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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Your Answer Sales budget , Production budget , Research and development


budget

Multiple Choice Single Answer


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/-.
Correct Answer Rs.600,000/-

Your Answer Rs.525,000/-

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

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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 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 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 Financial accounting may deal with the ascertainment of cost &
calculation of profitability of the individual product.
Correct Answer False
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
Multiple Choice Multiple Answer
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

Multiple Choice Multiple Answer


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.

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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


Question Correct Answer Your Answer
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.
Correct Answer False
Your Answer True

True/False
Question Amount invested in purchasing Fixed Asset is a revenue
expenditure.
Correct Answer False
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

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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


Question Correct Answer Your Answer
Error of Principle Trial Balance does not get Wrong Posting
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

Multiple Choice Multiple Answer


Question Direct Cost includes
Correct Answer Direct material , Direct labour , Direct expenses
Your Answer Direct material , Direct labour , Direct expenses

Multiple Choice Single Answer


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
Multiple Choice Multiple Answer
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

Multiple Choice Multiple Answer


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.

Multiple Choice Multiple Answer


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
amounts such as sales tax, excise duty, octroi duty

Multiple Choice Multiple Answer


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.
Correct Answer False
Your Answer False

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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.

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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
Correct Answer Cost Accounting
Your Answer Management Accounting
Correct Answer Management Accounting
Your Answer Cost 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

LIST OF ATTEMPTED QUESTIONS AND ANSWERS


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.
Correct Answer False

Your Answer False

Multiple Choice Single Answer


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)

Your Answer Rs.800/- (Favourable)

Select The Blank


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

Your Answer Profit and Loss Account

Match The Following


Question Correct Answer Your Answer

Daily Time sheets Time spent by worker on job Time spent by worker on job is
is recorded 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
LIST OF ATTEMPTED QUESTIONS AND ANSWERS MA1

Multiple Choice Single Answer


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

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

Multiple Choice Multiple Answer


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 , 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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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 Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer False

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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.
Correct Answer 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


Question Correct Answer Your Answer

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.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer


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.
Correct Answer False
Your Answer False

True/False
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True

Multiple Choice Single Answer


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

True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer 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 ________.
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


Question Correct Answer Your Answer

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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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.
Correct Answer 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 False

Multiple Choice Multiple Answer


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.
Correct Answer 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

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 ,
Cost of welfare facilities
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.
Correct Answer False
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

LIST OF ATTEMPTED QUESTIONS AND ANSWERS MA2

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


Question Correct Answer Your Answer

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 ,
Budget of a transportation company
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 ________.
Correct Answer Balance sheet
Your Answer Trial Balance

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


Question Correct Answer Your Answer

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.
Correct Answer False
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.
Correct Answer False
Your Answer True

Question Overhead absorption rate will be different at different capacity levels.


Correct Answer True
Your Answer True

Question Accounting is the art where transactions are …


Correct Answer Summarized , Classified , Recorded
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.
Correct Answer False
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
Correct Answer 153,000 units
Your Answer 136,000 units

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

Question Furniture account will always have a ________ balance.


Correct Answer Debit
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.
Correct Answer False
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

LIST OF ATTEMPTED QUESTIONS AND ANSWERS MA3

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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)

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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)

Multiple Choice Multiple Answer


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 ,
Screening each alternative so as to select the best one

Multiple Choice Multiple Answer


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,
helpers,etc. , Salary paid to factory supervisor

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.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer


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
Question Correct Answer Your Answer

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
market can fill the tender

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

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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.
Correct Answer False
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.
Correct Answer False
Your Answer True

Multiple Choice Multiple Answer


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.
Correct Answer False
Your Answer False

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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.
Correct Answer False
Your Answer False

Match The Following


Question Correct Answer Your Answer

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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


Question Annual sales were Rs.10,50,000/- and sales returned by customers amounted to
Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount
of incentive due to the salesmen.
Correct Answer Rs.30,660/-
Your Answer Rs.30,660/-

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

Multiple Choice Single Answer


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.
Correct Answer False
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.
Correct Answer Standard
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

Multiple Choice Multiple Answer


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 ,
Omission of posting an account in the ledger

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


Question Correct Answer Your Answer

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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


Question Which of the following cost is also termed as Prime Cost ?
Correct Answer Direct cost
Your Answer Direct cost
Multiple Choice Multiple Answer
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
Your Answer Co-partnership

Multiple Choice Multiple Answer


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.

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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
increase productivity

Select The Blank


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

Multiple Choice Multiple Answer


Question Select the appropriate rectification entries for the following transactions (i) Rs.200/-
received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid
Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal
account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account.
Correct Answer 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
Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True
Your Answer True

Multiple Choice Single Answer


Question Quantify the increase in profit on account of following errors : (a) Repairs of furniture
amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a.
(b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A
television purchased for the managing director's office for Rs.45,000/- was debited to Interior
decoration expenses.
Correct Answer Rs.43,200/-
Your Answer Rs.44,750/-

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.
Correct Answer fertilizer
Your Answer automobile

True/False
Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Correct Answer False
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
Question Balance sheet indicates the financial status of the business at given period.
Correct Answer True
Your Answer True

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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
Question Accounting is an art of recording, classifying & summarizing in a significant manner.
Correct Answer True
Your Answer True

Multiple Choice Single Answer


Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed.
The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim
amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the
year ending 31st March, 2004.
Correct Answer The net profit will decrease by Rs.18,000/-
Your Answer The net profit will increase by Rs.10,000/-

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

Multiple Choice Single Answer


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/-

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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


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

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

Multiple Choice Multiple Answer


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
Multiple Choice Single Answer
Question Which system can assist in fixing a common selling price for the industry as a whole
on the basis of cost of production of all units belonging to that industry ?
Correct Answer Uniform costing
Your Answer Uniform costing

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

Match The Following


Question Correct Answer Your Answer

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

LIST OF ATTEMPTED QUESTIONS AND ANSWERS KMA2

True/False
Question Balance sheet indicates the expenditure & income from the business.
Correct Answer 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.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer


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 ,
Writing off to the Costing Profit and Loss Account

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

Multiple Choice Single Answer


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.
Correct Answer False
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

Multiple Choice Single Answer


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/-

Multiple Choice Multiple Answer


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
Your Answer Cost accounting

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

Multiple Choice Multiple Answer


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. ,
Indicates the type, quantity and quality of material required , The information about the price of
material is excluded

Match The Following


Question Correct Answer Your Answer

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
Question Financial accounting may deal with the ascertainment of cost & calculation of
profitability of the individual product.
Correct Answer 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

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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
Correct Answer Debit
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

Multiple Choice Single Answer


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


Question Correct Answer Your Answer
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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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.
Correct Answer Accounting period
Your Answer Accounting period

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.
Correct Answer Debit
Your Answer Debit

Multiple Choice Multiple Answer


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
spoilage and defectives

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
Question The process of accounting split into three steams i.e. financial, cost, management
accounting.
Correct Answer True
Your Answer True

Select The Blank


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

True/False
Question Variable cost + Profit = Sales
Correct Answer 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 Depreciation
Your Answer Depreciation

Multiple Choice Multiple Answer


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 , Augments emplyees' efficiency

True/False
Question Cash account can have a credit balance.
Correct Answer 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.
Correct Answer suspense
Your Answer profit and loss

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


Question The cost that indicates historical cost, which is incurred in past, is known as
Correct Answer Sunk cost
Your Answer Sunk cost

Multiple Choice Single Answer


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

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

Match The Following


Question Correct Answer Your Answer

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
Question Book keeping is clerical while accounting is managerial
Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer

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

Multiple Choice Single Answer


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.
Correct Answer False
Your Answer False

Select The Blank


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


Question A company budgets for a production of 150,000 units. The variable cost per unit is
Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of
15% on total cost. What is the break even point for the company?
Correct Answer 68,182 units
Your Answer 61,182 units

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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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.

Multiple Choice Multiple Answer


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


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 Variable overhead volume

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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
Question Cost Accounting is a legal requirement.
Correct Answer False
Your Answer False

True/False
Question Management Accounting is a developed stage of Cost Accounting
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

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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
conditions , Trade cycle of business

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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
share the technological improvements , Information furnished by the units is complete and correct

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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


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

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

Multiple Choice Multiple Answer


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

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

Multiple Choice Single Answer


Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one
product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate
annual break even point.
Correct Answer 80,000 units
Your Answer 64,000 units

True/False
Question 1) Cost Accounting and Management Accounting are similar to each other in many
respects.
Correct Answer True
Your Answer True

Multiple Choice Single Answer


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

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

LIST OF ATTEMPTED QUESTIONS AND ANSWERS


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

Multiple Choice Single Answer


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/-.
Correct Answer Rs.600,000/-

Your Answer Rs.525,000/-

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

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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


LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Your Answer Rs.6750/- ( Favorable )

Multiple Choice Single Answer


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 )

Your Answer Rs.4500/- ( Favorable )

Multiple Choice Multiple Answer


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


Question Correct Answer Your Answer
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
To take the step for
Initiating proper action for
Fixation of inventory level procurement of further lots
movement of material
of material

Select The Blank


If ________ is not provided, the asset may appear in the
Question
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
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

1 True/False
Question Accounting is an art of recording, classifying & summarizing in a significant
manner.
Correct Answer True
Your Answer False

2 True/False
Question Profitability statement indicates the amount of assets & liabilities.
Correct Answer False
Your Answer False

3 Select The Blank


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

4 Multiple Choice Multiple Answer


Question For the given transaction find the wrong entry that has been passed in the
books of accounts, the correct entry that should have been passed and the rectification
entry required to rectify the mistake. "On 1st September, 2004 the total of the previous
month's wages was debited to 'Manufacturing Wages Account". During the previous month,
a new machine was installed, and the firm's own employees had spent time thereon; the
previous month's wages for all such employees amounted to
Correct Answer Machinery A/c. . . Dr. Rs.14,100/- To Manufacturing Wages A/c
Rs.14,100/- , Machinery A/c . . . Dr. Rs.14,100/- To Cash A/c Rs.14,100/- , Rs.14,100/- To
Cash A/c Rs.14,100/-
Your Answer Manufacturing Wages A/c. . . Dr. Rs.14,100/- To Machinery A/c Rs.14,100/- ,
Machinery A/c. . . Dr. Rs.14,100/- To Manufacturing Wages A/c Rs.14,100/- , Machinery A/c .
. . Dr. Rs.14,100/- To Cash A/c Rs.14,100/-

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

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

7 Select The Blank


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

8 Select The Blank


Question Revenues are more than the differential costs, then the proposed project should
be ________
Correct Answer accepted
Your Answer accepted

9 Select The Blank


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

10 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

11 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.
Correct Answer Management
Your Answer Management

12 Multiple Choice Multiple Answer


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

13 Select The Blank


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

14 Multiple Choice Single Answer


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

Select The Blank


Question The various contents of a uniform cost manual are organisation, cost accounting
system and ________.
Correct Answer presentation of information
Your Answer presentation of information

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 construction

Multiple Choice Single Answer


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

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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

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

Multiple Choice Single Answer


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

Multiple Choice Single Answer


Question If the proprietor has taken away goods worth Rs.5,500/- for personal use, find
its impact on the proprietor's account in the organisatin.
Correct Answer The capital will decrease by Rs.5,500/-
Your Answer The balance of drawings account will increase by Rs.5,500/-

Multiple Choice Single Answer


Question Accrued income indicates:
Correct Answer Current year's income not received in the current year
Your Answer Current year's income not received in the current year

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

Match The Following


Question Correct Answer Your Answer
Freight inwards Manufacturing account Balance sheet

Sales Trading account Trading account

Freight outwards Profit and loss account Manufacturing account

Dividend paid Profit and loss appropriation account Profit and loss account

Select The Blank


Question The process of finding the reasons for the difference in the balance as per bank
book and pass book is known as ________.
Correct Answer Reconciliation
Your Answer Reconciliation

Multiple Choice Single Answer


Question Which of the following transactions fall within the definition of the 'standing
instruction'
Correct Answer Club membership subscription
Your Answer Bank interest

Multiple Choice Single Answer


Question The pass book showed a credit balance of Rs.1,000/-. This balance was after
considering the dividend of Rs.25/- collected by bank and Rs.5/- charged as collection
expenses: these enteries are not made in the bank book. Find the balance as per bank
book.
Correct Answer Rs.1,020/-
Your Answer Rs.1,030/-

Multiple Choice Multiple 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 ,
Goodwill of the supplier

Multiple Choice Single Answer


Question Calculate inventory turnover ratio from the following : Maximum stock -7,000
units; minimum stock - 3,000 units and quantity of material issued during the year - 150,000
units.
Correct Answer 30
Your Answer 15

Multiple Choice Single Answer


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)

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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 , Loans at reduced rate of
interest

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

True/False
Question Under the accelerating premium system incentive increases at a fast rate with
the decrease in output.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer


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 Sales , [Fixed cost / Marginal contribution] X Variable cost

Multiple Choice Multiple Answer


Question Merits of break even point analysis are as follows:
Correct Answer Useful diagnostic tool. , Used for analysing the risk implication of
alternative actions. , Used to graphically represent complicated data.
Your Answer Useful diagnostic tool. , Used for analysing the risk implication of alternative
actions. , Used to graphically represent complicated data.

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

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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


Question The composition of selling costs is given below : 1 salaries 4% of sales,
travelling expenses 1.5% of sales, and sales office 2% of sales. Find the amount of selling
overheads if the sales are Rs.120,000/-.
Correct Answer Rs.9,000/-
Your Answer Rs.9,000/-

Multiple Choice Single Answer


Question Production costs of a factory for the year 2003-04 are as follows: direct labour
cost Rs.100,000/-; direct material cost Rs.150,000/-; production overheads (fixed)
Rs.50,000/- and production overheads (variable) Rs.80,000/-. The production manager
projec
Correct Answer Rs.426,800/-
Your Answer Rs.380,000/-

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
Correct Answer False
Your Answer True

Match The Following


Question Correct Answer Your Answer

Plan of investment in fixed assets Capital Expenditure Budget Capital Expenditure Budget

Plan for surplus/shortage of cash Cash Budget Cash Budget

Operating income Cash Sales Cash Budget

Non-Operating income Issue of shares Issue of shares

Multiple Choice Multiple Answer


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 Use of sub-standard quality of material , Shortage of labour , Enforced idle
time, e.g.power breakdowns

Select The Blank


Question The systematic process of identifying and reporting variance is known as
________.
Correct Answer Variance analysis
Your Answer Standard costing

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

LIST OF ATTEMPTED QUESTIONS AND ANSWERS


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.
Correct Answer False

Your Answer False

Multiple Choice Single Answer


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)

Your Answer Rs.800/- (Favourable)

Select The Blank


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

Your Answer Profit and Loss Account

Match The Following


Question Correct Answer Your Answer

Daily Time sheets Time spent by worker on job Time spent by worker on job is
is recorded 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
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Question Correct Answer Your Answer

Normal Standards Anticipated to be achieved Anticipated to be achieved


in future in future
Basic Standards Established for a longer Established for a longer
period of time period of time
Current Standards Established for a shorter Established for a shorter
period of time period of time
Expected Standards Anticipated to be achieved Anticipated to be achieved
in the budget period in the budget period

Multiple Choice Single Answer


Question The cost that indicates historical cost, which is incurred in past,
is known as :-
Correct Answer Sunk cost

Your Answer Sunk cost

Select The Blank


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

Your Answer Purchase

Multiple Choice Multiple Answer


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

True/False
Question An item of cost that is direct for one business organization may
be indirect for another business organization.
Correct Answer True

Your Answer False

Select The Blank


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

Your Answer Low

Select The Blank


LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question As per the provisions of Section 209 of ________, all the
company form of organization is legally required to follow the
mercantile or accrual system of accounting.
Correct Answer The Companies Act, 1956

Your Answer The Companies Act, 1956

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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

Your Answer Furniture , Loan from Bank of America , Land & building

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


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

Your Answer Rs.100/- (Favourable)

Multiple Choice Single Answer


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/-
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question The ________ books are preferred when the volume of
transactions is very large.
Correct Answer Subsidiary

Your Answer Subsidiary

Multiple Choice Single Answer


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

Your Answer Rs.34,408.09

Multiple Choice Multiple Answer


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

Multiple Choice Multiple Answer


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

Multiple Choice Single Answer


Question The profit volume ratio of BB & Co,. dealing in precision
instruments, is 50% and the margin of safety is 40%. You are
required to work out the break-even point and the net profit if the
sale volume is Rs.50,00,000/-
Correct Answer Break even point-Rs.30,00,000/-, net profit-Rs.10,00,000/-

Your Answer Break even point-Rs.30,00,000/-, net profit-Rs.10,00,000/-

Multiple Choice Multiple Answer


LIST OF ATTEMPTED QUESTIONS AND ANSWERS
jute etc.
Your Answer Single organization having number of branches. , Number of
companies in same industry , Similar Industries such as cotton,
jute etc.

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 Variable overhead volume

Select The Blank


Question The concept of marginal costing is based on the important
distinction between product costs and ________ costs.
Correct Answer Period

Your Answer Variable

Multiple Choice Multiple Answer


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 yield variance -Rs.1,260/- , Labour yield variance is
favourable , Labour cost variance -Rs.700/- (Favourable)
Your Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield
variance -Rs.1,260/- , Labour yield variance is favourable

Multiple Choice Multiple Answer


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
actually used and that should have been used. , Considers
standard price X actual quantity , Considers standard price X
standard quantity

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.
Correct Answer False

Your Answer False

True/False
Question Compound journal entry avoids duplication of effort.
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question Carriage charges paid for a new machine purchased if debited to
carriage account would affect the ________.
Correct Answer Machinery A/c and carriage A/c

Your Answer Machinery A/c and carriage A/c

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

True/False
Question Financial accounting may deal with the ascertainment of cost &
calculation of profitability of the individual product.
Correct Answer False

Your Answer False

Multiple Choice Multiple Answer


Question The objectives of cost accounting are :-

Correct Answer Cost control , Ascertainment of cost of each product , Assist in


managerial decision-making
Your Answer Cost control , Ascertainment of cost of each product , Assist in
managerial decision-making

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

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

Multiple Choice Multiple Answer


Question For the month of November, a firm has budgeted sales of 20,000
units of X at a price of Rs.10/- and sale of 30,000 units of Y at a
price of Rs.6/- per unit. Actual sale during the month was 35,000