Multiple Choice Multiple Answer: List of Attempted Questions and Answers

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer

Question The advantages of written communication are
Correct Answer Accuracy , Can be recorded , Brevity
Your Answer Accuracy , Can be recorded

Question Business letters can be useful in different ways like
Correct Answer Legal evidence , Permanent information , Recovering dues
Your Answer Legal evidence , Permanent information , Recovering dues

Question Essential parts of business letters would be
Correct Answer Head address , Date , Outward number
Your Answer Head address , Date , Outward number

Question The Head address includes
Correct Answer Tel no. , Name of organization
Your Answer Tel no. , Name of organization , Name of person

Question The body of the letter may be divided into
Correct Answer Opening Para , Main communication , Closing paragraph
Your Answer Reference Para , Opening Para , Main communication , Closing

paragraph

Question Examples of salutations would be
Correct Answer Dear sir , Respected Sir
Your Answer Thanking you , Yours faithfully , Respected Sir

Question The matter in the memorandum may include
Correct Answer Procedures , Rules , Instructions
Your Answer Procedures , Rules , Instructions
True/False
People external to the organization do not have any access to
Question
the costing records.
Correct Answer True
Your Answer True

Question Features of Financial Accounting includes-----------------
Correct Answer It is a legal requirement , It protects the interest of outsiders , It

considers historical transactions
It is a legal requirement , It protects the interest of outsiders , It
Your Answer
considers historical transactions
True/False
A cheque received from a customer but not deposited into bank
Question
must be recorded in the cash book.
Correct Answer True
Your Answer False
Multiple Choice Single Answer

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

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

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

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

Question Following error affect the trial balance
Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of
an account , Omission of posting an account in the ledger
Posting on the wrong side of an account , Omission of posting
Your Answer
an account in the ledger
True/False
Question Due to compensating errors the arithmetical accuracy of the trial
balance get affected.
Correct Answer False
Your Answer False

Question This cost indicates historical cost which is incurred in past.
Correct Answer Sunk cost
Your Answer Sunk cost
Match The Following

Question Correct Answer Your Answer
Non-operating Income Profit on sale of shares Profit on sale of shares
Non-operating Expense Dividend on shares Dividend on shares
Selling & Distribution Advertisement Advertisement
Factory Cost Repair for factory building Repair for factory building
Total Cost Cost of finished goods Cost of finished goods

The prime cost is Rs. 10,00,000 the factory cost is Rs.
Question 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
Your Answer 37,86,000

Question Non Operating Expenses includes
Correct Answer Loss on sale of asset , Goodwill , Only a, b
Your Answer Goodwill , Preliminary expenses written off
True/False
Perpectual inventory system includes continuous verification of
Question physical stock at regular intervals.
Correct Answer True
Your Answer True

Under the differential time rate method of wage payment up to
Question
80% of efficiency following rate is offered.
Correct Answer Rs. 1.00 per hour
Your Answer Rs. 1.00 per hour
True/False
Per unit cost of variable overheads may reduce as the volume of
Question
output increases but the total overheads remain constant.
Your Answer False
True/False
Machine hour rate is calculated as (amount of overheads to be
Question
absorbed)/(labour hours required for production)
Your Answer False

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

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

Question wise classification of overheads takes the form of –
Correct Answer indirect material , indirect labour , indirect expenses
Your Answer indirect material , indirect labour , indirect expenses
True/False
To take make or buy decision under the marginal costing , if
Question purchase price of the product is less than its variable cost it is
advisable to go for manufacturing proposition.
Your Answer False
True/False
Question Budget is prepared for a fixed period of time.
Correct Answer True
Your Answer True
True/False
Question Depreciation does not involve cash out flow
Correct Answer True
Your Answer True

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

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

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

Calculate Labour Efficiency Variance, If actual rate per hour is
Question 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 )

Following factors will have to be considered before preparing
Question Production Budget in terms of quantity
Production capacity , Co-ordination with Sales forecast ,
Correct Answer
Management Policy
Your Answer Co –ordination with Stores department , Production capacity
Match The Following

The level above which The level above which

Maximum level actual stock should not actual stock should not
exceed exceed
The level below which The level below which
Minimum level actual stock should not actual stock should not
reduce reduce
To take the step for Initiating proper action for
Re-order level procurement of further lots
movement of material
of material
Danger level Below minimum level Below minimum level
Initiating proper action for To take the step for

Fixation of inventory level procurement of further lots
movement of material
of material
Select The Blank
Question If ________ is not provided, the asset may appear in the
Balance Sheet at an ________ amount
Correct Answer depreciation
Your Answer depreciation
Correct Answer overstated
Your Answer overstated
Select The Blank

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

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

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

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

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

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

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

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

Correct Answer lower
Your Answer lower
Select The Blank

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

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


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

Question Features of convention of consistency are . . .
Correct Answer The accounting policies and procedures should be followed

consistently , Facilitates the comparison of financial statements ,
It facilitates comparison of financial statements on period-to-
period basis
Your Answer The accounting policies and procedures should be followed
consistently , It facilitates comparison of financial statements on
period-to-period basis
True/False
Question The bin card and stores ledger, being independent records,
comparison of these two records should be avoided.
Your Answer False
Match The Following

Dividend paid Profit and loss Profit and loss account

appropriation account
Freight inwards Manufacturing account Manufacturing account
Sales Trading account Capital account
Freight outwards Profit and loss account Trading account
Select The Blank

Question Large angle of incidence indicates ________ amount of profits.
Correct Answer higher
Your Answer same
True/False
Question Error of commission refer to a situation where a transaction is
not recorded in the books of account.
Your Answer True

Question Relevant costs in decision making are :
Correct Answer Those costs which will arise as a result of the proposed action
Your Answer Those costs which will arise as a result of the proposed action
Select The Blank

Question ________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
Your Answer Trial Balance

Question Overhead capacity variance is the outcome of:
Correct Answer Shortage of labour , Enforced idle time, e.g.power breakdowns ,

Customer demand being more or less than anticipated
Your Answer Shortage of labour , Enforced idle time, e.g.power breakdowns ,
True/False
Question Factory overheads consist of all overhead costs incurred from
the stage of procurement of material till the production of
finished goods.
Correct Answer True
Your Answer True
True/False
Question Bank reconciliation statement must be prepared before the
preparation of profit and loss account and balance sheet.
Correct Answer True
Your Answer True

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

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

Increase in contribution Increase in profits Increase in profit volume

will lead to ratio
Increase in fixed cost will Increase in break even Decrease in contribution
lead to point
Decrease in variable cost Increase in profit volume Increase in profits
will lead to ratio
Decrease in selling price Decrease in contribution Increase in break even
will lead to point

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

Question Basic objective of Uniform Costing is . . .
Correct Answer comparison
Your Answer To control cost
Select The Blank

Question Re-order level should be higher than ________ but lesser than
maximum stock level.
Correct Answer Minimum level
Your Answer Minimum level
True/False
Question The variable costs are controllable at the lower lever.
Correct Answer True
Your Answer False
Select The Blank

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

Question 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
Your Answer Personal account
True/False
Question The purchase account should be debited when an order is
placed with the supplier of material.
Your Answer False
True/False
Question Accounting refers to the process of analyzing & interpreting the
information already recorded in the books of accounts.
Correct Answer True
Your Answer True
Select The Blank

Question Interest receivable is a________ for the organisation.
Correct Answer Current sset
Your Answer Long term asset

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

Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/-
on credit basis. Amit allowed 10% discount for on the spot
transaction. What is the amount that should be debited to the
cash account?
Correct Answer Rs.45,000/-
Your Answer Rs.50,000/-

Question 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.

Question The features of the Halsey Plan are:
Correct Answer The benefit of time saved is divided equally between the
employer and employee
Your Answer The benefit of time saved is divided equally between the
True/False
Question The sum of indirect material cost, indirect labour cost and
indirect expenses is termed as factory cost.
Your Answer True

Question 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
Your Answer 2,400 units

Select The Blank
Question An error of partial omission can be rectified by either debiting or
crediting the ________ account, as the case maybe.
Correct Answer suspense
Your Answer adjusted profit and loss

Question 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

Question With the help of the given information, find actual fixed
overheads for actual output. Fixed overheads volume variance -
Rs.75,000/- (Favourable); fixed overheads efficiency variance -
Rs.95,000/- (Favourable); fixed overheads calendar variance
Rs.20,000/- (Adverse); fixed voerheads expenditure variance
Rs.100,000/- (Adverse) and standard fixed overheads for actual
output -Rs.575,000/-.
Select The Blank

Question Furniture account will always have a ________ balance.
Correct Answer Debit
Your Answer Credit
Select The Blank

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

Question Which of the following information is included in the goods
received note?
Correct Answer Date of receipt of material , Quantity received , Description of
goods
Your Answer Date of receipt of material , Quantity received , Price of goods ,
Description of goods
Question 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
Question A business is an activity carried out with the intention of earning
the profit.
Correct Answer True
Your Answer True
True/False
Question Linking overhead to a cost unit is known as overhead
absorption.
Correct Answer True
Your Answer True

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

Question The main advantages of profit sharing are :
Correct Answer Employees try to increase productivity , Incentives are shared

by all the employees , Augments emplyees' efficiency
Your Answer Employees try to increase productivity , Incentives are shared
by all the employees

Question Labour efficiency variance Rs.1,000/- (favourable); labour mix
variance Rs.260/- (adverse) and labour rate variance Rs.300/-
(adverse). Compute labour cost variance and labour yield
variance.
Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield
variance -Rs.1,260/- , Labour yield variance is favourable
Your Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield
variance -Rs.1,260/-
True/False
Question The best way to reduce labour cost is to recruit cheap labour.
Your Answer False
True/False
Question Balance sheet indicates the financial status of the business at
given period.
Correct Answer True
Your Answer True

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

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

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

Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was
kept with Bank of India on 1st June, 2003, for a period of one
year. The type of the fixed deposit is cumulative, i.e. interest
shall be received only on maturity. What treatment should be
given in the books of accounts on 31st March, 2004, the year
ending date?
Correct Answer An entry for Rs.458.34, debiting interest accrued but not due
account should be passed
Your Answer An entry for Rs.458.34, crediting interest accrued but not due
LIST OF ATTEMPTED QUESTIONS AND ANSWERS MA1

Question KDL Ltd. charges depreciation @ 20% on written down value method. The net book
value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of
its machinery on year end, i.e.31st December, 2003, assuming there were no additions or
disposals during the year?
True/False
Question Malik started business by contributing cash Rs.50,000/- and his personal car worth
Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-.
Correct Answer True
Your Answer True

Correct Answer Health and safety services , Canteen facility , Loans at reduced rate of interest
Your Answer Health and safety services , Loans at reduced rate of interest
Select The Blank

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

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

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

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

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

Question Which system provides an opportunity to companies to adopt the one best method of
cost accounting system known to the industry ?

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

Question If the ordering cost ________s, then the economic order quantity will Increase.
Your Answer Decrease
Select The Blank

Question The difference between sales and cost of sales is termed as ________.
Correct Answer Net Profit
Your Answer Contribution Margin
Select The Blank

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

Book-Keeping Books of Accounts Financial status
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-
sheet
Accounting Process of analyzing & interpretation Process of analyzing & interpretation
Profitability statement Indicates the amount of profit earned Indicates the amount of profit earned
Balance-sheet Financial status Books of Accounts
True/False
Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms
belonging to the different industries.
Your Answer False

Question 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.
Your Answer Single organization having number of branches. , Number of companies in same
industry , Similar Industries such as cotton, jute etc.
True/False
Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Profitability statement indicates the amount of assets & liabilities.
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True

Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods
were received on 1st April, 2004. Calculate the impact of this transaction on the final statements
of accounts for the year ended 31st March, 2004.
Your Answer The net profit will not be affected
True/False
Question Balance sheet indicates the expenditure & income from the business.
Your Answer False
True/False
Question Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
Correct Answer True
Your Answer True
Select The Blank

Question The short run financial plan which acts as a guide to achieve the predefined targets is
known as ________.
Correct Answer Budget
Your Answer Budget
True/False
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True
Match The Following

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

Question Indirect Cost is termed as ________.
Correct Answer Overhead
Your Answer Overhead
True/False
Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True
Your Answer True

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

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

Question Interest on ________ is credited to Capital account.
Correct Answer Capital
Your Answer Capital
Select The Blank

Question Under the average cost method of valuing material issues, new issue price is
determined after ________ issue.
Correct Answer Each
Your Answer The next
True/False
Question The effect of price reduction is always reduction in the margin of safety and also
reduction in the break even point.
Your Answer False
True/False
Question Price based on Uniform Costing may be taken to be reliable and representative of the
whole industry.
Correct Answer True
Your Answer False

Question Which of the following is likely to be a contributory factor to the incidence of excess
expenditure on material cost?
Correct Answer The level of control of the used of material in the production cycle , The
incorrect choice of purchase order quantity , Failure to control the issue of materials from stores
Your Answer The level of control of the used of material in the production cycle , An increase in
the maximum material inventory level , Failure to control the issue of materials from stores
Question If the total manufacturing overhead of a tiles producing factory amounted to

Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period
can be stated as ________ sq.ft. tiles.
Correct Answer 300000
Your Answer 300000
Question Accounting is the art where transactions are …

Correct Answer Summarized , Classified , Recorded
Your Answer Classified , Recorded , Processed
True/False
Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to
give bonus to the employees.
Your Answer False
True/False
Question A fixed budget is useful only when the actual level of activity corresponds to
the budgeted level of activity.
Correct Answer True
Your Answer True
Question From the following select the examples of errors of commission -

Correct Answer Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- ,
Received cash from Sham, credited to Ram's account , Paid transport charges, credited to
transport charges account
Your 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
Question The operating profit as per cost statement may differ from the profit as per
Profit and Loss Account due to existence of
Correct Answer Depreciation on plant and machinery , Interest on loans taken from other ,
Interest on loans granted to others
Your Answer Depreciation on plant and machinery , Preliminary expenses written off
Question Expenditure on income-tax is an example of ________.

Correct Answer non-operating expenditure
Your Answer administrative overheads
Question If the sales forecast is less than the past sales but the top management
insists upon a certain amount of additional profits, then following steps can be taken to
achieve the target profit
Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer Increase the sales volume , Reduce cost of sales , Increase the selling efforts
Question These are the preventive costs of labour turnover.

Correct Answer Cost of maintaining good relations with the workers , Cost of medical services ,
Cost of welfare facilities
Your Answer Cost of maintaining good relations with the workers , Cost of medical services ,
Question Select the items which may be classified as administration overheads.

Correct Answer Depreciation on office furniture , Director's remuneration , Telephone
expenses
Your Answer Director's remuneration , Telephone expenses
Question Any amount of profit earned in the past which is not distributed to the owner,
belongs to the creditors.
Your Answer True
Question Management accounting is concerned with the following activities :

Correct Answer Decision making , Safeguarding assets , Planning and controlling activities
Your Answer Decision making , Planning and controlling activities
Question Under time rate system a worker is paid on the basis of production achieved
by him in a given time.
Your Answer False
Question Budgeted profit and loss account and budgeted balance sheet are also known
as ________.
Correct Answer Master budget
Your Answer Master budget
Match The Following

Drawings Proprietor's account Proprietor's account
Deferred revenue expenditure Real account Real account
Deferred revenue expenditure written off Nominal account Nominal account
Loan Personal account Personal account
Question ________ Accounting is the process of analysis and interpretation of financial

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

financial data collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True
Question A grinding machine is an example of impersonal cost centre

Correct Answer True
Your Answer True
Question Which of the following budgets may be termed as a long term budget?
Correct Answer Capital expenditure budget , Research and Development expenditure budget ,
Budget of a transportation company
Your Answer Capital expenditure budget , Research and Development expenditure budget ,
Question Piece rate systems are very useful in the following circumstances:
Correct Answer Units of output are measurable , Job is standardised , The flow of work is
regular
Your Answer Work delays are frequent , Job is standardised , The flow of work is regular
Question The process of recording the business transactions in a defined set of

records is referred to as ________.
Question P&L statement which is a period statement & relates to a certain period tells
about results of operations.
Correct Answer True
Your Answer True
Match The Following

Liabilities All the amount owed by the business All the amount owed by the business
Drawing Withdrawn for personal use Withdrawn for personal use
Journal Book of original entry Book of original entry
Ledger Maintain all types of Accounts Maintain all types of Accounts
Assets All the properties owned by the business All the properties owned by the business
Question Judge the given statement according to the given criteria. Goods being real
account, when goods are lost by fire, the goods account should be debited because the
goods are not going out of the factory.
Correct Answer The statement is correct but the reason is incorrect
Your Answer The statement and the reason both are incorrect
Question A ________ inventory turnover period indicates efficient utilisation of material.

Correct Answer Low
Your Answer High
Question Financial accounting may deal with the ascertainment of cost & calculation of
profitability of the individual product.
Your Answer False
Question Management Accounting aims at enabling the management to take the

decisions about the future. It may consider future data as well as non-financial factors.
Correct Answer True
Your Answer False
Question Financial Accounting primarily protects the interests of the outsiders dealing
with organization in various capacities.
Correct Answer True
Your Answer False
Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which
account should be debited?
Correct Answer Investment account - Rs.170,000/-
Your Answer Investment account - Rs.170,000/-
Question Contents of Uniform Cost Manual are

Correct Answer Organization , Cost Accounting system , Presentation of information
Your Answer Organization , Cost Accounting system , Presentation of information
Question The data for two materials P and Q is given below : Material P : opening stock
Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening
stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of
the given statements relevant to the data given are correct.
Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster
moving material , Consumption of material Q is Rs.860,000/-
Your Answer Inventory turnover period for material P is 40.5 days , Material Q is faster moving
material , Consumption of material Q is Rs.860,000/-
Question Cost Accounting is concerned with calculation of the profitability and state of
affairs of the organization as a whole.
Your Answer True
Question Overhead absorption rate will be different at different capacity levels.

Correct Answer True
Your Answer True

Your Answer Summarized , Classified , Recorded
Question Features of a cost sheet are as follows

Correct Answer Indicates the total cost of production during a given period , Indicates the unit
cost of production during a given period , Helps the management in fixing the selling price to be
quoted for the
Your Answer Indicates the total cost of production during a given period , Helps the
management in fixing the selling price to be quoted for the , Helps the management in taking
'make' or 'buy' decision for the
Question Essentials for effective implementation of budgetary control system are

Correct Answer Commitment of top management , Clearly defined objectives , Continous
budget education
Your Answer Commitment of top management , Clearly defined objectives , Continous budget
education
Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour
when the level of efficiency is between________.
Correct Answer 90% to 100%
Your Answer 90% to 100%
Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth
Your Answer Sell carpets
Question Direct labour hour rate method of absorption of overheads is suitable where
most of the production is done by using machines.
Your Answer True
Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter
of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004,
156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20
Question The sales mix variance highlights the fact that the actual mix of sales has been
in the same ratio as budgeted.
Your Answer True
Question The selection of ________ may depend upon the various factors like
characteristics of the business organisation, tax considerations, statutory requirements
etc.
Correct Answer Accounting period
Your Answer Accounting period
Question Calculate the machine hour rate. The amount of overhead pertaining to June,
2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator.
During the month June, 2004 the machine operator has been paid for 5,670 hours.
Correct Answer Rs.29.98
Your Answer Rs.30/-
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages
and fair wages.
Correct Answer True
Your Answer True
Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of
sales value.
Correct Answer 0.75
Your Answer 0.75
Question Balance sheet is considered to be a part of the financial statements.

Correct Answer True
Your Answer True
Question Select the cost that indicates increased or decreased total cost due to the
increased or decreased volume of operations.
Correct Answer Differential cost
Your Answer Differential cost
Question The objects of cost accountancy are . .

Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information
Your Answer To ascertain cost and profitability , Cost Control , Presentation of Information
Question The process of attributing proportions of items of costs amongst const

centres is called ________.
Correct Answer Cost apportionment
Your Answer Cost allocation
Question 1) Financial statements are basically in two forms i.e. profitability statement
and balance sheet.
Correct Answer True
Your Answer True
Question The variance which measures the deviation of the rate actually paid to labour
as from the standard hourly rate is known as:
Correct Answer Labour rate variance
Your Answer Labour rate variance
Question Advance received from customers is ________ for the organisation.

Correct Answer A liability
Your Answer A liability
Question Financial Accounting discloses the financial performance & financial

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

Your Answer Debit
Question Product costs under direct costing include:

Correct Answer Prime cost and variable factory overheads
Your Answer Prime cost only
Question Uniform costing may lead to monopolistic conditions within the industry,
prices may be raised and customers may suffer.
Correct Answer True
Your Answer False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is
termed as factory cost.
Your Answer False
Question Items debited to Profit & Loss Account are…

Correct Answer Salary , Discount allowed , Postage & telegram
Your Answer Salary , Discount allowed , Postage & telegram

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

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

Question If you are required to enforce uniform costing system in your industry, how would you
proceed ?
Correct Answer Collecting data from all units of your industry , Ensuring that the data collected
is complete and correct , Maintaining secrecy of the data collected
Your Answer Collecting data from all units of your industry , Ensuring that the data collected is
complete and correct , Allowing free access to all the units to the collected data

Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is
found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally
received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance
as per pass book.
Correct Answer Rs.128/- (overdraft)
Your Answer Rs.106/- (credit)

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

Question Identify the fixed expenses from the following.
Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners,
helpers,etc. , Salary paid to factory supervisor
Your Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners,
True/False
Question Budgetary control is one of the techniques of management accounting.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is a developed stage of Cost Accounting
Correct Answer True
Your Answer False
True/False
Question In the ledger account only credit entries relating to a particular account are posted.
Your Answer False

Question Features of Sunk cost are . . .
Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in
past
Your Answer Indicates historical cost , Not relevant in decision making process , Incurred in
past
Match The Following
Global Tender Any supplier from the global market can fill the tender Any supplier from the global
market can fill the tender
Single Tender Tender from only one supplier Tender from only one supplier
Limited Tender Tenders from reliable but few suppliers Tenders from reliable but few suppliers
Open Tender Any supplier from the local market can fill the tender Any supplier from the local
True/False
Question Fixed overhead variances may be calculated either on the basis of units of output or
on the basis of standard hours.
Correct Answer True
Your Answer True

Question Features of Taylor's differential piece rate system are as follows :
Correct Answer Minima clerical work is involved in calculating the wages , Helps in building up
an efficient labour force , Strong incentive to efficient and ambitious workers.
Your Answer Minima clerical work is involved in calculating the wages , Helps in building up an
efficient labour force , Strong incentive to efficient and ambitious workers.
True/False
Question Financial Accounting discloses the financial performance & Financial status of the
business as a whole
Correct Answer True
Your Answer True
Select The Blank

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

Question Direct Cost includes
Correct Answer Direct material , Direct labour , Direct expenses
Your Answer Direct material , Direct labour , Direct expenses
Select The Blank

Question The document which lays down the cost accounting plans and procedures to be
followed by the constituent units is known as ________.
Correct Answer uniform cost manual
Your Answer uniform cost manual
True/False
Question Cost Accounting is a legal requirement.
Your Answer False
Select The Blank

Question The principle of ________ is followed while preparing the financial statements.
Correct Answer Going concern
Your Answer Going concern
True/False
Question Cash account can have a credit balance.
Your Answer True

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

Question Copy of a firm's account in the bank's ledger is known as ________.
Correct Answer Bank statement
Your Answer Bank book
True/False
Question Period cost is the cost assigned to the products.
Your Answer False

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

Question Labour turnover means :
Correct Answer Influx and exit of employees , Quantitative measurement of instability of
working force , Rate of change in the average working force
Your Answer Influx and exit of employees , Quantitative measurement of instability of working
force , Rate of change in the average working force
True/False
Question Book keeping is clerical while accounting is managerial
Correct Answer True
Your Answer True
True/False
Question Financial Statements which are generated as a result of the management accounting
report & financial performance of the organization as a whole.
Your Answer False
Match The Following

Fixed overheads Variability wise classification Variability wise classification
Abnormal overheads Normality wise classification Normality wise classification

Indirect Material Element wise classification Element wise classification
Administration overheads Function wise classification Function wise classification

Question The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half -
37,500 units. The production pattern of the company is based on 80% of the sales of the current
six months and 20% of the budgeted sales of the next six months. Calcu
Correct Answer 1st half -31,500 units; 2nd half - 30,000 units
Your Answer 1st half -24,000 units; 2nd half - 30,000 units
Select The Blank

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

Question Annual sales were Rs.10,50,000/- and sales returned by customers amounted to
Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount
of incentive due to the salesmen.
True/False
Question An entry in the stores ledger is required for transfer of material from one job to
another in the same department.
Your Answer False
Select The Blank

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

Question Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood
as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10%
p.a., what should be the treatment of this interest in the profitability statement, assuming there
were no additions to capital during this period?
Correct Answer Profit and loss account should be debited with Rs.1,866.67
Your Answer Profit and loss account should be debited with Rs.1,866.67
True/False
Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement
the Uniform costing system.
Your Answer True
True/False
Question Bank reconciliation statement can be prepared on weekly basis.
Correct Answer True
Your Answer True
Select The Blank
Question The ________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Correct Answer Control
Your Answer Control
Select The Blank

Question In calculation of total sales margin variance, the ________cost of sales is deducted
from the actual sales revenue.
Your Answer Actual
True/False
Question 1) Cost Accounting and Management Accounting are similar to each other in many
respects.
Correct Answer True
Your Answer True
True/False
Question The reports generated by financial accounting are meant for the use by management
for effective decisions.
Correct Answer True
Your Answer False

Question Following errors affect the trial balance
Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account ,
Omission of posting an account in the ledger
Your Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account ,
Select The Blank

Question Token or disc method is a related to the system of ________.
Correct Answer Time-keeping
Your Answer Time-keeping
True/False
Question Cost Accounting may be considered to be a part of management Accounting.
Correct Answer True
Your Answer True
Select The Blank

Question The ________ variance is the difference between the actual variable overhead
incurred and the standard variable overhead charged to production.
Correct Answer Total variable overhead
Your Answer Total variable overhead
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are
yet to be made.
Correct Answer True
Your Answer True
True/False
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair
wages.
Correct Answer True
Your Answer True
True/False
Question Management Accounting is not at all a legal requirement
Correct Answer True
Your Answer True
LIST OF ATTEMPTED QUESTIONS AND ANSWERS KMA1
Select The Blank

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

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

Question Identify the variable expenses.
Correct Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward
by hired carriers , Wages paid to casual workers
Your Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by
hired carriers , Wages paid to casual workers
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are yet to be
made.
Correct Answer True
Your Answer True
Select The Blank

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

Your Answer comparison

Question Which of the following cost is also termed as Prime Cost ?
Correct Answer Direct cost
Your Answer Direct cost
Question Financial Accounting is …
Correct Answer Designed to supply information to internal/ external users , Referred as
'Historical' form of accounting , Concerned with financial factors
Your Answer Designed to supply information to internal/ external users , Referred as 'Historical'
form of accounting , Concerned with financial factors
Select The Blank

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


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

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

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

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

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

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

Question The analysis which is also referred as 'what if' analysis is known as________.
Correct Answer Cost volume profit analysis
Your Answer Profit variance analysis
True/False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed
as Overheads.
Correct Answer True
Your Answer True
Select The Blank

Question In India the gas industry and electricity industry, and ________ industry are examples
of industries using the uniform costing system.
Your Answer automobile
True/False
Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Your Answer False
Select The Blank

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

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

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

Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed.
The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim
amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the
year ending 31st March, 2004.
Your Answer The net profit will increase by Rs.10,000/-
True/False
Correct Answer True
Your Answer True
True/False
Question While preparing the labour cost budget, factors such as overtime working or night
shift working may be ignored.
Your Answer False

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

Question Examples of indirect material are
Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes
Your Answer Consumable stores , Glue used in book binding , Nails used in packing boxes
True/False
Your Answer False
Select The Blank

Question A person in charge of a ________ may be held responsible for its proper functioning
and cost control.
Correct Answer Cost centre
Your Answer Cost centre
True/False
Question It is very easy to measure the portion of increased sales which is due to expenditure
incurred for advertisement of the product
Your Answer True

expenses
Your Answer Depreciation on office furniture , Director's remuneration , Telephone expenses

Question Which of the following is a correct definition of the key factor?
Correct Answer The factor which limits the activites of the undertaking
Your Answer The factor which the top management feel is important
Select The Blank

Question The varinace that attempts to ascertain the effect of change in sales volume on the
difference between actual and budgeted contribution is known as ________ variance.
Correct Answer Sales margin volume
Your Answer Total sales margin
True/False
Question The role of the budget committee may be taken as an advisory role to the Chief
Executive.
Correct Answer True
Your Answer True
Select The Blank

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

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

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

Question Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/-
(adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour
yield variance.
Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -
Rs.1,260/- , Labour yield variance is favourable
Your Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- ,
Labour yield variance is favourable
Question Which system can assist in fixing a common selling price for the industry as a whole
on the basis of cost of production of all units belonging to that industry ?
True/False
Question All cash sales are recorded in the sales register.
Your Answer True
Match The Following

Transport facilities to employees Preventive cost of labour turnover Preventive cost of labour
turnover
Relationship between supervisor and worker Avoidable cause of labour turnover Avoidable cause
of labour turnover
Dismissal of employee Unavoidable cause of labour turnover Unavoidable cause of labour

turnover
Increased spoilage and defectives Replacement cost of labour turnover Replacement cost of
labour turnover
True/False
Your Answer False
True/False
Your Answer True
True/False
Question Uniform costing may lead to monopolistic conditions within the industry, prices may
be raised and customers may suffer.
Correct Answer True
Your Answer True
True/False
Question Indirect material cost is an integral part of finished goods.
Your Answer False

Question Select the various methods adopted for treatment of under or over absorbed
overheads
Correct Answer Use of supplementary rates , Carrying over the amount to remaining period ,
Writing off to the Costing Profit and Loss Account
Your Answer Use of supplementary rates , Carrying over the amount to remaining period ,
True/False
Question Generally speaking income represents wealth increase and business success; higher
the income, lower will be the success of a business.
Your Answer False

Question It is difficult to apply Uniform costing system for an industry which has labour
intensive companies as well as capital intensive companies, because :
Correct Answer The cost structure is different
Your Answer The cost structure is different
True/False
Question Cost Accounting is concerned with calculation of the profitability and state of affairs of
the organization as a whole.
Your Answer False
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
Correct Answer True
Your Answer True
True/False
Question P&L statement which is a period statement & relates to a certain period tells about
results of operations.
Correct Answer True
Your Answer True

Question Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has
actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour.
Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of
the worker as per Bedeaux Point System.
Correct Answer Rs.180/-
Your Answer Rs.160/-

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

Question Computation of gross wages, deductions and net wages payable is the function of
the ________ department.
Correct Answer Personnel
True/False
Question Management Accounting aims at enabling the management to take the decisions
about the future. It may consider future data as well as non-financial factors.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting primarily protects the interests of the outsiders dealing with
organization in various capacities.
Correct Answer True
Your Answer True

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

Normal Standards Anticipated to be achieved in future Established for a longer period of time
Basic Standards Established for a longer period of time Once established can never be altered
Current Standards Established for a shorter period of time Established for a shorter period of time
Expected Standards Anticipated to be achieved in the budget period Anticipated to be achieved in

future
True/False
Question Management Accounting is the process of analysis and interpretation of financial
data collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True
True/False
Question 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
Your Answer True
True/False
Your Answer False
Select The Blank

Question Loans which are borrowed from financial institutions are to be paid off in 8 years,
should be disclosed as ________ in the balance sheet.
Correct Answer Long term liabilities
Your Answer Long term liabilities
True/False
Question Financial Accounting discloses the financial performance & financial statements of
the business as a whole.
Correct Answer True
Your Answer True

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

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

Question The present unit cost data for a product is as follows: selling price Rs.15/-, variable
costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%.
Which of the following is the amended contribution to sales ratio?
Correct Answer 0.333
Your Answer 0.5

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

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

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

Question The overheads apportioned to three production departments A, B and C and two
service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and
Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of
4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2.
Ascertain the total overheads of each production department.
Correct Answer A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/-
Your Answer A -Rs.116,836/-; B -Rs.146,837/- and C -Rs.176,838/-
Match The Following

Purchase budget Forecast of quantity and value of materials Forecast of quantity and value of
materials
Budget committee Analyses the performance of different budget centres Analyses the
performance of different budget centres
Cash budget Assists in predicting shortage of cash Assists in predicting shortage of cash
Budget Objective is performance evaluation Objective is performance evaluation


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

Question The selection of ________ may depend upon the various factors like characteristics
of the business organisation, tax considerations, statutory requirements etc.
Select The Blank

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

Question These are the replacement costs of labour turnover.
Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased
spoilage and defectives
Your Answer Inefficiency of new workers , Cost of selection and placement , Increased
True/False
Question The labour cost which can be identified with the individual cost centre is known as the
Direct Labour Cost.
Correct Answer True
Your Answer True
True/False
accounting.
Correct Answer True
Your Answer True
Select The Blank

True/False
Question Variable cost + Profit = Sales
Your Answer False
Select The Blank

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

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
True/False
Your Answer False
Select The Blank

Question An error of partial omission can be rectified by either debiting or crediting the
________ account, as the case maybe.
Your Answer profit and loss


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

Question The integrated form of all functional budgets is known as :
Select The Blank

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

Question The final result disclosed by trading account is the ________profit earned by the
organization.
Correct Answer Gross
Your Answer Gross
LIST OF ATTEMPTED QUESTIONS AND ANSWERS kma1
Select The Blank

Question Number of days inventory is held can be calculated by dividing number of days in a
year by ________.
Correct Answer Inventory turnover ratio
Your Answer Inventory turnover ratio
True/False
Correct Answer True
Your Answer True
True/False
Question All personal expenses of the owner should be debited to the organisation's profit and
loss account.
Your Answer False
Match The Following

Total cost Cost of finished goods Cost of finished goods
Non operating income Profit on sale of investment Profit on sale of investment
Selling and distribution overheads Advertisement expenses Advertisement expenses
Factory overheads Repair for factory building Repair for factory building
True/False
Question The amount of profit which is retained by the organisation is transferred to 'Reserves
and Surplus' in the balance sheet.
Correct Answer True
Your Answer True
Select The Blank

Question Purchase of national saving certificates by the company from its profits, should be
debited to ________ account.
Correct Answer Investments
Your Answer Investments
True/False
Question Yield variance equal to zero indicates that the standard yield and actual yield are the
same.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
Match The Following

Advantageously applicable in similar industries Scope of uniform costing Scope of uniform

costing
Spirit of mutual trust Requisite for uniform costing Requisite for uniform costing
Avoids cut throat competition Advantage of uniform costing Advantage of uniform costing
Treatment given to research and development costs Fields covered by uniform costing Fields
covered by uniform costing

Question Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500
units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units.
Correct Answer 66.9 days
Your Answer 67 days
True/False
Question Material mix and material yield variance can be calculated even when only one raw
material is used for production.
Your Answer False
Select The Blank

Correct Answer Low
Your Answer Low


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

Question A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output
per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S
produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate
System.
Correct Answer P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80
Your Answer P - Rs.50/-; Q - Rs.69.20; S - Rs.79.80
Question A company budgets for a production of 150,000 units. The variable cost per unit is
Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of
15% on total cost. What is the break even point for the company?
True/False
Correct Answer True
Your Answer True

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

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


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

Your Answer Variable overhead volume

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

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

Question Warehousing cost is an item of ________
Correct Answer Distribution overheads
Your Answer Office overheads
Select The Blank

Question The lowest profit volume ratio can be ________%.
Correct Answer 0
Your Answer 0.1
True/False
Your Answer False
True/False
Correct Answer True
Your Answer True
True/False
Question Trading account is used to analyse how successfully and how efficiently the firm
runs, particularly with regards to the maintenance of the gross profit margin.
Correct Answer True
Your Answer True

Question Calculate the earnings of workers Monica and Sonica under Taylor's differential piece
rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30
seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above
standard. Monica produces 900 units per day and Sonica produces 1,100 units per day.
Correct Answer Monica -Rs.72/-; Sonica - Rs.132/-
Your Answer Monica -Rs.110/-; Sonica - Rs.90/ -
True/False
Question Standard costing is always accompanied by a system of budgeting but budgetary
control may be operated in business where standard costing is impracticable.
Correct Answer True
Your Answer True

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

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

Question Uniform costing system can be successfully implemented in any industry only when :
Correct Answer Information is freely supplied by all the units , Well organised sector is ready to
share the technological improvements , Information furnished by the units is complete and correct
Your Answer Information is freely supplied by all the units , Well organised sector is ready to
True/False
Question In marginal costing, under and over absorption of fixed overheads is bound to arise.
Your Answer True

regular
Your Answer Units of output are measurable , Work delays are frequent , Job is standardised

Question Judge the following narrative according to the criteria given : There are many
organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc.
Correct Answer The statement and the reason are both incorrect
Your Answer The statement and the reason are both correct
True/False
Question New companies can adopt Uniform costing system as a ready-made system.
Correct Answer True
Your Answer False
Select The Blank

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

Question Trade Discount refers to the discount . . .
Correct Answer received on purchases
Your Answer received on purchases
True/False
Correct Answer True
Your Answer True

overheads
Select The Blank

Question In India, where public undertakings operate along with the private sector
undertakings, ________ enables a comparative assessment to be made of the two sectors.
Correct Answer uniform costing
Your Answer uniform costing
Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one
product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate
annual break even point.
True/False
respects.
Correct Answer True
Your Answer True

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

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


consistently , Facilitates the comparison of financial statements ,
It facilitates comparison of financial statements on period-to-
period basis
consistently , It facilitates comparison of financial statements on
period-to-period basis
True/False
Your Answer False
Match The Following

Dividend paid Profit and loss Profit and loss account

appropriation account
Freight inwards Manufacturing account Manufacturing account
Sales Trading account Capital account
Freight outwards Profit and loss account Trading account
Select The Blank

Question Large angle of incidence indicates ________ amount of profits.
Your Answer same
True/False
Your Answer True

Question Relevant costs in decision making are :
Correct Answer Those costs which will arise as a result of the proposed action
Your Answer Those costs which will arise as a result of the proposed action
Select The Blank

Question ________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

Question Overhead capacity variance is the outcome of:
Correct Answer Shortage of labour , Enforced idle time, e.g.power breakdowns ,

Your Answer Shortage of labour , Enforced idle time, e.g.power breakdowns ,
True/False
the stage of procurement of material till the production of finished
goods.
Correct Answer True
Your Answer True
True/False
Question Bank reconciliation statement must be prepared before the
preparation of profit and loss account and balance sheet.
Correct Answer True
Your Answer True

balance should be written off. Calculate its impact on profit of the
company.
Your Answer The gross profit will increase by Rs.6,300/-
Select The Blank

Question In calculation of total sales margin variance, the ________cost of
sales is deducted from the actual sales revenue.
Your Answer Actual
Match The Following

Increase in contribution Increase in profits Increase in profit volume

will lead to ratio
Increase in fixed cost will Increase in break even Decrease in contribution
lead to point
Decrease in variable cost Increase in profit volume Increase in profits
will lead to ratio
Decrease in selling price Decrease in contribution Increase in break even
will lead to point

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

Your Answer To control cost
Select The Blank

Question Re-order level should be higher than ________ but lesser than
maximum stock level.
Correct Answer Minimum level
Your Answer Minimum level
True/False
Question The variable costs are controllable at the lower lever.
Correct Answer True
Your Answer False
Select The Blank

Select The Blank

Question 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
Your Answer Personal account
True/False
Your Answer False
True/False
Correct Answer True
Your Answer True
Select The Blank

Question Interest receivable is a________ for the organisation.
Correct Answer Current sset
Your Answer Long term asset

Question Purchases returns of Rs.18,000/- were wrongly transferred to the
sales returns account. Calculate its impact on net profit.

Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/-
on credit basis. Amit allowed 10% discount for on the spot
transaction. What is the amount that should be debited to the
cash account?

Question 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.

Question The features of the Halsey Plan are:
Correct Answer The benefit of time saved is divided equally between the
Your Answer The benefit of time saved is divided equally between the
True/False
indirect expenses is termed as factory cost.
Your Answer True

Question 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.

Select The Blank
Question An error of partial omission can be rectified by either debiting or
crediting the ________ account, as the case maybe.
Your Answer adjusted profit and loss


budget
Your Answer Sales budget , Production budget , Research and development
budget

Question With the help of the given information, find actual fixed
overheads for actual output. Fixed overheads volume variance -
Rs.75,000/- (Favourable); fixed overheads efficiency variance -
Rs.95,000/- (Favourable); fixed overheads calendar variance
Rs.20,000/- (Adverse); fixed voerheads expenditure variance
Rs.100,000/- (Adverse) and standard fixed overheads for actual
output -Rs.575,000/-.
Select The Blank

Your Answer Credit
Select The Blank

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

Question Which of the following information is included in the goods
received note?
Correct Answer Date of receipt of material , Quantity received , Description of
goods
Your Answer Date of receipt of material , Quantity received , Price of goods ,
Description of goods
Correct Answer Health and safety services , Canteen facility , Loans at reduced
rate of interest
True/False
the profit.
Correct Answer True
Your Answer True
True/False
Question Linking overhead to a cost unit is known as overhead absorption.
Correct Answer True
Your Answer True

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

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

variance.
variance -Rs.1,260/-
True/False
Your Answer False
True/False
given period.
Correct Answer True
Your Answer True

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

system.


Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was
kept with Bank of India on 1st June, 2003, for a period of one
year. The type of the fixed deposit is cumulative, i.e. interest
shall be received only on maturity. What treatment should be
given in the books of accounts on 31st March, 2004, the year
ending date?
Correct Answer An entry for Rs.458.34, debiting interest accrued but not due
Your Answer An entry for Rs.458.34, crediting interest accrued but not due
True/False
Question A business is an activity carried out with the intention of
earning the profit.
Correct Answer True
Your Answer True
True/False
given period.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing in
a significant manner.
Correct Answer True
Your Answer True
True/False
Question Financial accounting may deal with the ascertainment of cost &
calculation of profitability of the individual product.
Your Answer False
True/False
Question The reports generated by financial accounting are meant for
the use by management for effective decisions.
Correct Answer True
Your Answer True

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

Question 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.

Question 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

Question 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
Match The Following

Personal A/C Debit the receiver, Credit Debit the receiver, Credit
the giver the giver
Real A/C Debit what comes in, Debit what comes in,
Credit what goes out Credit what goes out
Nominal A/C Debit all the expenses, Debit all the expenses,
Credit all the incomes Credit all the incomes
Tangible assets Building, Machinery Building, Machinery
In tangible assets Patents, Trade marks Patents, Trade marks
True/False
Question Credit note is an intimation send to person dealing with the
business that his account being debited for the purpose
indicated therein.
Your Answer True
True/False
Question Amount invested in purchasing Fixed Asset is a revenue
expenditure.
Your Answer False
True/False
Question As per double entry system o accounting , total of all debits
should be equal to all credits.
Correct Answer True
Your Answer True

Question 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 profitability
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 profitability

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

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

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

Error of Principle Trial Balance does not Wrong Posting

get affected
Error of Omission The transaction is totally The transaction is totally
omitted omitted
Error of commission Wrong Posting Wrong classification
Compensating Error Wrong classification Trial Balance does not get

affected
Difference in trial balance Transferred to suspense Transferred to suspense
account account


Question Labour cost indicates that labour cost which cannot be
identified with the individual cost centre and is incurred for
those employees who are not engaged in the manufacturing
process but only assist i
Correct Answer Remuneration
Your Answer Indirect
Question The Prime Cost includes the aggregate of
Correct Answer Direct Material Cost , Direct Labour Cost , Direct Expenses
Your Answer Direct Material Cost , Direct Labour Cost , Direct Expenses

Question 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.

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

Question 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
Question Fixed cost tends to vary with time rather than with level of
activity.
Correct Answer True
Your Answer True
True/False
Question To take make or buy decision under the marginal costing , if
purchase price of the product is less than its variable cost it is
advisable to go for manufacturing proposition.
Your Answer False

Question 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
Question For better control, variances of a period may be compare with
the previous period.
Correct Answer True
Your Answer True
True/False
Question Expected standards are more realistic and useful for cost
control.
Correct Answer True
Your Answer True
True/False
Question The difference between standard cost and actual cost is
termed as Variance.
Correct Answer True
Your Answer True

Question 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.

Question Basic three steps in Standard Costing are
Correct Answer Setting standards , Comparing actuals with standards ,
Your Answer Setting standards , Comparing actuals with standards ,

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

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

Question Standard Costs are used as tool for
Correct Answer Cost Control
Your Answer Cost Control
Select The Blank

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

Question Along with financial accounting, ________ and ________ are
the other streams of accounting
Select The Blank

Question 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

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

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

Question Under the daily ________ sheets method, each worker is
provided with a daily time sheet on which time ________ by
him on various jobs is expected to be mentioned
Correct Answer time
Your Answer work
Correct Answer spent
Your Answer spent
Select The Blank

Question 4.Under the differential time rate method the wages are paid at
Rs. 1.50 per hour between ________ efficiency and Rs.1.25
per hour between ________ efficiency
Correct Answer 101% to 125 %
Your Answer 90-100
Correct Answer 80% to90%
Your Answer 101% to 125 %
Select The Blank

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

Question ________ and ________ are examples of element wise
classification ofoverhead costs
Correct Answer Idirect material
Your Answer Idirect material
Correct Answer indirect labour
Your Answer selling overheads
Select The Blank

Question 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

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

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

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

Question The budget that represents the funds investment for expansion,
diversification, etc. is known as ________.
Select The Blank

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

Question The cost that indicates historical cost, which is incurred in past, is known
as
Select The Blank

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

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

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

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

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

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

Question Creche expenses may be appropriately approtioned on the basis of
________.
Correct Answer Number of female workers
Your Answer Number of female workers

Question 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/-

Question 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
Select The Blank


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

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

Question 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)
Your Answer Rs.150/- (Favourable)

Question Techniques of management accounting include:
Correct Answer Marginal costing , Budgetary control , Standard costing
Your Answer Cost control , Budgetary control , Standard costing
True/False
Correct Answer True
Your Answer True
True/False
Your Answer False

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

Your Answer Preparing financial statements

Question The features of multiplicity of key factors are as follows :
Correct Answer More than one key factors , Refers to a complex situation , Can be
resolved by using linear programming technique
Your Answer More than one key factors , Refers to a complex situation , Can be
True/False
Your Answer False
True/False
Question Interim dividend paid by the company should be debited to the profit and
loss appropriation account.
Correct Answer True
Your Answer True

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

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

Question 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
Your Answer Variable costs

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
Your Answer Increase the selling price , Increase the sales volume , Reduce cost of
sales
True/False
Question Receipts and payments method of cash budget is useful for preparing
long term estimates.
Your Answer False

Question Select the advantages of standard cost system.
Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority ,
Promotes economy and efficiency
Your Answer Provides reliable basis for budgeting , Facilitates delegation of authority
True/False
Question The sales mix variance highlights the fact that the actual mix of sales has
been in the same ratio as budgeted.
Your Answer False
Select The Blank

Question In case of seasonal industry, the budget period may be taken as
________.
Correct Answer One season
Your Answer One season
True/False
Question Lack of efficient control on various aspects related to raw-material
increases the material cost component of the finished product.
Correct Answer True
Your Answer True
True/False
Question Due to compensating errors the arithmetical accuracy of the trial balance
is affected.
Your Answer False

Question Material price variance for a job is Rs.800/- (Favourable). 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/- (Favourable)
Select The Blank

Your Answer Profit and Loss Account
Match The Following

Daily Time sheets Time spent by worker on job Time spent by worker on job
is recorded is recorded
Time Keeping Department Recording of workers time Recording of workers time
Time booking department Jobwise booking of time. Jobwise booking of time.
Time Recording Clock Ticket number & clock card Ticket number & clock card
Method allotted to worker allotted to worker
True/False
Question Purchased goods by paying Rs.35,000/-: In this case, the cash account
should be debited.
Correct Answer True
Your Answer True
Select The Blank

Question If the customer is not likely to pay the amount receivable from him, this
amount should to be treated as ________.
Correct Answer Bad debts
Your Answer Bad debts
True/False
Question Accounting is an art of recording, classifying & summarizing in a
significant manner.
Correct Answer True
Your Answer True

Match The Following
Book-Keeping Books of Accounts Books of Accounts
Financial statement Profitability statement & Profitability statement &

Balance-sheet Balance-sheet
Accounting Process of analyzing & Process of analyzing &
interpretation interpretation
Profitability statement Indicates the amount of profit Indicates the amount of profit
earned earned
Balance-sheet Financial status Financial status
True/False
Question The problem of multiple key factors can be solved with the help of
techniques like linear programming, operations research, etc.
Correct Answer True
Your Answer True
Select The Blank

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

Question If you are required to enforce uniform costing system in your industry,
how would you proceed ?
Correct Answer Collecting data from all units of your industry , Ensuring that the data
collected is complete and correct , Maintaining secrecy of the data
collected
Your Answer Collecting data from all units of your industry , Ensuring that the data
collected is complete and correct , Allowing free access to all the units to
the collected data
True/False
Question All costs are controllable.
Your Answer False

True/False
the stage of procurement of material till the production of finished
goods.
Correct Answer True
Your Answer True
True/False
Question Manufacturing overheads represents all costs incurred in the
factory including direct material cost and direct labour cost.
Your Answer False
True/False
Your Answer False

Question The use of contribution per unti of limiting factor as the basis for
ranking products to be produced and sold is aimed at which of
the following?
Correct Answer Maximisation of short-term profit
Your Answer Maximisation of short-term profit

Correct Answer Repairs of plant when it is undertaken by an outside agency ,

Carriage inward by hired carriers , Wages paid to casual workers
Your 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

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

True/False
Question If the physical stock is less than the stock as per the stores
ledger, such shortage should be treated as an issue of material.
Correct Answer True
Your Answer True

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

True/False
Question Marginal costing is a technique of cost control.
Correct Answer True
Your Answer True

Select The Blank

Question A ________ inventory turnover period indicates efficient
utilisation of material.
Correct Answer Low
Your Answer Low
True/False
Question Provision for discount on debtors account should be credited to
the Profit and Loss Account.
Your Answer True

Question 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?

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

Question Select the transactions which can be entered in the Journal
proper.
True/False
Question The problem of multiple key factors can be solved with the help
of techniques like linear programming, operations research, etc.
Correct Answer True
Your Answer True

Question Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected
to be bad. What should be the amount of debtors that must be
disclosed in the balance sheet?
True/False
Question Balance sheet indicates the expenditure & income from the
business.
Your Answer False

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

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

Correct Answer To ascertain cost and profitability , Cost Control , Presentation of

Information
Your Answer To ascertain cost and profitability , Cost Control , Presentation of
Information

Question Which of the following transactions should be excluded while
preparing a cost sheet ?
Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit
Your Answer Sale of scrap material , Interest on loan , Bad debts
Select The Blank

Question Under Differential Time Rate method payment is made at Rs.
1.40 per hour when the level of efficiency is between________.
True/False
Question Absorption costing is more suitable for decision making than
marginal costing
Your Answer False
True/False
significant manner.
Correct Answer True
Your Answer True
True/False
Question The process of accounting split into three steams i.e. financial,
cost, management accounting.
Correct Answer True
Your Answer True
True/False
Question 1) Financial statements are basically in two forms i.e. profitability
statement and balance sheet.
Correct Answer True
Your Answer True

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

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

Correct Answer More than one key factors , Refers to a complex situation , Can
be resolved by using linear programming technique
Your Answer More than one key factors , Refers to a complex situation , Can
be resolved by using linear programming technique
Select The Blank

Question ________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
Your Answer Ledger

Question 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
Your Answer The debit side of the trial balance will be in excess by
Rs.13,250/- , Involves an error of principle , Involves an error of
commission

Question 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
Your 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 closing balances of both the books are tallying
True/False
Question Bank charges debited in the pass book represent clerical
mistake on the part of the bank employees.
Your Answer True

Question A dividend warrant of Rs.2,076/- was paid direct to the bank and
nothing appeared in the cash book. This is an example of :
Correct Answer Direct deposit into the bank
Your Answer Direct deposit into the bank
True/False
Correct Answer True
Your Answer True

True/False
Question While preparing the labour cost budget, factors such as overtime
working or night shift working may be ignored.
Your Answer False
Select The Blank

Question ________ Accounting is the process of analysis and
interpretation of financial data collected with help of financial
accounting & cost accounting
Match The Following

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

Question The wages paid to a trainee who constructs wooden mould for
concrete laying on a building contract should be defined as :
Correct Answer Direct labour cost
Your Answer Indirect labour cost

Question If you are required to enforce uniform costing system in your
industry, how would you proceed ?
Correct Answer Collecting data from all units of your industry , Ensuring that the
data collected is complete and correct , Maintaining secrecy of
the data collected
Your Answer Collecting data from all units of your industry , Ensuring that the
data collected is complete and correct , Allowing free access to
all the units to the collected data
Match The Following

Advantageously Scope of uniform costing Scope of uniform costing

applicable in similar
industries
Spirit of mutual trust Requisite for uniform Requisite for uniform
costing costing
Avoids cut throat Advantage of uniform Advantage of uniform
competition costing costing
Treatment given to Fields covered by uniform Process of uniform costing
research and costing
development costs
Select The Blank

Question Margin of safety indicates ________ of operations.
Correct Answer Profitability
Your Answer Profitability
True/False
Question Depreciation, interest and property tax continue even when the
operations are discontinued.
Correct Answer True
Your Answer True
True/False
given period.
Correct Answer True
Your Answer True

Question Uncontrollable variances are
Correct Answer Strike , Change in customers demand , Devaluation of currency
Your Answer Change in customers demand , Wrong management policy , Devaluation

of currency
True/False
Question Indirect labour cost indicates that labour cost which cannot be identified
with the individual cost centre.
Correct Answer True
Your Answer True
True/False
Question There is no need to open a suspense account if the trial balance does not
agree.
Your Answer False
Select The Blank

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

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

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

Question Material Price Variance may occur due to
Correct Answer Change in price of material , Failure to take discounts , Weak purchase
organization
Your Answer Careless use of material , Change in price of material
Select The Blank

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

Question Goods return by Pande worth Rs. 2000 should have appeared on the
credit side of Pande’s account for rectifying the same. Following account to
be credited
Your Answer Suspense A/C
True/False
Question Accounting is an art of recording, classifying & summarizing in a significant
manner.
Correct Answer True
Your Answer True
Select The Blank

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

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

Question While selecting source of supply ________ epartment may call for the
________ from the prospective suppliers
True/False
Your Answer True

Question Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit,
Standard price is Rs.5/- per unit and actual sales volume is 500 units.
True/False
Question Debit the receiver & credit the giver is a rule of Real a/c.
Your Answer True

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

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

Advance Not related in current year Not related in current year
Application Increase in Assets Increase in Assets
Outstanding Amount still payable in Amount still payable in current

current year year
Prepaid Amount paid for next year Amount paid for next year
Drawing Amount of personal use Amount of personal use

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

Question __________ Accounting is primarily protects the interest of the outsiders
dealing with the organization various capacities like investors, suppliers,
customers etc.
Correct Answer Financial
Your Answer Cost
True/False
Question Head of the Department should sign the purchase requisition.
Correct Answer True
Your Answer True

Question FIFO method
Correct Answer The price of the earliest available lot is considered first , If the lot is
exhausted, the price of the next available lot is considered , It is used for
issue of material
Your 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 , Physical lots
of the material are kept separate , It is used for issue of material
True/False
Correct Answer True
Your Answer True
Select The Blank

Question Bin card is maintained by ________ department whereas ________ is
maintained by costing department.
Correct Answer Stores
Your Answer Stores
Correct Answer Store ledger
Your Answer Store ledger
True/False
Question The situation of over absorption arises if the overheads absorbed are less
than the actual overheads.
Your Answer True

Question Accounts is a
Correct Answer Record of all transaction
Your Answer Record of all transaction , Record of purchasing goods & services , Record
of selling goods & services

Question If production overheads to be absorbed are Rs. 20000/- and machine
hours worked are 5000 then the machine hour rate will be,
Correct Answer Re. 4 per machine hour.
Your Answer Rs. 5 per machine hour.
True/False
Question Due to errors of principle the arithmetical accuracy of the trial balance get
affected.
Your Answer True

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

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

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

Question From the following data, workout the EOQ annual demand. 5000 units,
ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying
cost15% on average inventory
Correct Answer 300
Your Answer 200
Select The Blank

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

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

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

Discount received Suppliers Suppliers
Outstanding expenses Liabilities Liabilities
Depreciation Assets Assets
Interest on capital Borrowed capital Borrowed capital
Discount allowed Debtors Debtors
True/False
Question canteen facility to workers, health and safety services are examples of
monetary incentives.
Your Answer True

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

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

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

Question Standard Costing system facilitates ________ and ________ for each
individual or department
Correct Answer Delegation of authority
Your Answer Fixation of responsibility
Correct Answer Fixation of responsibility
Your Answer Delegation of authority
True/False
Question If actual cost is more than the standard cost then it is called favorable
variance.
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting the information
already recorded in the books of accounts.
Correct Answer True
Your Answer True
True/False
Question The aggregate of indirect material cost, indirect labour cost and indirect
expenses is termed as factory cost.
Your Answer True
Select The Blank

Question Fixed cost is the cost that tend to remain ________ irrespective of
________

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

Correct Answer Health and safety services , Canteen facility , Loans at reduced rate of interest
Your Answer Health and safety services , Loans at reduced rate of interest
Select The Blank

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

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

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

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

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

Question Which system provides an opportunity to companies to adopt the one best method of
cost accounting system known to the industry ?

Correct Answer Level of activity , Capacity utilization , Level of sales
Your Answer Level of activity , Capacity utilization , Level of sales
Select The Blank

Select The Blank

Question The difference between sales and cost of sales is termed as ________.
Correct Answer Net Profit
Your Answer Contribution Margin
Select The Blank

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

Book-Keeping Books of Accounts Financial status
Financial statement Profitability statement & Balance-sheet Profitability statement & Balance-
sheet
Accounting Process of analyzing & interpretation Process of analyzing & interpretation
True/False
Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms
belonging to the different industries.
Your Answer False

True/False
Correct Answer True
Your Answer False
True/False
Your Answer False
True/False
Correct Answer True
Your Answer True

Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods
were received on 1st April, 2004. Calculate the impact of this transaction on the final statements
of accounts for the year ended 31st March, 2004.
True/False
Your Answer False
True/False
Question Interim dividend paid by the company should be debited to the profit and loss
appropriation account.
Correct Answer True
Your Answer True
Select The Blank

Question The short run financial plan which acts as a guide to achieve the predefined targets is
known as ________.
Your Answer Budget
True/False
accounting.
Correct Answer True
Your Answer True
Match The Following

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

True/False
Correct Answer True
Your Answer True

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

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

Your Answer Capital
Select The Blank

Question Under the average cost method of valuing material issues, new issue price is
determined after ________ issue.
Correct Answer Each
Your Answer The next
True/False
Question The effect of price reduction is always reduction in the margin of safety and also
reduction in the break even point.
Your Answer False
True/False
Question Price based on Uniform Costing may be taken to be reliable and representative of the
whole industry.
Correct Answer True
Your Answer False

Question Which of the following is likely to be a contributory factor to the incidence of excess
expenditure on material cost?
Correct Answer The level of control of the used of material in the production cycle , The
incorrect choice of purchase order quantity , Failure to control the issue of materials from stores
Your Answer The level of control of the used of material in the production cycle , An increase in
the maximum material inventory level , Failure to control the issue of materials from stores
Question If the total manufacturing overhead of a tiles producing factory amounted to

Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period
can be stated as ________ sq.ft. tiles.
Your Answer 300000

Your Answer Classified , Recorded , Processed
True/False
Your Answer False
True/False
Question A fixed budget is useful only when the actual level of activity corresponds to
the budgeted level of activity.
Correct Answer True
Your Answer True
Question From the following select the examples of errors of commission -

Correct Answer Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- ,
Received cash from Sham, credited to Ram's account , Paid transport charges, credited to
transport charges account
Your 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
Question The operating profit as per cost statement may differ from the profit as per
Profit and Loss Account due to existence of
Correct Answer Depreciation on plant and machinery , Interest on loans taken from other ,
Interest on loans granted to others
Your Answer Depreciation on plant and machinery , Preliminary expenses written off
Question Expenditure on income-tax is an example of ________.

Correct Answer non-operating expenditure
Your Answer administrative overheads
insists upon a certain amount of additional profits, then following steps can be taken to
achieve the target profit
Your Answer Increase the sales volume , Reduce cost of sales , Increase the selling efforts

Correct Answer Cost of maintaining good relations with the workers , Cost of medical services ,
Your Answer Cost of maintaining good relations with the workers , Cost of medical services ,

expenses
Your Answer Director's remuneration , Telephone expenses
Question Any amount of profit earned in the past which is not distributed to the owner,
belongs to the creditors.
Your Answer True
Question Management accounting is concerned with the following activities :

Correct Answer Decision making , Safeguarding assets , Planning and controlling activities
Your Answer Decision making , Planning and controlling activities
Question Under time rate system a worker is paid on the basis of production achieved
by him in a given time.
Your Answer False
Question Budgeted profit and loss account and budgeted balance sheet are also known
as ________.
Match The Following

Drawings Proprietor's account Proprietor's account
Deferred revenue expenditure Real account Real account
Deferred revenue expenditure written off Nominal account Nominal account
Loan Personal account Personal account
Question ________ Accounting is the process of analysis and interpretation of financial

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

financial data collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True

Correct Answer True
Your Answer True
Correct Answer Capital expenditure budget , Research and Development expenditure budget ,
Your Answer Capital expenditure budget , Research and Development expenditure budget ,
regular
Your Answer Work delays are frequent , Job is standardised , The flow of work is regular

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

Liabilities All the amount owed by the business All the amount owed by the business
Assets All the properties owned by the business All the properties owned by the business
Question Judge the given statement according to the given criteria. Goods being real
account, when goods are lost by fire, the goods account should be debited because the
goods are not going out of the factory.
Correct Answer The statement is correct but the reason is incorrect
Your Answer The statement and the reason both are incorrect

Correct Answer Low
Your Answer High
Your Answer False
Question Management Accounting aims at enabling the management to take the

decisions about the future. It may consider future data as well as non-financial factors.
Correct Answer True
Your Answer False
Question Financial Accounting primarily protects the interests of the outsiders dealing
with organization in various capacities.
Correct Answer True
Your Answer False
Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which
account should be debited?
Correct Answer Investment account - Rs.170,000/-
Your Answer Investment account - Rs.170,000/-

Question The data for two materials P and Q is given below : Material P : opening stock
Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening
stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of
the given statements relevant to the data given are correct.
Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster
moving material , Consumption of material Q is Rs.860,000/-
Your Answer Inventory turnover period for material P is 40.5 days , Material Q is faster moving
material , Consumption of material Q is Rs.860,000/-
Question Cost Accounting is concerned with calculation of the profitability and state of
affairs of the organization as a whole.
Your Answer True

Correct Answer True
Your Answer True


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
Your Answer Indicates the total cost of production during a given period , Helps the
management in fixing the selling price to be quoted for the , Helps the management in taking
'make' or 'buy' decision for the
Question Essentials for effective implementation of budgetary control system are

Correct Answer Commitment of top management , Clearly defined objectives , Continous
budget education
Your Answer Commitment of top management , Clearly defined objectives , Continous budget
education
Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour
when the level of efficiency is between________.
Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth
Your Answer Sell carpets
Question Direct labour hour rate method of absorption of overheads is suitable where
most of the production is done by using machines.
Your Answer True
Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter
of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004,
156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20
Question The sales mix variance highlights the fact that the actual mix of sales has been
in the same ratio as budgeted.
Your Answer True
Question The selection of ________ may depend upon the various factors like
characteristics of the business organisation, tax considerations, statutory requirements
etc.
Question Calculate the machine hour rate. The amount of overhead pertaining to June,
2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator.
During the month June, 2004 the machine operator has been paid for 5,670 hours.
Your Answer Rs.30/-
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages
and fair wages.
Correct Answer True
Your Answer True
Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of
sales value.
Correct Answer 0.75
Your Answer 0.75
Question Balance sheet is considered to be a part of the financial statements.

Correct Answer True
Your Answer True
Question Select the cost that indicates increased or decreased total cost due to the

Question The process of attributing proportions of items of costs amongst const

centres is called ________.
Question 1) Financial statements are basically in two forms i.e. profitability statement
and balance sheet.
Correct Answer True
Your Answer True
Question The variance which measures the deviation of the rate actually paid to labour
as from the standard hourly rate is known as:
Correct Answer Labour rate variance
Your Answer Labour rate variance


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

Your Answer Debit
Question Product costs under direct costing include:

Correct Answer Prime cost and variable factory overheads
Your Answer Prime cost only
Question Uniform costing may lead to monopolistic conditions within the industry,
prices may be raised and customers may suffer.
Correct Answer True
Your Answer False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is
termed as factory cost.
Your Answer False

Your Answer Salary , Discount allowed , Postage & telegram

Correct Answer Stores department , Transport department , Accounting department
Your Answer Stores department , Transport department , Accounting department

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

Question If you are required to enforce uniform costing system in your industry, how would you
proceed ?
Correct Answer Collecting data from all units of your industry , Ensuring that the data collected
is complete and correct , Maintaining secrecy of the data collected
Your Answer Collecting data from all units of your industry , Ensuring that the data collected is
complete and correct , Allowing free access to all the units to the collected data

Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is
found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally
received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance
as per pass book.
Correct Answer Rs.128/- (overdraft)
Your Answer Rs.106/- (credit)

Question Identify the steps involved in the process of decision making :
Correct Answer Determination of the problem , Ascertainment of alternative courses of action ,
Your Answer Determination of the solution , Ascertainment of alternative courses of action ,

Question Identify the fixed expenses from the following.
Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners,
Your Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners,
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer False
True/False
Question In the ledger account only credit entries relating to a particular account are posted.
Your Answer False

Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in
past
Your Answer Indicates historical cost , Not relevant in decision making process , Incurred in
past
Match The Following
Global Tender Any supplier from the global market can fill the tender Any supplier from the global
Single Tender Tender from only one supplier Tender from only one supplier
Limited Tender Tenders from reliable but few suppliers Tenders from reliable but few suppliers
Open Tender Any supplier from the local market can fill the tender Any supplier from the local
True/False
Question Fixed overhead variances may be calculated either on the basis of units of output or
on the basis of standard hours.
Correct Answer True
Your Answer True

True/False
Question Financial Accounting discloses the financial performance & Financial status of the
business as a whole
Correct Answer True
Your Answer True
Select The Blank


Select The Blank

Question The document which lays down the cost accounting plans and procedures to be
followed by the constituent units is known as ________.
True/False
Your Answer False
Select The Blank

Question The principle of ________ is followed while preparing the financial statements.
True/False
Your Answer True

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

Question Copy of a firm's account in the bank's ledger is known as ________.
True/False
Question Period cost is the cost assigned to the products.
Your Answer False

Question Interest on drawings of partners should be credited to which account?

Question Labour turnover means :
Correct Answer Influx and exit of employees , Quantitative measurement of instability of
working force , Rate of change in the average working force
Your Answer Influx and exit of employees , Quantitative measurement of instability of working
force , Rate of change in the average working force
True/False
Correct Answer True
Your Answer True
True/False
Question Financial Statements which are generated as a result of the management accounting
report & financial performance of the organization as a whole.
Your Answer False
Match The Following

Fixed overheads Variability wise classification Variability wise classification
Abnormal overheads Normality wise classification Normality wise classification

Indirect Material Element wise classification Element wise classification
Administration overheads Function wise classification Function wise classification

Question The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half -
37,500 units. The production pattern of the company is based on 80% of the sales of the current
six months and 20% of the budgeted sales of the next six months. Calcu
Correct Answer 1st half -31,500 units; 2nd half - 30,000 units
Your Answer 1st half -24,000 units; 2nd half - 30,000 units
Select The Blank

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

Question 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.
True/False
Question An entry in the stores ledger is required for transfer of material from one job to
another in the same department.
Your Answer False
Select The Blank

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

Question Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood
as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10%
p.a., what should be the treatment of this interest in the profitability statement, assuming there
were no additions to capital during this period?
Correct Answer Profit and loss account should be debited with Rs.1,866.67
Your Answer Profit and loss account should be debited with Rs.1,866.67
True/False
Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement
the Uniform costing system.
Your Answer True
True/False
Question Bank reconciliation statement can be prepared on weekly basis.
Correct Answer True
Your Answer True
Select The Blank
Question The ________ ledger carries the individual accounts, whereas the general ledger
records the consolidated effect of the individual transactions.
Correct Answer Control
Your Answer Control
Select The Blank

Question In calculation of total sales margin variance, the ________cost of sales is deducted
from the actual sales revenue.
Your Answer Actual
True/False
respects.
Correct Answer True
Your Answer True
True/False
Question The reports generated by financial accounting are meant for the use by management
for effective decisions.
Correct Answer True
Your Answer False

Question Following errors affect the trial balance
Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account ,
Your Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account ,
Select The Blank

Question Token or disc method is a related to the system of ________.
Correct Answer Time-keeping
Your Answer Time-keeping
True/False
Correct Answer True
Your Answer True
Select The Blank

True/False
Question It is said that marginal costs are used primarily in guiding decisions that are
yet to be made.
Correct Answer True
Your Answer True
True/False
Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair
wages.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
Select The Blank

Question The variance which measures the profit consequences of selling different products in
proportions other than the standard, is known as ________ variance.
Your Answer Sales quantity
Match The Following

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

Correct Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward
by hired carriers , Wages paid to casual workers
Your Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by
hired carriers , Wages paid to casual workers
True/False
Question It is said that marginal costs are used primarily in guiding decisions that are yet to be
made.
Correct Answer True
Your Answer True
Select The Blank

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


Question Which of the following cost is also termed as Prime Cost ?
Correct Answer Direct cost
Your Answer Direct cost
Question Financial Accounting is …
Correct Answer Designed to supply information to internal/ external users , Referred as
'Historical' form of accounting , Concerned with financial factors
Your Answer Designed to supply information to internal/ external users , Referred as 'Historical'
form of accounting , Concerned with financial factors
Select The Blank

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


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

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

Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to
Your Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to
Select The Blank

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

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

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

Question The analysis which is also referred as 'what if' analysis is known as________.
Correct Answer Cost volume profit analysis
Your Answer Profit variance analysis
True/False
Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed
as Overheads.
Correct Answer True
Your Answer True
Select The Blank

Question In India the gas industry and electricity industry, and ________ industry are examples
of industries using the uniform costing system.
Your Answer automobile
True/False
Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Your Answer False
Select The Blank

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

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

overheads
True/False
Correct Answer True
Your Answer True

Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed.
The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim
amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the
year ending 31st March, 2004.
Your Answer The net profit will increase by Rs.10,000/-
True/False
Correct Answer True
Your Answer True
True/False
Question While preparing the labour cost budget, factors such as overtime working or night
shift working may be ignored.
Your Answer False

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

Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes
Your Answer Consumable stores , Glue used in book binding , Nails used in packing boxes
True/False
Your Answer False
Select The Blank

Question A person in charge of a ________ may be held responsible for its proper functioning
and cost control.
Correct Answer Cost centre
Your Answer Cost centre
True/False
Question It is very easy to measure the portion of increased sales which is due to expenditure
incurred for advertisement of the product
Your Answer True

expenses
Your Answer Depreciation on office furniture , Director's remuneration , Telephone expenses

Select The Blank

Question The varinace that attempts to ascertain the effect of change in sales volume on the
difference between actual and budgeted contribution is known as ________ variance.
Correct Answer Sales margin volume
Your Answer Total sales margin
True/False
Question The role of the budget committee may be taken as an advisory role to the Chief
Executive.
Correct Answer True
Your Answer True
Select The Blank

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

Question A business's telephone bill should nromally be classified into which one of the
following categories?
Select The Blank

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

Question Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/-
(adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour
yield variance.
Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -
Rs.1,260/- , Labour yield variance is favourable
Your Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- ,
Labour yield variance is favourable
Question Which system can assist in fixing a common selling price for the industry as a whole
on the basis of cost of production of all units belonging to that industry ?
True/False
Question All cash sales are recorded in the sales register.
Your Answer True
Match The Following

Transport facilities to employees Preventive cost of labour turnover Preventive cost of labour
turnover
Relationship between supervisor and worker Avoidable cause of labour turnover Avoidable cause
of labour turnover
Dismissal of employee Unavoidable cause of labour turnover Unavoidable cause of labour

turnover
Increased spoilage and defectives Replacement cost of labour turnover Replacement cost of
labour turnover
True/False
Your Answer False
True/False
Your Answer True
True/False
Question Uniform costing may lead to monopolistic conditions within the industry, prices may
be raised and customers may suffer.
Correct Answer True
Your Answer True
True/False
Your Answer False

Question Select the various methods adopted for treatment of under or over absorbed
overheads
Correct Answer Use of supplementary rates , Carrying over the amount to remaining period ,
Your Answer Use of supplementary rates , Carrying over the amount to remaining period ,
True/False
Question Generally speaking income represents wealth increase and business success; higher
the income, lower will be the success of a business.
Your Answer False

Question It is difficult to apply Uniform costing system for an industry which has labour
intensive companies as well as capital intensive companies, because :
True/False
Question Cost Accounting is concerned with calculation of the profitability and state of affairs of
the organization as a whole.
Your Answer False
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and
balance sheet.
Correct Answer True
Your Answer True
True/False
Question P&L statement which is a period statement & relates to a certain period tells about
results of operations.
Correct Answer True
Your Answer True

Question Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has
actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour.
Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of
the worker as per Bedeaux Point System.

Correct Answer 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
Your Answer To fix a common selling price for the industry as a whole , To compile reliable
cost data for inter-firm comparison of costs , To fix a common selling price so as to maximize
profits of each unit
Select The Blank

Question Computation of gross wages, deductions and net wages payable is the function of
the ________ department.
Correct Answer Personnel
True/False
Question Management Accounting aims at enabling the management to take the decisions
about the future. It may consider future data as well as non-financial factors.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting primarily protects the interests of the outsiders dealing with
organization in various capacities.
Correct Answer True
Your Answer True

Correct Answer Raised when the stock of a raw material has fallen to the re-order level. ,
Your Answer Raised when the stock of a raw material has fallen to the re-order level. ,
Match The Following

Normal Standards Anticipated to be achieved in future Established for a longer period of time
Basic Standards Established for a longer period of time Once established can never be altered
Current Standards Established for a shorter period of time Established for a shorter period of time
Expected Standards Anticipated to be achieved in the budget period Anticipated to be achieved in

future
True/False
Question Management Accounting is the process of analysis and interpretation of financial
data collected with help of financial accounting and cost accounting
Correct Answer True
Your Answer True
True/False
Question 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
Your Answer True
True/False
Your Answer False
Select The Blank

Question Loans which are borrowed from financial institutions are to be paid off in 8 years,
should be disclosed as ________ in the balance sheet.
Correct Answer Long term liabilities
Your Answer Long term liabilities
True/False
Question Financial Accounting discloses the financial performance & financial statements of
the business as a whole.
Correct Answer True
Your Answer True

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


Question The present unit cost data for a product is as follows: selling price Rs.15/-, variable
costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%.
Which of the following is the amended contribution to sales ratio?
Correct Answer 0.333
Your Answer 0.5

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

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

Question A written order sent to inform the purchasing department of a need for materials is
called a ________.

Question The overheads apportioned to three production departments A, B and C and two
service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and
Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of
4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2.
Ascertain the total overheads of each production department.
Correct Answer A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/-
Your Answer A -Rs.116,836/-; B -Rs.146,837/- and C -Rs.176,838/-
Match The Following

Purchase budget Forecast of quantity and value of materials Forecast of quantity and value of
materials
Budget committee Analyses the performance of different budget centres Analyses the
performance of different budget centres
Cash budget Assists in predicting shortage of cash Assists in predicting shortage of cash
Budget Objective is performance evaluation Objective is performance evaluation


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

Question The selection of ________ may depend upon the various factors like characteristics
of the business organisation, tax considerations, statutory requirements etc.
Select The Blank

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

Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased
Your Answer Inefficiency of new workers , Cost of selection and placement , Increased
True/False
Question The labour cost which can be identified with the individual cost centre is known as the
Direct Labour Cost.
Correct Answer True
Your Answer True
True/False
accounting.
Correct Answer True
Your Answer True
Select The Blank

True/False
Your Answer False
Select The Blank

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

Correct Answer Employees try to increase productivity , Incentives are shared by all the
Your Answer Employees try to increase productivity , Incentives are shared by all the
True/False
Your Answer False
Select The Blank

Question An error of partial omission can be rectified by either debiting or crediting the
________ account, as the case maybe.
Your Answer profit and loss


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

Question The integrated form of all functional budgets is known as :
Select The Blank

Question If overhead absorbed i.e. overheads charged to units during the period is more than
the overhead incurred, it is said that the overheads are ________.
Select The Blank

Question The final result disclosed by trading account is the ________profit earned by the
organization.
Correct Answer Gross
Your Answer Gross
LIST OF ATTEMPTED QUESTIONS AND ANSWERS kma1
Select The Blank

Question Number of days inventory is held can be calculated by dividing number of days in a
year by ________.
Correct Answer Inventory turnover ratio
Your Answer Inventory turnover ratio
True/False
Correct Answer True
Your Answer True
True/False
Question All personal expenses of the owner should be debited to the organisation's profit and
loss account.
Your Answer False
Match The Following

Total cost Cost of finished goods Cost of finished goods
Non operating income Profit on sale of investment Profit on sale of investment
Selling and distribution overheads Advertisement expenses Advertisement expenses
Factory overheads Repair for factory building Repair for factory building
True/False
Question The amount of profit which is retained by the organisation is transferred to 'Reserves
and Surplus' in the balance sheet.
Correct Answer True
Your Answer True
Select The Blank

Question Purchase of national saving certificates by the company from its profits, should be
debited to ________ account.
Correct Answer Investments
Your Answer Investments
True/False
Question Yield variance equal to zero indicates that the standard yield and actual yield are the
same.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
Match The Following

Advantageously applicable in similar industries Scope of uniform costing Scope of uniform

costing
Spirit of mutual trust Requisite for uniform costing Requisite for uniform costing
Avoids cut throat competition Advantage of uniform costing Advantage of uniform costing
Treatment given to research and development costs Fields covered by uniform costing Fields
covered by uniform costing

Question Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500
units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units.
Correct Answer 66.9 days
Your Answer 67 days
True/False
Question Material mix and material yield variance can be calculated even when only one raw
material is used for production.
Your Answer False
Select The Blank

Correct Answer Low
Your Answer Low


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
Your Answer Nil

Question A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output
per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S
produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate
System.
Question A company budgets for a production of 150,000 units. The variable cost per unit is
Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of
15% on total cost. What is the break even point for the company?
True/False
Correct Answer True
Your Answer True

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

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


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

Your Answer Variable overhead volume

Question Select the transactions which can be entered in the Journal proper.

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
Your 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

Question Warehousing cost is an item of ________
Correct Answer Distribution overheads
Your Answer Office overheads
Select The Blank

Question The lowest profit volume ratio can be ________%.
Correct Answer 0
Your Answer 0.1
True/False
Your Answer False
True/False
Correct Answer True
Your Answer True
True/False
Question Trading account is used to analyse how successfully and how efficiently the firm
runs, particularly with regards to the maintenance of the gross profit margin.
Correct Answer True
Your Answer True

Question Calculate the earnings of workers Monica and Sonica under Taylor's differential piece
rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30
seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above
standard. Monica produces 900 units per day and Sonica produces 1,100 units per day.
Your Answer Monica -Rs.110/-; Sonica - Rs.90/ -
True/False
Question Standard costing is always accompanied by a system of budgeting but budgetary
control may be operated in business where standard costing is impracticable.
Correct Answer True
Your Answer True

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

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

Correct Answer Information is freely supplied by all the units , Well organised sector is ready to
Your Answer Information is freely supplied by all the units , Well organised sector is ready to
True/False
Question In marginal costing, under and over absorption of fixed overheads is bound to arise.
Your Answer True

regular
Your Answer Units of output are measurable , Work delays are frequent , Job is standardised

Question Judge the following narrative according to the criteria given : There are many
organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc.
True/False
Question New companies can adopt Uniform costing system as a ready-made system.
Correct Answer True
Your Answer False
Select The Blank

Question An amount of Rs.200/- is received from P and is credited to Q. The rectification entry

Question Trade Discount refers to the discount . . .
Correct Answer received on purchases
Your Answer received on purchases
True/False
Correct Answer True
Your Answer True

overheads
Select The Blank

Question In India, where public undertakings operate along with the private sector
undertakings, ________ enables a comparative assessment to be made of the two sectors.
Correct Answer uniform costing
Your Answer uniform costing
Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one
product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate
annual break even point.
True/False
respects.
Correct Answer True
Your Answer True

Question Cool-wind Ltd., manufactures fans, which at sold at Rs.400 pre piece. The cost of
sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in
material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of
which the profit at current selling price may dwindle by 39% of present gross profit. With the
above information, you are required to determine the future selling price, if the present rate of
gross profit is to be maintained.
True/False
Question Credit balance in interest account indicates income for the organisation.
Correct Answer True
Your Answer True
True/False
the profit.
Correct Answer True
Your Answer True
True/False
given period.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
True/False
significant manner.
Correct Answer True
Your Answer True
True/False
Your Answer False
True/False
Question Cost Accounting restrict itself with historical transactions
Your Answer True
True/False
Question A very wide scope of Management Accounting is the limitation
by itself.
Correct Answer True
Your Answer True

Question Financial Accounting ______________
Correct Answer Designed to supply information for internal/ external uses. ,

Deals with the transaction during specific period. , It is
compulsory
Your Answer Designed to supply information for internal/ external uses. ,
Deals with the transaction during specific period.

Question Cost Accounting ______________.
Correct Answer Concerned with specific activities. , Classified according to their

nature. , It deals with both i.e. past & present.
Your Answer Concerned with specific activities. , Classified according to their
nature. , It covers whole business
Match The Following


Profitability statement Indicates the amount of Indicates the amount of
profit earned profit earned


Question Features of double entry accounting system are . . .
Correct Answer Every business transaction has two elements , When business
receives something, it has to pay something , Every debit has a
corresponding credit
Your Answer Every business transaction has two elements , When business
receives something, it has to pay something , Every debit has a
corresponding credit
True/False
Question Depreciation can be defined as a permanent, continuous and
gradual reduction in the book value of a fixed asset.
Correct Answer True
Your Answer True
True/False
Question Penalty paid for delay in payment to creditors represents
uncontrollable cost.
Your Answer True

Correct Answer Stores department , Transport department , Accounting

department
Your Answer Stores department , Transport department , Accounting
department
Match The Following

Cost Centre Facilitate the fixation of Increase or Decrease in

responsibility cost
Cost Control Process of controlling Facilitate the fixation of
costs of operations responsibility
Differential Cost Increase or Decrease in Increase or Decrease in
cost cost
Sunk Cost Historical Cost Historical Cost

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
Your 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 ,
Helps the management in taking 'make' or 'buy' decision for the
Select The Blank

Question ________ Accounting assists the management in establishing
the plans to attain the economic objectives and take proper
decisions for the attainment of its objectives.
Select The Blank

Question Depreciation charged on office furniture on straight line basis is
an example of ________.
Correct Answer Administration overheads
Your Answer Administration overheads
True/False
Question Linking overhead to a cost unit is known as overhead absorption.
Correct Answer True
Your Answer True
True/False
Your Answer False

Correct Answer Single organization having number of branches. , Number of

companies in same industry , Similar Industries such as cotton,
jute etc.
Your Answer Single organization having number of branches. , Number of
companies in same industry , Similar Industries such as cotton,
jute etc.
True/False
Question New companies can adopt Uniform costing system as a ready-
made system.
Correct Answer True
Your Answer False

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

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

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

balance should be written off. Calculate its impact on profit of the
company.
Your Answer The gross profit will decrease by Rs.6,300/-

Question A lathe machine was purhcased on 31st March, 2004 for
Rs.65,000/-, however it was installed only on 5th April, 2004.
The depreciation is charged @ 15% p.a.. Find the amount of
depreciation charge for the said lathe machine for the year
ended 31st March, 2004.
Correct Answer Nil
Your Answer Nil
True/False
Question Malik started business by contributing cash Rs.50,000/- and his
personal car worth Rs.25,000/-; thus his capital account should
be credited with Rs.75,000/-.
Correct Answer True
Your Answer True
True/False
Question While passing the journal entry, it is of utmost importance to
ensure that the total of amount debited is equal to the total of the
amount credited.
Correct Answer True
Your Answer True
Select The Blank

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

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

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

Question The cost of idle time incurred by employees that is considered
normal for the production process should be charged to :
True/False
Question The cost of abnormal time may be recovered by inflating the
hourly labour rate.
Correct Answer True
Your Answer True
Select The Blank

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

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

Question ABC Ltd. is planning to sell 200,000 units of product B. The fixed
costs are Rs.400,000/- and the variable costs are 60% of the
selling price. In order to realize a profit of Rs.100,000/-, the
selling price per unit would have to be :
Your Answer Rs.4.17

Question The total production cost for making 20,000 units was
Rs.21,000/- and the total production cost for making 50,000 units
was Rs.34,000/-. Once production exceeds 25,000 units,
additional fixed costs of Rs.4,000/- are incurred. The full
production cost per unit of making 30,000 units is:
Correct Answer Re.0.98
Your Answer Re.0.84

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

budget
Your Answer Sales budget , Production budget , Capital expenditure budget

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

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

Your Answer Administrative expenses
True/False
Question Amortisation of goodwill should be considered while preparing
cash budget.
Your Answer True

Question Features of material usage variance are :
Correct Answer Measures the difference between the quantity of materials

actually used and that should have been used. , Considers
standard price X actual quantity , Considers standard price X
standard quantity
Your Answer Measures the difference between the quantity of materials
standard quantity
Select The Blank

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

Select the correct formulae for calculating break even point.
a)
Fixed
cost / (Selling
b)
price per unit
- Variable
c) cost per unit)
d) [Fixed
cost /
Marginal
contribution]
X Sales
[Fixed
cost /
Marginal
contribution]
X Variable
cost
[Fixed
cost / (Fixed
cost + Net
Profit)] X
Sales
Select the transactions which can be entered in the
Journal proper.
a)
Opening
entries
b)
Closing
c) entries
d) Average
entries
Rectification
entries
Compound
journal entry
avoids
duplication of
effort.
True
False
Labour efficiency variance Rs.1,000/-
(favourable); labour mix variance Rs.260/-
(adverse) and labour rate variance Rs.300/-
(adverse). Compute labour cost variance
and labour yield variance.
a)
Labour
cost variance
b) -Rs.700/-
(Favourable)
c)
Labour
d) yield variance
-Rs.1,260/-
Labour
yield variance
is adverse
Labour
yield variance
is favourable
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?
a)
Rs.29,200/-
b) Rs.26,000/-
c) Rs.26,545.45
d) Rs.26,788.99
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 estimated that
10% of the creditors
are in the prompt
category. Find the
amount paid to
a)
Rs.161,000/-
b) Rs.121,000/-
c) Rs.177,000/-
d) Rs.118,000/-
A company
budgets for a
production of
150,000 units. The
variable cost per
unit is Rs.14/- and
fixed cost is Rs.2/-
per unit. The
company fixes its
selling price to
fetch a profit of
15% on total cost.
What is the break
even point for the
company?
a)
68,182 units
b) 68,100 units
c) 61,182 units
d) 61,100 units
Select The Blank

Select The Blank

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

Question The different purposes served by standard costing technique
are :
Correct Answer Cost control , Cost awareness , Performance appraisal
Your Answer Cost control , Cost awareness , Profit planning
True/False
significant manner.
Correct Answer True
Your Answer True
True/False
Your Answer False

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

Question If a predetermined overhead rate is not employed an the volume
of production is increased over the level planned, the cost per
unit would be expected to :
Correct Answer Decrease for fixed costs and remain unchanged for variable
costs
Your Answer Remain unchanged for fixed costs and increase for variable
costs
Select The Blank
Question The variance which measures the difference between what is
paid for a given quantity of materials and what should have
been paid for, is known as ________ variance.
Correct Answer Direct material cost
Your Answer Direct material cost
True/False
business.
Your Answer False

Question It is said that adoption of uniform costing creates customer
confidence because . . .
Correct Answer Prices are reliable
Your Answer Prices are reliable
True/False
Question Deferred revenue expenditure written off account is a real
account.
Your Answer False
Select The Blank

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

Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged
as depreciation. Calculate the rate of depreciation.
Correct Answer 0.17
Your Answer 0.17
True/False
Question Balance sheet is considered to be a part of the financial
statements.
Correct Answer True
Your Answer True
Select The Blank

changes in sales volume on the profit of the company, in the
________.
Correct Answer short run
Your Answer short run

Question The following figures relate to a company manufacturing a
varied range of products : Year 2003 Total sales Rs.22,23,000/-
and total cost Rs.19,83,600/-. Year 2004 : Total sales
Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability
in prices, calculate the profit volume ratio
Correct Answer 0.3
Your Answer 0.7

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

Question While preparing sales budget the following factors must be
considered :
Correct Answer The number and types of products sold by the organisation ,
Whether the organisation's market share is increasing or
decreasing? , Details of seasonal fluctuations in sales
Your 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
indirect expenses is termed as Overheads.
Correct Answer True
Your Answer True
Select The Blank

Question Generally all the liabilities will have ________balance.
Correct Answer Credit
Your Answer Credit
True/False
Question Uniform costing system is a pre-requisite to an inter-firm
comparison of firms belonging to the different industries.
Your Answer False
True/False
Question Error of commission refer to calculation errors, totaling errors,
errors in carrying forward etc.
Correct Answer True
Your Answer True

Your Answer Marginal costing , Budgetary control , Standard costing

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

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

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
Your Answer Designed particularly for internal use , Helpful in estimating the
future along with past period , Useful in furnishing the necessary
information to the management
True/False
Question Malik started business by contributing cash Rs.50,000/- and his
personal car worth Rs.25,000/-; thus his capital account should
be credited with Rs.75,000/-.
Correct Answer True
Your Answer True

Question Flood occurred on 18th March, 2004 an d 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.

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

Question XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st
October, 2003. Interest is to be paid on half yearly basis. What
treatment should be given in the books of accounts of XYZ &
Co. as on 31st March, 2004?
Correct Answer Interest account should be debited with Rs.7,520.55 and
outstanding interest account should be credited with
Rs.7,520.55
Your Answer Interest account should be debited with Rs.7,520.55 and
outstanding interest account should be credited with
Rs.7,520.55
True/False
Question The labour cost which can be identified with the individual cost
centre is known as the Direct Labour Cost.
Correct Answer True
Your Answer True
Match The Following

Ledger Maintain all types of Maintain all types of

accounts accounts
Audit Reviewing internal control Reviewing internal control
system system
True/False
the profit.
Correct Answer True
Your Answer True
Select The Blank

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

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


Question If you are required to enforce uniform costing system in your
industry, how would you proceed ?
Correct Answer Collecting data from all units of your industry , Ensuring that the
data collected is complete and correct , Maintaining secrecy of
the data collected
Your Answer Collecting data from all units of your industry , Ensuring that the
data collected is complete and correct , Allowing free access to
all the units to the collected data
True/False
given period.
Correct Answer True
Your Answer True
Select The Blank

Question The indirect material cost, indirect labour cost and indirect
expenses cost, collectively are termed as ________.
True/False
Question Under time rate system a worker is paid on the basis of
production achieved by him in a given time.
Your Answer False

True/False
Correct Answer True
Your Answer True

variance.
Select The Blank

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

Purchase budget Forecast of quantity and Forecast of quantity and

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

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

True/False
Question A business is an activity carried out with the
intention of earning the profit.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status
of the business at given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of
analyzing & interpreting the information
Correct Answer True
Your Answer True
True/False
Question Accounting is an art of recording, classifying
& summarizing in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Profitability statement indicates the amount
of assets & liabilities.
Your Answer False
Match The Following

Accounting Process of Process of
analyzing & analyzing &
Profitability Indicates the Indicates the
statement amount of profit amount of profit
earned earned
Financial statement Profitability Profitability
statement & statement &
Match The Following

Bills Payable Amount payable to Amount payable to
supplier supplier
Bills Receivable Amount received Amount received
from the customer from the customer
Trade Discount Not accounted for Not accounted for in
in the books of the books of
Accounts Accounts
Cash Discount Accounted for in Accounted for in the
the books of books of Accounts
Accounts
Bad debts Amount not Amount not
received from received from
customer customer
True/False
Question Real Accounts may also consist the
accounts of some intangible assets like
Goodwill Account
Correct Answer True
Your Answer True
True/False
Question The rate at which the depreciation is to be
calculated are also specified in the Income
Tax Act 1961.
Correct Answer True
Your Answer True

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

Correct Answer salary , discount allowed , postage &
telegram
Your Answer salary , postage & telegram

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

Question Amit sold Goods to Atul for Rs. 50,000 on
cash & Rs. 50,000 on credit basis & allowed
10% discount on on the spot transaction.
Cash Account debited to Rs.
_____________
Your Answer 45,000
Question A proprietor purchase goods worth Rs.
5500 & cash account credited to Rs. 5000
rectification of the suspense accounted
debited to Rs
Correct Answer 500
Your Answer 500

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

Correct Answer Wrong totaling of subsidiary books , Posting
on the wrong side of an account , Omission
of posting an account in the ledger
Your Answer Wrong totaling of subsidiary books , Posting

Correct Answer Wrong totaling of subsidiary books , Posting
Your Answer Wrong totaling of subsidiary books , Posting
True/False
Question A bill of Rs. 500 for old furniture sold to Raj,
was entered in the sales day book
Your Answer True
True/False
Question Abnormal cost indicates that cost which is
normally incurred at a certain level of output
under normal circumstances.
Your Answer False

Question This cost indicates increased or decreased
cost due to the increased or decreased
volume of operations.
Your Answer Opportunity Cost
True/False
Question Indirect material cost assist the
manufacturing process is an integral part of
finish goods.
Your Answer True

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

Question Indirect Expenses includes
Correct Answer Rent , Telephone expenses , Insurance
Your Answer Rent , Telephone expenses , Insurance
True/False
Question Material cost is the first and probably the
most important element of cost.
Correct Answer True
Your Answer True

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

Question 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
Your Answer One copy to Purchase department , One
copy to Accounts department , One copy to
Costing department

Question Valuation of material uses the following
methods
Correct Answer FIFO and LIFO , Average price method ,
Market price
Your Answer FIFO and LIFO , Average price method ,
Market price

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

Question Under the Emerson’s Efficiency Bonus
System at following efficiency level no
bonus is payable.
Correct Answer Below 66.66%
Your Answer Below 66.66%
True/False
Question 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
Your Answer True
True/False
Question Fixed cost is the cost that varies in direct
proportion with the level of activity or
volume of operations.
Your Answer False

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

Question Budgetory Control deals with
Correct Answer Establishment of budgets , Comparison of
budgeted results with actuals , Computation
of variance.
Your Answer Establishment of budgets , Comparison of
budgeted results with actuals , Computation
of variance.
True/False
Question The analysis of overhead variances is
different and the most complex task.
Correct Answer True
Your Answer True
True/False
Question Standard costing and Marginal Costing are
the best possible tools available to the
management for cost control
Your Answer False

Question Current standards includes
Correct Answer Expected standards , Normal standards ,
Ideal standards
Your Answer Expected standards , Normal standards ,
Ideal standards

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

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

Question After material is received from the supplier,
quantity actually received is compared with
quantity ________-and ________-if any,
are taken up with the supplier
Your Answer ordered
Select The Blank

Question Labour Turnover indicates ________ in
labour force showing a highly increasing
trend or highly ________ trend
Your Answer change
Select The Blank

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

Question ________ and ________ are non monetary
incentives
Correct Answer Safety services
Your Answer Safety services
Correct Answer education facility
Your Answer education facility
Select The Blank

Question Semi ________ overheads are neither
________ nor variable in nature.
Your Answer fixed
Correct Answer variable
Select The Blank

Question Fixed overheads normally arise as a result
of policy and are largely ________ in nature
at the ________ level of the management
Correct Answer uncontrollable
Your Answer controllable
Correct Answer lower
Your Answer top
Select The Blank
Question variable cost is the cost that tend to
________ in direct proportion with
________
Correct Answer vary
Your Answer vary
Select The Blank

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

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

Question Uniform costing is not a separate method of
________.
Select The Blank

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

Correct Answer Level of activity , Capacity utilization , Level
of sales
Your Answer Level of activity , Capacity utilization , Level
of sales

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

Question Discount received from the creditor has
been entered in the creditor's account but
discount has not been credited; what type
of error is this ________
Correct Answer Omission of posting an amount in the
ledger
Your Answer errors of principle
True/False
Question Under some circumstances, it may be
advisable to sell at prices equal to or below
the marginal cost ignoring fixed cost.
Correct Answer True
Your Answer False

Question Which of the following operations would
normally be carried out first when preparing
a master budget?
Correct Answer Determining the budget period
Your Answer Identifying the principal budget factor
Select The Blank

Question Interest on capital is an allowable
expenditure for parntership firms, as per
the provisions of the ________ .
Correct Answer Income Tax Act, 1961
Your Answer The Partnership Act, 1956
Match The Following

Financial statement Profitability Profitability
statement & statement &
Accounting Process of Process of
analyzing & analyzing &
Profitability Indicates the Indicates the
statement amount of profit amount of profit
earned earned

Question Mixers Ltd. is engaged in producing a
standard mix using 60kg of chemical X and
40 kg of chemical Y. The standard loss of
production is 30%. The standard price of X
is Rs.5/- per kg.and of Y Rs.10/- per kg.
The actual mix and yield were as follows :
X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @
Rs.8/- per kg. Actual yield - 115
kg.Compute material yield variance.
True/False
Question A business is an activity carried out with the
intention of earning the profit.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status
of the business at given period.
Correct Answer True
Your Answer True

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

Question 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
Your Answer The number and types of products sold by
the organisation , Whether the
organisation's market share is increasing or
decreasing? , Details of seasonal
fluctuations in sales

Question 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
Your Answer Profit and loss account should be debited
with Rs.1,866.67

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

Correct Answer 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
Your 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
Question Profitability statement indicates the amount
of assets & liabilities.
Your Answer False
True/False
Question Standard costing is always accompanied
by a system of budgeting but budgetary
control may be operated in business where
standard costing is impracticable.
Correct Answer True
Your Answer False
Select The Blank

Question An amount of Rs.200/- is received from P
and is credited to Q. The rectification entry
True/False
Question Under time rate system a worker is paid on
the basis of production achieved by him in
a given time.
Your Answer False

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

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

Question Which of the following is the most efficient
use of the clock card?
Correct Answer To facilitate payment for time spend on the
work premises
Your Answer To allow labour time to be charged to
individual jobs
True/False
Question Budgetary control system provides a basis
for establishment of the incentive systems.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording,
classifying & summarizing in a significant
manner.
Correct Answer True
Your Answer True
True/False
Question A fixed budget is useful only when the
actual level of activity corresponds to the
budgeted level of activity.
Correct Answer True
Your Answer True
Select The Blank

Question A low margin of safety indicates ________
fixed overheads.
Your Answer lower
Select The Blank

Question Category A items, as per ABC analysis,
represent ________ % of the total number
of items in inventory.
Correct Answer less than 10
Your Answer 70 to 100

Question The gross profit transferred from the trading
account is Rs.98,999/-. The expenses
debited to the profit and loss account are
salary Rs.12,000/-; advertisement
expenses Rs.18,000/-; printing and
stationery Rs.5,500/- and managing
director's incentive Rs.28,000/-. It was
noted that no entry was made for salary of
one month which was due but not yet paid.
Find the net profit of the company.
Correct Answer Rs.34,408.09
True/False
Question Credit balances in all the Personal & Real
accounts appear on asset side.
Your Answer False
Select The Blank

Question A complete list of all material required, with
quantities, for a particular job is given in the
________.
Correct Answer Bill of material
Your Answer Bill of material
True/False
Your Answer False
True/False
Question Price based on Uniform Costing may be
taken to be reliable and representative of
the whole industry.
Correct Answer True
Your Answer True
Select The Blank

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

Question The budget manual must contain statement
regarding:
Correct Answer Objectives of the orgainsation
Your Answer Working hours of the organisation

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

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

Question Since the pass book and the bank book
record the ________ transactions, the bank
balance as per these books should be
equal.
Correct Answer Same
Your Answer Same
True/False
Question A pre-determined factory overhead rate
holds up product costing.
Your Answer False

Question These are the replacement costs of labour
turnover.
Correct Answer Inefficiency of new workers , Cost of
selection and placement , Increased
Your Answer Cost of personnel administration ,
Inefficiency of new workers , Cost of
selection and placement
True/False
Question Accounting refers to the process of
analyzing & interpreting the information
Correct Answer True
Your Answer True
Question Rent of Rs.7,500/- for the month of April
was received in March. Which account
should be credited in the books of accounts
for making an entry for receipt of the said
amount?
Correct Answer Rent received in advance account
Your Answer Rent received in advance account
True/False
Question Bank reconciliation statement can be
prepared on weekly basis.
Correct Answer True
Your Answer True

Question Amit sold Goods to Atul for Rs. 50,000/- on
cash & Rs. 50,000/- on credit basis. Amit
allowed 10% discount for on the spot
transaction. What is the amount that should
be debited to the cash account?
Match The Following

Liabilities All the amount All the amount
owed by the owed by the
business business
Drawing Withdrawn for Withdrawn for
personal use personal use
Journal Book of original Book of original
entry entry
Ledger Maintain all types Maintain all types of
of Accounts Accounts
Assets All the properties All the properties
owned by the owned by the
business business
True/False
liabilities.
Your Answer False
Select The Blank

Question Advance received from customers is ________ for the
organisation.

Correct Answer More than one key factors , Refers to a complex situation ,
Can be resolved by using linear programming technique
Your Answer More than one key factors , Refers to a complex situation ,
Can be resolved by using linear programming technique
True/False
Question Maintenance Department is a service cost centre.
Correct Answer True
Your Answer True
Match The Following

Liabilities All the amount owed by All the properties owned

the business by the business
Drawing Withdrawn for personal Withdrawn for personal
use use
Ledger Maintain all types of Maintain all types of

Accounts Accounts
Assets All the properties owned All the amount owed by
by the business the business
Select The Blank

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

Question Identify the budgets for which the production manager sould
be held responsible :
Correct Answer Production budget , Production overheads budget , Plant
utilisation budget
Your Answer Materials budget , Production budget , Production overheads
budget
True/False
Question 1) Financial statements are basically in two forms i.e.
profitability statement and balance sheet.
Correct Answer True
Your Answer True

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

Question Select the cost that indicates increased or decreased total cost
due to the increased or decreased volume of operations.
Your Answer Variable cost
Select The Blank

Question If the owner brings in personal calculator for office use,
________ account should be credited.
Your Answer Capital
True/False
Question The process of accounting split into three steams i.e.
financial, cost, management accounting.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting discloses the financial performance &
financial statements of the business as a whole.
Correct Answer True
Your Answer True
True/False
Your Answer False
True/False
Question P&L statement which is a period statement & relates to a
certain period tells about results of operations.
Correct Answer True
Your Answer True
Match The Following

Advantageously Scope of uniform costing Fields covered by

applicable in similar uniform costing
industries
Spirit of mutual trust Requisite for uniform Requisite for uniform
costing costing
Avoids cut throat Advantage of uniform Advantage of uniform
competition costing costing
Treatment given to Fields covered by Scope of uniform costing
research and uniform costing
development costs

Question A firm employs ten workers at an hourly rate of Rs.20/-.
They worked for 40 hours each and completed the job for
which standard time was 48 hours for each worker. Calculate
labour cost for the job under the Rowan Plan.
Correct Answer Rs.9,333.33
Your Answer Rs.9,666.67

Question Features of material usage variance are :
Correct Answer Measures the difference between the quantity of materials
standard quantity
Your Answer Measures the difference between the quantity of materials
standard quantity
True/False
Question Treating capital receipt as revenue income is an example of
errors of commission.
Your Answer True


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

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

Correct Answer Indicates historical cost , Not relevant in decision making
process , Incurred in past
Your Answer Indicates historical cost , Not relevant in decision making
True/False
Question For a manufacturing company, dividend received is a non-
operating income.
Correct Answer True
Your Answer False

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
Your Answer Raised when the stock of a raw material has fallen to the re-
order level. , Raised to intimate the supplierteh quantity and
quality of new material required. , Indicates the type,
quantity and quality of material required

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

Question Crane expenses should be apportioned on the basis of
________.
Correct Answer Number of hours crane worked in the department
Your Answer Number of employees working on the crane
Select The Blank

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

consistently , Facilitates the comparison of financial
statements , It facilitates comparison of financial statements
on period-to-period basis
consistently , Facilitates the comparison of financial
statements , It facilitates comparison of financial statements
on period-to-period basis
Select The Blank

Your Answer costing
True/False
Question Suspense account is closed automatically after rectification
of all the errors.
Correct Answer True
Your Answer False
True/False
Your Answer True
Select The Blank

Question Generally all the liabilities will have ________balance.
Correct Answer Credit
Your Answer Debit
Select The Blank

Question If overhead absorbed i.e. overheads charged to units during
the period is more than the overhead incurred, it is said that
the overheads are ________.
True/False
business.
Your Answer True

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

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

department
Your Answer Stores department , Transport department , Machining
department
True/False
indirect expenses is termed as Overheads.
Correct Answer True
Your Answer True

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

Question You are using petrol as one of the raw materials. Daily you
purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it
generally gets lost due to spillage and evaporation. On a
particular hot and dry day, the issue of petrol from 1,000
litres drum was as follows : To job X 200 litres; job Y 400
litres and job Z 320 litres. After these issues the drum was
empty. Calculate per litre charge for use of petrol, quantum
of loss and total quantum of petrol used for jobs X,Y and Z.
Correct Answer Loss due to spillage and evaporation - 30 litres. , Rate of
charge per litre of petrol - Rs.30/-
Your Answer Rate of charge per litre of petrol - Rs.30.98 , Total petrol
used for jobs X, Y and Z - 920 litres
True/False
Question Error of commission refer to calculation errors, totaling
errors, errors in carrying forward etc.
Correct Answer True
Your Answer True
True/False
Question Cheque received from a client on 28th September, 2004 must
be entered in the bank book only after it is credited in the
pass book.
Your Answer False
Select The Blank

________.
Select The Blank

Question The column which refers to the page number of the ledger is
known as ________.
Correct Answer Ledger folio
Your Answer Ledger folio
True/False
Question Management Accounting is the process of analysis and
interpretation of financial data collected with help of
financial accounting and cost accounting
Correct Answer True
Your Answer True

Question The direct material useage budget and direct material
purchase budget differ because of which of the following:
Correct Answer A planned change in the level of material stock
Your Answer A planned change in the level of material stock
True/False
given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting
the information already recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing
in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Management Accounting aims at enabling the management
to take the decisions about the future. It may consider future
data as well as non-financial factors.
Correct Answer True
Your Answer True

Question 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
Match The Following





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

Question Double Entry Accounting System__________________
Correct Answer Every business transactions have two elements , When
business receives something, it has to pay something , Every
debit has a corresponding credit
Your Answer Every business transactions have two elements , When
True/False
Question Sundry creditors transfer to asset side.
Your Answer False

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

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

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

Question Goods distributed as free sample amounted to Rs. 10,000.
Prepare Neonboard Rs. 5000. The total amount transfer to
advertisement account is Rs.____
Your Answer 15,000
True/False
Question A bank reconciliation statement is prepared on a particular
date.
Correct Answer True
Your Answer True

Question When bank balance as per bank book is considered then
following to be added.
Correct Answer cheques issued but not presented , direct deposit by customer
, wrong credits given by bank
Your Answer cheques issued but not presented , direct deposit by customer
True/False
Question As soon as the suspense account balance is wiped out , it
may be assumed that all mistakes have been corrected.
Your Answer True
True/False
Question Credit sale of Rs. 5000 to Bobby should be entered in the
purchase book.
Your Answer False


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

Question LAST IN FIRST OUT (LIFO)
Correct Answer The price of the latest available lot is considered first , If that
lot is exhausted, the price of the 10% prior to that is
considered , Physical issue of the material may not be made
out of the said lot
Your Answer The price of the latest available lot is considered first ,
Physical issue of the material may not be made out of the
said lot , Only a and c

Question The Bin card and stores ledges do not match due to the
following reasons:
Correct Answer Arithmetical errors in calculating , Non- posting a certain
document , Posting a wrong Bin card
Your Answer Arithmetical errors in calculating , Non- posting a certain
True/False
Question Flux method is important method of wage payment.
Your Answer False
Question The causes of idle time can be analysed as
Correct Answer Administrative causes , Productive causes , economic causes
Your Answer Administrative causes , Productive causes , economic causes

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

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.
Your Answer difficult for classification as fixed cost and variable cost. ,
True/False
Question Flexible budget is an effective tool for evaluation of
performance.
Correct Answer True
Your Answer True
True/False
Question Material Mix Variance occurs where only one raw material
is required
Your Answer False

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

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

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

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

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

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

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

Ordering cost Associated with Associated with

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

Question Generally accounts of the assets will have ________ balance
Your Answer debits
Your Answer credits
Select The Blank

Question Interest on overdraft charged by the bank is ________ to the
pass book and ________ to the cash book
Your Answer debited
Select The Blank

Question While selecting source of supply ________ epartment may
call for the ________ from the prospective suppliers
Select The Blank

received is compared with quantity ________-and
________-if any, are taken up with the supplier
Your Answer ordered
Select The Blank

Question Labour Turnover indicates ________ in labour force
showing a highly increasing trend or highly ________ trend
Your Answer change
Select The Blank

Question Administration overheads are ________ in nature and can be
controlled mainly at ________ level of the management
Correct Answer top
Your Answer top
Select The Blank
Question Planning lays down the course of action to be taken in future.
In case budgetary control, it is in the form of the ________
and in case of ________ costing, it is in the form of the
standard cost
Your Answer budgets
Your Answer standard
Select The Blank

Select The Blank

Your Answer
Select The Blank

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

Question Bin card is maintained by ________ department whereas
________ is maintained by costing department.
Your Answer Stores
True/False
given period.
Correct Answer True
Your Answer True
True/False
Question Accounting refers to the process of analyzing & interpreting
the information already recorded in the books of accounts.
Correct Answer True
Your Answer False
True/False
Question Accounting is an art of recording, classifying & summarizing
in a significant manner.
Correct Answer True
Your Answer True
True/False
Question Management Accounting aims at enabling the management
to take the decisions about the future. It may consider future
data as well as non-financial factors.
Correct Answer True
Your Answer True

Question Limitations of Management Accounting includes--------------
-----
Correct Answer Its wide scope , Possibility of intuitive decision , Requires
Your Answer Its wide scope , Possibility of intuitive decision , Requires
Match The Following





Your Answer Business is separated from the owner. , The accounting
process carried out for the business

Question Double Entry Accounting System__________________
Correct Answer Every business transactions have two elements , When
Your Answer Every business transactions have two elements , When
True/False
Question Sundry creditors transfer to asset side.
Your Answer False

Correct Answer 750
Your Answer 750

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

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

Question Goods distributed as free sample amounted to Rs. 10,000.
Prepare Neonboard Rs. 5000. The total amount transfer to
advertisement account is Rs.____
Your Answer 15,000
True/False
Question A bank reconciliation statement is prepared on a particular
date.
Correct Answer True
Your Answer True

Question When bank balance as per bank book is considered then
following to be added.
Correct Answer cheques issued but not presented , direct deposit by customer
Your Answer cheques issued but not presented , direct deposit by customer
True/False
Question As soon as the suspense account balance is wiped out , it
may be assumed that all mistakes have been corrected.
Your Answer True
True/False
Question Credit sale of Rs. 5000 to Bobby should be entered in the
purchase book.
Your Answer False


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

Question LAST IN FIRST OUT (LIFO)
Correct Answer The price of the latest available lot is considered first , If that
lot is exhausted, the price of the 10% prior to that is
considered , Physical issue of the material may not be made
out of the said lot
Your Answer The price of the latest available lot is considered first ,
Physical issue of the material may not be made out of the
said lot , Only a and c

Question The Bin card and stores ledges do not match due to the
following reasons:
Correct Answer Arithmetical errors in calculating , Non- posting a certain
Your Answer Arithmetical errors in calculating , Non- posting a certain
True/False
Question Flux method is important method of wage payment.
Your Answer False

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

Correct Answer difficult for classification as fixed cost and variable cost. ,
Your Answer difficult for classification as fixed cost and variable cost. ,
True/False
Question Flexible budget is an effective tool for evaluation of
performance.
Correct Answer True
Your Answer True
True/False
Question Material Mix Variance occurs where only one raw material
is required
Your Answer False

analyzed as
Variance
Variance


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

Your Answer Forecasting

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

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

Question During a month opening stock is 5,000 kg, closing stock is
6,000 kg and production is 21,000 kg , what is the quantity
of sales
Match The Following

Ordering cost Associated with Associated with

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

Question Generally accounts of the assets will have ________ balance
Your Answer debits
Your Answer credits
Select The Blank

Question Interest on overdraft charged by the bank is ________ to the
pass book and ________ to the cash book
Your Answer debited
Select The Blank

Question While selecting source of supply ________ epartment may
call for the ________ from the prospective suppliers
Select The Blank

received is compared with quantity ________-and
________-if any, are taken up with the supplier
Your Answer ordered
Select The Blank

Question Labour Turnover indicates ________ in labour force
showing a highly increasing trend or highly ________ trend
Your Answer change
Select The Blank

Question Administration overheads are ________ in nature and can be
controlled mainly at ________ level of the management
Correct Answer top
Your Answer top
Select The Blank
Question Planning lays down the course of action to be taken in future.
In case budgetary control, it is in the form of the ________
and in case of ________ costing, it is in the form of the
standard cost
Your Answer budgets
Your Answer standard
Select The Blank

Select The Blank

Your Answer
Select The Blank

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

Question Bin card is maintained by ________ department whereas
________ is maintained by costing department.
Your Answer Stores
True/False
the profit.
Correct Answer True
Your Answer True
True/False
given period.
Correct Answer True
Your Answer False
True/False
Correct Answer True
Your Answer True
True/False
significant manner.
Correct Answer True
Your Answer True
True/False
Question Cost Accounting restrict itself with historical transactions
Your Answer False
True/False
Question A very wide scope of Management Accounting is the limitation
by itself.
Correct Answer True
Your Answer True

Question Journal is popularly known as 'Book of . . .
Correct Answer Original Entry
Your Answer Original Entry
True/False
Question In a Balance-Sheet right hand side is referred as assets side
and left hand side is referred as liabilities.
Correct Answer True
Your Answer False

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

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

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

Correct Answer To ascertain cost and profitability , Cost Control , Presentation

of Information
Your Answer To ascertain cost and profitability , Cost Control , Presentation
of Information

Correct Answer Indicates historical cost , Not relevant in decision making

Your Answer Indicates historical cost , Not relevant in decision making

Correct Answer Consumable stores , Glue used in book binding , Nails used in
packing boxes
Your Answer Consumable stores , Nails used in packing boxes
Select The Blank

Question The principle of ________ is followed while preparing the
financial statements.
Select The Blank

Question The process of attributing proportions of items of costs amongst
const centres is called ________.
True/False
Your Answer False
Match The Following

Indirect Material Element wise Element wise classification

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

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

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

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

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

Question Ram and Laxman are partners of Kush & Bros. As on 1st April,
2003 Ram's capital is Rs.50,000/- and Laxman's capital is
Rs.80,000/-. If interest on capital is to be provided @ 10% p.a.,
what will be 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
Your 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
Question Non-trading income is disclosed on the credit side of ________
account.
Correct Answer Profit and loss
Your Answer Profit and loss
Select The Blank

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

Question An adjustment relating to outstanding expenses will ________
the net profit.
Select The Blank

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

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

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

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

Question While preparing the bank reconciliation statement as on 31st
March, 2004 you find the following discrepancy : 'a cheque of
Rs.3,700/- received and deposited in bank on 27th March, 2004
was entered credited in the pass book on 3rd April, 2004.' In this
background, which of the following statement holds true as on
31st March, 2004?
Correct Answer Balance as per pass book < Balance as per bank book
Your Answer Balance as per pass book < Balance as per bank book
True/False
Question Bank reconciliation statement is a systematic presentation of
errors made by the accountant.
Your Answer False
Select The Blank

Question The stores department is a ________ department.
Correct Answer Service
Your Answer Service
Select The Blank

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

Question The ________ is a perpetual inventory record.
Correct Answer Bin card
Your Answer Goods received note

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

Question Selecting an appropriate method of valuation of inventory is
important because :
Correct Answer It influences the figure of gross profit
Your Answer It influences the figure of gross profit
True/False
Question Re-order level for materials is determined considering maximum
consumption and maximum delivery period.
Correct Answer True
Your Answer True
True/False
Question Control on purchase of material is exercised by the storekeeper.
Your Answer True

Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of
motivation to increase productivity
Your Answer Ignores the efficiency of workers , Lack of motivation to increase
productivity
True/False
Your Answer False
True/False
Question Under some circumstances, it may be advisable to sell at prices
equal to or below the marginal cost ignoring fixed cost.
Correct Answer True
Your Answer True
Match The Following

Increase in fixed cost will Increase in break even Increase in break even
lead to point point
Decrease in variable cost Increase in profit volume Increase in profit volume
will lead to ratio ratio
Decrease in selling price Decrease in contribution Decrease in loss
will lead to
Increase in contribution Increase in profits Decrease in break even
will lead to point
Select The Blank


Correct Answer Provides reliable basis for budgeting , Facilitates delegation of

authority , Promotes economy and efficiency
Your Answer Provides reliable basis for budgeting , Facilitates delegation of
authority

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


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

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

Select The Blank

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

Question The cost that indicates historical cost, which is incurred in past, is known
as
Select The Blank

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

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


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

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

Question The cost of idle time incurred by employees that is considered normal for
the production process should be charged to :
Select The Blank

Question Creche expenses may be appropriately approtioned on the basis of
________.
Correct Answer Number of female workers
Your Answer Number of female workers

Question 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/-

Question Limitations of Management Accounting includes-------------------
Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate
Yo ur Answer Its wide scope , Possibility of intuitive decision , Requires elaborate
Select The Blank


Correct Answer It is a legal requirement , It protects the interest of outsiders , It considers

Your Answer It is a legal requirement , It protects the interest of outsiders , It considers

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

Question 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.

Your Answer Cost control , Budgetary control , Standard costing
True/False
Correct Answer True
Your Answer True
True/False
Your Answer False

Question Uniform costing system is useful in the following areas
Correct Answer Classification of cost accounts
Your Answer Preparing financial statements

Correct Answer More than one key factors , Refers to a complex situation , Can be
Your Answer More than one key factors , Refers to a complex situation , Can be
True/False
Your Answer False
True/False
Question Interim dividend paid by the company should be debited to the profit and
loss appropriation account.
Correct Answer True
Your Answer True

Question A materials requisition form normally contains the following aspects:
Your Answer Quantity requisitioned , Job number

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

Question 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:

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
Your Answer Increase the selling price , Increase the sales volume , Reduce cost of
sales
True/False
Question Receipts and payments method of cash budget is useful for preparing
long term estimates.
Your Answer False

Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority ,
Promotes economy and efficiency
Your Answer Provides reliable basis for budgeting , Facilitates delegation of authority
True/False
Question The sales mix variance highlights the fact that the actual mix of sales has
been in the same ratio as budgeted.
Your Answer False
Select The Blank

________.
True/False
Question Lack of efficient control on various aspects related to raw-material
increases the material cost component of the finished product.
Correct Answer True
Your Answer True
True/False
Question Due to compensating errors the arithmetical accuracy of the trial balance
is affected.
Your Answer False

Question Material price variance for a job is Rs.800/- (Favourable). 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/- (Favourable)
Select The Blank

Your Answer Profit and Loss Account
Match The Following

Daily Time sheets Time spent by worker on job Time spent by worker on job
is recorded is recorded
Time Keeping Department Recording of workers time Recording of workers time
Time booking department Jobwise booking of time. Jobwise booking of time.
Time Recording Clock Ticket number & clock card Ticket number & clock card
Method allotted to worker allotted to worker
True/False
Question Purchased goods by paying Rs.35,000/-: In this case, the cash account
should be debited.
Correct Answer True
Yo ur Answer True
Select The Blank

Question If the customer is not likely to pay the amount receivable from him, this
amount should to be treated as ________.
True/False
significant manner.
Correct Answer True
Your Answer True
Match The Following


Balance- sheet Balance-sheet
Profitability statement Indicates the amount of profit Indicates the amount of profit
earned earned
True/False
Question The problem of multiple key factors can be solved with the help of
techniques like linear programming, operations research, etc.
Correct Answer True
Your Answer True
Select The Blank

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

Question If you are required to enforce uniform costing system in your industry,
how would you proceed ?
Correct Answer Collecting data from all units of your industry , Ensuring that the data
collected is complete and correct , Maintaining secrecy of the data
collected
Your Answer Collecting data from all units of your industry , Ensuring that the data
collected is complete and correct , Allowing free access to all the units to
the collected data
True/False
Question All costs are controllable.
Your Answer False

True/False
the profit.
Correct Answer True
Your Answer True
True/False
given period.
Correct Answer True
Your Answer True
True/False
business.
Your Answer False
True/False
Correct Answer True
Your Answer True
Match The Following

Personal A/C Debit the receiver, Credit Debit the receiver, Credit
the giver the giver
Nominal A/C Debit all the expenses, Debit all the expenses,
Credit all the incomes Credit all the incomes
Tangible assets Building, Machinery Building, Machinery
In tangible assets Patents, Trade marks Patents, Trade marks

Question Accounting period Concept________________
Correct Answer Longer life-span on business is divided into shorter segments ,

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

Question Depreciation
Correct Answer Amount charged on Fixed Assets.
Your Answer Amount charged on Fixed Assets. , Amount charged on Current

Assets.
True/False
Question Purchased computers of Rs. 50,000 come under the heading of
fixed asset
Correct Answer True
Your Answer True
True/False
Question Amount with drawn for personal purpose drawing A/C to be
debited.
Correct Answer True
Your Answer True

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

Correct Answer 750
Your Answer 750

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

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

Question Discount received from the Creditors has been entered in the
Creditors A/C but discount amount has not been credited, for
rectifying such error which account to be debited.
True/False
Question Total of purchase register for the month of March is taken
50,000 instead of 55,000. Posting to individual A/C of supplier
total to correct amount is 55,000 but purchase account is
debited by Rs. 50,0
Correct Answer True
Your Answer True

Question This cost indicates increased or decreased cost due to the

Question Office & Administration overhead includes
Correct Answer Salary , Rent & Taxes , Stationary & postage
Your Answer Salary , Rent & Taxes , Stationary & postage
True/False
Question There is reverse relationship between the ordering cost and
carrying cost
Correct Answer True
Your Answer True

Question Store ledger
Correct Answer Record of all receipts and issue transactions , Financial

expressions of all transactions , Maintenance of Store ledges
provides a second check
Your Answer Record of all receipts and issue transactions , Maintained in
Stores department , Maintenance of Store ledges provides a
second check

Question Following points are taking into consideration for evaluation of
receipts
Correct Answer The Price , The trade discount is to be deducted , Other
Your Answer The Price , The trade discount is to be deducted , Advertisement
cost

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

Question Under the differential time rate method of wage payment
between 90% to 100% of efficiency following rate is offered.
True/False
Question Where overheads chargeable to the department are Rs. 5000/- ,
direct labour hours worked are 24000 then labour hour rate is
Re. 0.2083 labour hour.
Correct Answer True
Your Answer True

Question The selection of the base on which overheads should be
apportioned depend on the following principles.
Correct Answer service or use basis , survey basis , ability to pay basis
Your Answer service or use basis , survey basis , ability to pay basis
True/False
Question The Budget key factor may be in the form of sales, raw material,
labour etc.
Correct Answer True
Your Answer True

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

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


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

performance.
Your Answer Minimum

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

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

Token or Disc Method Token number & Token number &

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

Question Accounting to the matching principles of accounting, the
________ incurred during an accounting period are required to
be match with ________ during that period
Correct Answer cost
Your Answer liabilities
Select The Blank

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

Question Along with financial accounting, ________ and ________ are
the other streams of accounting
Select The Blank

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

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

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

Correct Answer breakages of machine
Your Answer medical services
Select The Blank

Question Semi ________ overheads are neither ________ nor variable in
nature.
Your Answer fixed
Select The Blank

Question Break even point is a situation of no ________ no ________
Correct Answer profit
Your Answer profit
Correct Answer loss
Your Answer loss
Select The Blank

Your Answer amount
Your Answer
Select The Blank

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

Select The Blank

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

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

Question ________ of Trial Balance generally ensures ________
accuracy of the process of ledger posting .
Your Answer Talling
True/False
Question While calculating the minimum level, normal lead time is not
necessary
Your Answer False
True/ False
Question To Increase the existing production capacity, additional capital
expenditure is required.
Correct Answer True
Your Answer True

Question Labour cost indicates that labour cost which cannot be identified
with the individual cost centre and is incurred for those
employees who are not engaged in the manufacturing process
but only assist i
Your Answer Remuneration

Question During one week X makes 200 units. He receives wages for a
guaranted 44hours per week at a rate of Rs. 1.50 per hour.
Estimated time to produce one unit is 15 minutes. Time allowed
is increased by 2
Correct Answer Rs. 83.60
Your Answer Rs. 78
Select The Blank

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

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

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

Question Calculate Labour Efficiency Variance, If actual rate per hour is
Rs.3.50/- , Standard rate is Rs.3/- per unit and standard hours
are 15,000 and Actual hours are 13, 500.

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

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

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

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

analyzed as
Variance
Variance

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

Question Accounts is a
Correct Answer Record of all transaction
Your Answer Record of all transaction
True/False
Question Whatever is to be sold need not be produced.
Correct Answer True
Your Answer True
True/False
Question Patents and Trade Marks Account is a Real Account.
Correct Answer True
Your Answer True

Question Budget is prepared in terms of
Correct Answer Quantity and/or Money
Your Answer Quantity and/or Money
True/False
Question Favorable variances need on investigation
Your Answer False

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

Contract jobs
Your Answer Small concerns , Industries having non-standardized products ,
Contract jobs
True/False
the profit.
Correct Answer True
Your Answer True

Question __________ Accounting becomes a source of information for
Management Accounting.
Your Answer Financial
Select The Blank

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

performance.
Your Answer All the above

Question During one week X makes 200 units. He receives wages for a
guaranted 44hours per week at a rate of Rs. 1.50 per hour.
Estimated time to produce one unit is 15 minutes. Time allowed
is increased by 2
Correct Answer Rs. 75
Your Answer Rs. 78

Accounting

True/False
Correct Answer True
Your Answer True
Match The Following

Book-Keeping Books of Accounts Process of analyzing & interpretation
Financial statement Profitability statement & Balance- Profitability statement & Balance-sheet
sheet
Accounting Process of analyzing & interpretation Books of Accounts

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

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
Your Answer Designed particularly for internal use , Helpful in estimating the future along with past
period , Useful in furnishing the necessary information to the management
True/False
Your Answer False
True/False
accounting.
Correct Answer True
Your Answer True
True/False
Question Match
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
True/False
Question 1) Financial statements are basically in two forms i.e. profitability statement and balance
sheet.
Correct Answer True
Your Answer True
Select The Blank

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

Your Answer Salary , Purchases of raw material , Postage & telegram
True/False
Your Answer False
Select The Blank

Question Budgeted profit and loss account and budgeted balance sheet are also known as
________.

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

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
Your Answer Rs.19.70
True/False
Question Differential cost analysis is incorporated in the cost books.
Your Answer True
Select The Blank

Question ________ variance represents the over or under utilisation of pland and machinery.
True/False
Question The process of recording attendance time of the workers is known as time booking.
Your Answer True

True/False
Question The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit
balance for this account.
Your Answer True

Question The causes of idle time can be analysed as -
Correct Answer Administrative causes , Productive causes , Economic causes
Your Answer Administrative causes , Productive causes
Select The Blank

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

Question 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
Your Answer Average quantity

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
Your Answer Information is freely supplied by all the units , Information furnished by the units is
complete and correct
Select The Blank

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

Select The Blank

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

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

Question Which of the following is usually prepared daily by employees for each job worked on?
Correct Answer Job card
Your Answer Job card
True/False
Question Profit = Profit volume ratio X Margin of safety
Correct Answer True
Your Answer True

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

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

Question It is difficult to apply Uniform costing system for an industry which has labour intensive
companies as well as capital intensive companies, because :
Match The Following

Liabilities All the amount owed by the business All the properties owned by the
business
Assets All the properties owned by the All the amount owed by the business
business
True/False
Correct Answer True
Your Answer True

Question Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be
debited for this transaction?
Correct Answer Maintenance of machine account
Your Answer Maintenance of machine account
True/False
Question Margin of safety = Contribution / Profit volume ratio
Your Answer False

Select The Blank

Question If the profit volume ratio is 25%, then the variable cost
is equal to ________ of sales value.
Correct Answer 0.75
Your Answer 0.75
True/False
Question Under time rate system a worker is paid on the basis of
production achieved by him in a given time.
Your Answer False


Question Which of the following costs is most likely to have a cost
behaviour pattern described as ..a fixed cost upto an activity level of
1,000 units, with a variable cost there after which decreases from 10
paise to 8 paise per unit at 2,000 units?
Correct Answer Wages payment which is fixed for a minimum output
quantity after which a bonus per unit is paid which reduces when
activity
level exceeds 1,000 units
Your Answer Material cost 12 paise per unit for the first 1,000
units followed by 10 paise per unit upto 2,000 units and 8 paise per
unit
thereafter.
True/False
Question The phrase 'By Balance c/d.' written on the credit side of
the rent account, indicates credit balance for this account.
Your Answer False
Select The Blank

Question In case of defective material being returned by the stores
department to the vendor, such material should be valued at
the________.
Correct Answer Purchase price
Your Answer Purchase price
True/False
Question Piece rate system is suitable when quality of goods
produced is of extreme importance.
Your Answer False
True/False
Question A firm earns profit when contribution is equal to fixed
costs under variable costing.
Your Answer False
Select The Blank
Question While preparing trial balance, the balance as per ________
book is considered as bank balance.
Correct Answer Bank
Your Answer Bank

Question Standard time required for a job is 10 hours, i.e.10 X 60
= 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6
X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared
between the worker and the foreman in the ratio of 3:1. Calculate total
earning of the worker as per Bedeaux Point System.
Select The Blank

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

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

Question Judge the following narrative according to the criteria
given : There are many organizations whose sales fluctuate with
fluctuations in the weather, viz. ice-cream, sweaters, etc.
Select The Blank

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

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

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
Your 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 , To fix a common selling price so as to maximize profits of each
unit

Question 200 units of material were purchased from X @ Rs.5/- per
unit and 300 units were purchased from Y @ Rs.6/- per unit. The
organisation follows FIFO system of pricing of issues and the above
purchases
have been recorded in stores ledger. 120 units have already been
issued.
60 units received from X are defective and are therefore returned. Find
the value of the material returned to X.
True/False
Question Long term loan borrowed from financial institution comes
under the heading of long term liabilities.
Correct Answer True
Your Answer True
Select The Blank

Question If the total manufacturing overhead of a tiles producing
factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per
sq.ft, then the production for the period can be stated as ________
sq.ft.
tiles.
Your Answer 300000
True/False
Question Balance sheet indicates the financial status of the
business at given period.
Correct Answer True
Your Answer False
True/False
liabilities.
Your Answer False
True/False
Question Category C items, as per the ABC analysis, usually refers
to indirect material.
Correct Answer True
Your Answer True
True/False
business.
Your Answer False

Question These are the methods of measuring labour turnover.
Correct Answer Replacement Method , Separation Method , Flux Method
Your Answer Replacement Method , Separation Method , Flux Method
True/False
Question According to the standard costing principles, only adverse
variance must be further investigated.
Your Answer True
Select The Blank

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

Closed the account with State Bank of India Henceforth, there shall be
no difference in overdraft balances Henceforth, there shall be no
difference in overdraft balances
Debit side of bank book is overcast Overdraft as per bank book <
Overdraft as per pass book Overdraft as per bank book < Overdraft as
per pass
book
Interest on debentures directly credited by bank Overdraft as per bank

book > Overdraft as per pass book Overdraft as per bank book >
Overdraft as per pass book
Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book
= Overdraft as per pass book Henceforth, there shall be maximum
differences in overdraft balances
Select The Blank

Question The ________ adjustment is necessary to relfect the cost
for the use of fixed asset during the year.
True/False
Question A business is an activity carried out with the intention
of earning the profit.
Correct Answer True
Your Answer True
True/False
Your Answer False

Question The purchase budget for October is Rs.12,500/- and
November is Rs.15,000/-. If the materials are purchased for cash the
supplier
is offering a rebate of 5%. If the materials are purchased on credit of
30 days, no rebate is offered. The company purchase
Correct Answer October- NIL, November- Rs.26,750/-
Your Answer October- Rs.11,875/-, November- Rs.14,250/-
Select The Blank

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

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

Correct Answer Health and safety services , Canteen facility ,
Loans at reduced rate of interest
True/False
Question Control on purchase of material is exercised by the
storekeeper.
Your Answer False
Select The Blank

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

Question The composition of selling costs is given below : 1
salaries 4% of sales, travelling expenses 1.5% of sales, and sales
office 2%
of sales. Find the amount of selling overheads if the sales are
Rs.120,000/-.
Match The Following

Ledger Maintain all types of accounts List of all types of accounts

Audit Reviewing internal control system Reviewing internal control
system
Accounting Process of analyzing & interpretation Process of analyzing &

interpretation
Select The Blank

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

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

Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/-
was kept with Bank of India on 1st June, 2003, for a period of one
year.
The type of the fixed deposit is cumulative, i.e. interest shall be
received only on maturity. What treatment should be given in the books
of
accounts on 31st March, 2004, the year ending date?
Correct Answer An entry for Rs.458.34, debiting interest accrued
but not due account should be passed
Your Answer An entry for Rs.458.34, crediting interest accrued but
not due account should be passed

Question If you are required to enforce uniform costing system in
your industry, how would you proceed ?
Correct Answer Collecting data from all units of your industry ,
Ensuring that the data collected is complete and correct , Maintaining
secrecy of the data collected
Your Answer Collecting data from all units of your industry ,
Ensuring that the data collected is complete and correct , Maintaining
secrecy of the data collected
True/False
Question Uniform Costing simplifies the work of wage boards of
fixing minimum wages and fair wages.
Correct Answer True
Your Answer True

Question Marginal costing is found to be unsuccessful in the
following situations :-
Correct Answer Impossible to distinguish costs into fixed and
variable component. , With respect to capital intensive industries
where
fixed costs are very large and hence cannot be ignored , With respect
to
service industries where employee costs are very large and almost fixed
in nature
Your Answer Impossible to distinguish costs into fixed and variable
component. , With respect to service industries where employee costs
are very large and almost fixed in nature
True/False
Question Accounting refers to the process of analyzing &
interpreting the information already recorded in the books of accounts.
Correct Answer True
Your Answer True

Question Master budget provides a basis for computing effect of
changes in :
Correct Answer product mix of the company , sales volume ,
production facilities
Your Answer product mix of the company , sales volume , production
facilities
True/False
Question Accounting is an art of recording, classifying &
summarizing in a significant manner.
Correct Answer True
Your Answer True
CHAP MATERIAL COST
1) EOQ = root (2AO) where

C*i
A = annual requirement
O = cost of placing an order
C = unit purchase price
i = carrying cost expenditure as a % of unit purchase price
2) No of orders = A
Order size
3) Carrying cost = (Order size) * (cost price) * (carrying cost in %)
2
4) Total cost = carrying cost + Ordering cost
5) Re-order level = Maximum lead time * Maximum usage
6) Maximum level = Reorder level + Reorder quantity – (Minimum Usage * Minimum
lead time )
7) Minimum level = Reorder level – (Normal lead time * Normal Usage)
8) Average level = (Max. level + Min. level)
2
Or
Safety stock + (Max. level or EOQ)
2
9) Danger level = Normal Usage * lead time for emergency purchases
CHAP LABOUR COST
A] Time Rate System:

1) High Wage Plan
2) Differential Time rate
Efficiency Normal day rate
Upto 80% Re 1 (Normal rate)
Between 80% - 90% Rs 1.25
Between 90% - 100% Rs 1.40
Between 100% - 125% Rs 1.50
B] Payment by Results
a) Straight Piece Rate System
b) Piece Rate with Guaranteed Time Rate
c) Differential Piece Rate System:
Efficiency Piece rate

Upto 83.% Normal piece rate
Between 83% - 100 % 10% above normal piece rate
Above 100% 30% above normal piece rate
The above is again differentiated into

1) Taylor Differential Piece Rate
2) Merrick Differential Piece Rate:
Efficiency Piece rate
Upto 83.% Normal rate
Between 83% - 100 % 110% above normal rate
Above 100% 130% above normal rate
3) Gantt Task Bonus System –

It is a combination of time rate and piece rate and provides for minimum time rate payment.
The wage structure may be fixed as below:
Output below standard Minimum time rate payment

Output at standard Time wages + some increase in wage rates
Output above standard High piece rate for entire output
C] Individual Incentive Systems:
1) Halsey Premium System –

(AR * HR) + {(SH – AH) * HR} (assuming 50% - 50% sharing between the
2 worker and employer)
2) Halsey – Weir Premium System -

1/3:2/3 ratio between worker and the employer
3) Rowan Premium System –

(AH * HR) {1 + SH – AH}
SH
D] Other methods of Premiums:

1) Barth Premium System –
Wages = HR * root (SH * AH)

Applicable only for beginners or apprentices
2) Emerson’s Efficiency Bonus System –
Wages = {AH * HR + Bonus % of AH * HR}

Efficiency Bonus
Upto 63.333% No bonus
66.333% - 100% Increases from 20% to 100%
Above 100% 20% + 1% bonus increase in every  in
efficiency
Eg. 101%  21% bonus
120%  30% bonus
120%  40% & so on
Suitable for non- efficient workers for improving their efficiency

Calculation for efficiency % :
On Time basis - On Output basis –
SH * 100 AH * 100
AH SH
3) Bedaux Point System –

SH is divided into standard minutes & each standard minute is called Bedaux point or B.
Wages = AH * HR + 75% of Bs * HR (B’s = no of Bs’ saved)

60
4) Accelerating Premium System –

Here incentive increase in a faster rate with an increase in output.
Y = 0.8 X 2 where
Y = earnings and X = efficiency
Now Earnings = (Basic wages + bonus) in % [for eg. If earnings = 1.25 then 125% =
100 % basic wages + 25 % bonus]
Basic wages = AH * HR
Bonus = % of basic wages
5) Baum Differential Plan –

Also called Milwankee Plan. It is a combination of Taylor Differential Piece rate + Halsey
System
6) Diemer System –
It is a combination of Halsey System + Gantt System
Measurement of Labour Turnover:

1] Separation Method:
No. of separations * 100
Average no of workers
2] Replacement Method:
No. of replacements * 100
3] Flux Method:
No. of separations + No of replacements * 100
Treatment of Idle time:

(Read all the cases)
case III
When idle time is normal and uncontrollable then, if attended time = x, time booked = y and
labour cost = l then
Idle time = lx /y
CHAP OVERHEAD COSTS
1] Direct Material Cost % Rate:
Amount of overheads to be absorbed * 100
Direct Material Cost
2] Direct Wages Cost % Rate:

Direct wages Cost
3] Prime Cost % Rate:

Prime Cost
4] Labour Hour Rate:

Labour hours required for production
5] Machine Hour Rate:

No. of Machines hours
Eg. period Overheads Actual Remarks

Absorbed (Rs) Overheads (Rs)
I 7500 9000 Under absorption
II 10000 8000 Over absorption

True/False
Question A business is an activity carried out with the intention of earning the
profit.
Correct Answer True
Your Answer True
True/False
Question Balance sheet indicates the financial status of the business at given
period.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer False
True/False
significant manner.
Correct Answer True
Your Answer True
True/False
Your Answer False
True/False
Your Answer False
True/False
Question Financial Accounting primarily protects the interests of the outsiders
dealing with organization in various capacities.
Correct Answer True
Your Answer True

Question __________ Accounting becomes a source of information for
Management Accounting.
Your Answer Cost
True/False
Question Patents and Trade Marks Account is a Real Account.
Correct Answer True
Your Answer False

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

Correct Answer salary , discount allowed , postage & telegram
Your Answer salary , discount allowed , postage & telegram

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

Question A started business with cash 5000, building 5000, furniture 2000,
having depreciation of 10% on building. The total amount of capital comes to Rs.
__________
Your Answer 12000

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

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

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

Correct Answer Wrong totaling of subsidiary books , Posting on the wrong
side of an account , Omission of posting an account in the ledger
Your Answer Wrong totaling of subsidiary books
Match The Following

Error of Principle Trial Balance does not get affected Wrong Posting
Error of Omission The transaction is totally omitted The transaction is totally

omitted
Error of commission Wrong Posting Wrong classification
Compensating Error Wrong classification Trial Balance does not get affected
Difference in trial balance Transferred to suspense account Transferred to

suspense account
True/False
Question There is no need to open a suspense account if the trial balance does
not agree.
Your Answer False
True/False
Question A contractor’s bill for the extension of premises amounting to Rs.
2750 has been debited to building repair account
Your Answer False
Match The Following

Opportunity Cost Cost can be controlled Return or yield
Differential Cost Historical Cost Increase or Decrease in cost

Sunk Cost Cannot be controlled Historical Cost
Controllable Cost Increase or Decrease in cost Cost can be controlled
Uncontrollable Cost Return or yield Cannot be controlled
True/False
Question Indirect material cost assist the manufacturing process is an integral
part of finish goods.
Your Answer True
True/False
Question Dividend received is a Non-operating Income.
Correct Answer True
Your Answer True

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

Question A Co. having factory cost of Rs. 13,10,800. The administrative
overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400,
Depreciation 2400, Directors fees 24,000, General Charges 2
Your Answer none of above

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

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

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

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

Correct Answer cost of maintaining good relations with the workers , Cost of
medical services , cost of welfare facilities
Your Answer Cost of medical services , training costs , cost of welfare facilities

Question These are the features of variable overheads
Correct Answer vary directly in proportion to volume of output. , per unit cost
remains the same , total overheads may increase or decrease as per volume of
output.
Your 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.
True/False
Question To take make or buy decision under the marginal costing , if purchase
price of the product is less than its variable cost it is advisable to go for
manufacturing proposition.
Your Answer False

Question The cost that varies in direct proportion with the level of activity is
called
Correct Answer variable cost
Your Answer variable cost
True/False
Question The ultimate incorporation of all functional budgets takes the form of
budgeted Profit & Loss Account and Balance Sheet.
Correct Answer True
Your Answer True
True/False
Question Flexible budget is an effective tool for evaluation of performance.
Correct Answer True
Your Answer True

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

Your Answer Coordinating

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

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

Question Interest on overdraft charged by the bank is ________ to the pass
book and ________ to the cash book
Your Answer debited
Select The Blank

Question While selecting source of supply ________ epartment may call for the
________ from the prospective suppliers
Your Answer production
Select The Blank
Question After material is received from the supplier, quantity actually received
is compared with quantity ________-and ________-if any, are taken up with the
supplier
Your Answer ordered
Select The Blank

Question ________ and ________ are non monetary incentives
Correct Answer Safety services
Your Answer Safety services
Correct Answer education facility
Your Answer education facility
Select The Blank

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

Question variable cost is the cost that tend to ________ in direct proportion
with ________
Correct Answer vary
Your Answer vary
Select The Blank

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

Question ________ Legal charges and ________ are the accounts which are
shown on the debit side of Profit & Loss Account
Correct Answer Like office rent,
Your Answer Audit fees
Correct Answer Audit fees
Your Answer Depreciation on Machinery
Management Accounting
Question Bank 1
QUESTION BANK
(TOTAL MARKS: 100)
Note : (1) Attempt any Ten questions.

(2) All questions carry equal marks.
1. Explain the term Accounting. What are the different streams of accounting
? How are they related to each other ?
2. Explain step-by-step process of Financial Accounting with the intention to

prepare the financial statements.
3. Write an essay on “Depreciation”.
4. What do you mean by Financial Statements ? What are the limitations of the
Financial Statements ? Give the standard format of the Financial Statement
and explain each item appearing in the Financial Statement.
5. What do you mean by Bank Reconciliation Statement ? Why is it prepared ?

Give a standard format of a Bank Reconciliation Statement.
6. What do you mean by Elements of Cost ? How the cost is classified into
various elements of cost. Draft a standard format of a cost sheet for a
machine tool manufacturing company. Make the necessary assumptions.
7. Explain step-by-step procedure of identifying the direct material cost with

the individual cost center. Give the formats of various documents which are
prepared in the process.
8. Explain step-by-step procedure of identifying the direct labour cost with the
individual cost center. Give the formats of various documents which are
prepared in the process.
9. Explain step-by-step procedure of identifying the overheads with the

individual cost center.
10. Explain the terms Marginal Cost and Marginal Costing. State the various
application areas of Marginal Costing for the managerial decision-making.
11. With the help of a Simple Break Even Chart and Contribution Break Even
Chart, explain the significance and method of calculation of the following
terms–
_ Contribution
_ Profit Volume Ratio
_ Break Even Point
_ Margin of Safety
_ Angle of Incidence
12. Explain the advantages and disadvantages of Standard Costing as a cost

control technique. How Standard Costing is related to Budgetary Control ?
13. What do you mean by Uniform Costing ? Explain the various areas covered
by Uniform Costing. Explain the prerequisites for the success of Uniform
Costing as a cost control technique.
14. Write short notes on any Three of the following –

_ Labour Turnover
_ Accounting for Idle Time
_ Under Absorption and Over Absorption of Overheads
_ Flexible Budget
_ Cash Budget
Note : Even if the Question Bank consists of only theory questions, in the final
examination you can expect problems as well.

Your Answer The accounting process carried out for the business , Separate
legal entity , Business & person treated as one and same

Question Standard Costs are used as tool for
Correct Answer Cost Control
Your Answer Price fixation
True/False
Question The danger level fixed below maximum level
Your Answer False

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

Question The material physically received is compared with material ordered
as per the this order
Correct Answer Purchase order
Your Answer Goods received note
Match The Following

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

Question When bank balance as per pass book is considered then following to
be added.
Correct Answer cheques deposited but not cleared , Interest debited by bank
, bank charges debited by bank
Your Answer wrong credit given by bank
True/False
Question Accounting refers to the process of analyzing & interpr eting the
Correct Answer True
Your Answer True
True/False
Question (No. of unit * Rate of depreciation per unit ) this formula is used
for written down value method.
Your Answer False

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

Question Cash and---------------are the two systems of accounting.
Your Answer Credit

Question This cost indicates increased or decreased cost due to the
Match The Following

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

Question Under the differential time rate method of wage payment between 90%
to 100% of efficiency following rate is offered.

Question Important advantages of Uniform Costing can be said to be
Correct Answer It is a useful tool for management control , It avoids cut
throat competition , Weaker units can take advantage of settled systems of
better managed units
Your 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
Select The Blank
Question Along with financial accounting, ________ and ________ are the
other streams of accounting

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

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

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

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

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

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

Question A budget manual is a document setting out the ________ of the
persons and ________ required for the budget control.
Correct Answer Responsibilities
Your Answer Responsibilities
Correct Answer Forms and procedures
Your Answer Forms and procedures
Select The Blank
Question Accounting to the matching principles of accounting, the ________
incurred during an accounting period are required to be match with ________
during that period
Correct Answer cost
Your Answer cost

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

Question To ascertain the ________ of all the transactions recorded in the
ledger account, the account is required to be ________
Correct Answer Net effect
Your Answer Net effect
Correct Answer Balanced
Your Answer Balanced
True/False
Question Depreciation does not involve cash out flow
Correct Answer True
Your Answer True
True/False
Question The difference between standard cost and actual cost is termed as
Variance.
Correct Answer True
Your Answer True
True/False
Question Wage payment system should be properly tied up with quality control
procedures to ensure that the workers are paid only for good and quality
production.
Correct Answer True
Your Answer True
Select The Blank

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

Question Semi ________ overheads are neither ________ nor variable in
nature.
Your Answer fixed
Question In Cash budget Operating cash inflow includes
Correct Answer Cash Sales , Collection from De btors , Interest/Dividend
received
Your Answer Cash Sales , Collection from Debtors , Interest/Dividend
received
True/False
Question If the product is labour intensive, more stress may be necessary on
inventory control procedure.
Your Answer True
True/False
given period.
Correct Answer True
Your Answer True
True/False
Question A good wage payment system will not punish the workers for the
matters beyond the control of the workers.
Correct Answer True
Your Answer True
True/False
Question Fixed assets do not give the returns during the same period during
which they are paid for
Correct Answer True
Your Answer True

Question The material issued to production department may be returned back
to the stores because material issued in excess requirement and
Correct Answer Material issued is defective
Your Answer Material issued is defective
True/False
the profit.
Correct Answer True
Your Answer True

Question Following are called the element of Cost
Correct Answer Material , Labour , Expenses
Your Answer Material , Labour , Expenses
Select The Blank

Question ________ of Trial Balance generally ensures ________ accuracy of
the process of ledger posting .
Your Answer Talling
Question Convention of Materiality __________________
Correct Answer Only those transactions will be considered which have
material impact on profitability , Insignificant transaction will be ignored ,
The cost of non-used should not be considered as the item of cost
Your 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
Question Amount with drawn for personal purpose drawing A/C to be debited.
Correct Answer True
Your Answer True
Select The Blank

Question Under the repeated distribution method the overheads of ________
department are distributed to other departments on agreed ________
Correct Answer service
Your Answer service
Correct Answer percentage
Your Answer percentage
True/False
Question Under time rate system a worker is paid on the basis of production
achieved by him.
Your Answer True

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


Question Cost Accountancy is a science, art and practice of a cost
Accountant.
Correct Answer Science indicates the possession and the application of
relevant systematic knowledge. , Art indicates the skill and ability. , Practice
indicates continuous effects on the part of cost accountant.
Your 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.
MA 7

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

________.
Your Answer Bank statement
True/False
significant manner.
Correct Answer True
Your Answer True
True/False
Your Answer False
Select The Blank

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

Liabilities All the amount owed by the business All the amount owed by the
business
Journal Book of original entry Maintain all types of Accounts
Ledger Maintain all types of Accounts Book of original entry
Page 1
MA 7
Assets All the properties owned by the business All the properties owned by
the business

Question Lata and Tara are partners of Latara & Co. As on 31st March,
2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual
drawings amounted to Rs.18,000/-. If interest on drawings is charged @ 15%
p.a., what is the amount of income for Latara & Co.?
True/False
business.
Your Answer False
True/False
Question Generally speaking income represents wealth increase and
business success; higher the income, lower will be the success of a business.
Your Answer False

Question 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
Your 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 , Confirm that the closing
balances of both the books are tallying

department
Your Answer Stores department , Transport department , Accounting
department
Page 2
MA 7

Question An order for goods worth Rs.18,000/- was placed on 25th March,
2004. The goods were received on 1st April, 2004. Calculate the impact of this
transaction on the final statements of accounts for the year ended 31st March,
2004.
True/False
Question Error of commission refer to calculation errors, totaling errors,
errors in carrying forward etc.
Correct Answer True
Your Answer True
Select The Blank

Question If the customer is not likely to pay the amount receivable from
him, this amount should to be treated as ________.
Select The Blank

Question 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
Your Answer Normal
Select The Blank

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

Question Benefits available from revenue expenditure are received in the :
Correct Answer Same year
Your Answer Next year
Page 3
MA 7
Select The Blank

Question The ________ is of immense help in guiding the companies to
operate their accounts on uniform basis.
Your Answer uniform accounting manual

Question Judge the sentence in italics according to criteria given below : " It
is difficult to adopt Uniform costing system when a product can be
manufactured by employing more than one method because the cost of
production will vary according to the method used."
Correct Answer The assertion and the reason are both correct
Your Answer The assertion and the reason are both correct
True/False
Question Profit and loss account indicates the profit earned as on a
particular date.
Your Answer True

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

Question Select the appropriate rectification entries for the following
transactions (i) Rs.200/- received in respect of a bad debt previously written
off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk,
as salary in lieu of notice. This amount was debited to his personal account
(iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general
expenses account.
Correct Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c
Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses
A/c Rs.250/-
Your Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c
Page 4
MA 7
A/c Rs.250/-
Select The Blank

Question The indirect material cost, indirect labour cost and indirect
expenses cost, collectively are termed as ________.
True/False
Question Uniform costing system is a pre-requisite to an inter-firm
comparison of firms belonging to the different industries.
Your Answer False
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True

Correct Answer Increased spoilage and defectives , Inefficiency of new
workers , Cost of selection and placement
Your Answer Inefficiency of new workers , Cost of selection and placement ,
Increased spoilage and defectives
Select The Blank

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

Question Interest on drawings of partners should be credited to which
account?
Page 5
MA 7
True/False
Question Balance sheet indicates the financial status of the business at given
period.
Correct Answer True
Your Answer True
True/False
Question Cheque received from a client on 28th September, 2004 must be
entered in the bank book only after it is credited in the pass book.
Your Answer True
True/False
Question Time rate system is suitable for workers of the maintenance
department.
Correct Answer True
Your Answer True
Match The Following

Book-Keeping Books of Accounts Profitability statement & Balance-sheet
Financial statement Profitability statement & Balance-sheet Financial status
Accounting Process of analyzing & interpretation Process of analyzing &

interpretation
Profitability statement Indicates the amount of profit earned Indicates the

amount of profit earned

Page 6
MA 7
Question The overheads of a machine shop X should be apportioned using
which of the following basis?
Correct Answer Machine hours
Your Answer Machine hours
True/False
Question The perpetual inventory system enables management to ascertain
stock without physical verification.
Correct Answer True
Your Answer True
True/False
Question Long term loan borrowed from financial institution comes under
the heading of long term liabilities.
Correct Answer True
Your Answer True

Question A business's telephone bill should nromally be classified into which
one of the following categories?
Select The Blank

Question A forecast is mere estimate of what is likely to happen, but
________ is the action plan to be followed.
Your Answer Budget

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

Question Locate the error and its features in the following -
Correct Answer Compensating errors , Trial balance will not be affected ,
Trial balance will be affected
Your Answer Compensating errors , Trial balance will not be affected ,
Error of principle
Page 7
MA 7
True/False
Question Uniform Costing simplifies the work of wage boards of fixing
minimum wages and fair wages.
Correct Answer True
Your Answer True
Select The Blank

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

Question The system which provides an opportunity to the small units to
take advantage of the research work taken by the large scale units of the same
industry is known as ________ system.
True/False
the profit.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True
Page 8
ma vish

Question An advertisement contract was made with an artist which stated
that the remuneration will be 12% of net sales. On an average the monthly
sales were Rs.36,000/-, however the average rate of sales return was 5% of
that month's sale. Find the expenditure on account of advertisement.
True/False
Question Cost Accounting is concerned with calculation of the profitability
and state of affairs of the organization as a whole.
Your Answer False
True/False
Question The sum of indirect material cost, indirect labour cost and indirect
expenses is termed as Overheads.
Correct Answer True
Your Answer False

Question The various areas in which uniform costing can be adopted are :-
Correct Answer Valuation of inventories , Charging of depreciation ,
Apportionment of overheads
Your Answer Valuation of inventories , Charging of depreciation ,
Apportionment of overheads
Match The Following

Sunk Cost Historical Cost Historical Cost
Cost Centre Facilitate the fixation of responsibility Facilitate the fixation of

responsibility
Cost Control Process of controlling costs of operations Process of controlling

costs of operations
Differential Cost Increase or Decrease in cost Increase or Decrease in cost
Page 1
ma vish

Question Goods kept in the godown were destroyed by fire on 18th June,
2004. The cost of such goods was Rs.18,950/-. The goods were not insured.
Find the amount which should be debited to the profitability statement.
True/False
Question Financial accounting may deal with the ascertainment of cost &
calculation of profitability of the individual product.
Your Answer False
Select The Blank

changes in sales volume on the profit of the company, in the ________.
Correct Answer Short run
Your Answer Short run
True/False
Question Margin of safety = Contribution / Profit volume ratio
Your Answer False

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

Question Which of the following budgets may be termed as a long term
budget?
Correct Answer Capital expenditure budget , Research and Development
Your Answer Capital expenditure budget , Research and Development
Select The Blank

Question Under Bedaux Point system the standard time is divided into
standard minutes and each standard minute identified as ________.
Correct Answer Bedaux point or B
Page 2
ma vish
Your Answer Bedaux point or B
True/False
Question A pre-determined factory overhead rate holds up product costing.
Your Answer False

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

Question Select the appropriate rectification entries for the following
transactions (i) Rs.200/- received in respect of a bad debt previously written
off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk,
as salary in lieu of notice. This amount was debited to his personal account
(iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general
expenses account.
Correct Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c
A/c Rs.250/-
Your Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c
Rs.200/-
True/False
Question Management Accounting aims at enabling the management to
take the decisions about the future. It may consider future data as well as
non-financial factors.
Correct Answer True
Your Answer True
True/False
Question Financial Accounting primarily protects the interests of the
outsiders dealing with organization in various capacities.
Correct Answer True
Your Answer True
Page 3
ma vish
True/False
Question Revenue expenditure indicates the amount of funds spent during a
certain period with the intention to receive the returns in future.
Your Answer True
Select The Blank

Question A written order sent to inform the purchasing department of a
need for materials is called a ________.
True/False
Question Provision for discount on debtors account should be credited to the
Profit and Loss Account.
Your Answer False

Question Select the cost that indicates increased or decreased total cost due
to the increased or decreased volume of operations :-

Question A factory has 8 hours a day and the standard daily wage is
Rs.80/-. Standard output per hour is 5 units. During a day worker P
produced 30 units, Q produced 36 units and S produced 42 units. Calculate
wages payable to P,Q and S under Merrick Multiple Piece Rate System.
True/False
Question The reports generated by financial accounting are meant for the
use by management for effective decisions.
Correct Answer True
Your Answer True
Select The Blank

Your Answer Capital
Page 4
ma vish
True/False
Question P&L statement which is a period statement & relates to a certain
period tells about results of operations.
Correct Answer True
Your Answer True
Select The Blank

Question If the ordering cost ________s, then the economic order quantity
will Increase.
True/False
Question The process of recording attendance time of the workers is known
as time booking.
Your Answer False
True/False
Question Financial Accounting discloses the financial performance &
financial statements of the business as a whole.
Correct Answer True
Your Answer True
True/False
Question Larger the size of the purchase order, smaller will be the number
of orders required to be placed in a year.
Correct Answer True
Your Answer True
True/False
Question High time wages means necessarily high cost of production.
Your Answer True

Question The statement, mainly applicable to company form of
organization, which discloses the manner in which the profit after tax is
distributed is known as:
Correct Answer Profit & Loss Account Appropriation Account
Your Answer Profit & Loss Account
Page 5
ma vish
Select The Blank

________.
Select The Blank

Question If the customer is not likely to pay the amount receivable from
him, this amount should to be treated as ________.
Select The Blank

Question ________ Accounting is the process of analysis and
interpretation of financial data collected with help of financial accounting &
cost accounting

Question 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
Your 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
Select The Blank

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

Question Features of convention of consistency are :-
consistently , Facilitates the comparison of financial statements , It facilitates
comparison of financial statements on period-to-period basis
consistently , Facilitates the comparison of financial statements , It facilitates
Page 6
ma vish
comparison of financial statements on period-to-period basis

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

Question 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.
Your Answer Monica -Rs.72/-; Sonica - Rs.132/-

Question The integrated form of all functional budgets is known as :-
True/False
Question Depreciation on assets is credited to the trading account.
Your Answer True
Match The Following

Accounting Art of interpreting & classifying business transaction Systematic

recording of business transactions
Book Keeping Recording of business transactions Recording of business

transactions
Financial Accounting Systematic recording of business transactions Art of

interpreting & classifying business transaction
Cost Accounting Ascertainment of cost Ascertainment of cost
Page 7
ma vish
Management Accounting Analyzing & interpretation of financial data
Analyzing & interpretation of financial data

Question Different types of tenders are :-
Correct Answer Singly tender , Open tender , Global tender
Your Answer Singly tender , Open tender , Global tender
True/False
Question Management Accounting is the process of analysis and
interpretation of financial data collected with help of financial accounting and
cost accounting
Correct Answer True
Your Answer True
Select The Blank

Question The handloom industry will have ________ fixed cost and high
variable cost.
Correct Answer Low
Your Answer Low

Question The reasons and objectives of budgets may be stated as :-
Correct Answer To aid the planning of annual operations , To communicate
the organizational plans to the different departments , To motivate the
managers to strive for attainment of the organizational goals
Your Answer To aid the planning of annual operations , To communicate
the organizational plans to the different departments , To motivate the
managers to strive for attainment of the organizational goals
True/False
Question Variable cost + Profit = Sales.
Your Answer False
Page 8

Multiple Choice Multiple Answer: List of Attempted Questions and Answers

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Multiple Choice Multiple Answer: List of Attempted Questions and Answers

Încărcat de

Drepturi de autor:

Formate disponibile

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer

Correct Answer Accuracy , Can be recorded , Brevity

Your Answer Accuracy , Can be recorded

Multiple Choice Multiple Answer

Correct Answer Legal evidence , Permanent information , Recovering dues

Your Answer Legal evidence , Permanent information , Recovering dues

Multiple Choice Multiple Answer

Correct Answer Head address , Date , Outward number

Your Answer Head address , Date , Outward number

Multiple Choice Multiple Answer

Correct Answer Tel no. , Name of organization

Your Answer Tel no. , Name of organization , Name of person

Multiple Choice Multiple Answer

Correct Answer Opening Para , Main communication , Closing paragraph

Your Answer Reference Para , Opening Para , Main communication , Closing

Multiple Choice Multiple Answer

Correct Answer Dear sir , Respected Sir

Your Answer Thanking you , Yours faithfully , Respected Sir

Multiple Choice Multiple Answer

Correct Answer Procedures , Rules , Instructions

Your Answer Procedures , Rules , Instructions

Your Answer True

Multiple Choice Multiple Answer

Correct Answer It is a legal requirement , It protects the interest of outsiders , It

Your Answer False

Multiple Choice Single Answer

Your Answer Goods A/C

Multiple Choice Single Answer

Your Answer 540

Multiple Choice Single Answer

Your Answer Cash A/C

Multiple Choice Single Answer

Your Answer 900

Multiple Choice Multiple Answer

Your Answer False

Multiple Choice Single Answer

Correct Answer Sunk cost

Your Answer Sunk cost

Match The Following

Non-operating Income Profit on sale of shares Profit on sale of shares

Non-operating Expense Dividend on shares Dividend on shares

Selling & Distribution Advertisement Advertisement

Total Cost Cost of finished goods Cost of finished goods

Your Answer 37,86,000

Multiple Choice Multiple Answer

Correct Answer Loss on sale of asset , Goodwill , Only a, b

Your Answer Goodwill , Preliminary expenses written off

Your Answer True

Multiple Choice Single Answer

Your Answer Rs. 1.00 per hour

Your Answer False

Your Answer False

Multiple Choice Single Answer

Your Answer material

Multiple Choice Single Answer

Correct Answer electricity

Your Answer electricity

Multiple Choice Multiple Answer

Correct Answer indirect material , indirect labour , indirect expenses

Your Answer indirect material , indirect labour , indirect expenses

Your Answer False

Correct Answer True