can become a key factor in the following circumstances :-
Correct Answer Limited capacity due to lack of capital , Insufficient capacity due to shortage of space , Limited number of hours for which the plant can be used

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

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

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

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

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

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

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

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

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

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

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

True/False
Question Match
Correct Answer True

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Multiple Choice Single Answer
Question The statement, mainly applicable to company form of organization, which discloses the manner in which the profit after tax is distributed is known as:
Correct Answer Profit & Loss Account Appropriation Account

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

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

True/False
Question The problem of multiple key factors can be solved with the help of techniques like linear programming, operations research, etc.
Correct Answer True

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

Multiple Choice Single Answer
Question Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that the real worth of these loose tools is only Rs.30,000/-. What can be done to achieve the desired reduction in the net book value of loose tools?
Correct Answer By providing depreciation to the extent of Rs.15,000/-

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

Match The Following
Question Correct Answer

Tool-room expenses Direct labour hours

Power Horse power of machine

Stores department Number of material requisitions

Boiler house Cubic feet of steam supplied

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

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

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

Match The Following
Question Correct Answer

Dividend paid Profit and loss appropriation account

Freight inwards Manufacturing account

Sales Trading account

Freight outwards Profit and loss account

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

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

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

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

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

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

Match The Following
Question Correct Answer

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

Piece rate system Output X Wage rate per unit

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

Time rate system Attendance time X Hourly wage rate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Match The Following
Question Correct Answer

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

Fixed cost / Contribution margin ratio Break even point

Fixed cost - (Sales X Profit volume ratio) Profit

(Sales X Profit volume ratio) -Fixed cost Loss

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Multiple Choice Single Answer
Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as :-
Correct Answer Drawings

Select The Blank
Question The various contents of a uniform cost manual are organization, cost accounting system and ________.
Correct Answer Presentation of information

Multiple Choice Multiple Answer
Question Which of the following information is included in the goods received note?
Correct Answer Date of receipt of material , Quantity received , Description of goods

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Question Indirect Cost is termed as ________.
Correct Answer Overhead

Question Interest on ________ is credited to Capital account.
Correct Answer Capital

Question The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point.
Correct Answer False

Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost?
Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores

Question Accounting is the art where transactions are …
Correct Answer Summarized , Classified , Recorded

Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees.
Correct Answer False

Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of
Correct Answer Depreciation on plant and machinery , Interest on loans taken from other , Interest on loans granted to others

Question Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors.
Correct Answer False

Question Management accounting is concerned with the following activities :
Correct Answer Decision making , Safeguarding assets , Planning and controlling activities

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

Question A grinding machine is an example of impersonal cost centre
Correct Answer True

Question Piece rate systems are very useful in the following circumstances:
Correct Answer Units of output are measurable , Job is standardised , The flow of work is regular

Question The process of recording the business transactions in a defined set of records is referred to as ________.
Correct Answer Balance sheet

Question A ________ inventory turnover period indicates efficient utilisation of material.
Correct Answer Low

Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited?
Correct Answer Investment account - Rs.170,000/-

Question The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct.
Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster moving material , Consumption of material Q is Rs.860,000/-

Question Overhead absorption rate will be different at different capacity levels.
Correct Answer True

Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________.
Correct Answer 90% to 100%

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

Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20
Correct Answer 153,000 units

Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc.
Correct Answer Accounting period

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

Question Product costs under direct costing include:
Correct Answer Prime cost and variable factory overheads

Question Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer.
Correct Answer True

Question Items debited to Profit & Loss Account are…
Correct Answer Salary , Discount allowed , Postage & telegram

Question Select the entries which need to be rectified
Correct Answer Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) , Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased) , Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for)

Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book.
Correct Answer Rs.128/- (overdraft)

Question Identify the fixed expenses from the following.
Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,etc. , Salary paid to factory supervisor

Question Budgetary control is one of the techniques of management accounting.
Correct Answer True

Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True

Question In the ledger account only credit entries relating to a particular account are posted.
Correct Answer False

Match The Following
Question Correct Answer

Global Tender Any supplier from the global market can fill the tender

Single Tender Tender from only one supplier

Limited Tender Tenders from reliable but few suppliers

Open Tender Any supplier from the local market can fill the tender

Question Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours.
Correct Answer True

Question Features of Taylor's differential piece rate system are as follows :
Correct Answer Minima clerical work is involved in calculating the wages , Helps in building up an efficient labour force , Strong incentive to efficient and ambitious workers.