You are on page 1of 96

Management Accounting 1

________ Accounting assists the management in establishing the plans to attain the
Management
economic objectives and take proper decisions for the attainment of its objectives.
________ Accounting is the process of analysis and interpretation of financial data
Management
collected with help of financial accounting & cost accounting
________ and ________ are examples of element wise classification ofoverhead
Idirect material indirect labour
costs
________ and ________ are examples of semi- variable overheads. Maintenance cost electricity
________ and ________ are non monetary incentives Safety services education facility
________ is any documentary evidence to justify that a particular transaction has
Voucher
taken place.
________ Legal charges and ________ are the accounts which are shown on the
Like office rent, Audit fees
debit side of Profit & Loss Account
________ of Trial Balance generally ensures ________ accuracy of the process of
Talling arithmetical
ledger posting .
________ system of wage payment is a combination of Halsey system and Gantt
Diemer
system.
________ variance arises when the mix of materials used in the production is
Materials mix
different from the predetermined standard mix of operation.
________ variance represents the over or under utilisation of pland and machinery. Capacity
__________ Accounting becomes a source of information for Management
Financial
Accounting.
__________ Accounting is primarily protects the interest of the outsiders dealing
Financial
with the organization various capacities like investors, suppliers, customers etc.
________account can be defined as the record of all the transactions pertaining to
a person, asset, liability income or expenditure which have taken place in a Ledger
specified period.
________is the summary of all the balances in all the accounts listed in ledger
Trial Balance
account of an organization at any given point of time.
200 units of material were purchased from X @ Rs.5/- per unit and 300 units were tion follows FIFO system of pricing of issues and the
purchased from Y @ Rs.6/- per unit. The above purchases
4.Under the differential time rate method the wages are paid at Rs. 1.50 per hour
101% to 125 % 80% to90%
between ________ efficiency and Rs.1.25 per hour between ________ efficiency
A ________ inventory turnover period indicates efficient utilisation of material. Low
A budget manual is a document setting out the ________ of the persons and
Responsibilities Forms and procedures
________ required for the budget control.
Management Accounting 2
Duties and responsibilities of various executives ,
A Budget Manual may contain the following particulars Functions and duties of Budget Officer , Scope of the
Budget and area to be covered
A business's telephone bill should nromally be classified into which one of the
Semi-variable cost
following categories?
A cheque of Rs.400/- received and deposited into bank on 26th September, was
Difference in the balance as per bank book and as per
credited in the pass book but was omitted to be entered in the bank book: this error
pass book
will result in :
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, 14,59,200
Directors fees 24,000, General Charges 2
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 68,182 units
a profit of 15% on total cost. What is the break even point for the company?
A company has normal capacity of 100 machines working 8 hours per day of 25
days in a month. The budgeted fixed overheads of a month are Rs.150,000/-. The
standard time to manufacture one unit of product is 4 hours. In a particular month,
Rs.9,000/- (Adverse)
the company worked for 24 days of 750 machine hours per day and produced 4,500
units of the product. The actual fixed overheads incurred amounted to Rs.145,000/-.
Compute capacity variance.
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 Product B
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/-.
A company wishes to earn a 15% profit margin on selling price when quoting for a
job. Which of the following is the profit margin of cost which will achieve the required 0.1765
profit margin ?
A complete list of all material required, with quantities, for a particular job is given in
Bill of material
the ________.
A dividend warrant of Rs.2,076/- was paid direct to the bank and nothing appeared
Direct deposit into the bank
in the cash book. This is an example of :
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
P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80
and S produced 42 units. Calculate wages payable to P,Q and S under Merrick
Multiple Piece Rate System.
Management Accounting 3
A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours
each and completed the job for which standard time was 48 hours for each worker. Rs.9,333.33
Calculate labour cost for the job under the Rowan Plan.
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/-. 80,000 units
Calculate annual break even point.
A firm has purchased a machine for manufacturing a new product, the cost data for
Rs.9.20/-
which is given below.
A firm is able to break even at 60% capacity with budgeted fixed cost of
Rs.300,000/-, budgeted selling price Rs.20/- per unit and budgeted contribution
Rs.82,500/-
Rs.6/- per unit. The firm can produce and sell at 90% capacity but it is estimated
that in that case
A forecast is mere estimate of what is likely to happen, but ________ is the action
Budget
plan to be followed.
A key factor is defined as the factor which, at a particular point of time or over a
limit output
period will ________ the volume of ________
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
Nil
the amount of depreciation charge for the said lathe machine for the year ended
31st March, 2004.
A low margin of safety indicates ________ fixed overheads. higher
Quantity requisitioned , Per unit material cost , Job
A materials requisition form normally contains the following aspects:
number
A person in charge of a ________ may be held responsible for its proper functioning
Cost centre
and cost control.
A producer has a policy of fixing selling price at two-and-a-half times the variable
cost. He also wants to have a monthly break-even at sales of 20,000 units. Annual Rs.12.50
fixed cost is Rs.18,00,000/-. What is the selling price per unit of the product?
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 Rs.8,000/-
inventory in stores, and other storage expenses are Rs.2.20 per unit. Calculate
annual ordering cost.
A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000
500
rectification of the suspense accounted debited to Rs
A started business with cash 5000, building 5000, furniture 2000, having
depreciation of 10% on building. The total amount of capital comes to Rs. 11500
__________
Management Accounting 4

A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit
Semi-variable
completed, this type of labour cost may be classified as ________ cost.
A written order sent to inform the purchasing department of a need for materials is
Purchase requisition note
called a ________.
A written request sent to a supplier for specified goods at an agreed upon price is
Purchase order
often called as :
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 Rs.6.25
profit of Rs.100,000/-, the selling price per unit would have to be :
Accounting is the art where transactions are … Summarized , Classified , Recorded
Longer life-span on business is divided into shorter
segments , Each one being in the form of accounting
Accounting period Concept________________
period , Selection of accounting period may depend on
various factors
Accounting to the matching principles of accounting, the ________ incurred during
cost revenues
an accounting period are required to be match with ________ during that period
Accounts is a Record of all transaction
Accrued income indicates: Current year's income not received in the current year
Abnormal expenses , In efficient use of labour , In
Actual costs may be affected due to inefficient functioning such as
efficient use of material
Adjustment entries always have ________ effects. Two
Administration overheads are ________ in nature and can be controlled mainly at
fixed top
________ level of the management
Advance received from customers is ________ for the organisation. A liability
After material is received from the supplier, quantity actually received is compared
ordered variation
with quantity ________-and ________-if any, are taken up with the supplier
Along with financial accounting, ________ and ________ are the other streams of
Cost Accounting Management Accounting
accounting
Alpha Bros. manufactures and sells four products-A, B, C and D. The sales mix in
value comprises 33-1/3%, 41-2/3%, 16-2/3% and 8-1/3%, respectively, out of the
total sales of Rs.60,000/-. Operating costs are 60%, 68%, 80% and 40%,
Rs.42,000/-
respectively of the selling price. Fixed costs are Rs.14,700/- per month. You are
required to find out the break even point for the products on an overall basis for
Alpha Bros.
Management Accounting 5

Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as
540
6170 rectifying the transaction the creditor A/C is to be debited amount to Rs
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. 45000
_____________
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 Rs.45,000/-
should be debited to the cash account?
An adjustment relating to outstanding expenses will ________ the net profit. Decrease
An advertisement contract was made with an artist which stated that the
remuneration will be 12% of net sales. On an average the monthly sales were
Rs.49,248/-
Rs.36,000/-, however the average rate of sales return was 5% of that month's sale.
Find the expenditure on account of advertisement.
An amount of Rs.200/- is received from P and is credited to Q. The rectification
P's A/c and Q's A/c
entry would affect ________
An error of partial omission can be rectified by either debiting or crediting the
suspense
________ account, as the case maybe.
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 The net profit will not be affected
statements of accounts for the year ended 31st March, 2004.
Angle formed by the intersection of total cost line and sales line is called angle of
Incidence
________.
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
0.2
expected to go up by 20%. By what percentage the break even point will go up in
the next year.
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 Rs.30,660/-
the amount of incentive due to the salesmen.
Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per
Balance as per bank book > Balance as per pass book
the standing instructions, and advise sent thereafter, may lead to:
As a part of the data presented in support of a proposal to increase the production
of clock radios, the sales manager of Wittman Electronics reproted the total
Incremental cost
additional cost required for the proposed increased production level. The increase in
total cost is known as :
As cost centers facilitate the control function, in many cases, they are termed as . . . Responsibility centers
Management Accounting 6
As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its
market price as on the same day was Rs.66,584/-. Which value of closing stock
Rs.66,584/-
should be considered in the final statement of accounts for the year ended on 30th
September, 2004?
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 The Companies Act, 1956
accounting.
At 60% capacity utilisation the overhead recovery rate is Rs.35/- per unit. At 70%
capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate Rs.28/- per unit
if the production attains 90% capacity utilisation?
At a break even point of 400 units, the variable costs are Rs.400/- and the fixed
Re.0.50
costs are Rs.200/-. What will the 401st unit sold contribute to profit?
Average stock = ________ + (Order size / 2) Safety stock
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 reasons pass book
not match
Based on the journal entry given, identify what transaction has taken place. Suresh
Cash paid to Kailash should not be recovered from
Account………….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on
creditor Suresh
behalf of creditor Suresh)
per unit selling price remains constant at all the levels
Basic assumptions made by marginal costing are of activities. , whatever is produced by the organisation
is sold off. , per unit variable cost remain constant.
Basic objective of Uniform Costing is . . . comparison
Bin card is maintained by ________ department whereas ________ is maintained
Stores Store ledger
by costing department.
Bin Card is not an ________ record but only a ________ record. Accounting Quantitative
Break even point is a situation of no ________ no ________ profit loss
Budget is prepared in terms of Quantity and/or Money
Budgetary Control is useful for ________-and ________-as a powerful tool in the
Cost control Maximization of profits
hands of management
Budgeted profit and loss account and budgeted balance sheet are also known as
Master budget
________.
Establishment of budgets , Comparison of budgeted
Budgetory Control deals with
results with actuals , Computation of variance.
Business is separated from the owner. , The
Business Entity Concept ______________. accounting process carried out for the business ,
Separate legal entity
Management Accounting 7

Calculate Efficiency Variance, If actual production is 22,000 units, Standard


Rs.1,500/-( Favorable )
production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-.
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 66.9 days
units.
Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard
Rs.4500/- ( Favorable )
rate is Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500.
Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard
Rs.9,000/- ( favourable )
rate is Rs.3/- and Actual hours are 13, 500.
Calculate Labour Rate Variance, If actual rate per hour is Rs.3.50/- , Standard rate
Rs.6750/- ( Adverse )
is Rs.3/- per unit and actual hours are 13, 500.
Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is
Rs.200/- ( Favorable )
Rs.5/- per unit and actual sales volume is 500 units.
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 Monica -Rs.72/-; Sonica - Rs.132/-
piece rate at or above standard. Monica produces 900 units per day and Sonica
produces 1,100 units per day.
Calculate the machine hour rate. The amount of overhead pertaining to June, 2004
to be apportioned is Rs.170,010/-. The machine cannot work without an operator. Rs.29.98
During the month June, 2004 the machine operator has been paid for 5,670 hours.
Calculate Volume Variance, If budgeted production is 20,000 units, actual
Rs.3,000/- ( Favorable )
production is 22,000 units and Standard rate per unit is Rs.1.5/-.
Calendar Variance arises only if there is abnormal increase or decrease in Actual number of working days
Cash and---------------are the two systems of accounting. Mercantile
Category A items, as per ABC analysis, represent ________ % of the total number
less than 10
of items in inventory.
Uneconomical size of purchase orders , Failure to avail
Causes for adverse material price variance are: discounts allowed by suppliers. , Excessive freight
charges
It may be prepared in terms of quantity or money or
Characteristics of budget can be said to be both , It is prepared for a fixed period of time , It spells
out objectives to be attained
Collection charges of Rs.4/- on a cheque received from Calcutta should be
Credited
________ in the bank book.
Management Accounting 8
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. 10,50,000
What will be prime cost.
Computation of gross wages, deductions and net wages payable is the function of
Personnel
the ________ department.
Organization , Cost Accounting system , Presentation
Contents of Uniform Cost Manual are
of information
Contribution represents pool of resources available for meeting all costs other than
Variable costs
________.
Contribution represents pool of resources available for meeting all costs other than
Variable costs
________.
Only those transactions will be considered which have
material impact on profitability , Insignificant transaction
Convention of Materiality __________________
will be ignored , The cost of non-used should not be
considered as the item of cost
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 Rs.452/-
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.
Copy of a firm's account in the bank's ledger is known as ________. Bank statement
Science indicates the possession and the application of
relevant systematic knowledge. , Art indicates the skill
Cost Accountancy is a science, art and practice of a cost Accountant.
and ability. , Practice indicates continuous effects on
the part of cost accountant.
Concerned with specific activities. , Classified
Cost Accounting ______________. according to their nature. , It deals with both i.e. past &
present.
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 20,000,18,000,16,200
as per the reducing balance m
Cost-sheet may be prepared separately for each Different Cost Centre
Crane expenses should be apportioned on the basis of ________. Number of hours crane worked in the department
Creche expenses may be appropriately approtioned on the basis of ________. Number of female workers
Expected standards , Normal standards , Ideal
Current standards includes
standards
Depreciation Amount charged on Fixed Assets.
Management Accounting 9
Depreciation charged on office furniture on straight line basis is an example of
Administration overheads
________.
Depreciation is caused by use factor, obsolescence and ________. Time factor
Determine re-order level from the following : Maximum daily consumption - 200
units; maximum delivery period - 12 days; average daily consumption - 150 units 2,400 units
and average delivery period - 8 days.
Direct Cost includes Direct material , Direct labour , Direct expenses
Discount received from the creditor has been entered in the creditor's account but
Omission of posting an amount in the ledger
discount has not been credited; what type of error is this ________
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 Suspense A/C
debited.
Dividend received on amount invested in shares is an example of ________. non-operating income
Every business transactions have two elements , When
Double Entry Accounting System__________________ business receives something, it has to pay something ,
Every debit has a corresponding credit
During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production
20,000 kg
is 21,000 kg , what is the quantity of sales
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 Rs. 83.60
minutes. Time allowed is increased by 2
Economical use of labour, materials and facilities can achieved with the help of
Budgetary control
________.
Education facility to workers and their children, pension, superannuation fund are
Non-monetary
examples of ________ incentives.
Education facility to workers and their children, pension, superannuation fund are
Non-monetary
examples of ________ incentives.
Entry for dishonour of cheque appears only in the pass book, this entry should be
Passed
________ in the bank book.
Commitment of top management , Clearly defined
Essentials for effective implementation of budgetary control system are
objectives , Continous budget education
Consumable stores , Glue used in book binding , Nails
Examples of indirect material are
used in packing boxes
Excess direct labour wages will be disclosed by 'Direct labour________ variance'. Rate

Expenditure like general lighting are apportioned considering ________ as a base


number of light points value of assets
and expenditure like depreciation are apportioned considering ________ as a base.
Expenditure on income-tax is an example of ________. non-operating expenditure
Management Accounting 10
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 83750
Rs.________/-
Factory light, telephone expenses are examples of ________ expenses. Indirect
Production overheads , Works overheads ,
Factory overheads are termed as
Manufacturing overheads
Indicates the total cost of production during a given
period , Indicates the unit cost of production during a
Features of a cost sheet are as follows
given period , Helps the management in fixing the
selling price to be quoted for the
Anticipates all future losses and expenses , Ignores all
Features of convention of conservation are . . . future incomes and profits, unless they are actually
realised , Applicable to valuation of current assets
The accounting policies and procedures should be
followed consistently , Facilitates the comparison of
Features of convention of consistency are . . .
financial statements , It facilitates comparison of
financial statements on period-to-period basis
transactions having material impact on profitability
Features of convention of materiality are . . . should be considered , Insignificant transactions will be
ignored
Every business transaction has two elements , When
Features of double entry accounting system are . . . business receives something, it has to pay something ,
Every debit has a corresponding credit
Measures the difference between the quantity of
materials actually used and that should have been
Features of material usage variance are :
used. , Considers standard price X actual quantity ,
Considers standard price X standard quantity
Only those transactions and facts are included
expressed in terms of money are considered , Imposes
Features of money measurement concept are . . . severe restrictions on the kind of information available
from financial statements , Works as a major drawback
of financial accounting
Raised when the stock of a raw material has fallen to
the re-order level. , Indicates the type, quantity and
Features of purchase requisition slip are :
quality of material required , The information about the
price of material is excluded
Mainly deals with items which are having physical ,
Features of real account are . . . Consists of some intangible assets , examples include -
Lane, Building, Vehicles
Management Accounting 11
Indicates historical cost , Not relevant in decision
Features of Sunk cost are . . .
making process , Incurred in past
Minima clerical work is involved in calculating the
Features of Taylor's differential piece rate system are as follows : wages , Helps in building up an efficient labour force ,
Strong incentive to efficient and ambitious workers.

The price of the earliest available lot is considered first


FIFO method , If the lot is exhausted, the price of the next available
lot is considered , It is used for issue of material
Designed to supply information for internal/ external
Financial Accounting ______________ uses. , Deals with the transaction during specific
period. , It is compulsory
Designed to supply information to internal/ external
Financial Accounting is … users , Referred as 'Historical' form of accounting ,
Concerned with financial factors
Financial Accounting protects the interest of outsiders . it considers ________
historical legal
transaction and it is a ________ requirement
Find out Labour Efficiency Variance, if Standard Rate is Rs.1.50/- per hour,
Rs.900/- ( Adverse )
Standard hours are 12,000 and Actual hours are 12,600.
Fixed cost is the cost that tend to remain ________ irrespective of ________ constant level of activity
Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India
of the fixed deposit is cumulative, i.e. interest shall be
on 1st June, 2003, for a period of one year.
Fixed overheads normally arise as a result of policy and are largely ________ in
uncontrollable lower
nature at the ________ level of the management
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/-
The net profit will decrease by Rs.18,000/-
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.
Following are called the element of Cost Material , Labour , Expenses
Stores department , Transport department , Accounting
Following are the examples of service cost centre
department
Wrong totaling of subsidiary books , Posting on the
Following error affect the trial balance wrong side of an account , Omission of posting an
account in the ledger
Wrong totaling of subsidiary books , Posting on the
Following errors affect the trial balance wrong side of an account , Omission of posting an
account in the ledger
Management Accounting 12
Error of Principle , Error of Omission , Error of
Following errors do not affect the trial balance
Commission
Store department , Internal Transport department ,
Following example comes under service cost centre
Accounting/Costing department
The Price , The trade discount is to be deducted ,
Following points are taking into consideration for evaluation of receipts Other amounts such as sales tax, excise duty, octroi
duty
For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg.
Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.375/-( Adverse )
Rs.3.60/- per kg.
For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg.
Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.600/-( favorable )
Rs.6/- per kg.
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 3,15,000
of raw material to be purchased
For successful implementation of uniform costing system, it is very essential to
cost manual
devise ________, containing recommended cost accounting plan and procedures.
For the month of November, a firm has budgeted sales of 20,000 units of X at a
price of Rs.10/- and sale of 30,000 untis of Y at a price of Rs.6/- per unit. Actual Sales volume variance -Rs.120,000/- (Favourable) ,
sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y Sales mix variance -Rs.44,000/- (Favourable) , Sales
at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales Quantity variance-Rs.76,000/- (Favourable)
quantity variance.
For the proper interpretation and presentation of cost the overhead further classified Factory overheads , Office and administration
as overheads , Selling & distribution overhead
From the following data, determine the net profit if sales are 20% above the break
even point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed Rs.4,000/-
overheads Rs.20,000/-
From the following data, workout the EOQ annual demand. 5000 units, ordering
cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average 300
inventory
Sales recorded in the sales register as Rs.2,020/-
instead of Rs.2,200/- , Received cash from Sham,
From the following select the examples of errors of commission -
credited to Ram's account , Paid transport charges,
credited to transport charges account
From the following, select current assets: Sundry debtors , Stock , Pre paid expenses
Furniture account will always have a ________ balance. Debit
Generally accounts of the assets will have ________ balance and liabilities will have
debits credits
________ balance
Management Accounting 13
Generally all the liabilities will have ________balance. Credit
Generally, all real accounts will have a ________ balance Debit
Indefinite longer period , Not likely to close down in
Going Concern Concept __________________ shorter period , This affects the values of asset and
liabilities
Going concern concept is also known Continuity concept
Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs.
15000
5000. The total amount transfer to advertisement account is Rs.____
Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of
such goods was Rs.18,950/-. The goods were not insured. Find the amont which Rs.18,950/-
should be debited to the profitability statement.
One copy to Purchase department , One copy to
Goods received note or goods received report is prepared in following copies Accounts department , One copy to Costing
department
Goods return by Pande worth Rs. 2000 should have appeared on the credit side of
Suspense A/C
Pande’s account for rectifying the same. Following account to be credited
Goods returned to the suppliers from whom it was ________d is recorded in
Purchase
thePurchasereturn register.
Production budget , Production overheads budget ,
Identify the budgets for which the production manager should be held responsible :
Plant utilisation budget
Production budget , Production overheads budget ,
Identify the budgets for which the production manager sould be held responsible :
Plant utilisation budget
Excess staffing , Lack of experienced and efficient
Identify the causes due to which the cost of labour may be high:
personnel , High labour turnover
Rent and taxes of the factory , Wages paid to indirect
Identify the fixed expenses from the following. workers like cleaners, helpers,etc. , Salary paid to
factory supervisor
Carriage inward - Factory overheads , Carriage
Identify the items which are correctly classified. outward - Selling and distribution overheads , Sales
research expenses -Selling and distribution overheads
Determination of the problem , Ascertainment of
Identify the steps involved in the process of decision making : alternative courses of action , Screening each
alternative so as to select the best one
Repairs of plant when it is undertaken by an outside
Identify the variable expenses. agency , Carriage inward by hired carriers , Wages
paid to casual workers
Management Accounting 14
If ________ books are the books which record the transactions in the chronological
order, ________ is the book where transactions of a similar nature are pooled subsidiary ledger
together
If ________ is not provided, the asset may appear in the Balance Sheet at an
depreciation overstated
________ amount
If a predetermined overhead rate is not employed an the volume of production is Decrease for fixed costs and remain unchanged for
increased over the level planned, the cost per unit would be expected to : variable costs
If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are
fixed and 40 % are variable) then what will the amount of total factory overheads at Rs.10,800/-
60% capacity
If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and
4,500 kg
closing stock is 500 kg then what will be the quantity of production
If overhead absorbed i.e. overheads charged to units during the period is more than
Over-absorbed
the overhead incurred, it is said that the overheads are ________.
If production overheads to be absorbed are Rs. 20000/- and machine hours worked
Re. 4 per machine hour.
are 5000 then the machine hour rate will be,
If production overheads to be absorbed are Rs. 50000/- and labour hours worked
Re. 0.50 per labour hour.
are 100000 then the labour hour rate will be,
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 Drawings
business.
If the bank pays off the credit card bill, as per the standing instructions, the overdraft
Lesser than
as per bank book will be ________ the overdraft as per pass book.
If the customer is not likely to pay the amount receivable from him, this amount
Bad debts
should to be treated as ________.
If the firm is operating with zero margin of safety, decline of even a single unit in
Loss
sales will result in ________.
If the ordering cost ________s, then the economic order quantity will Increase. Increase
If the owner brings in personal calculator for office use, ________ account should
Capital
be credited.
If the profit volume ratio is 25%, then the variable cost is equal to ________ of
0.75
sales value.
If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales
0.75
value.
If the quantity of material purchased and quantity used are different, then which
Quantity of material purchased
quantity should be used to compute the material price variance?
If the sales budget shows a sharp increase in a particular month, then (in order to
meet the sales forecast) the production budget must call for increased production in Previous month
the :
Management Accounting 15
If the sales forecast is less than the past sales but the top management insists upon
Increase the selling price , Reduce cost of sales ,
a certain amount of additional profits, then following steps can be taken to achieve
Increase the selling efforts
the target profit
If the standard contribution is less than the actual contribution, then ________
Favourable
variance arises.
If the total amount on the ________ side of commission account is more than the
Debit
total of its credit side, the commission account is said to have a Debit balance.
If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 hen the production for the period can be stated as
lakhs and the overhead rate was Rs.5/- per ________ sq.ft.
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 300000
can be stated as ________ sq.ft. tiles.
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 4200
wages for the month of February is
If you are required to enforce uniform costing system in your industry, how would
Collecting data from all units of your industry ,
you proceed ?
Collecting data from all units of your industry , Ensuring
If you are required to enforce uniform costing system in your industry, how would
that the data collected is complete and correct ,
you proceed ?
Maintaining secrecy of the data collected
Collecting data from all units of your industry , Ensuring
If you are required to enforce uniform costing system in your industry, how would
that the data collected is complete and correct ,
you proceed?
Maintaining secrecy of the data collected
It is a useful tool for management control , It avoids cut
Important advantages of Uniform Costing can be said to be throat competition , Weaker units can take advantage
of settled systems of better managed units

In a factory, bonus to workmen is paid according to the Rowan plan. The allotted
time for a job is 40 hours and the normal rate of wages is Rs.1.25 per hour. The
factory overhead charges are 50 paise per hor for the hours taken. The factory cost
30 hours
of a work order, executed by one worker, X, is Rs.161.875 and that by another, Y, is
Rs.155.46. The cost of material in each case is Rs.100/-. Calculate the amount of
time taken by the the workman X to complete the work order.
In calculation of total sales margin variance, the ________cost of sales is deducted
Standard
from the actual sales revenue.
In case of defective material being returned by the stores department to the vendor,
___.
such material should be valued at
Management Accounting 16
In case of industries where capital investment is very high, budget should be
Longer period
prepared for a
Receipt of loan/borrowings , Issue of shares , Sale of
In Cash budget , Non operating cash inflow includes
fixed assets
In Cash budget , Non-Operating cash outflow includesVarious kinds of over heads Loan instalments , Taxes , Purchase of fixed assets.
Payment to Creditors , Cash purchases of raw material
In Cash budget , Operating cash outflow includes
, Wages/salaries
Cash Sales , Collection from Debtors ,
In Cash budget Operating cash inflow includes
Interest/Dividend received
In EOQ, to express carrying cost as a percentage of the unit cost of purchases this
i
is used in the formula-----------
In financial statements P& L Accounts relates to a specific duration whereas
P& L Accounts Balance sheet
________ is for a given point of time
Variance Efficiency Variance , Capacity Variance ,
In fixed overhead variance, the volume variance is further analyzed as
Calendar Variance
In India the gas industry and electricity industry, and ________ industry are
fertilizer
examples of industries using the uniform costing system.
In India, where public undertakings operate along with the private sector
undertakings, ________ enables a comparative assessment to be made of the two uniform costing
sectors.
In order to rectify the totaling mistake, wherein the sales return ledger was
credited
undercast by Rs.2,000/-, the suspense account should be ________ with Rs.2,000/-

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

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


In the adjustment entry passed for closing stock, the ________ account should be
Trading
credited.
In the determination of factory overhad application rates, the numerator of the
Estimated factory overhead for the next period
formula is the :
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 Rs.1,169.55
but the premium is not yet paid. Find the amount of insurance premium still payable
as on 31st March, 2004.
Sales are too difficult to predict , Supply level of input
In which of the following situations, the flexible budget should be preferred? cannot be predicted , Varying levels of production
activity
Management Accounting 17
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 The net profit will decrease by Rs.6,300/-
impact on profit of the company.
Income Tax Act, recognise only one method of depreciation namely ________. Written down value method
Indirect Cost is termed as ________. Overhead
Indirect Expenses includes Rent , Telephone expenses , Insurance
Wages paid to storekeeper , Salary of works manager ,
Indirect Labour Cost
Wages paid to gatekeeper
Information as to the cost and profit / loss associated with the firm's operations is
Management
provided to the ________ by Management accounting.
Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy
period is one year from the date of payment of insurance. On 31st March, 2004
Rs.3,750/-
what amount should be debited to the Profit and Loss account as expenditure on
account of insurance premium?
Interest on ________ is credited to Capital account. Capital
Interest on capital is an allowable expenditure for parntership firms, as per the
Income Tax Act, 1961
provisions of the ________ .
Interest on drawings of partners should be credited to which account? Profit and loss account
Interest on overdraft charged by the bank is ________ to the pass book and
debited credited
________ to the cash book
Cost of insurance , Rent of store house , Salary of
Inventory holding cost comprises of :
store keeper
It is an appropriate basis of apportionment of depreciation expenditure value of assets
It is difficult to apply Uniform costing system for an industry which has labour
The cost structure is different
intensive companies as well as capital intensive companies, because :
It is said that adoption of uniform costing creates customer confidence because . . . Prices are reliable
Items credited to Trading Account are … Sales , Goods lost by fire , Closing stock
Items debited to Profit & Loss Account are… Salary , Discount allowed , Postage & telegram
Items debited to Profit & Loss Account area Salary , Discount allowed , Postage & telegram
Journal is popularly known as 'Book of . . . Original Entry
Judge the following narrative according to the criteria given : There are many
ions in the weather, viz. ice-cream, sweaters, etc.
organizations whose sales fluctuate with
Judge the following narrative according to the criteria given : There are many
organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, The statement and the reason are both incorrect
sweaters, etc.
Judge the given statement according to the given criteria. Goods being real
account, when goods are lost by fire, the goods account should be debited because The statement is correct but the reason is incorrect
the goods are not going out of the factory.
Management Accounting 18
Judge the sentence in italics according to criteria given below : " It is difficult to
adopt Uniform costing system when a product can be manufactured by employing
The assertion and the reason are both correct
more than one method because the cost of production will vary according to the
method used."
Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per
1,10,000
year. What is the total amount of the capital
KDL Ltd. charges depreciation @ 20% on written down value method. The net book
value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net
Rs.100,000/-
book value of its machinery on year end, i.e.31st December, 2003, assuming there
were no additions or disposals during the year?
Keeping company's liquid position sufficiently sound to meet its daily obligation is
Cash
the main object of preparing ________ budget.
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 Remuneration
manufacturing process but only assist i
Labour cost is the cost of __________ paid to employees of the organization. Remuneration
Records of past performance , Time & Motion Study ,
Labour Efficiency Standards are decided by considering following factors
Trial Runs
Inefficient supervisor , Poor working conditions , Use of
Labour efficiency variance arises due to:
sub-standard quality of material
Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/- Labour cost variance -Rs.700/- (Favourable) , Labour
(adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost yield variance -Rs.1,260/- , Labour yield variance is
variance and labour yield variance. favourable
Labour Turnover indicates ________ in labour force showing a highly increasing
change decreasing
trend or highly ________ trend
Influx and exit of employees , Quantitative
Labour turnover means : measurement of instability of working force , Rate of
change in the average working force
The number of leavers replaced divided by the average
Labour turnover rate is best defined as :
of employees on the payroll
The price of the latest available lot is considered first ,
If that lot is exhausted, the price of the 10% prior to
LAST IN FIRST OUT (LIFO)
that is considered , Physical issue of the material may
not be made out of the said lot
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/-
Rs.6,450/-
. If interest on drawings is charged @ 15% p.a., what is the amount of income for
Latara & Co.?
Like initial formation expenses, ________ and R & D are the examples of Deferred
Initial Advertisement R&D
Revenue Expenditure
Management Accounting 19
Its wide scope , Possibility of intuitive decision ,
Limitations of Management Accounting includes-------------------
Requires elaborate organizational structure
difficult for classification as fixed cost and variable cost.
, does not provide any standard for the evaluation of
Limitations of marginal costing are
performance. , it is useful technique only in the short
run.
Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest
Rs.500/-
expenditure on 31st March, 2004.
Loans which are borrowed from financial institutions are to be paid off in 8 years,
Long term liabilities
should be disclosed as ________ in the balance sheet.
Compensating errors , Trial balance will not be affected
Locate the error and its features in the following -
, Trial balance will be affected
Locate the steps involved in rectifying the errors in the books of accounts Find the wrong entry passed , Find the correct entry
Find the wrong entry passed , Find the correct entry to
Locate the steps involved in rectifying the errors in the books of accounts be passed , Find the entry that will resolve the mistake
in the books
Loss is equal to fixed cost minus ________ Contribution
Loss on account of goods lost due to earthquake should be debited to which
Profit and loss account
account?
M Ltd. manufactures three products P, Q and R. The unit selling price of these
products are Rs.100/-, Rs.80/- and Rs.50/-, respectively. The corresponding unit
variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantitywise
40,000 units
proportion in which these products are manufactured and sold are 20%, 30% and
50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to
work out the overall break even point qunatity for
M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor
Drawings
of Vivek Enterprises. This payment should be treated as
Management Accounting has a very ________ scope and it requires ________
wide elaborate
organizational structure
Decision making , Safeguarding assets , Planning and
Management accounting is concerned with the following activities :
controlling activities
Designed particularly for internal use , Helpful in
estimating the future along with past period , Useful in
Management Accounting is…
furnishing the necessary information to the
management
Designing the product , The quantity and quality ,
Manufacturing process involves study of
Material used
Margin of safety are the sales beyond break even point
Management Accounting 20
Margin of safety indicates ________ of operations. Profitability
Marginal costing is found to be unsuccessful in the following situations :- Impossible to distinguish costs into fixed and
Decision to drop a product line , Decision to accept a
Marginal costing technique is useful in taking decisions relating to which of the
special offer at price lower than the normal selling price
following courses of action?
, Decision regarding temporary shut-downs
Master budget provides a basis for computing effect of changes in : product mix of the company , sales volume ,
Change in price of material , Failure to take discounts ,
Material Price Variance may occur due to
Weak purchase organization
Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- Material cost variance -Rs.400/- (Adverse) , Material
(Favourable) and material price variance - Rs.350/- (Favourable). Find material cost usage variance -Rs.750/- , Material usage variance is
variance and material usage variance. adverse
Meera Industries Ltd. is a single product organisation having a manufacturing
capacity of 6,000 units per week of 48 hours. The output data vis-à-vis different
elements of cost for two consecutive weeks are given below : Week 1 : units
Rs.18.75
produced 2400; direct material Rs.4,800/-; direct labour Rs.6,000/- and total factory
overheads Rs.37,200/-. Week 2 : units produced 2,800; direct material Rs.5,600/-;
direct labour Rs.7,000/-
Metal India Ltd. is holding two accounts, savings and current, with the Central Bank
of India. On 31st January, 2004 his ledger shows the following balances : Savings
account Rs.5,000/-; Current accountRs.2,250/- (overdraft). It is found that a deposit Savings account-Rs.6,500/-, current account-Rs.3,750/-
of Rs.1,500/- made into the savings account on 20th January, 2004 has been (overdraft)
entered in the ledger in the of Current account. Find the correct ledger balances of
savings and current accounts.
Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and
40 kg of chemical Y. The standard loss of production is 30%. The standard price of
X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows Rs.100/- (Favourable)
: X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115
kg.Compute material yield variance.
Only those transactions and facts expressed in terms
of money , This Concept imposes severe restrictions
Money Measurement Concept__________________ on the kind of information available from financial
statements , Due to several restrictions it becomes
drawback of financial accounting
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
By providing depreciation to the extent of Rs.15,000/-
Rs.30,000/-. What can be done to achieve the desired reduction in the net book
value of loose tools?
Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and
Rs.3,00,000/-
closing stock Rs.1,47,750/-. Calculate the Gross Profit.
Non-trading income is disclosed on the credit side of ________ account. Profit and loss
Management Accounting 21
Number of days inventory is held can be calculated by dividing number of days in a
Inventory turnover ratio
year by ________.
Office & Administration overhead includes Salary , Rent & Taxes , Stationary & postage
Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for
900
rectifying the same Suspense A/C credited to Rs
Omission of posting an amount in the ledger Error of Omission
One of the limitations of the budgetory control is that it ________. is an expensive affair
Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What
Rs.53,750/-
should be the amount of debtors that must be disclosed in the balance sheet?
Over absorption of overheads may take place due to the reasons like ________
actual estimated
overheads being less than the ________ overheads
Shortage of labour , Enforced idle time, e.g.power
Overhead capacity variance is the outcome of: breakdowns , Customer demand being more or less
than anticipated
Overheads chargeable to a product, using direct labour cost basis, may be
________.
calculated by multiplying percentage of direct labour
Overheads chargeable to a product, using direct labour cost basis, may be
Direct labour cost of the product
calculated by multiplying percentage of direct labour cost and ________.
P/L A/C debit side includes salary , discount allowed , postage & telegram
Panna Ltd. temporarily has excess production capacity. The idle plant facilaties can
be used to manufacture a low-margin item. The low-margin item should be Variable costs
produced if it can be sold for more than its:
Units of output are measurable , Job is standardised ,
Piece rate systems are very useful in the following circumstances:
The flow of work is regular
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 budgets standard
form of the standard cost
Limted capacity due to lack of capital , Insufficient
Plant and equipment can become a key factor in the following circumstances : capacity due to shortage of space , Limited number of
hours for which the plant can be used
Spirit of mutual trust , Free Exchange of ideas , No
Pre-requisites of Uniform Costing are . . .
rivalry
Presentation of information to enable managerial decision making' is one of the
Cost Accounting
objects of which of the following
Preventive costs of labour turnover refers to all the costs which may be incurred by
discourage leaving
the organisation to keep workers happy and ________ them from ________ the job
Product costs under direct costing include: Prime cost and variable factory overheads
Management Accounting 22
Gross profit , Commission received , Interested
Profit & Loss A/C credit side has
received
Profit volume ratio is also known as ________. Contribution to sales ratio
Purchase day book for the month of April was under cast by Rs.1000/- which
Suspense Account
account should be credited? ________
Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is
750
_______
Purchase of national saving certificates by the company from its profits, should be
Investments
debited to ________ account.
Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account
Investment account - Rs.170,000/-
should be debited?
Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were
delivered directly to the plant situated at Nagar and hence this transaction was not
The gross profit will increase by Rs.6,450/-
recorded in the purchase book, which is maintained at the corporate office. Analyse
the impact of this transaction.
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 Rs.43,200/-
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.

Quantify the increase in profit on account of following errorss: (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 Rs.43,200/-
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.

Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital
is Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be Ram's capital Rs.55,000/- , Laxman's capital
provided @ 10% p.a., what will be amount of capital of each of the partners as on Rs.88,000/- , Interest on capital should be debited to
31st March, 2004, assuming there were no additions during this period? Also, state the Profit and loss account
the treatment of this item in the Profit and loss account.
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 Rent received in advance account
said amount?
Maximum stock level - re-order level + (minimum
Re-order quantity may be measured as :
usage X minimum re-order period)
Replacement costs of labour turnover are ________ and ________ training breakages of machine
Management Accounting 23
Revenues are more than the differential costs, then the proposed project should be
accepted
________
Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to
Drawing A/C
general expenses account for rectifying the error, which A/C to be debited
Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account
Maintenance of machine account
should be debited for this transaction?
Rs.5000 paid as ________ to ________ should be debited to salary account Mahesh salary
S Ltd., a multi-product company, furnishes the following data: 1st half of 2004 Total
sales Rs.45, 000 /- and total cost Rs.40, 000/-. 2nd half of 2004: Total sales Rs.50,
000 /- and total cost Rs.43, 000/-. Assuming stability in prices and that fixed Rs.65,000/-
expenses are incurred equally in the two half year periods, calculate the break even
sales for S Ltd. for the year 2004.
Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The
Balance Sheet - liability side
outstanding salary account will be disclosed in the …
Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid . The outstanding
Transfer to balance sheet liability side
salary is debited to Profit &Loss A/C. The second effect is --
Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an
Error of Commission
example of_______
Sales quantity may be forecasted after taking into consideration various factors Analysis of past trends , Market research , Reports by
such as salesmen
Provides reliable basis for budgeting , Facilitates
Select the advantages of standard cost system. delegation of authority , Promotes economy and
efficiency
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 Debtors A/c ..........Dr. Rs.200/- to bad debts recovered
account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- ,
amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.250/- to General Expenses A/c Rs.250/-
Rs.5,000/- was debited to general expenses account.
Closing stock is valued at cost or market price
whichever is lower , Providing for discount on debtors ,
Select the cases where convention of conservation is applied :
Amorisation of goodwill (goodwill being written off to
Profit and Loss Account)
Fixed cost / (Selling price per unit - Variable cost per
Select the correct formulae for calculating break even point. unit) , [Fixed cost / Marginal contribution] X Sales ,
[Fixed cost / (Fixed cost + Net Profit)] X Sales
Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Ram is a creditor , Rs.10,000/- has been paid to Ram ,
Rs.10,000 The payment is made by cheque
Management Accounting 24
Select the cost that indicates increased or decreased total cost due to the increased
Differential cost
or decreased volume of operations.
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
Select the entries which need to be rectified
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)
Sales budget , Production budget , Research and
Select the examples of functional budgets:
development budget
Select the information to be considered before installing a costing system Labour intensivity of the product
Depreciation on office furniture , Director's
Select the items which may be classified as administration overheads.
remuneration , Telephone expenses
Delivery van expenses , Rent of finished goods
Select the items which may be classified as selling and distribution overheads.
warehouse , Sales research expenses
Health and safety services , Canteen facility , Loans at
Select the non-monetary incentives
reduced rate of interest
Compare the transactions in the bank book and the
pass book , Check the totals and the balancing of both
Select the steps to be followed while preparing bank reconciliation statement.
the books , Confirm that the opening balances of both
the books are tallying
Select the transactions which can be entered in the Journal proper. Opening entries , Closing entries , Rectification entries
Use of supplementary rates , Carrying over the amount
Select the various methods adopted for treatment of under or over absorbed
to remaining period , Writing off to the Costing Profit
overheads
and Loss Account
Selecting an appropriate method of valuation of inventory is important because : It influences the figure of gross profit
Indirect Material such as packing material, samples
etc., , Indirect labour like salaries to sales personnel
Selling and distribution overheads includes
manager , Indirect expenses like warehouse charges,
advertisement
Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed
53000
cost is Rs. 18,02000. Find out the BEP in units,
Semi ________ overheads are neither ________ nor variable in nature. fixed variable
Since the pass book and the bank book record the ________ transactions, the bank
Same
balance as per these books should be equal.
Management Accounting 25

Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood
as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be Profit and loss account should be debited with
provided @ 10% p.a., what should be the treatment of this interest in the profitability Rs.1,866.67
statement, assuming there were no additions to capital during this period?
Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods
12750
worth appear on account ___________
Small concerns , Industries having non-standardized
Standard Costing may not be useful in
products , Contract jobs
Standard Costing specifically relates to the function of Production
Standard Costing system facilitates ________ and ________ for each individual or
Delegation of authority Fixation of responsibility
department
Standard costs are the targets to be attained by the actual performance. Minimum
Standard Costs are used as tool for Cost Control
Standard labour cost of a job has been specified as 50 hours work by skilled
workers @ Rs.20/- per hour and 150 hours work by unskilled workers @ Rs.10/- per
Rs.500/- (Adverse)
hor. Actual time taken was 70 hours by skilled workers @ Rs.18/- per hour and 170
hours by unskilled workers @ Rs.13/- per hour. Calculate labour yield variance.
Standard may not be necessarily useful for this purpose. Forecasting
Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has 60 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is
actually completed the job in 6 hours, i.e.6 shared
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.180/-
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.
State the features of these transactions : (i) Commission paid Rs.250/- was posted
The debit side of the trial balance will be in excess by
twice to Commission account (ii) Rs.5,000/- representing goods sold to A, was
Rs.250/- , Involves an error of principle , Involves an
posted to the credit to commission received account (iii) Sold machine for Rs.8000/-
error of commission
, was credited to Sales account.
Record of all receipts and issue transactions , Financial
Store ledger expressions of all transactions , Maintenance of Store
ledges provides a second check

Techniques of management accounting include: Marginal costing , Budgetary control , Standard costing
The ________ adjustment is necessary to relfect the cost for the use of fixed asset
Depreciation
during the year.
Management Accounting 26
The ________ adjustment is necessary to relfect the cost for the use of fixed asset
Depreciation
during the year.
The ________ is a perpetual inventory record. Bin card
The ________ is of immense help in guiding the companies to operate their
uniform cost manual
accounts on uniform basis.
The ________ is responsible for material losses while in storage. Store-keeper
The ________ ledger carries the individual accounts, whereas the general ledger
Control
records the consolidated effect of the individual transactions.
The ________ variance is the difference between the actual variable overhead
Total variable overhead
incurred and the standard variable overhead charged to production.
Maintaining Bin cards , Maintaining store ledger ,
The aims of perpetual inventory system are as follows
Continuous verification of physical stock
The alternative courses of action for an integrated textile mill are: Sell cloth
The analysis which is also referred as 'what if' analysis is known as________. Cost volume profit analysis
The balance of the suspense account will ________ after all the errors are become zero
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
Rs.128/- (overdraft)
cheque, originally received from Mr.A. The fact of dishonour was not recorded in the
bank book. Find the balance as per pass book.
Arithmetical errors in calculating , Non- posting a
The Bin card and stores ledges do not match due to the following reasons:
certain document , Posting a wrong Bin card
The budget manual must contain statement regarding: Objectives of the orgainsation
The budget that represents the funds investment for expansion, diversification, etc.
Capital expenditure budget
is known as ________.
The capacity utilised to installed capacity ratio is 80% for the company. The capacity
utilisation ratio in respect of a machine for a particular month is 90%. The available
working hours in a month are 200 hours. The break of idle time is as follows :
Rs.96/-
Waiting for job - 5hours, breakdown - 4 hours and waiting for tools - 3 hours.
Calculate the idle time cost when the hourly fixed cost of running the machine is
Rs.8/-.
Administrative causes , Productive causes , economic
The causes of idle time can be analysed as
causes
Administrative causes , Productive causes , Economic
The causes of idle time can be analysed as -
causes
The characteristics of a good wage system are : Flexible , Economical to use , Easy to understand
The column which refers to the page number of the ledger is known as ________. Ledger folio
The combination in which different products are sold by a company is known as
Sales mix
________.
Management Accounting 27
Distribution expenses , Publicity expenditure , Salary of
The components of the selling and distribution cost budget are :
sales-office workers
The composition of selling costs is given below : salaries 4% of sales, travelling
. Find the amount of selling overheads if the sales are
expenses 1.5% of sales, and sales office 2%
The concept of marginal costing is based on the important distinction between
period
product costs and ________ costs.
The cost accountancy is defined as “ the application of costing principles,methods
and techniques to the ________, art and practice of ________ ascertainment of the science cost control
profitability and the presenta
The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10
10000
yrs. Calculate the depreciation according to straight line method
The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation.
0.17
Calculate the percentage
The cost of idle time incurred by employees that is considered normal for the
Factory overheads
production process should be charged to :
The cost that indicates historical cost, which is incurred in past, is known as Sunk cost
The cost that varies in direct proportion with the level of activity is called variable cost
The cost-volume-profit analysis basically highlights the effect of changes in sales
short run
volume on the profit of the company, in the ________.
The credit purchases are as follows : July Rs.80,000/- and August Rs.140,000/-.
Creditors are paid either on a 'prompt basis' (on the spot) or 30 days basis. It is
Rs.177,000/-
estimated that 10% of the creditors are in the prompt category. Find the amount
paid to
The credit side of the sales book was overcast by Rs.2,000/-. As a result of this The liability side of the balance sheet will increase by
rectification, what of the given impacts is likely to happen? Rs.2,000/-
The data for two materials P and Q is given below : Material P : opening stock
Inventory turnover period for material P is 40.5 days ,
Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q :
Material P is faster moving material , Consumption of
opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-.
material Q is Rs.860,000/-
Identify which of the given statements relevant to the data given are correct.
The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost
Rs.105,000/-; working capital is equal to 25% of the sales value. The company Sales Rs.128,000/- , Return on capital employed ,
expects 25% return on capital employed. Capital employed is equal to fixed assets Working capital Rs.32,000/-
plus working capital. Select the C.Ans :-s:
The difference between sales and cost of sales is termed as ________. Net Profit
The difference between sales and factory/ works cost is termed as ________ the
gross profit cost of sales
difference between sales and ________ ermed as net profit
The different purposes served by standard costing technique are : Cost control , Cost awareness , Performance appraisal
Management Accounting 28
The direct material useage budget and direct material purchase budget differ
A planned change in the level of material stock
because of which of the following:
Ignores the efficiency of workers , Higher labour cost ,
The disadvantages of time rate system are :
Lack of motivation to increase productivity
The document which lays down the cost accounting plans and procedures to be
.
followed by the constituent units is known as
The document which lays down the cost accounting plans and procedures to be
uniform cost manual
followed by the constituent units is known as ________.
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
153,000 units
2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of
20
Type of budget, viz. Sales or capital expenditure
The factors that influence determination of budget period are : budget , General economic conditions , Trade cycle of
business
The factors which influence the selection of the method for absorption of overheads Type of industry , Nature of products , Manufacturing
are: process
More than one key factors , Refers to a complex
The features of multiplicity of key factors are as follows : situation , Can be resolved by using linear
programming technique
The benefit of time saved is divided equally between
The features of the Halsey Plan are:
the employer and employee
The final result disclosed by Profit & Loss Account is the ________ profit after taxes
Net
earned by the organization.
The final result disclosed by the Manufacturing account is the ________. Cost of production
The final result disclosed by trading account is the ________profit earned by the
Gross
organization.
The finance manager is responsible for which of the following budget? Cash budget
Percentage of profits , Availability of funds ,
The following factors affects the budgeted advertisement cost
Competitors policy
The following information is available regarding two orders for the same product.
Order I : material Rs.20,000/-; wages Rs.25,000/-; selling price Rs.120,000/- and
100% of works cost
percentage of profit on cost 20%. Order II : material Rs.30,000/-; wages Rs.40,000/-
; selling price Rs.195,000/- and percentage of profit on cost 25%.
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
Rs.75,981/-
director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year
2004.
Management Accounting 29

The gross profit transferred from the trading account is Rs.98,999/-. The expenses
debited to the profit and loss account are salary Rs.12,000/-; advertisement
expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's Rs.34,408.09
incentive Rs.28,000/-. It was noted that no entry was made for salary of one month
which was due but not yet paid. Find the net profit of the company.
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
1st half -31,500 units; 2nd half - 30,000 units
of the current six months and 20% of the budgeted sales of the next six months.
Calcu
The ideal standards are generally ________ in nature and the variances always
theoretical unfavorable
shows ________ trends
The integrated form of all functional budgets is known as : Master budget
The key factor determines the : Level of activity , Capacity utilization , Level of sales
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 ________ Stores Re-order level
level.
The lowest profit volume ratio can be ________%. 0
Employees try to increase productivity , Incentives are
The main advantages of profit sharing are : shared by all the employees , Augments emplyees'
efficiency
Helps in immediate compilation of costs , Helps
The main objectives of determining overhead rates are : application of overhead on an equitable basis , Assits
in calculating unit cost before starting production
The management of Horngreen Ltd. is deciding whether to continue working at loss
Loss of trained personnel , Loss of regular customers ,
or to temporarily shut down the factory. State the qualitative aspects that must be
Expenditure required to restart the factory
considered before arriving at a decision.
The material issued to production department may be returned back to the stores
Material issued is defective
because material issued in excess requirement and
The material physically received is compared with material ordered as per the this
Purchase order
order
Number and date , Department demanding the material
The material Requisition note contains
, Signature of the authority approving the demand
The method of overhead apportionment which considers both the material cost as
Prime cost percentage rate
well as the labour cost, is known as ________ method.
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 Profit-sharing
________ method.
Management Accounting 30
The method which deals with ownership rights being given to workers is known as
Co-partnership
________ method of remuneration.
Accrued commission income of-Rs.32,960/- was not
The net profit before certain adjustments was Rs.95,040/-. After giving due effects entered in the books , Rent for the month of March was
to the adjustments, the revised net profit (after considering the adjustments) is payable and yet to be recorded Rs.19,280/- , Repairs
Rs.78,560/-. Select the adjustments which might brought this change. expenditure to the extent of Rs.30,160/- was wrongly
transferred to Machinery account
Cost control , Ascertain ment of cost of each product ,
The objectives of cost accounting are :
Assist in managerial decision-making
To fix a common selling price for the industry as a
whole , To compare efficiency of each unit against
The objectives of Uniform costing system are as follows :
industry's overall performance , To compile reliable
cost data for inter-firm comparison of costs
To ascertain cost and profitability , Cost Control ,
The objects of cost accountancy are . .
Presentation of Information
The operating profit as per cost statement may differ from the profit as per Profit Depreciation on plant and machinery , Interest on loans
and Loss Account due to existence of taken from other , Interest on loans granted to others
Functional responsibility of different functional
managers , Delegation of authority to various
The organization chart shows the following aspects :
managers , Inter-functional relationships of these
managers
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
A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/-
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.
The periodical total of sales book was cash short by Rs. 5000 for rectifying the
Suspense A/C
same, which A/C to be debited
The present unit cost data for a product is as follows: selling price Rs.15/-, variable
costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased 0.333
by 12.5%. Which of the following is the amended contribution to sales ratio?
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. 37,86,000
What is the Total cost?
Management Accounting 31
Classifying labour cost according to jobs, processes,
etc. , Preparation of different reports based on direct,
The principal functions of the cost accounting department are :
indirect labour cost, etc. , To focus on areas where
labour cost may be reduced.
The principle of ________ is followed while preparing the financial statements. Going concern
The process of Allocation & apportionment can followed to decide the ________ of
Allocation & apportionment Loading
overheads to each budget center
The process of attributing proportions of items of costs amongst const centres is
Cost apportionment
called ________.
The process of recording the business transactions in a defined set of records is
Balance sheet
referred to as ________.
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 . . Cost accounting
.
The profit volume ratio of BB & Co, dealing in precision instruments, is 50% and the
Break even point-Rs.30,00,000/-, net profit-
margin of safety is 40%. You are required to work out the break-even point and the
Rs.10,00,000/-
net profit if the sale volume is Rs.50,00,000/-
The profit volume ratio of X Ltd. is 50% and the margin of safety to sales ratio is
Rs.20,000/-
40%. You are required to calculate the net profit if sale volume is Rs.100,000/-
The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If ing a rebate of 5%. If the materials are purchased on
the materials are purchased for cash the supplier credit of
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
October- NIL, November- Rs.26,750/-
materials are purchased on credit of 30 days, no rebate is offered. The company
purchase
To aid the planning of annual operations , To
communicate the organisational plans to the different
The reasons and objectives of budgets may be stated as :
departments , To motivate the managers to strive for
attainment of the organisational goals
The sales forecast (quantity) should be compared with the ________ to find out
Production capacity
whether it is possible for the firm to handle this level of sales.
The selection of ________ may depend upon the various factors like characteristics
Accounting period
of the business organisation, tax considerations, statutory requirements etc.
The selection of the base on which overheads should be apportioned depend on the
service or use basis , survey basis , ability to pay basis
following principles.
The short run financial plan which acts as a guide to achieve the predefined targets
Budget
is known as ________.
Management Accounting 32
The sources which have been used by an organisation to raise funds indicate
A liability
________for the organisation.
The stores department is a ________ department. Service
The system which provides an opportunity to the small units to take advantage of
the research work taken by the large scale units of the same industry is known as Uniform costing
________ system.
The systematic process of identifying and reporting variance is known as ________. Variance analysis
The term ________ indicates expenditure incurred on or attributable to a given
Cost
thing.
The total production cost for making 20,000 units was Rs.21,000/- and the total
production cost for making 50,000 units was Rs.34,000/-. Once production exceeds
Re.0.98
25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production
cost per unit of making 30,000 units is:
The treatment of ________ time in cost accounting depends upon the distinction
Idle
between normal and abnormal time.
The use of contribution per unti of limiting factor as the basis for ranking products to
Maximisation of short-term profit
be produced and sold is aimed at which of the following?
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 Volume
________ variance.
The variance which measures the deviation of the rate actually paid to labour as
Labour rate variance
from the standard hourly rate is known as:
The variance which measures the profit consequences of selling different products
________ variance.
in proportions other than the standard, is
The variance which measures the profit consequences of selling different products
Sales margin mix
in proportions other than the standard, is known as ________ variance.
The varinace that attempts to ascertain the effect of change in sales volume on the
difference between actual and budgeted contribution is known as ________ Sales margin volume
variance.
Valuation of inventories , Charging of depreciation ,
The various areas in which uniform costing can be adopted are . .
Apportionment of overheads
The wages paid to a trainee who constructs wooden mould for concrete laying on a
Direct labour cost
building contract should be defined as :
The wages paid to maintenance department workers who do repair work principally
for production departments but also on the vehicles in the distribuiton department Service costs
shoud be charged as:
total cost remains the same , per unit cost may vary ,
These are the features of fixed overheads
not dependent on volume of output
Management Accounting 33
vary directly in proportion to volume of output. , per unit
These are the features of variable overheads cost remains the same , total overheads may increase
or decrease as per volume of output.
Replacement Method , Separation Method , Flux
These are the methods of measuring labour turnover.
Method
Cost of maintaining good relations with the workers ,
These are the preventive costs of labour turnover.
Cost of medical services , Cost of welfare facilities
Inefficiency of new workers , Cost of selection and
These are the replacement costs of labour turnover.
placement , Increased spoilage and defectives
This cost indicates historical cost which is incurred in past. Sunk cost
This cost indicates increased or decreased cost due to the increased or decreased
Differential cost
volume of operations.
This is not the non monetary incentive. Co-partnership
This is the best example of element wise classification of cost. material
This is the process of recording attendance time of the workers. Time keeping
To ascertain the ________ of all the transactions recorded in the ledger account,
Net effect Balanced
the account is required to be ________
Token or disc method is a related to the system of ________. Time-keeping
Tom company has sales of Rs.200, 000/- with variable expenses of Rs.150,000/-,
fixed expenses of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much
Rs.200,000/-
would Tom have to increase its sales in order to achieve an operating income of
10% of sales?
Trade Discount refers to the discount . . . received on purchases
Trading a/c credit side includes sales , goods lost by fire , closing stock
Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in
the market. Their forecasted profit and loss accounts for the year ending December
2003 are as follows : Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; Hero Ltd.
fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-;
fixed costs Rs.150,000/-. You are
Strike , Change in customers demand , Devaluation of
Uncontrollable variances are
currency
Under Differential Time Rate method payment is made at Rs. 1.40 per hour when
90% to 100%
the level of efficiency is between________.
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 below standard at standard
plus some increase in wage rates
Under Merrick Differential Piece rate System of wage payment up to 83% of
Normal
efficiency following rate is offered.
Management Accounting 34
Payment for idle time to workers , Production hold ups
Under stocking may have following consequences resulting into disturbed delivery schedule , Eleventh
hour purchase
Under the average cost method of valuing material issues, new issue price is
Each
determined after ________ issue.
Under the differential time rate method of wage payment between 90% to 100% of
Rs. 1.40 per hour
efficiency following rate is offered.
Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus
Below 66.66%
is payable.
Under the repeated distribution method the overheads of ________ department are
service percentage
distributed to other departments on agreed ________
Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. The asset side of the balance sheet will increase by
Find its correct impact. Rs.5,000/-
Uniform costing is not a separate method of ________. cost accounting
In single organization having number of branches. ,
Uniform Costing Methods may be advantageously applied Number of companies in same industry. , Similar
Industries such as cotton, jute etc.
Single organization having number of branches. ,
Uniform Costing Methods may be advantageously applied to . . . Number of companies in same industry , Similar
Industries such as cotton, jute etc.
Information is freely supplied by all the units , Well
Uniform costing system can be successfully implemented in any industry only when organised sector is ready to share the technological
: improvements , Information furnished by the units is
complete and correct
Valuation of material uses the following methods FIFO and LIFO , Average price method , Market price

variable cost is the cost that tend to ________ in direct proportion with ________ vary level of activity
Variable costs are the controllable costs at the ________ level of the management
whereas fixed costs can be controlled only on the ________ level of the Lower Top
management
The system of wage payments , System for bonus
Wage rate standards takes into consideration the following factors
payment , Grades of workers required
Warehousing cost is an item of ________ Distribution overheads
What will be the impact of following transactions on the cost of a lathe machine : (a)
Transport charges on the lathe machine were debited to Carriage inward account,
Cost will increase by Rs.1,300/-
Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous
expenses account, Rs.200/-
When bank balance as per bank book is considered for preparing bank Cheques issued but not presented , Direct deposit
reconciliation statement, then following items need to be added : made by customer , Wrong credits given by bank
Management Accounting 35
cheques issued but not presented , direct deposit by
When bank balance as per bank book is considered then following to be added.
customer , wrong credits given by bank
cheques deposited but not cleared , Interest debited by
When bank balance as per pass book is considered then following to be added.
bank , bank charges debited by bank
cheques issued but not presented , direct deposit by
When bank balance as per pass book is considered then following to be deducted.
customer , wrong credits given by bank
Which cost is defined as an estimated cost, prepared in advance of production or
Standard cost
supply, estimated within a prescribed set of working conditions?
Which of the following aspects are mainly responsible for difficulty in application of
Capital investment , Plant size , Location
Uniform costing system.
Capital expenditure budget , Research and
Which of the following budgets may be termed as a long term budget? Development expenditure budget , Budget of a
transportation company
Which of the following cost is also termed as Prime Cost ? Direct cost
Which of the following costs is most likely to have a cost behaviour pattern its, with a variable cost there after which decreases
described as ..a fixed cost upto an activity level of from 10
Which of the following documents contains information as to quantity and value of
Stores ledger
material stock?
Date of receipt of material , Quantity received ,
Which of the following information is included in the goods received note?
Description of goods
Which of the following is a correct definition of the key factor? The factor which limits the activites of the undertaking
The level of control of the used of material in the
Which of the following is likely to be a contributory factor to the incidence of excess production cycle , The incorrect choice of purchase
expenditure on material cost? order quantity , Failure to control the issue of materials
from stores
Which of the following is most likely to be an allocated production overhead cost to
Salary of the finishing centre's manager
the finishing cost centre?
To facilitate payment for time spend on the work
Which of the following is the most efficient use of the clock card?
premises
Which of the following is usually prepared daily by employees for each job worked
Job card
on?
Which of the following operations would normally be carried out first when preparing
Determining the budget period
a master budget?
Which of the following source documetns in a cost accounting system is designed to
exercise control over the delivery of and accurate recording of the receipts of Goods received note
goods?
Which of the following transactions should be excluded while preparing a cost sheet Interest on loan , Bad debts , Expenses on criminal law
? suit
Management Accounting 36
Change in contribution / Change in sales , 1 - (Change
Which of the formulae can be used to calculate profit volume ratio : in variable cost / Change in sales) , (Fixed cost + Profit)
/ Sales
Which system can assist in fixing a common selling price for the industry as a whole
longing to that industry ?
on the basis of cost of production of all
Which system can assist in fixing a common selling price for the industry as a whole
Uniform costing
on the basis of cost of production of all units belonging to that industry ?
Which system provides an opportunity to companies to adopt the one best method
Uniform costing
of cost accounting system known to the industry ?
Which variance is used to analyse the effect of change in the quantity of output from
Materials yield variance
a given mix of inputs?
The number and types of products sold by the
organisation , Whether the organisation's market share
While preparing sales budget the following factors must be considered :
is increasing or decreasing? , Details of seasonal
fluctuations in sales
While preparing the bank reconciliation statement as on 31st March, 2004 you find
the following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank
on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In Balance as per pass book < Balance as per bank book
this background, which of the following statement holds true as on 31st March,
2004?
While preparing trial balance, the balance as per ________ book is considered as
Bank
bank balance.
While preparing trial balance, the balance as per ________ book is considered as
Bank
bank balance.
While selecting source of supply ________ epartment may call for the ________
purchase quotation
from the prospective suppliers
XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest account should be debited with Rs.7,520.55
Interest is to be paid on half yearly basis. What treatment should be given in the and outstanding interest account should be credited
books of accounts of XYZ & Co. as on 31st March, 2004? with Rs.7,520.55
XYZ & Co. is a partnership with X and Z as partners. The capital of X is Rs.58, 000/-
and that of Z is Rs.75, 000/-. Interest on capital is charged @ 12% p.a. and interest
on drawings is charged @ 5% p.a. The drawings of X totaled to Rs.15, 000/- and
X - Rs.118,721.28 and Z -Rs.153,888.72
that of Z totaled to Rs.12, 000/-. The profit for the year after considering interest on
capital and drawings is Rs.125, 000/- and the profits are shared in the ratio of their
capitals, i.e. 58: 75. Find the balance of capital accounts after giving
Management Accounting 37
XYZ Ltd. has set up the following standards for variable production overheads :
standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The
actual data for the month is as follows : actual variable overheads incurred Rs.20,000/- (Adverse)
Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours.
Find variable overheads cost variance.
You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of
petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and
evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres Loss due to spillage and evaporation - 30 litres. , Rate
drum was as follows : To job X 200 litres; job Y 400 litres and job Z 320 litres. After of charge per litre of petrol - Rs.30/-
these issues the drum was empty. Calculate per litre charge for use of petrol,
quantum of loss and total quantum of petrol used for jobs X,Y and Z.
Manufacturing overheads represents all costs incurred in the factory including direct
FALSE
material cost and direct labour cost.
Profitability statement indicates the amount of assets & liabilities. FALSE
Provision for discount on debtors account should be credited to the Profit and Loss
FALSE
Account.
Balance sheet indicates the expenditure & income from the business. FALSE
Absorption costing is more suitable for decision making than marginal costing FALSE
Bank charges debited in the pass book represent clerical mistake on the part of the
FALSE
bank employees.
While preparing the labour cost budget, factors such as overtime working or night
FALSE
shift working may be ignored.
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 FALSE
proposition.
Credit balances in all the Personal & Real accounts appear on asset side. FALSE
Non-operating / financial expenses are added while calculating net profit. FALSE
Bin Card is having all the information of item received and issued. FALSE
Cost Accounting is concerned with calculation of the profitability and state of affairs
FALSE
of the organization as a whole.
Financial accounting may deal with the ascertainment of cost & calculation of
FALSE
profitability of the individual product.
Amount invested in purchasing Fixed Asset is a revenue expenditure. FALSE
Valuation of returns indicates the material returned by store department to
FALSE
production department
A good wage payment system will punish the workers for the matters beyond the
FALSE
control of the workers.
Under marginal costing technique only fixed costs are considered as relevant for
FALSE
decision making.
Management Accounting 38
Uniform Costing disturbs the healthy competition in the industry FALSE
The danger level fixed below maximum level FALSE
(No. of unit * Rate of depreciation per unit ) this formula is used for written down
FALSE
value method.
If the product is labour intensive, more stress may be necessary on inventory
FALSE
control procedure.
Under time rate system a worker is paid on the basis of production achieved by him. FALSE
Cost Accounting restrict itself with historical transactions FALSE
Generally speaking income represents wealth increase and business success;
FALSE
higher the income, lower will be the success of a business.
Bank reconciliation statement is a systematic presentation of errors made by the
FALSE
accountant.
Control on purchase of material is exercised by the storekeeper. FALSE
The best way to reduce labour cost is to recruit cheap labour. FALSE
Sundry creditors transfer to asset side. FALSE
As soon as the suspense account balance is wiped out , it may be assumed that all
FALSE
mistakes have been corrected.
Credit sale of Rs. 5000 to Bobby should be entered in the purchase book. FALSE
Flux method is important method of wage payment. FALSE
Material Mix Variance occurs where only one raw material is required FALSE
Variable cost + Profit = Sales FALSE
Treating capital receipt as revenue income is an example of errors of commission. FALSE
Cheque received from a client on 28th September, 2004 must be entered in the
FALSE
bank book only after it is credited in the pass book.
Under time rate system a worker is paid on the basis of production achieved by him
FALSE
in a given time.
A pre-determined factory overhead rate holds up product costing. FALSE
A bill of Rs. 500 for old furniture sold to Raj, was entered in the sales day book FALSE
Abnormal cost indicates that cost which is normally incurred at a certain level of
FALSE
output under normal circumstances.
Indirect material cost assist the manufacturing process is an integral part of finish
FALSE
goods.
Fixed cost is the cost that varies in direct proportion with the level of activity or
FALSE
volume of operations.
Standard costing and Marginal Costing are the best possible tools available to the
FALSE
management for cost control
Penalty paid for delay in payment to creditors represents uncontrollable cost. FALSE
Management Accounting 39
The bin card and stores ledger, being independent records, comparison of these
FALSE
two records should be avoided.
Amortisation of goodwill should be considered while preparing cash budget. FALSE
Uniform costing system is a pre-requisite to an inter-firm comparison of firms
FALSE
belonging to the different industries.
The effect of price reduction is always reduction in the margin of safety and also
FALSE
reduction in the break even point.
If excess of cash is estimated in the cash budget, it may be possible to utilise it to
FALSE
give bonus to the employees.
Any amount of profit earned in the past which is not distributed to the owner,
FALSE
belongs to the creditors.
Direct labour hour rate method of absorption of overheads is suitable where most of
FALSE
the production is done by using machines.
The sales mix variance highlights the fact that the actual mix of sales has been in
FALSE
the same ratio as budgeted.
The sum of indirect material cost, indirect labour cost and indirect expenses is
FALSE
termed as factory cost.
In the ledger account only credit entries relating to a particular account are posted. FALSE
Cost Accounting is a legal requirement. FALSE
Cash account can have a credit balance. FALSE
Period cost is the cost assigned to the products. FALSE
Financial Statements which are generated as a result of the management
FALSE
accounting report & financial performance of the organization as a whole.
An entry in the stores ledger is required for transfer of material from one job to
FALSE
another in the same department.
GAIL having monopoly in the CNG (Compressed Natural Gas) market can
FALSE
implement the Uniform costing system.
The balance sheet has three columns, viz. assets, liabilities and ledger folio. FALSE
It is very easy to measure the portion of increased sales which is due to expenditure
FALSE
incurred for advertisement of the product
Depreciation under Reducing Balance Method is calculated as (Number of units *
FALSE
Rate of depreciation per unit)
All cash sales are recorded in the sales register. FALSE
Indirect material cost is an integral part of finished goods. FALSE
All personal expenses of the owner should be debited to the organisation's profit
FALSE
and loss account.
Material mix and material yield variance can be calculated even when only one raw
FALSE
material is used for production.
Management Accounting 40

In marginal costing, under and over absorption of fixed overheads is bound to arise. FALSE

There is no need to open a suspense account if the trial balance does not agree. FALSE
A contractor’s bill for the extension of premises amounting to Rs. 2750 has been
FALSE
debited to building repair account
Under time rate system a worker is paid on the basis of production achieved by him
FALSE
in a given time.
The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates
FALSE
credit balance for this account.
Piece rate system is suitable when quality of goods produced is of extreme
FALSE
importance.
A firm earns profit when contribution is equal to fixed costs under variable costing. FALSE
Profitability statement indicates the amount of assets & liabilities. FALSE
Balance sheet indicates the expenditure & income from the business. FALSE
According to the standard costing principles, only adverse variance must be further
FALSE
investigated.
The purchase account should be debited when an order is placed with the
FALSE
supplier of material.
Control on purchase of material is exercised by the storekeeper. FALSE
Differential cost analysis is incorporated in the cost books. FALSE
The process of recording attendance time of the workers is known as time booking. FALSE
The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates
FALSE
credit balance for this account.
Margin of safety = Contribution / Profit volume ratio FALSE
While calculating the minimum level, normal lead time is not necessary FALSE
Favorable variances need on investigation FALSE
Debit the receiver & credit the giver is a rule of Real a/c. FALSE
The situation of over absorption arises if the overheads absorbed are less than the
FALSE
actual overheads.
Due to errors of principle the arithmetical accuracy of the trial balance get affected. FALSE
canteen facility to workers, health and safety services are examples of monetary
FALSE
incentives.
If actual cost is more than the standard cost then it is called favorable variance. FALSE
The aggregate of indirect material cost, indirect labour cost and indirect expenses is
FALSE
termed as factory cost.
Management Accounting 41
According to the standard costing principles, only adverse variance must be further
FALSE
investigated.
Error of commission refer to a situation where a transaction is not recorded in the
FALSE
books of account.
Semi variable expenses fluctuate in direct proportion to volume. FALSE
The greater the volume of production, the greater is the unit cost of production. FALSE
Routing the purchase requisition through the purchase department entails
FALSE
unnecessary delay in receiving the required materials.
Under ABC analysis, category A represents items with high volumes. FALSE
Narration must be mentioned in the ledger. FALSE
Receipts and payments method of cash budget is useful for preparing long term
FALSE
estimates.
Make or buy decisions are made by comparing fixed cost with outside purchase
FALSE
price.
Depreciation on assets is credited to the trading account. FALSE
Balance sheet is a part of the ledger accounts maintained by the company. FALSE
The term 'scheduled costs' is used interchangeably with the word 'standard costs'. FALSE
A low inventory turnover ratio should always be preferred. FALSE
Under the Rowan plan bonus is a fixed percentage. FALSE
High time wages means necessarily high cost of production. FALSE
Factory overheads consist of all overhead costs incurred from the stage of
TRUE
procurement of material till the production of finished goods.
If the physical stock is less than the stock as per the stores ledger, such shortage
TRUE
should be treated as an issue of material.
Marginal costing is a technique of cost control. TRUE
The problem of multiple key factors can be solved with the help of techniques like
TRUE
linear programming, operations research, etc.
Accounting is an art of recording, classifying & summarizing in a significant manner. TRUE
The process of accounting split into three steams i.e. financial, cost, management
TRUE
accounting.
Financial statements are basically in two forms i.e. profitability statement and
TRUE
balance sheet.
A business is an activity carried out with the intention of earning the profit. TRUE
Accounting refers to the process of analyzing & interpreting the information already
TRUE
recorded in the books of accounts.
Depreciation, interest and property tax continue even when the operations are
TRUE
discontinued.
Management Accounting 42
Balance sheet indicates the financial status of the business at given period. TRUE
Income received in advance transfer to current liabilities TRUE
For taking make or buy decision marginal costing technique provide useful
TRUE
assistance.
The variable costs are controllable at the lower level. TRUE
Due to errors of principle the arithmetical accuracy of the trial balance does not get
TRUE
affected.
Budget is prepared for a fixed period of time. TRUE
A very wide scope of Management Accounting is the limitation by itself. TRUE
Financial Accounting discloses the financial performance & financial statements of
TRUE
the business as a whole.
Management Accounting is the process of analysis and interpretation of financial
TRUE
data collected with help of financial accounting and cost accounting
P&L statement which is a period statement & relates to a certain period tells about
TRUE
results of operations.
Management Accounting aims at enabling the management to take the decisions
TRUE
about the future. It may consider future data as well as non-financial factors.
Financial Accounting primarily protects the interests of the outsiders dealing with
TRUE
organization in various capacities.
Cheques issued but not yet presented – the balance as per the bank pass book will
TRUE
be higher.
The wage payment system should take into consideration the external obligations
such as the Minimum wages Act and the agreement entered into by the TRUE
organization with the workers.
Product mix refers to the proportion in which various products of a company can be
TRUE
sold.
Depreciation does not involve cash out flow TRUE
The difference between standard cost and actual cost is termed as Variance. TRUE
Wage payment system should be properly tied up with quality control procedures to
TRUE
ensure that the workers are paid only for good and quality production.
A good wage payment system will not punish the workers for the matters beyond
TRUE
the control of the workers.
Fixed assets do not give the returns during the same period during which they are
TRUE
paid for
Amount with drawn for personal purpose drawing A/C to be debited. TRUE
In a Balance-Sheet right hand side is referred as assets side and left hand side is
TRUE
referred as liabilities.
New companies can adopt Uniform costing system as a ready-made system. TRUE
Management Accounting 43
Re-order level for materials is determined considering maximum consumption and
TRUE
maximum delivery period.
Under some circumstances, it may be advisable to sell at prices equal to or below
TRUE
the marginal cost ignoring fixed cost.
A bank reconciliation statement is prepared on a particular date. TRUE
Fixed cost tends to vary with time rather than with level of activity. TRUE
Flexible budget is an effective tool for evaluation of performance. TRUE
Maintenance Department is a service cost centre. TRUE
For a manufacturing company, dividend received is a non-operating income. TRUE
Suspense account is closed automatically after rectification of all the errors. TRUE
The sum of indirect material cost, indirect labour cost and indirect expenses is
TRUE
termed as Overheads.
Error of commission refer to calculation errors, totaling errors, errors in carrying
TRUE
forward etc.
Standard costing is always accompanied by a system of budgeting but budgetary
TRUE
control may be operated in business where standard costing is impracticable.
Budgetary control system provides a basis for establishment of the incentive
TRUE
systems.
A fixed budget is useful only when the actual level of activity corresponds to the
TRUE
budgeted level of activity.
Price based on Uniform Costing may be taken to be reliable and representative of
TRUE
the whole industry.
Bank reconciliation statement can be prepared on weekly basis. TRUE
Real Accounts may also consist the accounts of some intangible assets like
TRUE
Goodwill Account
The rate at which the depreciation is to be calculated are also specified in the
TRUE
Income Tax Act 1961.
Material cost is the first and probably the most important element of cost. TRUE
If the organisation follows the policy of considering predetermined overhead
absorption rates, it may face the problem of under or over absorption of overheads TRUE
if the actual overheads to be absorbed o
The analysis of overhead variances is different and the most complex task. TRUE
Depreciation can be defined as a permanent, continuous and gradual reduction in
TRUE
the book value of a fixed asset.
Linking overhead to a cost unit is known as overhead absorption. TRUE
Malik started business by contributing cash Rs.50,000/- and his personal car worth
TRUE
Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-.
Management Accounting 44
While passing the journal entry, it is of utmost importance to ensure that the total of
TRUE
amount debited is equal to the total of the amount credited.
The cost of abnormal time may be recovered by inflating the hourly labour rate. TRUE
Interim dividend paid by the company should be debited to the profit and loss
TRUE
appropriation account.
A grinding machine is an example of impersonal cost centre TRUE
Overhead absorption rate will be different at different capacity levels. TRUE
Uniform Costing simplifies the work of wage boards of fixing minimum wages and
TRUE
fair wages.
Balance sheet is considered to be a part of the financial statements. TRUE
Uniform costing may lead to monopolistic conditions within the industry, prices may
TRUE
be raised and customers may suffer.
Budgetary control is one of the techniques of management accounting. TRUE
Management Accounting is a developed stage of Cost Accounting TRUE
Fixed overhead variances may be calculated either on the basis of units of output or
TRUE
on the basis of standard hours.
Financial Accounting discloses the financial performance & Financial status of the
TRUE
business as a whole
Book keeping is clerical while accounting is managerial TRUE
1) Cost Accounting and Management Accounting are similar to each other in many
TRUE
respects.
The reports generated by financial accounting are meant for the use by
TRUE
management for effective decisions.
Cost Accounting may be considered to be a part of management Accounting. TRUE
It is said that marginal costs are used primarily in guiding decisions that are yet to
TRUE
be made.
Management Accounting is not at all a legal requirement TRUE
The role of the budget committee may be taken as an advisory role to the Chief
TRUE
Executive.
Trading account is an important account which will be used to analyse how
TRUE
successful and how efficiently the firm runs its business.
The labour cost which can be identified with the individual cost centre is known as
TRUE
the Direct Labour Cost.
The amount of profit which is retained by the organisation is transferred to
TRUE
'Reserves and Surplus' in the balance sheet.
Yield variance equal to zero indicates that the standard yield and actual yield are the
TRUE
same.
Management Accounting 45

Trading account is used to analyse how successfully and how efficiently the firm
TRUE
runs, particularly with regards to the maintenance of the gross profit margin.
Credit balance in interest account indicates income for the organisation. TRUE
Patents and Trade Marks Account is a Real Account. TRUE
Dividend received is a Non-operating Income. TRUE
The ultimate incorporation of all functional budgets takes the form of budgeted Profit
TRUE
& Loss Account and Balance Sheet.
Long term loan borrowed from financial institution comes under the heading of long
TRUE
term liabilities.
Balance sheet indicates the financial status of the business at given period. TRUE
Category C items, as per the ABC analysis, usually refers to indirect material. TRUE
A business is an activity carried out with the intention of earning the profit. TRUE
Uniform Costing simplifies the work of wage boards of fixing minimum wages and
TRUE
fair wages.
Accounting refers to the process of analyzing & interpreting the information already
TRUE
recorded in the books of accounts.
Accounting is an art of recording, classifying & summarizing in a significant manner. TRUE
Match TRUE
Profit = Profit volume ratio X Margin of safety TRUE
To Increase the existing production capacity, additional capital expenditure is
TRUE
required.
Whatever is to be sold need not be produced. TRUE
Purchased computers of Rs. 50,000 come under the heading of fixed asset TRUE
Total of purchase register for the month of March is taken 50,000 instead of 55,000.
Posting to individual A/C of supplier total to correct amount is 55,000 but purchase TRUE
account is debited by Rs. 50,0
There is reverse relationship between the ordering cost and carrying cost TRUE
Where overheads chargeable to the department are Rs. 5000/- , direct labour hours
TRUE
worked are 24000 then labour hour rate is Re. 0.2083 labour hour.
The Budget key factor may be in the form of sales, raw material, labour etc. TRUE
Indirect labour cost indicates that labour cost which cannot be identified with the
TRUE
individual cost centre.
Head of the Department should sign the purchase requisition. TRUE
Compound journal entry avoids duplication of effort. TRUE
Fundamentally, changes in price and changes in sales volume give rise to sales
TRUE
variances.
Management Accounting 46
The actual loss incurred by a company, due to fire, is the extent of difference
between the cost of goods destroyed and the amount of claim settled by the TRUE
insurance company.
Lack of efficient control on various aspects related to raw-material increases the
TRUE
material cost component of the finished product.
The purpose of profit and loss account is to brign together information which relates
TRUE
to gross profit and the expenses for running the business.
According to Reducing Balance Method, the depreciation is provided at a
predetermined percentage on the balance of cost of asset after deduction of the TRUE
depreciation previously charged.
The perpetual inventory system enables management to ascertain stock without
TRUE
physical verification.
The rates at which the depreciation is to be calculated are specified in the Income
TRUE
Tax Act 1961 and The Companies Act, 1956.
The actual hours taken by the labour are compared with the standard hours allowed
TRUE
for output to find out the labour yield variance.
Uniform costing system is defined as a system using common concepts and
standard accounting practices by different entities in different industry to facilitate TRUE
inter-firm comparison.
Marginal costing rewards sales whereas absorption costing rewards production. TRUE

Match the following


Real A/C Debit what comes in, Credit what goes out
Trade Discount Not accounted for in the books of Accounts
Cash Discount Accounted for in the books of Accounts
Rs.1 Personal A/C Debit the receiver, Credit the giver

Advantageously applicable in similar industries Scope of uniform costing


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

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
Management Accounting 47
Drawing Withdrawn for personal use

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

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

Straight Piece rate system The rate of payment is fixed per piece
Diemer system Halsey system & Gantt System
Time rate System Worker is paid on the basis of time attended by him
Workers are paid according to the production achieved
Payment by Result
by him
Different hourly rates are fixed for different levels of
Differential Time rate
efficiency

Fixed cost + variable cost Total cost


Total cost – fixed cost variable cost
sales- variable cost contribution
contribution – fixed cost profit
Total cost + profit Sales

Indirect Material Element wise classification


Administration overheads Function wise classification
Fixed overheads Variability wise classification
Abnormal overheads Normality wise classification

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


Decrease in variable cost will lead to Increase in profit volume ratio
Decrease in selling price will lead to Decrease in contribution
Increase in contribution will lead to Increase in profits

Accounting Process of analyzing & interpretation


Management Accounting 48
Profitability statement Indicates the amount of profit earned
Balance-sheet Financial status
Book-Keeping Books of Accounts
Financial statement Profitability statement & Balance-sheet

Ordering cost Associated with administrative efforts


Carrying cost Cost of holding the inventory
Total cost Ordering cost + carrying cost
Inventory control Maintain the inventory of any kind
E.O.Q Economic Ordering Quantity

Liabilities All the amount owed by the business


Drawing Withdrawn for personal use
Journal Book of original entry
Ledger Maintain all types of Accounts
Assets All the properties owned by the business

Advantageously applicable in similar industries Scope of uniform costing


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

Cost Centre Facilitate the fixation of responsibility


Cost Control Process of controlling costs of operations
Differential Cost Increase or Decrease in cost
Sunk Cost Historical Cost

Drawings Proprietor's account


Deferred revenue expenditure Real account
Deferred revenue expenditure written off Nominal account
Loan Personal account

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

Fixed overheads Variability wise classification


Management Accounting 49
Abnormal overheads Normality wise classification
Indirect Material Element wise classification
Administration overheads Function wise classification

Non-Operating income Issue of shares


Plan of investment in fixed assets Capital Expenditure Budget
Plan for surplus/shortage of cash Cash Budget
Operating income Cash Sales

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

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

Purchase budget Forecast of quantity and value of materials


Budget committee Analyses the performance of different budget centres
Cash budget Assists in predicting shortage of cash
Budget Objective is performance evaluation

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

Error of Principle Trial Balance does not get affected


Error of Omission The transaction is totally omitted
Error of commission Wrong Posting
Compensating Error Wrong classification
Difference in trial balance Transferred to suspense account

Opportunity Cost Cost can be controlled


Differential Cost Historical Cost
Sunk Cost Cannot be controlled
Controllable Cost Increase or Decrease in cost
Management Accounting 50
Uncontrollable Cost Return or yield

Henceforth, there shall be no difference in overdraft


Closed the account with State Bank of India
balances
Overdraft as per bank book < Overdraft as per pass
Debit side of bank book is overcast
book
Overdraft as per bank book > Overdraft as per pass
Interest on debentures directly credited by bank
book
Overdraft as per bank book = Overdraft as per pass
Received sanction for a loan of Rs.10 lakhs
book

Ledger Maintain all types of accounts


Audit Reviewing internal control system
Accounting Process of analyzing & interpretation
Journal Book of original entry

Token number & identification number allotted to


Token or Disc Method
worker
Time Recording Clock Method Ticket number & clock card allotted to worker
Daily Time sheets Time spent by worker on job is recorded
Weekly Time sheets Record of time for all the jobs during the week is made
Hand Written method Attendance register

Advance Not related in current year


Application Increase in Assets
Outstanding Amount still payable in current year
Prepaid Amount paid for next year
Drawing Amount of personal use

Discount received Suppliers


Outstanding expenses Liabilities
Depreciation Assets
Interest on capital Borrowed capital
Discount allowed Debtors

Tool-room expenses Direct labour hours


Power Horse power of machine
Stores department Number of material requisitions
Boiler house Cubic feet of steam supplied
Management Accounting 51

[( 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

Daily Time sheets Time spent by worker on job is recorded


Time Keeping Department Recording of workers time
Time booking department Jobwise booking of time.
Time Recording Clock Method Ticket number & clock card allotted to worker

Purchase budget Forecast of quantity and value of materials


Budget committee Analyses the performance of different budget centres
Cash budget Assists in predicting shortage of cash
Budget Objective is performance evaluation

Change in profit/ Change in activity level Profit volume ratio


Change in total cost/ Change in activity level Variable cost per unit
Total sales X Profit volume ratio Total contribution
Selling price ( Actual sales - Break even sales) Margin of safety

Power Horse power of machine


Stores department Number of material requisitions
Boiler house Cubic feet of steam supplied
Tool-room expenses Direct labour hours

Selling and distribution budget Cost of demand creation


Administration budget Salary of CEO
Materials budget Carriage inwards
Cash budget Interest on loan

Budgetary Control Points out efficiency/inefficiency


Standard Costing Further probe and investigation
Current Standards Established for a shorter period
Normal Standards Considers past performance
Management Accounting
True/False
Fundamentally, changes in price and changes in sales volume give rise to sales variances.
Correct Answer: True
Select The Blank
The various contents of a uniform cost manual are organization, cost accounting system and ________.
Correct Answer: Presentation of information
Select The Blank
While preparing trial balance, the balance as per ________ book is considered as bank balance.
Correct Answer: Bank
Multiple Choice Multiple Answer
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
Multiple Choice Single Answer
A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price for copper is
Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg
of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of copper.
Correct Answer: Rs.200,000/-
True/False
Narration must be mentioned in the ledger.
Correct Answer: False
Multiple Choice Single Answer
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
True/False
One of the main objection to the contribution approach of costing is that it ignores fixed cost.
Correct Answer: True
Multiple Choice Multiple Answer
For the following transactions find out the value of material issued using FIFO (First in first out) method. 1/7/04 - Opening
balance 200 units @ Rs.10/- 3/7/04 - Issued to production department 80 units. 4/7/04 - Purchased 300 units @ Rs.11/-.
6/7/04 - Issued to production department 150 units. 8/7/04 - Purchased 250 units @ Rs.13/-. 11/7/04 - Issued to
production department 170 units.
Correct Answer: 3/7/04 - 80 units @ Rs.10/-, 6/7/04 - 120 units @ Rs.10/- and 30 units @ Rs.11/-, 11/7/04 - 170 units @
True/False
It is said that the income statement represents wealth increase /decrease for the organization.
Correct Answer: True
Multiple Choice Single Answer
Select the correct journal entry for the following transaction. "Received Rs.475/- from M/s.Manohar & Co. in full
settlement of Rs.500/-'.
Correct Answer: Cash account…………....Dr. Rs.475/- Discount account ………..….Dr. Rs.25/- To M/s. Manohar &
Co. A/c Cr. Rs.475/-
True/False
The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads.
Correct Answer: True
Select The Blank
In the scheme of cost-________-profit analysis, an attempt is made to measure the variations of cost with Volume.
Correct Answer: Volume
Multiple Choice Single Answer
M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-, Rs.80/- and Rs.50/-
, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantity wise
proportion in which these products are manufactured and sold are 20%, 30% and 50%, respectively. The total fixed costs
are Rs.14,80,000/-. You are required to work out the overall break even point quantity for M Ltd.
Correct Answer: 40,000 units
Multiple Choice Single Answer
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
True/False
The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and
the amount of claim settled by the insurance company.
Correct Answer: True
Multiple Choice Multiple Answer
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
Multiple Choice Single Answer
A withdrawal of Rs.500/- from Mr. Jone's account on 2nd October, 2004 has been entered by the bank in the pass book
of Mr. Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book
as on 31st October,2004 is Rs.2,250/- for Mr. Johny, find out the balance as per his bank book.
Correct Answer: Rs.1,750/- (debit)
Multiple Choice Single Answer
Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations:-
Correct Answer: Differential cost
Select The Blank
Number of days inventory is held can be calculated by dividing number of days in a year by ________.
Correct Answer: Inventory turnover ratio
Select The Blank
Re-order level should be higher than ________ but lesser than maximum stock level.
Correct Answer: Minimum level
Multiple Choice Multiple Answer
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
Select The Blank
A worker is paid a monthly salary of Rs.500/- along with a bonus of 50 paise per unit completed, this type of labour cost
may be classified as ________ cost.
Correct Answer: Semi-variable
Multiple Choice Multiple Answer
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
Select The Blank
One of the limitations of the budgetary control is that it ________.
Correct Answer: Is an expensive affair
Multiple Choice Single Answer
A group of 10 men and 20 women workers were expected to produce 400 units of a product in an 8 hour day. The
standard hourly rate was fixed at Rs.25/- and Rs.15/-, respectively. Actually, a group of 15 men and 10 women workers
was deployed and paid for 8 hours a day at an hourly rate of Rs.22/- and Rs.18/-, respectively. Two hours were wasted for
the entire group due to power failure and only 300 units were produced. Calculate labour rate variance.
Correct Answer: Rs.120/- (Favourable)
Select The Blank
Revenues are more than the differential costs, then the proposed project should be ________
Correct Answer: Accepted
Select The Blank
The lowest profit volume ratio can be ________%.
Correct Answer: 0
True/False
Differential cost analysis is incorporated in the cost books.
Correct Answer: False
Multiple Choice Single Answer
The annual variable production overheads of a factory are Rs.70,000/-. The production manager anticipates that in the
next year, the production efficiency will decrease by 4%. Find out budgeted production overheads for the next year.
Correct Answer: Rs.72,800/-
Multiple Choice Single Answer
KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st
January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003,
assuming there were no additions or disposals during the year?
Correct Answer: Rs.100,000/-
Multiple Choice Multiple Answer
Merits of break even point analysis are as follows:-
Correct Answer: Useful diagnostic tool., Used for analyzing the risk implication of alternative actions., Used to graphically
represent complicated data.
Select The Blank
The process of finding the reasons for the difference in the balance as per bank book and pass book is known as
Correct Answer: Reconciliation
Multiple Choice Multiple Answer
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
Select The Blank
If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________
the overdraft as per pass book.
Correct Answer: Lesser than
Multiple Choice Single Answer
Commission payable to General Manager is 10% of the net profits. If the net profit before charging commission is
Rs.29,200/-, then what will be the amount of his net profit after commission?
Correct Answer: Rs.26,545.45
True/False
The purchase account should be debited when an order is placed with the supplier of material.
Correct Answer: False
Multiple Choice Single Answer
If the proprietor has taken away goods worth Rs.5,500/- for personal use, find its impact on the proprietor's account in the
organization.
Correct Answer: The capital will decrease by Rs.5,500/-
True/False
Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using
Correct Answer: False
Multiple Choice Single Answer
XYZ Ltd. has set up the following standards for variable production overheads: standard hours per unit -3 hours; standard
variable overhead per hour -Rs.10/-. The actual data for the month is as follows: actual variable overheads incurred
Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance.
Correct Answer: Rs.20,000/- (Adverse)
Multiple Choice Single Answer
Cost of fringe benefits provided to a factory worker should be charged to:-
Correct Answer: Factory overheads
Multiple Choice Multiple Answer
Select the accounts to be disclosed on the assets side of the Balance sheet:-
Correct Answer: Furniture, Loan to Bank of U.S.A., Land & building
Multiple Choice Multiple Answer
Piece rate systems are very useful in the following circumstances:-
Correct Answer: Units of output are measurable, Job is standardized, The flow of work is regular
Multiple Choice Single Answer
From the following information for the year ending 31st December, 2004, compute the cost of materials consumed.
Purchases Rs.208,000/-; opening stock Rs.40,000/- and closing stock Rs.24,000/-
Correct Answer: Rs.224,000/-
Multiple Choice Multiple Answer
Following errors affect the trial balance:-
Correct Answer: Wrong totaling of subsidiary books, Posting on the wrong side of an account, Omission of posting an
account in the ledger
Multiple Choice Single Answer
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/-
True/False
A business is an activity carried out with the intention of earning the profit.
Correct Answer: True
Select The Blank
Angle formed by the intersection of total cost line and sales line is called angle of ________.
Correct Answer: Incidence
True/False
The role of the budget committee may be taken as an advisory role to the Chief Executive.
Correct Answer: True
True/False
The problem of multiple key factors can be solved with the help of techniques like linear programming, operations
Correct Answer: True
True/False
If the storage cost of inventory increases, then the economic order quantity also increases.
Correct Answer: False
Multiple Choice Single Answer
A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was
omitted to be entered in the bank book: this error will result in:
Correct Answer: Difference in the balance as per bank book and as per pass book
Multiple Choice Multiple Answer
Features of convention of materiality are:-
Correct Answer: Transactions having material impact on profitability should be considered, Insignificant transactions will
be ignored
Multiple Choice Multiple Answer
The quarterly production of a company's product which has a steady market is 20,000 units. Each unit of product requires
0.5 kg of raw material. The cost of placing one order for raw material is Rs.100/- and the inventory carrying cost is Rs.2/-
per kg per annum. The lead time for procurement of raw material is 36 days and a safety stock of 1,000 kg of raw
materials is maintained by the company. The company has been able to negotiate the following discount structure with the
raw material supplier: For order quantity below 7,000 kg -discount per order is NIL. For order quantity between 7,000 kg
and 8,000 kg., discount per order is Rs.400/-. For order quantity between 8,000 kg and 16,000 kg., discount per order is
Rs.2,000/-. For order quantity between 16,000 kg and 30,000 kg., discount per order is Rs.3,200/-. Find the statements
which indicate the correct costs for the different order sizes.
Correct Answer: If order size is 6,667 units, total cost is Rs.6,867/-, If order size is 10,000 units, total cost is Rs.8,400/-, If
order size is 20,000 units, total cost is Rs.17,000/-
True/False
Overhead absorption is an exercise by which overhead is properly spread over production for the period.
Correct Answer: True
Multiple Choice Multiple Answer
In practical circumstances, control ledgers may be maintained for the following categories:-
Correct Answer: Sundry debtors, Sundry creditors, Advance to Staff
True/False
Credit balance in interest account indicates income for the organization.
Correct Answer: True
Select The Blank
An adjustment relating to outstanding expenses will ________ the net profit.
Correct Answer: Decrease
True/False
Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account
should be credited with Rs.75,000/-.
Correct Answer: True
Multiple Choice Multiple Answer
The selection of the supplier may depend upon the following aspects:-
Correct Answer: Geographical location of the supplier, Price quoted by the supplier, Goodwill of the supplier
Select The Blank
Profit = Contribution per unit X ________.
Correct Answer: Margin of safety (units)
Select The Blank
Copy of a firm's account in the bank's ledger is known as ________.
Correct Answer: Bank statement
Select The Blank
If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________.
Correct Answer: Loss
Select The Blank
If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________.
Correct Answer: Bad debts
Select The Blank
Under the Merrick's differential piece rate system of wage payment if the efficiency level of a worker is below 83%, then
he is paid wages at ________ piece rate.
Correct Answer: Normal
Select The Blank
A standard that is never altered, after being established, is known as ________ standard.
Correct Answer: Ideal
Select The Blank
The ________ is of immense help in guiding the companies to operate their accounts on uniform basis.
Correct Answer: uniform cost manual
Select The Blank
The indirect material cost, indirect labor cost and indirect expenses cost, collectively are termed as ________.
Correct Answer: Overhead
Multiple Choice Single Answer
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/-
Multiple Choice Single Answer
Benefits available from revenue expenditure are received in the:
Correct Answer: Same year
Multiple Choice Single Answer
Judge the sentence in italics according to criteria given below: “It is difficult to adopt Uniform costing system when a
product can be manufactured by employing more than one method because the cost of production will vary according to
the method used."
Correct Answer: The assertion and the reason are both correct
Multiple Choice Single Answer
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 Multiple Answer
The characteristics of a good wage system are:
Correct Answer: Flexible, Economical to use, Easy to understand
Multiple Choice Multiple Answer
Select the steps to be followed while preparing bank reconciliation statement.
Correct Answer: Compare the transactions in the bank book and the pass book, Check the totals and the balancing of
both the books, Confirm that the opening balances of both the books are tallying
Multiple Choice Multiple Answer
Following are the examples of service cost centre
Correct Answer: Stores department, Transport department, Accounting department
Multiple Choice Multiple Answer
Accounting is the art where transactions are …
Correct Answer: Summarized, Classified, Recorded
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
Error of commission refers to calculation errors, totaling errors, errors in carrying forward etc.
Correct Answer: True
Multiple Choice Multiple Answer
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
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/-
True/False
Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer: True
True/False
Profitability statement indicates the amount of assets & liabilities.
Correct Answer: False
True/False
Balance sheet indicates the expenditure & income from the business.
Correct Answer: False
True/False
Generally speaking income represents wealth increase and business success; higher the income, lower will be the
success of a business.
Correct Answer: False
True/False
Profit and loss account indicates the profit earned as on a particular date.
Correct Answer: False
True/False
Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries.
Correct Answer: False
True/False
The process of accounting split into three steams i.e. financial, cost, management accounting.
Correct Answer: True
True/False
Financial statements are basically in two forms i.e. profitability statement and balance sheet.
Correct Answer: True
Multiple Choice Multiple Answer
These are the replacement costs of labor turnover.
Correct Answer: Increased spoilage and defectives, Inefficiency of new workers, Cost of selection and placement
Select The Blank
Goods returned to the suppliers from whom it was ________d is recorded in the Purchase-return register.
Correct Answer: Purchase
Multiple Choice Single Answer
Interest on drawings of partners should be credited to which account?
Correct Answer: Profit and loss account
True/False
Balance sheet indicates the financial status of the business at given period.
Correct Answer: True
True/False
Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the
pass book.
Correct Answer: False
True/False
Time rate system is suitable for workers of the maintenance department.
Correct Answer: True
Multiple Choice Single Answer
The overheads of a machine shop X should be apportioned using which of the following basis?
Correct Answer: Machine hours
True/False
The perpetual inventory system enables management to ascertain stock without physical verification.
Correct Answer: True
True/False
Long term loan borrowed from financial institution comes under the heading of long term liabilities.
Correct Answer: True
Multiple Choice Single Answer
A business's telephone bill should normally be classified into which one of the following categories?
Correct Answer: Semi-variable cost
Select The Blank
A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be followed.
Correct Answer: Budget
Multiple Choice Single Answer
Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations.
Correct Answer: Differential cost
Multiple Choice Multiple Answer
Locate the error and its features in the following -
Correct Answer: Compensating errors, Trial balance will not be affected, Trial balance will be affected
True/False
Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages.
Correct Answer: True
Select The Blank
Since the pass book and the bank book record the ________ transactions, the bank balance as per these books should
be equal.
Correct Answer: Same
Select The Blank
The system which provides an opportunity to the small units to take advantage of the research work taken by the large
scale units of the same industry is known as ________ system.
Correct Answer: Uniform costing
True/False
Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts.
Correct Answer: True
Select The Blank
Income Tax Act, recognizes only one method of depreciation namely ________.
Correct Answer: Written down value method
Multiple Choice Multiple Answer
For the given transaction find the wrong entry that has been passed in the books of accounts, the correct entry that
should have been passed and the rectification entry required to rectify the mistake.†On 1st September, 2004 the total
of the previous month's wages was debited to†Manufacturing Wages Account†. During the previous month, a new
machine was installed, and the firm's own employees had spent time thereon; the previous month's wages for all such
Correct Answer: Machinery A/c... Dr. Rs.14,100 /- To Manufacturing Wages A/c Rs.14,100 /-, Machinery A/c... Dr.
Rs.14,100 /- To Cash A/c Rs.14,100 /-, Rs.14,100 /- To Cash A/c Rs.14,100 /-
True/False
Error of commission refers to a situation where a transaction is not recorded in the books of account.
Correct Answer: False
Select The Blank
The term ________ indicates expenditure incurred on or attributable to a given thing.
Correct Answer: Cost
Select The Blank
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
Select The Blank
Dividend received on amount invested in shares is an example of ________.
Correct Answer: non-operating income
Select The Blank
Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by
Management accounting.
Correct Answer: Management
Select The Blank
The various contents of a uniform cost manual are organisation, cost accounting system and ________.
Correct Answer: presentation of information
Select The Blank
In India the gas industry and electricity industry, and ________ industry are examples of industries using the uniform
costing system.
Correct Answer: fertilizer
Multiple Choice Single Answer
Which system involves adoption of same costing principles, practices and procedures by the individual firms of an
Correct Answer: Uniform costing
Multiple Choice Multiple Answer
Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system.
Correct Answer: Capital investment, Plant size, Location
True/False
Price based on Uniform Costing may be taken to be reliable and representative of the whole industry.
Correct Answer: True
Multiple Choice Single Answer
Loss on account of goods lost due to earthquake should be debited to which account?
Correct Answer: Profit and loss account
Multiple Choice Single Answer
If the proprietor has taken away goods worth Rs.5,500 /- for personal use, find its impact on the proprietor's account in
the organization.
Correct Answer: The capital will decrease by Rs.5,500 /-
Multiple Choice Single Answer
Accrued income indicates:
Correct Answer: Current year's income not received in the current year
Multiple Choice Single Answer
Which of the following transactions fall within the definition of the 'standing instruction'
Correct Answer: Club membership subscription
Multiple Choice Single Answer
The pass book showed a credit balance of Rs.1,000/-. This balance was after considering the dividend of Rs.25/-
collected by bank and Rs.5/- charged as collection expenses: these entries are not made in the bank book. Find the
balance as per bank book.
Correct Answer: Rs.1,020/-
Multiple Choice Multiple Answer
The selection of the supplier may depend upon the following aspects:
Correct Answer: Geographical location of the supplier, Price quoted by the supplier, Goodwill of the supplier
Multiple Choice Single Answer
Calculate inventory turnover ratio from the following: Maximum stock -7,000 units; minimum stock - 3,000 units and
quantity of material issued during the year - 150,000 units.
Correct Answer: 30
Multiple Choice Single Answer
Re-order quantity may be measured as:
Correct Answer: Maximum stock level - re-order level + (minimum usage X minimum re-order period)
Multiple Choice Multiple Answer
Labor turnover means:
Correct Answer: Influx and exit of employees, Quantitative measurement of instability of working force, Rate of change in
the average working force
Multiple Choice Multiple Answer
Select the non-monetary incentives
Correct Answer: Health and safety services, Canteen facility, Loans at reduced rate of interest
True/False
The best way to reduce labor cost is to recruit cheap labor.
Correct Answer: False
True/False
Under the accelerating premium system incentive increases at a fast rate with the decrease in output.
Correct Answer: False
Multiple Choice Multiple Answer
Merits of break even point analysis are as follows:
Correct Answer: Useful diagnostic tool, Used for analyzing the risk implication of alternative actions, Used to graphically
represent complicated data.
True/False
Profit = Profit volume ratio X Margin of safety
Correct Answer: True
True/False
Marginal costing is a technique of cost control
Correct Answer: True
Multiple Choice Multiple Answer
Identify the budgets for which the production manager should be held responsible:
Correct Answer: Production budget, Production overheads budget, Plant utilization budget
Multiple Choice Single Answer
The composition of selling costs is given below: salaries 4% of sales, traveling 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/-
Multiple Choice Single Answer
Production costs of a factory for the year 2003-04 are as follows: direct labor cost Rs.100,000/-; direct material cost
Rs.150,000/-; production overheads (fixed) Rs.50,000/- and production overheads (variable) Rs.80,000/-. The production
manager project
Correct Answer: Rs.426,800/-
True/False
It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the
Correct Answer: False
Multiple Choice Multiple Answer
Overhead capacity variance is the outcome of:
Correct Answer: Shortage of labor, Enforced idle time, e.g. power breakdowns, Customer demand being more or less
than anticipated
Select The Blank
The systematic process of identifying and reporting variance is known as ________.
Correct Answer: Variance analysis
True/False
The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted.
Correct Answer: False
True/False
Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of
finished goods.
Correct Answer: True
True/False
Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labor cost.
Correct Answer: False
Multiple Choice Single Answer
The use of contribution per unit of limiting factor as the basis for ranking products to be produced and sold is aimed at
which of the following?
Correct Answer: Maximization of short-term profit
Multiple Choice Multiple Answer
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
Select The Blank
Profit volume ratio is also known as ________.
Correct Answer: Contribution to sales ratio
True/False
If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of
Correct Answer: True
Multiple Choice Single Answer
Which of the following is the most efficient use of the clock card?
Correct Answer: To facilitate payment for time spend on the work premises
Multiple Choice Single Answer
Which of the following is a correct definition of the key factor?
Correct Answer: The factor which limits the activities of the undertaking
Multiple Choice Single Answer
The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there
from ascertain the cost, is known as...
Correct Answer: Cost accounting
Select The Blank
A ________ inventory turnover period indicates efficient utilization of material.
Correct Answer: Low
True/False
Provision for discount on debtors account should be credited to the Profit and Loss Account.
Correct Answer: False
Multiple Choice Single Answer
Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the date of
payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss account as
expenditure on account of insurance premium?
Correct Answer:Rs.3,750/-
Multiple Choice Multiple Answer
The factors which influence the selection of the method for absorption of overheads are:
Correct Answer: Type of industry, Nature of products, Manufacturing process
Multiple Choice Multiple Answer
Select the transactions which can be entered in the Journal proper.
Correct Answer: Opening entries, Closing entries, Rectification entries
Multiple Choice Single Answer
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/-
Select The Blank
________ variance represents the over or under utilization of plant and machinery.
Correct Answer: Capacity
Multiple Choice Multiple Answer
The objects of cost accountancy are:
Correct Answer: To ascertain cost and profitability, Cost Control, Presentation of Information
Select The Blank
Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is
Correct Answer: 90% to 100%
True/False
Absorption costing is more suitable for decision making than marginal costing
Correct Answer: False
Multiple Choice Multiple Answer
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 labor force,
Strong incentive to efficient and ambitious workers.
Select The Blank
________account can be defined as the record of all the transactions pertaining to a person, asset, liability income or
expenditure which have taken place in a specified period.
Correct Answer: Ledger
Multiple Choice Multiple Answer
State the features of these transactions: (i) Commission paid Rs.250/- was posted twice to Commission account (ii)
Rs.5,000/- representing goods sold to A, was posted to the credit to commission received account (iii) Sold machine for
Rs.8000/-, was credited to Sales account.
Correct Answer: The debit side of the trial balance will be in excess by Rs.250/-, Involves an error of principle, Involves an
error of commission
True/False
Bank charges debited in the pass book represent clerical mistake on the part of the bank employees.
Correct Answer: False
Multiple Choice Single Answer
A dividend warrant of Rs.2,076/- was paid direct to the bank and nothing appeared in the cash book. This is an example
Correct Answer: Direct deposit into the bank
True/False
While preparing the labor cost budget, factors such as overtime working or night shift working may be ignored.
Correct Answer: False
Select The Blank
________ Accounting is the process of analysis and interpretation of financial data collected with help of financial
accounting & cost accounting
Correct Answer: Management
Multiple Choice Single Answer
The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract should be defined
Correct Answer:Direct labor cost
Select The Blank
Margin of safety indicates ________ of operations.
Correct Answer: Profitability
True/False
Depreciation, interest and property tax continue even when the operations are discontinued.
Correct Answer: True
Multiple Choice Multiple Answer
Essentials for effective implementation of budgetary control system are
Correct Answer: Commitment of top management, Clearly defined objectives, Continuous budget education
Multiple Choice Multiple Answer
Features of convention of consistency are...
Correct Answer: The accounting policies and procedures should be followed consistently, Facilitates the comparison of
financial statements, It facilitates comparison of financial statements on period-to-period basis
True/False
The bin card and stores ledger, being independent records, comparison of these two records should be avoided.
Correct Answer: False
Select The Blank
Large angle of incidence indicates ________ amount of profits.
Correct Answer: higher
Multiple Choice Single Answer
Relevant costs in decision making are:
Correct Answer: Those costs which will arise as a result of the proposed action
Select The Blank
________is the summary of all the balances in all the accounts listed in ledger account of an organization at any given
point of time.
Correct Answer: Trial Balance
True/False
Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet.
Correct Answer: True
Multiple Choice Single Answer
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/-
Select The Blank
In calculation of total sales margin variance, the ________cost of sales is deducted from the actual sales revenue.
Correct Answer: Standard
Multiple Choice Multiple Answer
Marginal costing technique is useful in taking decisions relating to which of the following courses of action?
Correct Answer: Decision to drop a product line, Decision to accept a special offer at price lower than the normal selling
price, Decision regarding temporary shut-downs
Multiple Choice Single Answer
Basic objective of Uniform Costing is...
Correct Answer: comparison
True/False
The variable costs are controllable at the lower lever.
Correct Answer: True
Select The Blank
Economical use of labor, materials and facilities can achieved with the help of ________.
Correct Answer: Budgetary control
Select The Blank
Goods returned by Pawan worth Rs.1,000/- is debited to Pawan's Account. In order to rectify the mistake, which account
should be debited? ________
Correct Answer: Suspense account
Select The Blank
Interest receivable is a________ for the organization.
Correct Answer: Current asset
Multiple Choice Single Answer
Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit.
Correct Answer: The net profit will not be affected
Multiple Choice Single Answer
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/-
Multiple Choice Single Answer
Interest on bank loan, was paid till the quarter ending 30th September, 2003, Rs.36,000/-. Find the amount to be debited
to the profit and loss account for the year ending on 31st March, 2004, assuming the loan is not yet repaid as on this date.
Correct Answer:Rs.72,000/-
Multiple Choice Single Answer
The features of the Halsey Plan are:
Correct Answer: The benefit of time saved is divided equally between the employer and employee
True/False
The sum of indirect material cost, indirect labor cost and indirect expenses is termed as factory cost.
Correct Answer: False
Multiple Choice Single Answer
Determine re-order level from the following: Maximum daily consumption - 200 units; maximum delivery period - 12 days;
average daily consumption - 150 units and average delivery period - 8 days.
Correct Answer:2,400 units
Select The Blank
An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe.
Correct Answer: suspense
Multiple Choice Multiple Answer
Select the examples of functional budgets:
Correct Answer: Sales budget, Production budget, Research and development budget
Your Answer: Sales budget, Production budget, Research and development budget
Multiple Choice Single Answer
With the help of the given information, find actual fixed overheads for actual output. Fixed overheads volume variance -
Rs.75,000/- (Favorable); fixed overheads efficiency variance -Rs.95,000/- (Favorable); fixed overheads calendar variance
Rs.20,000/- (Adverse); fixed overheads expenditure variance Rs.100,000/- (Adverse) and standard fixed overheads for
actual output -Rs.575,000/-.
Correct Answer:Rs.600,000/-
Your Answer:Rs.525,000/-
Select The Blank
Furniture account will always have a ________ balance.
Correct Answer: Debit
Your Answer: Credit
Select The Blank
If the ordering cost ________s, then the economic order quantity will Increase.
Correct Answer: Increase
Your Answer: Increase
Multiple Choice Multiple Answer
Which of the following information is included in the goods received note?
Correct Answer: Date of receipt of material, Quantity received, Description of goods
Your Answer: Date of receipt of material, Quantity received, Price of goods, Description of goods
Multiple Choice Multiple Answer
Select the non-monetary incentives
Correct Answer: Health and safety services, Canteen facility, Loans at reduced rate of interest
Your Answer: Health and safety services, Canteen facility
True/False
Linking overhead to a cost unit is known as overhead absorption.
Correct Answer: True
Multiple Choice Multiple Answer
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
Your Answer: Depreciation on plant and machinery, Interest on loans taken from other
Multiple Choice Multiple Answer
The main advantages of profit sharing are:
Correct Answer: Employees try to increase productivity, Incentives are shared by all the employees, Augments emplyees'
efficiency
Your Answer: Employees try to increase productivity, Incentives are shared by all the employees
Multiple Choice Multiple Answer
Labor efficiency variance Rs.1,000/- (favorable); labor mix variance Rs.260/- (adverse) and labor rate variance Rs.300/-
(adverse). Compute labor cost variance and labor yield variance.
Correct Answer: Labor cost variance -Rs.700/- (Favorable), Labor yield variance -Rs.1,260/-, Labor yield variance is
Your Answer: Labor cost variance -Rs.700/- (Favorable), Labor yield variance -Rs.1,260/-
Multiple Choice Multiple Answer
Select the items which may be classified as selling and distribution overheads.
Correct Answer: Delivery van expenses, Rent of finished goods warehouse, Sales research expenses
Your Answer: Delivery van expenses, Rent of finished goods warehouse, Sales research expenses
Multiple Choice Single Answer
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
Your Answer: An entry for Rs.458.34, crediting interest accrued but not due account should be passed
True/False
Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product.
Correct Answer: False
True/False
The reports generated by financial accounting are meant for the use by management for effective decisions.
Correct Answer: True
Multiple Choice Multiple Answer
Cost Accounting ______________.
Correct Answer: Concerned with specific activities, Classified according to their nature, It deals with both i.e. past &
Your Answer: Concerned with specific activities, Classified according to their nature, It covers whole business
Multiple Choice Multiple Answer
Management Accounting __________________.
Correct Answer: Designed particularly for internal use only, Looks forward in estimating the future along with past period,
This furnishes the necessary information to management.
Your Answer: Designed particularly for internal use only, Looks forward in estimating the future along with past period,
This furnishes the necessary information to management, Only a, b, c.
Multiple Choice Multiple Answer
Accounting is the art of ______________, ____________ and ____________ in a significant manner and in terms of
money transactions and events which are of a financial character and interpreting the res
Correct Answer: Summarizing, Classifying, Recording
Your Answer: Summarizing, Classifying, Recording
Multiple Choice Multiple Answer
The process of accounting has three streams of accounting ---------------, --------and ----------------------.
Correct Answer: Financial Accounting, Cost Accounting, Management Accounting
Your Answer: Financial Accounting, Cost Accounting, Management Accounting
True/False
Credit note is an intimation sent to person dealing with the business that his account being debited for the purpose
indicated therein.
Correct Answer: False
True/False
Amount invested in purchasing Fixed Asset is a revenue expenditure.
Correct Answer: False
True/False
As per double entry system o accounting, total of all debits should be equal to all credits.
Correct Answer: True
Multiple Choice Multiple Answer
Convention of Consistency Materiality ________________
Correct Answer: The accounting policies & procedures should follow consistently on period to period, It facilitates the
comparison of financial statements on period to period, If any change the fact should be disclosed with its effects on
Your Answer: The accounting policies & procedures should follow consistently on period to period, It facilitates the
comparison of financial statements on period to period, If any change the fact should be disclosed with its effects on
Multiple Choice Multiple Answer
Cash and---------------are the two systems of accounting.
Correct Answer: Mercantile
Your Answer: Mercantile
Multiple Choice Single Answer
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 closing balance?
Correct Answer: 80,000
Your Answer: 80,000
Multiple Choice Single Answer
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
Your Answer: difference between the bank balance as per the bank book and as per pass book
Multiple Choice Multiple Answer
Direct Cost includes
Correct Answer: Direct material, Direct labor, Direct expenses
Your Answer: Direct material, Direct labor, Direct expenses
Multiple Choice Single Answer
Labor cost indicates that labor 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 is:
Correct Answer: Remuneration
Your Answer: Indirect
Multiple Choice Multiple Answer
The Prime Cost includes the aggregate of
Correct Answer: Direct Material Cost, Direct Labor Cost, Direct Expenses
Your Answer: Direct Material Cost, Direct Labor Cost, Direct Expenses
Multiple Choice Multiple Answer
From the following particulars what must appear in purchase requisition
Correct Answer: Material to be purchased should be cleanly specified, Material should purchase whenever the market for
the same is favorable, Purchase requisition should state the quantity of material required.
Your Answer: Material to be purchased should be cleanly specified, Purchase requisition should state the quantity of
material required.
Multiple Choice Multiple Answer
Following points are taking into consideration for evaluation of receipts
Correct Answer: The Price, The trade discount is to be deducted, Other amounts such as sales tax, excise duty, octroi
Your Answer: The Price, The trade discount is to be deducted, Other amounts such as sales tax, excise duty, octroi duty
Multiple Choice Multiple Answer
While fixing the maximum level following factors are considered
Correct Answer: Maximum usage, Storage facilities, Availability of funds
Your Answer: Maximum usage, Rate of consumption
True/False
Fixed cost tends to vary with time rather than with level of activity.
Correct Answer: True
True/False
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
Multiple Choice Single Answer
Find out the break even point and profit if sales are Rs. 50,00,000 and P/V Ratio is 50% and margin of safety is 40%
Correct Answer: Rs.30,00,000 and Rs.10,00,000
Your Answer: Rs.30,00,000 and Rs.10,00,000
True/False
For better control, variances of a period may be compared with the previous period.
Correct Answer: True
True/False
Expected standards are more realistic and useful for cost control.
Correct Answer: True
True/False
The difference between standard cost and actual cost is termed as Variance.
Correct Answer: True
Multiple Choice Multiple Answer
For reporting of variance, following propositions should be considered
Correct Answer: Responsibility of each individual should be defined, Reporting should be simple, clear and quick, Analysis
of variance should be accurate.
Your Answer: Responsibility of each individual should be defined, Reporting should be simple, clear and quick, Analysis of
variance should be accurate.
Multiple Choice Multiple Answer
Basic three steps in Standard Costing are
Correct Answer: Setting standards, Comparing actual with standard, Measurement of variance
Your Answer: Setting standards, Comparing actual with standard, Measurement of variance
Multiple Choice Single Answer
Find out Labor Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours
are 12,600.
Correct Answer: Rs.900/- (Adverse)
Your Answer: Rs.900/- (Adverse)
Multiple Choice Single Answer
Standard costs are the targets to be attained by the actual performance.
Correct Answer: Minimum
Your Answer: Minimum
Multiple Choice Single Answer
Standard Costs are used as tool for
Correct Answer: Cost Control
Your Answer: Cost Control
Select The Blank
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
Your Answer: cost
Correct Answer: revenues
Your Answer: revenues
Select The Blank
Along with financial accounting, ________ and ________ are the other streams of accounting
Correct Answer: Cost Accounting
Accounting
Correct Answer: Management Accounting
Select The Blank
If the revenue expenditure is treated as ________ expenditure, it will not affect the agreement of ________ balance
Correct Answer: capital
Your Answer: capital
Correct Answer: trial
Your Answer: trial
Select The Blank
While selecting source of supply ________ department may call for the ________ from the prospective suppliers
Correct Answer: purchase
Your Answer: purchase
Correct Answer: quotation
Your Answer: quotation
Select The Blank
After material is received from the supplier, quantity actually received is compared with quantity ________-and ________-
if any, are taken up with the supplier
Correct Answer: ordered
Your Answer: ordered
Correct Answer: variation
Your Answer: variation
Select The Blank
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
Your Answer: work
Correct Answer: spent
Your Answer: spent
Select The Blank
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 %
Your Answer: 90-100
Correct Answer: 80% to90%
Your Answer: 101% to 125 %
Select The Blank
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
Your Answer: below standard
Correct Answer: at standard
Your Answer: at standard
Select The Blank
________ and ________ are examples of element wise classification of overhead costs
Correct Answer: Indirect material
Your Answer: Indirect material
Correct Answer: indirect labor
Your Answer: selling overheads
Select The Blank
Fixed cost is the cost that tend to remain ________ irrespective of ________
Correct Answer: constant
Your Answer: constant
Correct Answer: level of activity
Your Answer: level of activity
Select The Blank
The process of _________________ can followed to decide the ________ of overheads to each budget center
Correct Answer: Allocation & apportionment
Your Answer: Distribution
Correct Answer: Loading
Your Answer: Loading
Multiple Choice Single Answer
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/-
Your Answer: By providing depreciation to the extent of Rs.15,000/-
True/False
Overhead absorption rate will be different at different capacity levels.
Correct Answer: True
Select The Blank
The budget that represents the funds investment for expansion, diversification, etc. is known as ________.
Correct Answer: Capital expenditure budget
Your Answer: Capital expenditure budget
Select The Blank
The ________ variance is the difference between the actual variable overhead incurred and the standard variable
overhead charged to production.
Correct Answer: Total variable overhead
Your Answer: Total variable overhead
Multiple Choice Single Answer
The cost that indicates historical cost, which is incurred in past, is known as
Correct Answer: Sunk cost
Your Answer: Sunk cost
Select The Blank
Uniform costing is not a separate method of ________.
Correct Answer: cost accounting
Multiple Choice Multiple Answer
Which of the following budgets may be termed as a long term budget?
Correct Answer: Capital expenditure budget, Research and Development expenditure budget, Budget of a transportation
company
Your Answer: Capital expenditure budget, Research and Development expenditure budget
Multiple Choice Single Answer
The following figures relate to a company manufacturing a varied range of products: Year 2003 Total sales Rs.22,23,000/-
and total cost Rs.19,83,600/-. Year 2004: Total sales Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability in
prices, calculate the profit volume ratio
Correct Answer: 0.3
0.3
Multiple Choice Single Answer
The cost of idle time incurred by employees that is considered normal for the production process should be charged to:
Correct Answer: Factory overheads
Your Answer: Direct labor
Select The Blank
Creche expenses may be appropriately apportioned on the basis of ________.
Correct Answer: Number of female workers
Your Answer: Number of female workers
Multiple Choice Single Answer
Opening stock of Rs.1,80,000/-, purchases Rs.8,00,000/-, freight inward Rs.35,000/-, closing stock Rs.2,00,000/-, direct
wages Rs.2,35,000/-. Calculate the prime cost.
Correct Answer:Rs.10,50,000/-
Your Answer:Rs.10,70,000/-
Multiple Choice Multiple Answer
Limitations of Management Accounting includes -------------------
Correct Answer: Its wide scope, Possibility of intuitive decision, Requires elaborate organizational structure
Your Answer: Its wide scope, Possibility of intuitive decision, Requires elaborate organizational structure
Select The Blank
Indirect Cost is termed as ________.
Correct Answer: Overhead
Your Answer: Overhead
Multiple Choice Multiple Answer
Features of Financial Accounting includes-----------------
Correct Answer: It is a legal requirement, It protects the interest of outsiders, It considers historical transactions
Your Answer: It is a legal requirement, It protects the interest of outsiders, It considers historical transactions
Multiple Choice Multiple Answer
Techniques of management accounting include:
Correct Answer: Marginal costing, Budgetary control, Standard costing
Your Answer: Cost control, Budgetary control, Standard costing
Multiple Choice Single Answer
Uniform costing system is useful in the following areas
Correct Answer: Classification of cost accounts
True/False
Interim dividend paid by the company should be debited to the profit and loss appropriation account.
Correct Answer: True
Multiple Choice Multiple Answer
A materials requisition form normally contains the following aspects:
Correct Answer: Quantity requisitioned, Per unit material cost, Job number
Multiple Choice Multiple Answer
The production budget may be prepared in terms of:
Correct Answer: Units produced, Production cost, Material cost, labor cost and overheads
Multiple Choice Single Answer
Panna Ltd. temporarily has excess production capacity. The idle plant facilties can be used to manufacture a low-margin
item. The low-margin item should be produced if it can be sold for more than its:
Correct Answer: Variable costs
Multiple Choice Multiple Answer
If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional
profits, then following steps can be taken to achieve the target profit
Correct Answer: Increase the selling price, Reduce cost of sales, Increase the selling efforts
True/False
Receipts and payments method of cash budget is useful for preparing long term estimates.
Correct Answer: False
Multiple Choice Multiple Answer
Select the advantages of standard cost system.
Correct Answer: Provides reliable basis for budgeting, Facilitates delegation of authority, Promotes economy and
Select The Blank
In case of seasonal industry, the budget period may be taken as ________.
Correct Answer: One season
True/False
Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished
product.
Correct Answer: True
True/False
Due to compensating errors the arithmetical accuracy of the trial balance is affected.
Correct Answer: False
Multiple Choice Single Answer
Material price variance for a job is Rs.800/- (Favorable). Actual quantity of material used is 100 kg whereasthe standard
quantity of material is 120% of actual quantity. Actual price paid for the material is 80% of the standard price. Calculate
material cost variance.
Correct Answer:Rs.1,600/- (Favorable)
Select The Blank
The process of recording the business transactions in a defined set of records is referred to as ________.
Correct Answer: Balance sheet
True/False
Purchased goods by paying Rs.35,000/-: In this case, the cash account should be debited.
Correct Answer: True
Select The Blank
The ________ books are preferred when the volume of transactions is very large.
Correct Answer: Subsidiary
True/False
All costs are controllable.
Correct Answer: False
Multiple Choice Single Answer
As cost centers facilitate the control function, in many cases, they are termed as...
Correct Answer: Responsibility centers
Multiple Choice Single Answer
XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis.
What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004?
Correct Answer: Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited
with Rs.7,520.55
Multiple Choice Single Answer
Labor turnover rate is best defined as:
Correct Answer: The number of leavers replaced divided by the average of employees on the payroll
Multiple Choice Single Answer
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
Multiple Choice Multiple Answer
The key factor determines the:
Correct Answer: Level of activity, Capacity utilization, Level of sales
Select The Blank
The difference between sales and cost of sales is termed as ________.
Correct Answer: Net Profit
Select The Blank
The method which deals with ownership rights being given to workers is known as ________ method of remuneration.
Correct Answer: Co-partnership
Multiple Choice Multiple Answer
Uniform Costing Methods may be advantageously applied to...
Correct Answer: Single organization having number of branches, Number of companies in same industry, Similar
Industries such as cotton, jute etc.
Select The Blank
The short run financial plan which acts as a guide to achieve the predefined targets is known as ________.
Correct Answer: Budget
Multiple Choice Multiple Answer
The objectives of cost accounting are:
Correct Answer: Cost control, Ascertain ment of cost of each product, Assist in managerial decision-making
Multiple Choice Single Answer
The finance manager is responsible for which of the following budget?
Correct Answer: Cash budget
Select The Blank
Interest on ________ is credited to Capital account.
Correct Answer: Capital
Select The Blank
Under the average cost method of valuing material issues, new issue price is determined after ________ issue.
Correct Answer: Each
True/False
The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point.
Correct Answer: False
Multiple Choice Multiple Answer
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
True/False
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
True/False
A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity.
Correct Answer: True
From the following select the examples of errors of commission -
Correct Answer: Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/-, Received cash from Sham,
credited to Ram's account, Paid transport charges, credited to transport charges account
Expenditure on income-tax is an example of ________.
Correct Answer: non-operating expenditure
These are the preventive costs of labor turnover.
Correct Answer: Cost of maintaining good relations with the workers, Cost of medical services, Cost of welfare facilities
Select the items which may be classified as administration overheads.
Correct Answer: Depreciation on office furniture, Director's remuneration, Telephone expenses
Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors.
Correct Answer: False
Budgeted profit and loss account and budgeted balance sheet are also known as ________.
Correct Answer: Master budget
Management Accounting is the process of analysis and interpretation of financial data collected with help of financial
accounting and cost accounting
Correct Answer: True
A grinding machine is an example of impersonal cost centre
Correct Answer: True
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
P&L statement which is a period statement & relates to a certain period tells about results of operations.
Correct Answer: True
Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the
goods account should be debited because the goods are not going out of the factory.
Correct Answer: The statement is correct but the reason is incorrect
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
Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities.
Correct Answer: True
Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited?
Correct Answer: Investment account - Rs.170,000/-
Contents of Uniform Cost Manual are
Correct Answer: Organization, Cost Accounting system, Presentation of information
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/-
Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole.
Correct Answer: False
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
The alternative courses of action for an integrated textile mill are:
Correct Answer: Sell cloth
Direct labor hour rate method of absorption of overheads is suitable where most of the production is done by using
Correct Answer: False
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
Correct Answer: 153,000 units
The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax
considerations, statutory requirements etc.
Correct Answer: Accounting period
Your Answer: Accounting period
Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-.
The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for
Correct Answer: Rs.29.98
Balance sheet is considered to be a part of the financial statements.
Correct Answer: True
The process of attributing proportions of items of costs amongst const centres is called ________.
Correct Answer: Cost apportionment
The variance which measures the deviation of the rate actually paid to labor as from the standard hourly rate is known as:
Correct Answer: Labor rate variance
Advance received from customers is ________ for the organisation.
Correct Answer: A liability
Financial Accounting discloses the financial performance & financial statements of the business as a whole.
Correct Answer: True
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
Product costs under direct costing include:
Correct Answer: Prime cost and variable factory overheads
Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer.
Correct Answer: True
Items debited to Profit & Loss Account are…
Correct Answer: Salary, Discount allowed, Postage & telegram
Multiple Choice Multiple Answer
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)
Multiple Choice Single Answer
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)
Multiple Choice Multiple Answer
Identify the steps involved in the process of decision making:
Correct Answer: Determination of the problem, Ascertainment of alternative courses of action, Screening each alternative
so as to select the best one
Multiple Choice Multiple Answer
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
True/False
Budgetary control is one of the techniques of management accounting.
Correct Answer: True
True/False
Management Accounting is a developed stage of Cost Accounting
Correct Answer: True
True/False
In the ledger account only credit entries relating to a particular account are posted.
Correct Answer: False
Multiple Choice Multiple Answer
Features of Sunk cost are...
Correct Answer: Indicates historical cost, Not relevant in decision making process, Incurred in past
True/False
Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours.
Correct Answer: True
True/False
Financial Accounting discloses the financial performance & Financial status of the business as a whole
Correct Answer: True
Select The Blank
Loss is equal to fixed cost minus ________
Correct Answer: Contribution
True/False
Cost Accounting is a legal requirement.
Correct Answer: False
True/False
Cash account can have a credit balance.
Correct Answer: False
Multiple Choice Multiple Answer
Identify the causes due to which the cost of labor may be high:
Correct Answer: Excess staffing, Lack of experienced and efficient personnel, High labor turnover
True/False
Period cost is the cost assigned to the products.
Correct Answer: False
True/False
Book keeping is clerical while accounting is managerial
Correct Answer: True
True/False
Financial Statements which are generated as a result of the management accounting report & financial performance of
the organization as a whole.
Correct Answer: False
Multiple Choice Single Answer
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
Correct Answer: 1st half -31,500 units; 2nd half - 30,000 units
Select The Blank
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
Multiple Choice Single Answer
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/-
True/False
An entry in the stores ledger is required for transfer of material from one job to another in the same department.
Correct Answer: False
Select The Blank
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
Multiple Choice Single Answer
Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as Rs.10,000/- and Gita's capital as
Rs.18,000/-. If interest on capital is to be provided @ 10% p.a, what should be the treatment of this interest in the
profitability statement, assuming there were no additions to capital during this period?
Correct Answer: Profit and loss account should be debited with Rs.1,866.67
True/False
GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system.
Correct Answer: False
True/False
Bank reconciliation statement can be prepared on weekly basis.
Correct Answer: True
Select The Blank
The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the
individual transactions.
Correct Answer: Control
True/False
Cost Accounting and Management Accounting are similar to each other in many respects.
Correct Answer: True
Multiple Choice Multiple Answer
Following errors affect the trial balance
Correct Answer: Wrong totaling of subsidiary books, Posting on the wrong side of an account, Omission of posting an
account in the ledger
Select The Blank
Token or disc method is a related to the system of ________.
Correct Answer: Time-keeping
True/False
Cost Accounting may be considered to be a part of management Accounting.
Correct Answer: True
True/False
It is said that marginal costs are used primarily in guiding decisions that are yet to be made.
Correct Answer: True
True/False
Management Accounting is not at all a legal requirement
Correct Answer: True
Multiple Choice Single Answer
Which of the following cost is also termed as Prime Cost?
Correct Answer: Direct cost
Multiple Choice Multiple Answer
Financial Accounting is …
Correct Answer: Designed to supply information to internal/ external users, Referred as 'Historical' form of accounting,
Concerned with financial factors
Select The Blank
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
Multiple Choice Multiple Answer
The disadvantages of time rate system are:
Correct Answer: Ignores the efficiency of workers, Higher labor cost, Lack of motivation to increase productivity
Multiple Choice Single Answer
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/-
Select The Blank
The analysis which is also referred as 'what if' analysis is known as________.
Correct Answer: Cost volume profit analysis
True/False
The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Correct Answer: False
Select The Blank
Income Tax Act, recognize only one method of depreciation namely ________.
Correct Answer: Written down value method
Multiple Choice Multiple Answer
The various areas in which uniform costing can be adopted are:
Correct Answer: Valuation of inventories, Charging of depreciation, Apportionment of overheads
Multiple Choice Single Answer
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/-
Multiple Choice Single Answer
Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact.
Correct Answer: The asset side of the balance sheet will increase by Rs.5,000/-
Multiple Choice Multiple Answer
Examples of indirect material are
Correct Answer: Consumable stores, Glue used in book binding, Nails used in packing boxes
Select The Blank
A person in charge of a ________ may be held responsible for its proper functioning and cost control.
Correct Answer: Cost centre
Select The Blank
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
Select The Blank
Depreciation is caused by use factor, obsolescence and ________.
Correct Answer: Time factor
True/False
Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit)
Correct Answer: False
True/False
All cash sales are recorded in the sales register.
Correct Answer: False
True/False
Indirect material cost is an integral part of finished goods.
Correct Answer: False
Multiple Choice Multiple Answer
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
Multiple Choice Single Answer
It is difficult to apply Uniform costing system for an industry which has labor intensive companies as well as capital
intensive companies, because:
Correct Answer: The cost structure is different
Multiple Choice Multiple Answer
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
Select The Blank
Computation of gross wages, deductions and net wages payable is the function of the ________ department.
Correct Answer: Personnel
Select The Blank
Computation of gross wages, deductions and net wages payable is the function of the ________ department.
Correct Answer: Personnel
Multiple Choice Multiple Answer
Features of purchase requisition slip are:
Correct Answer: Raised when the stock of a raw material has fallen to the re-order level, Indicates the type, quantity and
quality of material required, The information about the price of material is excluded
True/False
Trading account is an important account which will be used to analyse how successful and how efficiently the firm runs its
business.
Correct Answer: True
Select The Blank
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
Multiple Choice Single Answer
The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend
received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the
Correct Answer: Rs.75,981/-
Multiple Choice Multiple Answer
The components of the selling and distribution cost budget are:
Correct Answer: Distribution expenses, Publicity expenditure, Salary of sales-office workers
Multiple Choice Single Answer
The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are
reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales
Correct Answer: 0.333
Multiple Choice Multiple Answer
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
Select The Blank
Generally, all real accounts will have a ________ balance
Correct Answer: Debit
Select The Blank
A written order sent to inform the purchasing department of a need for materials is called a ________.
Correct Answer: Purchase requisition note
Multiple Choice Single Answer
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/-
Select The Blank
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
True/False
The labor cost which can be identified with the individual cost centre is known as the Direct Labor Cost.
Correct Answer: True
True/False
Variable cost + Profit = Sales
Correct Answer: False
Multiple Choice Single Answer
The integrated form of all functional budgets is known as:
Correct Answer: Master budget
Select The Blank
If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that
the overheads are ________.
Correct Answer: Over-absorbed
Select The Blank
The final result disclosed by trading account is the ________profit earned by the organization.
Correct Answer: Gross
True/False
All personal expenses of the owner should be debited to the organisation's profit and loss account.
Correct Answer: False
True/False
The amount of profit which is retained by the organization is transferred to 'Reserves and Surplus' in the balance sheet.
Correct Answer: True
Select The Blank
Purchase of national saving certificates by the company from its profits, should be debited to ________ account.
Correct Answer: Investments
True/False
Yield variance equal to zero indicates that the standard yield and actual yield are the same.
Correct Answer: True
Multiple Choice Single Answer
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
True/False
Material mix and material yield variance can be calculated even when only one raw material is used for production.
Correct Answer: False
Multiple Choice Single Answer
A lathe machine was purchased 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
Multiple Choice Single Answer
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
Multiple Choice Single Answer
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
Correct Answer: 68,182 units
Multiple Choice Multiple Answer
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
Multiple Choice Single Answer
An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an
average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find
the expenditure on account of advertisement.
Correct Answer: Rs.49,248/-
Multiple Choice Multiple Answer
Management Accounting is…
Correct Answer: Designed particularly for internal use, Helpful in estimating the future along with past period, Useful in
furnishing the necessary information to the management
Select The Blank
Warehousing cost is an item of ________
Correct Answer: Distribution overheads
True/False
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
Multiple Choice Single Answer
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/-
True/False
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 Multiple Answer
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
Multiple Choice Multiple Answer
Inventory holding cost comprises of:
Correct Answer: Cost of insurance, Rent of store house, Salary of store keeper
Multiple Choice Multiple Answer
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
True/False
In marginal costing, under and over absorption of fixed overheads is bound to arise.
Correct Answer: False
True/False
New companies can adopt Uniform costing system as a ready-made system.
Correct Answer: True
Select The Blank
An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________
Correct Answer: P's A/c and Q's A/c
Multiple Choice Single Answer
Trade Discount refers to the discount...
Correct Answer: received on purchases
Select The Blank
In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative
assessment to be made of the two sectors.
Correct Answer: uniform costing
Multiple Choice Single Answer
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
Multiple Choice Single Answer
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
Correct Answer: Rs.452/-
True/False
Credit balance in interest account indicates income for the organisation.
Correct Answer: True
Multiple Choice Multiple Answer
The advantages of written communication are
Correct Answer: Accuracy, Can be recorded, Brevity
Multiple Choice Multiple Answer
Business letters can be useful in different ways like
Correct Answer: Legal evidence, Permanent information, Recovering dues
Multiple Choice Multiple Answer
Essential parts of business letters would be
Correct Answer: Head address, Date, Outward number
Multiple Choice Multiple Answer
The Head address includes
Correct Answer: Tel no, Name of organization
Multiple Choice Multiple Answer
The body of the letter may be divided into
Correct Answer: Opening Para, Main communication, Closing paragraph
Multiple Choice Multiple Answer
Examples of salutations would be
Correct Answer: Dear sir, Respected Sir
Multiple Choice Multiple Answer
The matter in the memorandum may include
Correct Answer: Procedures, Rules, Instructions
True/False
People external to the organization do not have any access to the costing records.
Correct Answer: True
True/False
A cheque received from a customer but not deposited into bank must be recorded in the cash book.
Correct Answer: True
Multiple Choice Single Answer
Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the
same. Following account to be credited
Correct Answer: Suspense A/C
Multiple Choice Single Answer
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
Multiple Choice Single Answer
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
Multiple Choice Single Answer
Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C
credited to Rs
Correct Answer: 900
Multiple Choice Multiple Answer
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
True/False
Due to compensating errors the arithmetical accuracy of the trial balance get affected.
Correct Answer: False
Multiple Choice Single Answer
This cost indicates historical cost which is incurred in past.
Correct Answer: Sunk cost
Multiple Choice Single Answer
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
Multiple Choice Multiple Answer
Non Operating Expenses includes
Correct Answer: Loss on sale of asset, Goodwill, Only a, b
True/False
Perpetual inventory system includes continuous verification of physical stock at regular intervals.
Correct Answer: True
Multiple Choice Single Answer
Under the differential time rate method of wage payment up to 80% of efficiency following rate is offered.
Correct Answer: Rs. 1.00 per hour
True/False
Per unit cost of variable overheads may reduce as the volume of output increases but the total overheads remain
Correct Answer: False
True/False
Machine hour rate is calculated as (amount of overheads to be absorbed)/(labor hours required for production)
Correct Answer: False
Multiple Choice Single Answer
This is the best example of element wise classification of cost.
Correct Answer: material
Multiple Choice Single Answer
This is an example of semi variable overheads.
Correct Answer: electricity
Multiple Choice Multiple Answer
wise classification of overheads takes the form of –
Correct Answer: indirect material, indirect labor, indirect expenses
True/False
Budget is prepared for a fixed period of time.
Correct Answer: True
True/False
Depreciation does not involve cash out flow
Correct Answer: True
Multiple Choice Multiple Answer
Uncontrollable variances are
Correct Answer: Strike, Change in customers demand, Devaluation of currency
Multiple Choice Single Answer
Calculate Labor Rate Variance, If actual rate per hour is Rs.3.50/-, Standard rate is Rs.3/- per unit and actual hours are
Correct Answer:Rs.6750/- (Adverse)
Multiple Choice Single Answer
Calculate Labor 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)
Multiple Choice Multiple Answer
Following factors will have to be considered before preparing Production Budget in terms of quantity
Correct Answer: Production capacity, Co-ordination with Sales forecast, Management Policy
Select The Blank
If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount
Correct Answer: depreciation, overstated
Select The Blank
Generally accounts of the assets will have ________ balance and liabilities will have ________ balance
Correct Answer: debits, credits
Select The Blank
In financial statements P& L Accounts relates to a specific duration whereas ________ is for a given point of time
Correct Answer: P& L Accounts, Balance sheet
Select The Blank
Labor Turnover indicates ________ in labor force showing a highly increasing trend or highly ________ trend
Correct Answer: change, decreasing
Select The Blank
Preventive costs of labor 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, leaving
Select The Blank
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, value of assets
Select The Blank
Under absorption of overheads may take place due to the reasons like ________ overheads being more than the
________ overheads
Correct Answer: actual, estimated
Select The Blank
Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________ level of the
management
Correct Answer: uncontrollable, lower
Select The Blank
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, output
Select The Blank
________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting.
Correct Answer: Talling, arithmetical
Multiple Choice Multiple Answer
Business Entity Concept ______________.
Correct Answer: Business is separated from the owner, The accounting process carried out for the business, Separate
legal entity
True/False
The danger level fixed below maximum level
Correct Answer: False
Multiple Choice Multiple Answer
Following example comes under service cost centre
Correct Answer: Store department, Internal Transport department, Accounting/Costing department
Multiple Choice Single Answer
The material physically received is compared with material ordered as per the this order
Correct Answer: Purchase order
Multiple Choice Multiple Answer
When bank balance as per pass book is considered then following to be added.
Correct Answer: cheques deposited but not cleared, Interest debited by bank, bank charges debited by bank
True/False
(No. of unit * Rate of depreciation per unit) this formula is used for written down value method.
Correct Answer: False
Multiple Choice Single Answer
Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account
Correct Answer: 12750
Multiple Choice Single Answer
This cost indicates increased or decreased cost due to the increased or decreased volume of operations.
Correct Answer: Differential cost
Multiple Choice Single Answer
Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered.
Correct Answer: Rs. 1.40 per hour
Multiple Choice Multiple Answer
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
Multiple Choice Single Answer
Margin of safety are the sales beyond
Correct Answer: break even point
Multiple Choice Multiple Answer
Indirect Labor Cost
Correct Answer: Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper
Select The Blank
The difference between sales and factory/ works cost is termed as ________ the difference between sales and
________ ermed as net profit
Correct Answer: gross profit, cost of sales
Multiple Choice Single Answer
Labor cost is the cost of __________ paid to employees of the organization.
Correct Answer: Remuneration
Multiple Choice Single Answer
For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance
if actual quantity is 500 kg and actual price is Rs.3.60/- per kg.
Correct Answer: Rs.375/-(Adverse)
Multiple Choice Multiple Answer
Labor Efficiency Standards are decided by considering following factors
Correct Answer: Records of past performance, Time & Motion Study, Trial Runs
Select The Blank
A budget manual is a document setting out the ________ of the persons and ________ required for the budget control.
Correct Answer: Responsibilities, Forms and procedures
Multiple Choice Single Answer
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
Select The Blank
To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________
Correct Answer: Net effect, Balanced
True/False
Wage payment system should be properly tied up with quality control procedures to ensure that the workers are paid only
for good and quality production.
Correct Answer: True
Select The Blank
Semi ________ overheads are neither ________ nor variable in nature.
Correct Answer: fixed, variable
Multiple Choice Multiple Answer
In Cash budget Operating cash inflow includes
Correct Answer: Cash Sales, Collection from Debtors, Interest/Dividend received
True/False
If the product is labor intensive, more stress may be necessary on inventory control procedure.
Correct Answer: False
True/False
A good wage payment system will not punish the workers for the matters beyond the control of the workers.
Correct Answer: True
True/False
Fixed assets do not give the returns during the same period during which they are paid for
Correct Answer: True
Multiple Choice Single Answer
The material issued to production department may be returned back to the stores because material issued in excess
requirement and
Correct Answer: Material issued is defective
Multiple Choice Multiple Answer
Following are called the element of Cost
Correct Answer: Material, Labor, Expenses
Multiple Choice Multiple Answer
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
True/False
Amount with drawn for personal purpose drawing A/C to be debited.
Correct Answer: True
Select The Blank
Under the repeated distribution method the overheads of ________ department are distributed to other departments on
agreed ________
Correct Answer: service
Correct Answer: percentage
True/False
Under time rate system a worker is paid on the basis of production achieved by him.
Correct Answer: False
Multiple Choice Multiple Answer
The causes of idle time can be analyzed as
Correct Answer: Administrative causes, Productive causes, economic causes
Multiple Choice Multiple Answer
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.
Multiple Choice Single Answer
__________ Accounting becomes a source of information for Management Accounting.
Correct Answer: Financial
True/False
Patents and Trade Marks Account is a Real Account.
Correct Answer: True
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
P/L A/C debit side includes
Correct Answer: salary, discount allowed, postage & telegram
Multiple Choice Multiple Answer
Profit & Loss A/C credit side has
Correct Answer: Gross profit, Commission received, Interested received
Multiple Choice Single Answer
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 Answer11500
Multiple Choice Single Answer
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
Multiple Choice Multiple Answer
Following errors do not affect the trial balance
Correct Answer: Error of Principle, Error of Omission, Error of Commission
True/False
There is no need to open a suspense account if the trial balance does not agree.
Correct Answer: False
True/False
A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account
Correct Answer: False
True/False
Indirect material cost assist the manufacturing process is an integral part of finish goods.
Correct Answer: False
True/False
Dividend received is a Non-operating Income.
Correct Answer: True
Multiple Choice Single Answer
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
Multiple Choice Single Answer
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
Multiple Choice Multiple Answer
Factory overheads are termed as
Correct Answer: Production overheads, Works overheads, Manufacturing overheads
Multiple Choice Multiple Answer
Selling and distribution overheads includes
Correct Answer: Indirect Material such as packing material, samples etc,, Indirect labor like salaries to sales personnel
manager, Indirect expenses like warehouse charges, advertisement
Multiple Choice Multiple Answer
The aims of perpetual inventory system are as follows
Correct Answer: Maintaining Bin cards, Maintaining store ledger, Continuous verification of physical stock
Multiple Choice Multiple Answer
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.
Multiple Choice Single Answer
The cost that varies in direct proportion with the level of activity is called
Correct Answer: variable cost
True/False
The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet.
Correct Answer: True
True/False
Flexible budget is an effective tool for evaluation of performance.
Correct Answer: True
Multiple Choice Single Answer
Calendar Variance arises only if there is abnormal increase or decrease in
Correct Answer: Actual number of working days
Multiple Choice Single Answer
Standard may not be necessarily useful for this purpose.
Correct Answer: Forecasting
Multiple Choice Single Answer
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
Multiple Choice Single Answer
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
Select The Blank
Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book
Correct Answer: debited, credited
Select The Blank
________ and ________ are non monetary incentives
Correct Answer: Safety services, education facility
Select The Blank
variable cost is the cost that tend to ________ in direct proportion with ________
Correct Answer: vary, level of activity
Select The Blank
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, Top
Select The Blank
________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account
Correct Answer: Like office rent, Audit fees
Select The Blank
If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value.
Correct Answer: 0.75
True/False
Under time rate system a worker is paid on the basis of production achieved by him in a given time.
Correct Answer: False
Multiple Choice Single Answer
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
True/False
The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account.
Correct Answer: False
Select The Blank
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
True/False
Piece rate system is suitable when quality of goods produced is of extreme importance.
Correct Answer: False
True/False
A firm earns profit when contribution is equal to fixed costs under variable costing.
Correct Answer: False
Multiple Choice Single Answer
Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours,
i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared between the worker and the foreman in the
ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System.
Correct Answer: Rs.180/-
Select The Blank
Contribution represents pool of resources available for meeting all costs other than ________.
Correct Answer: Variable costs
Multiple Choice Multiple Answer
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
Select The Blank
Overheads chargeable to a product, using direct labor cost basis, may be calculated by multiplying percentage of direct
labor cost and ________.
Correct Answer: Direct labor cost of the product
Multiple Choice Multiple Answer
Causes for adverse material price variance are:
Correct Answer: Uneconomical size of purchase orders, Failure to avail discounts allowed by suppliers, Excessive freight
charges
Multiple Choice Single Answer
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/-
Select The Blank
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
True/False
Category C items, as per the ABC analysis, usually refers to indirect material.
Correct Answer: True
Multiple Choice Multiple Answer
These are the methods of measuring labor turnover.
Correct Answer: Replacement Method, Separation Method, Flux Method
True/False
According to the standard costing principles, only adverse variance must be further investigated.
Correct Answer: False
Select The Blank
Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives.
Correct Answer: Non-monetary
Select The Blank
The ________ adjustment is necessary to reflect the cost for the use of fixed asset during the year.
Correct Answer: Depreciation
Multiple Choice Single Answer
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/-
Select The Blank
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
Multiple Choice Single Answer
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
True/False
Control on purchase of material is exercised by the storekeeper.
Correct Answer: False
Select The Blank
In practical circumstances, the ________ are referred to as application of funds.
Correct Answer: Assets
Select The Blank
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
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
Master budget provides a basis for computing effect of changes in:
Correct Answer: product mix of the company, sales volume, production facilities
Multiple Choice Multiple Answer
The principal functions of the cost accounting department are:
Correct Answer: Classifying labor cost according to jobs, processes, etc, Preparation of different reports based on direct,
indirect labor cost, etc, To focus on areas where labor cost may be reduced.
Select The Blank
The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time.
Correct Answer: Idle
True/False
The process of recording attendance time of the workers is known as time booking.
Correct Answer: False
Select The Blank
The balance of the suspense account will ________ after all the errors are
Correct Answer: become zero
Multiple Choice Single Answer
If the quantity of material purchased and quantity used are different, then which quantity should be used to compute the
material price variance?
Correct Answer: Quantity of material purchased
Select The Blank
Factory light, telephone expenses are examples of ________ expenses.
Correct Answer: Indirect
Select The Blank
For successful implementation of uniform costing system, it is very essential to devise ________, containing
recommended cost accounting plan and procedures.
Correct Answer: cost manual
Select The Blank
The combination in which different products are sold by a company is known as ________.
Correct Answer: Sales mix
Multiple Choice Single Answer
Which of the following is usually prepared daily by employees for each job worked on?
Correct Answer: Job card
Multiple Choice Single Answer
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
True/False
Margin of safety = Contribution / Profit volume ratio
Correct Answer: False
Select The Blank
Over absorption of overheads may take place due to the reasons like ________ overheads being less than the ________
overheads
Correct Answer: actual, estimated
True/False
While calculating the minimum level, normal lead time is not necessary
Correct Answer: False
True/False
To Increase the existing production capacity, additional capital expenditure is required.
Correct Answer: True
Multiple Choice Single Answer
During one week X makes 200 units. He receives wages for a guaranteed 44 hours 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
Select The Blank
Financial Accounting protects the interest of outsiders. it considers ________ transaction and it is a ________
Correct Answer: historical, legal
Multiple Choice Multiple Answer
Office & Administration overhead includes
Correct Answer: Salary, Rent & Taxes, Stationary & postage
Multiple Choice Single Answer
Cost-sheet may be prepared separately for each
Correct Answer: Different Cost Centre
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
In fixed overhead variance, the volume variance is further analyzed as
Correct Answer: Variance Efficiency Variance, Capacity Variance, Calendar Variance
Multiple Choice Multiple Answer
Accounts is a
Correct Answer: Record of all transaction
True/False
Whatever is to be sold need not be produced.
Correct Answer: True
Multiple Choice Single Answer
Budget is prepared in terms of
Correct Answer: Quantity and/or Money
True/False
Favorable variances need on investigation
Correct Answer: False
Multiple Choice Multiple Answer
Standard Costing may not be useful in
Correct Answer: Small concerns, Industries having non-standardized products, Contract jobs
Select The Blank
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
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
Depreciation
Correct Answer: Amount charged on Fixed Assets.
True/False
Purchased computers of Rs. 50,000 come under the heading of fixed asset
Correct Answer: True
Multiple Choice Single Answer
Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______
Correct Answer: 750
Multiple Choice Multiple Answer
When bank balance as per pass book is considered then following to be deducted.
Correct Answer: Cheques issued but not presented, direct deposit by customer, wrong credits given by bank
Multiple Choice Single Answer
Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to general expenses account for
rectifying the error, which A/C to be debited
Correct Answer: Drawing A/C
Multiple Choice Single Answer
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
True/False
Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier
total to correct amount is 55,000 but purchase account is debited by Rs. 50,0
Correct Answer: True
True/False
There is reverse relationship between the ordering cost and carrying cost
Correct Answer: True
Multiple Choice Multiple Answer
Store ledger
Correct Answer: Record of all receipts and issue transactions, Financial expressions of all transactions, Maintenance of
Store ledges provides a second check
Multiple Choice Multiple Answer
In EOQ, to express carrying cost as a percentage of the unit cost of purchases this is used in the formula-----------
Correct Answer: i
True/False
Where overheads chargeable to the department are Rs. 5000/-, direct labor hours worked are 24000 then labor hour rate
is Re. 0.2083 labor hour.
Correct Answer: True
Multiple Choice Multiple Answer
The selection of the base on which overheads should be apportioned depend on the following principles.
Correct Answer: service or use basis, survey basis, ability to pay basis
True/False
The Budget key factor may be in the form of sales, raw material, labor etc.
Correct Answer: True
Multiple Choice Single Answer
For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if
actual quantity is 400 kg and actual price is Rs.6/- per kg.
Correct Answer:Rs.600/-(favorable)
Multiple Choice Single Answer
Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and
Standard rate per unit is Rs.1.5/-.
Correct Answer:Rs.1,500/-(Favorable)
Multiple Choice Single Answer
Calculate Labor Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13,
Correct Answer: Rs.9,000/- (favorable)
Multiple Choice Multiple Answer
The following factors affects the budgeted advertisement cost
Correct Answer: Percentage of profits, Availability of funds, Competitors policy
Select The Blank
Management Accounting has a very ________ scope and it requires ________ organizational structure
Correct Answer: wide
Correct Answer: elaborate
Select The Blank
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
Select The Blank
Replacement costs of labor turnover are ________ and ________
Correct Answer: training
Correct Answer: breakages of machine
Select The Blank
Break even point is a situation of no ________ no ________
Correct Answer: profit
Correct Answer: loss
Select The Blank
The process of Allocation & apportionment can followed to decide the ________ of overheads to each budget center
Correct Answer: Allocation & apportionment
Correct Answer: Loading
Select The Blank
Rs.5000 paid as ________ to ________ should be debited to salary account
Correct Answer: Mahesh
Correct Answer: salary
Select The Blank
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
Multiple Choice Multiple Answer
Material Price Variance may occur due to
Correct Answer: Change in price of material, Failure to take discounts, Weak purchase organization
Select The Blank
Bin Card is not an ________ record but only a ________ record.
Correct Answer: Accounting
Correct Answer: Quantitative
Multiple Choice Single Answer
Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid. The outstanding salary is debited to Profit &Loss A/C.
The second effect is --
Correct Answer: Transfer to balance sheet liability side
Multiple Choice Single Answer
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)
True/False
Debit the receiver & credit the giver is a rule of Real a/c.
Correct Answer: False
Select The Blank
Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management
Correct Answer: fixed
Correct Answer: top
Multiple Choice Single Answer
If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what
will the amount of total factory overheads at 60% capacity
Correct Answer:Rs.10,800/-
Multiple Choice Multiple Answer
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
Multiple Choice Single Answer
__________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities
like investors, suppliers, customers etc.
Correct Answer: Financial
True/False
Head of the Department should sign the purchase requisition.
Correct Answer: True
Multiple Choice Multiple Answer
FIFO method
Correct Answer: The price of the earliest available lot is considered first, If the lot is exhausted, the price of the next
available lot is considered, It is used for issue of material
Select The Blank
Bin card is maintained by ________ department whereas ________ is maintained by costing department.
Correct Answer: Stores
Correct Answer: Store ledger
True/False
The situation of over absorption arises if the overheads absorbed are less than the actual overheads.
Correct Answer: False
Multiple Choice Single Answer
If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate
Correct Answer: Re. 4 per machine hour.
True/False
Due to errors of principle the arithmetical accuracy of the trial balance get affected.
Correct Answer: False
Multiple Choice Multiple Answer
Trading a/c credit side includes
Correct Answer: sales, goods lost by fire, closing stock
Multiple Choice Multiple Answer
From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs.
100, inventory carrying cost15% on average inventory
Correct Answer:300
Multiple Choice Single Answer
Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable.
Correct Answer: Below 66.66%
Select The Blank
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: budgets
Correct Answer: standard
True/False
canteen facility to workers, health and safety services are examples of monetary incentives.
Correct Answer: False
Multiple Choice Single Answer
This is the process of recording attendance time of the workers.
Correct Answer: Time keeping
Multiple Choice Multiple Answer
Wage rate standards takes into consideration the following factors
Correct Answer: The system of wage payments, System for bonus payment, Grades of workers required
Select The Blank
Standard Costing system facilitates ________ and ________ for each individual or department
Correct Answer: Delegation of authority
Correct Answer: Fixation of responsibility
True/False
If actual cost is more than the standard cost then it is called favorable variance.
Correct Answer: False
True/False
The aggregate of indirect material cost, indirect labor cost and indirect expenses is termed as factory cost.
Correct Answer: False
True/False
Cost Accounting restrict itself with historical transactions
Correct Answer: False
True/False
A very wide scope of Management Accounting is the limitation by itself.
Correct Answer: True
Multiple Choice Single Answer
Journal is popularly known as 'Book of...
Correct Answer: Original Entry
True/False
In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities.
Correct Answer: True
Multiple Choice Single Answer
Presentation of information to enable managerial decision making' is one of the objects of which of the following
Correct Answer: Cost Accounting
Select The Blank
The principle of ________ is followed while preparing the financial statements.
Correct Answer: Going concern
Multiple Choice Single Answer
It is said that adoption of uniform costing creates customer confidence because...
Correct Answer: Prices are reliable
Multiple Choice Multiple Answer
Pre-requisites of Uniform Costing are...
Correct Answer: Spirit of mutual trust, Free Exchange of ideas, No rivalry
Multiple Choice Multiple Answer
Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is Rs.50,000/- and Laxman's capital
is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a, what will be amount of capital of each of the partners as
on 31st March, 2004, assuming there were no additions during this period? Also, state the treatment of this item in the
Profit and loss account.
Correct Answer: Ram's capital Rs.55,000/-, Laxman's capital Rs.88,000/-, Interest on capital should be debited to the
Profit and loss account
Select The Blank
Non-trading income is disclosed on the credit side of ________ account.
Correct Answer: Profit and loss
Select The Blank
In the adjustment entry passed for closing stock, the ________ account should be credited.
Correct Answer: Trading
Multiple Choice Single Answer
Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The
goods were not insured. Find the amount which should be debited to the profitability statement.
Correct Answer: Rs.18,950/-
Multiple Choice Single Answer
While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy: 'a cheque
of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April,
2004.' In this background, which of the following statement holds true as on 31st March, 2004?
Correct Answer: Balance as per pass book < Balance as per bank book
True/False
Bank reconciliation statement is a systematic presentation of errors made by the accountant.
Correct Answer: False
Select The Blank
The stores department is a ________ department.
Correct Answer: Service
Select The Blank
The ________ is responsible for material losses while in storage.
Correct Answer: Store-keeper
Select The Blank
The ________ is a perpetual inventory record.
Correct Answer: Bin card
Multiple Choice Single Answer
A written request sent to a supplier for specified goods at an agreed upon price is often called as:
Correct Answer: Purchase order
Multiple Choice Single Answer
Selecting an appropriate method of valuation of inventory is important because:
Correct Answer: It influences the figure of gross profit
True/False
Re-order level for materials is determined considering maximum consumption and maximum delivery period.
Correct Answer: True
True/False
Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost.
Correct Answer: True
Multiple Choice Single Answer
Which variance is used to analyze the effect of change in the quantity of output from a given mix of inputs?
Correct Answer: Materials yield variance
Multiple Choice Multiple Answer
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
True/False
Sundry creditors transfer to asset side.
Correct Answer: False
Multiple Choice Single Answer
The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage
Correct Answer: 17%
True/False
A bank reconciliation statement is prepared on a particular date.
Correct Answer: True
Multiple Choice Multiple Answer
When bank balance as per bank book is considered then following to be added.
Correct Answer: Cheque issued but not presented, direct deposit by customer, wrong credits given by bank
True/False
As soon as the suspense account balance is wiped out, it may be assumed that all mistakes have been corrected.
Correct Answer: False
True/False
Credit sale of Rs. 5000 to Bobby should be entered in the purchase book.
Correct Answer: False
Multiple Choice Multiple Answer
Manufacturing process involves study of
Correct Answer: Designing the product, The quantity and quality, Material used
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
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
True/False
Flux method is important method of wage payment.
Correct Answer: False
Multiple Choice Single Answer
If production overheads to be absorbed are Rs. 50000/- and labor hours worked are 100000 then the labor hour rate will
Correct Answer: Re. 0.50 per labor hour.
Multiple Choice Multiple Answer
Limitations of marginal costing are
Correct Answer: difficult for classification as fixed cost and variable cost, does not provide any standard for the evaluation
of performance, it is useful technique only in the short run.
True/False
Material Mix Variance occurs where only one raw material is required
Correct Answer: False
Multiple Choice Multiple Answer
In Cash budget, Non operating cash inflow includes
Correct Answer: Receipt of loan/borrowings, Issue of shares, Sale of fixed assets
Multiple Choice Multiple Answer
In Cash budget, Non-Operating cash outflow includes various kinds of over heads
Correct Answer: Loan installments, Taxes, Purchase of fixed assets.
Multiple Choice Single Answer
During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg, what is the quantity of
Correct Answer: 20,000 kg
Select The Blank
The ideal standards are generally ________ in nature and the variances always shows ________ trends
Correct Answer: theoretical
Correct Answer: unfavorable
True/False
Maintenance Department is a service cost centre.
Correct Answer: True
Multiple Choice Multiple Answer
The data for XYZ Ltd. is as follows: Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of
the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus
working capital. Select the correct answers:
Correct Answer: Sales Rs.128,000/-, Return on capital employed, Working capital Rs.32,000/-
Select The Blank
If the owner brings in personal calculator for office use, ________ account should be credited.
Correct Answer: Capital
Multiple Choice Single Answer
A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which
standard time was 48 hours for each worker. Calculate labor cost for the job under the Rowan Plan.
Correct Answer: Rs.9,333.33
Multiple Choice Multiple Answer
Features of material usage variance are:
Correct Answer: Measures the difference between the quantity of materials actually used and that should have been used,
Considers standard price X actual quantity, Considers standard price X standard quantity
True/False
Treating capital receipt as revenue income is an example of errors of commission.
Correct Answer: False
Multiple Choice Single Answer
Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit
and loss accounts for the year ending December 2003 are as follows: Hero Ltd.: Sales Rs.500,000/-; Variable cost
Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-.
Correct Answer: Hero Ltd.
Select The Blank
Crane expenses should be apportioned on the basis of ________.
Correct Answer: Number of hours crane worked in the department
True/False
Suspense account is closed automatically after rectification of all the errors.
Correct Answer: True
Select The Blank
Generally all the liabilities will have ________balance.
Correct Answer: Credit
Multiple Choice Single Answer
Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004.
Correct Answer: Rs.500/-
Select The Blank
The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to
handle this level of sales.
Correct Answer: Production capacity
Multiple Choice Multiple Answer
You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it
generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres
drum was as follows: To job X 200 litres; job Y 400 litres and job Z 320 litres. After these issues the drum was empty.
Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z.
Correct Answer: Loss due to spillage and evaporation - 30 litres, Rate of charge per litre of petrol - Rs.30/-
Select The Blank
The column which refers to the page number of the ledger is known as ________.
Correct Answer: Ledger folio
Multiple Choice Single Answer
The direct material useage budget and direct material purchase budget differ because of which of the following:
Correct Answer: A planned change in the level of material stock
Select The Blank
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
Multiple Choice Single Answer
Which of the following operations would normally be carried out first when preparing a master budget?
Correct Answer: Determining the budget period
Select The Blank
Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________.
Correct Answer: Income Tax Act, 1961
Multiple Choice Single Answer
Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss
of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as
follows: X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance.
Correct Answer: Rs.100/- (Favorable)
Multiple Choice Multiple Answer
The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net
profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change.
Correct Answer: Accrued commission income of-Rs.32,960/- was not entered in the books, Rent for the month of March
was payable and yet to be recorded Rs.19,280/-, Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred
to Machinery account
Multiple Choice Multiple Answer
While preparing sales budget the following factors must be considered:
Correct Answer: The number and types of products sold by the organisation, Whether the organisation's market share is
increasing or decreasing?, Details of seasonal fluctuations in sales
True/False
Budgetary control system provides a basis for establishment of the incentive systems.
Correct Answer: True
Select The Blank
A low margin of safety indicates ________ fixed overheads.
Correct Answer: higher
Select The Blank
Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory.
Correct Answer: less than 10
Multiple Choice Single Answer
The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account
are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's
incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find
the net profit of the company.
Correct Answer: Rs.34,408.09
True/False
Credit balances in all the Personal & Real accounts appear on asset side.
Correct Answer: False
Select The Blank
A complete list of all material required, with quantities, for a particular job is given in the ________.
Correct Answer: Bill of material
Multiple Choice Single Answer
The budget manual must contain statement regarding:
Correct Answer: Objectives of the orgainsation
Multiple Choice Single Answer
Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise
sent thereafter, may lead to:
Correct Answer: Balance as per bank book > Balance as per pass book
Select The Blank
Entry for dishonour of cheque appears only in the pass book, this entry should be ________ in the bank book.
Correct Answer: Passed
True/False
A pre-determined factory overhead rate holds up product costing.
Correct Answer: False
Multiple Choice Single Answer
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
True/False
Real Accounts may also consist the accounts of some intangible assets like Goodwill Account
Correct Answer: True
True/False
The rate at which the depreciation is to be calculated are also specified in the Income Tax Act 1961.
Correct Answer: True
Multiple Choice Single Answer
A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 rectification of the suspense accounted
debited to Rs
Correct Answer: 500
True/False
A bill of Rs. 500 for old furniture sold to Raj, was entered in the sales day book
Correct Answer: False
True/False
Abnormal cost indicates that cost which is normally incurred at a certain level of output under normal circumstances.
Correct Answer: False
Multiple Choice Multiple Answer
Indirect Expenses includes
Correct Answer: Rent, Telephone expenses, Insurance
True/False
Material cost is the first and probably the most important element of cost.
Correct Answer: True
Multiple Choice Multiple Answer
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
Multiple Choice Multiple Answer
Goods received note or goods received report is prepared in following copies
Correct Answer: One copy to Purchase department, One copy to Accounts department, One copy to Costing department
Multiple Choice Multiple Answer
Valuation of material uses the following methods
Correct Answer: FIFO and LIFO, Average price method, Market price
True/False
If the organisation follows the policy of considering predetermined overhead absorption rates, it may face the problem of
under or over absorption of overheads if the actual overheads to be absorbed o
Correct Answer: True
True/False
Fixed cost is the cost that varies in direct proportion with the level of activity or volume of operations.
Correct Answer: False
Multiple Choice Multiple Answer
Budgetory Control deals with
Correct Answer: Establishment of budgets, Comparison of budgeted results with actuals, Computation of variance.
True/False
The analysis of overhead variances is different and the most complex task.
Correct Answer: True
True/False
Standard costing and Marginal Costing are the best possible tools available to the management for cost control
Correct Answer: False
Multiple Choice Multiple Answer
Current standards includes
Correct Answer: Expected standards, Normal standards, Ideal standards
Multiple Choice Single Answer
In case of industries where capital investment is very high, budget should be prepared for a
Correct Answer: Longer period
Select The Blank
________ and ________ are examples of semi- variable overheads.
Correct Answer: Maintenance cost
Correct Answer: electricity
Multiple Choice Multiple Answer
The different purposes served by standard costing technique are:
Correct Answer: Cost control, Cost awareness, Performance appraisal
Multiple Choice Single Answer
If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the
cost per unit would be expected to:
Correct Answer: Decrease for fixed costs and remain unchanged for variable costs
Select The Blank
The variance which measures the difference between what is paid for a given quantity of materials and what should have
been paid for, is known as ________ variance.
Correct Answer: Direct material cost
True/False
Deferred revenue expenditure written off account is a real account.
Correct Answer: False
Multiple Choice Single Answer
The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation.
Correct Answer: 0.17
Select The Blank
The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in
the ________.
Correct Answer: short run
Select The Blank
The expenses relating to maintenance and creation of demand for the product should be included in the ________budget
Correct Answer: Selling expenses
Multiple Choice Multiple Answer
When bank balance as per bank book is considered for preparing bank reconciliation statement, then following items
need to be added:
Correct Answer: Cheques issued but not presented, Direct deposit made by customer, Wrong credits given by bank
Select The Blank
If the standard contribution is less than the actual contribution, then ________ variance arises.
Correct Answer: Favorable
Multiple Choice Single Answer
As a part of the data presented in support of a proposal to increase the production of clock radios, the sales manager of
Wittman Electronics reported the total additional cost required for the proposed increased production level. The increase
in total cost is known as:
Correct Answer: Incremental cost
Multiple Choice Multiple Answer
Financial Accounting ______________
Correct Answer: Designed to supply information for internal/ external uses, Deals with the transaction during specific
period, It is compulsory
True/False
Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset.
Correct Answer: True
True/False
Penalty paid for delay in payment to creditors represents uncontrollable cost.
Correct Answer: False
Select The Blank
________ Accounting assists the management in establishing the plans to attain the economic objectives and take
proper decisions for the attainment of its objectives.
Correct Answer: Management
Select The Blank
Depreciation charged on office furniture on straight line basis is an example of ________.
Correct Answer: Administration overheads
Multiple Choice Multiple Answer
Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated
at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office.
Analyse the impact of this transaction.
Correct Answer: The gross profit will increase by Rs.6,450/-
True/False
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
True/False
The cost of abnormal time may be recovered by inflating the hourly labor rate.
Correct Answer: True
Multiple Choice Single Answer
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
Multiple Choice Single Answer
The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units
was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full
production cost per unit of making 30,000 units is:
Correct Answer:Re.0.98
Multiple Choice Multiple Answer
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
True/False
Amortization of goodwill should be considered while preparing cash budget.
Correct Answer: False
Multiple Choice Single Answer
A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is the total amount of capital?
Correct Answer: Rs. 12,000
Select The Blank
________ authorizes the production department to issue requisition for materials.
Correct Answer: Bill of material
Select The Blank
The variance 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
Multiple Choice Multiple Answer
From the following, select current assets:-
Correct Answer: Sundry debtors, Stock, Pre paid expenses
True/False
Sales estimate given in the sales budget is a mere guess.
Correct Answer: False
Select The Blank
The final result disclosed by trading account is the ________ profit earned by the organization.
Correct Answer: Gross
Multiple Choice Single Answer
Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre?
Correct Answer: Salary of the finishing center's manager
Multiple Choice Multiple Answer
The features of multiplicity of key factors are as follows:-
Correct Answer: More than one key factors, Refers to a complex situation, Can be resolved by using linear programming
technique
Multiple Choice Single Answer
Determine re-order level from the following: Maximum daily consumption - 200 units; maximum delivery period - 12 days;
average daily consumption - 150 units and average delivery period - 8 days.
Correct Answer: 2,400 units

You might also like