RVS Institute of Management Studies and Research Multiple Choice Questions Accounting For Managers 2009 BATCH 1.

. Indian Bank Account is a _______. A) Personal Account B) Real Account C) Nominal Account D) None of these 2. Out standing Salaries is a _________. A) Nominal Account B) Personal Account C) Real Account D) None of these 3. Income tax paid by the Sole Traders is _______. A) debited to Trading Account B) debited to Profit and Loss Account C) deducted from his capital account in the balance sheet as drawings D) None of these 4. Functions of Accounting are _______. A) Keeping systematic record B) protecting properties of the books C) Communicating the results D) All the above 5. The purchase books records _______. A) Purchase returns B) Cash Purchases C) Credit Purchases D) None of the above 6. Proprietor and business are separate under ______. A) Entitiy Concept B) Money measurement Concept C) Going Concern Concept D) Dual Concept 7. Capital means ________ . A) Liability + Assets C) Assets 8. Cash is a ______ . A) Nominal Account C) Personal Account 9. Debit means _____ . A) Loss C) Expenses + Loss + Assets B) Asset - Liability D) All the above B) Real Account D) None of these B) Expenses only D) Asset - Liability

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10. The balances appearing as expenditure on the debit side of the Trial Balance are shown in the _____. A) Balance sheet B) Trading Account C) Profit and Loss Account D) None of these 11. The Accounting equation is based on ______. A) Dual Aspect Concept B) Money Measurement Concept C) Entity Concept D) None of these 12. Cost of goods sold Rs.8,00,000; opening stock Rs.1,00,000; closing stock Rs. 1,20,000; Purchases to be _____. A) Rs. 8,20,000 B) Rs. 8,00,000 C) Rs. 8,40,000 D) Rs. 6,00,000 13. The Balance sheet indicates the financial position of the concern _________. A) as on a given date B) for a particular period C) on the date of preparation D) None of the above 14. Assets convertible into cash easily are ____. A) Floating Assets B) Current Assets C) Fixed Assets D) Liquid Assets 15. If the closing stock appears in the trial balance, it will transfer to ______. A) Trading Account B) Trading Account and Balance Sheet C) Profit and Loss Account D) Balance Sheet 16. Cash withdrawn by the proprietor from business is credited to ____. A) Drawings A/c B) Cash A/c C) Capital A/c D) None 17. Depreciation means_____. A) Decrease in Value of fixed assets B) Increase in value of fixed assets C) Decrease in value of current assets D) Increase in value of current assets 18.Trial Balance is a _______. A) Statement C) Subsidiary Book B) Ledger D) None

19. Depreciation is a process of ________. A) Valuation B) Allocation C) Both (A) and (B) D) None

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20. What is Trade Discount? A) Reduction in catalogue price of article B) Price discount C) Bulk discount D) None of these 21. Preliminary accounts appears in ________. A) Asset side of balance sheet B) Debit side of trading account C) debit side of profit and loss account D) None of these 22. The term Fixed assets includes ______. A) Bank Balance B) Stock in trade C) Debtors D) Goodwill 23. Bank overdraft is ________. A) Current asset C) Long term liability B) Current liability D) Long term asset

24. A trial balances shows ________. A) the status of investments B) the flow of funds C) the arithmetical accuracy of postings D) none of the above. 25. Carriage inwards in a Trial Balance is to be ________. A) Debited to Trading A/c B) Credited to Trading A/c C) Debited to P&L A/c D) None of these 26.The difference between assets and liabilities is known as __________. A) Capital B) Loss C) Profit D) None 27. Bad debt is _________. A) A loss C) A gain 28. Doubtful debt is _________. A) A loss C) A gain B) An expected loss D) An income B) An expected loss D) An income

29.The purpose of Charging depreciation is ______________. A)To estimate the scrap B)To ascertain true profit C)To find purchase cost D) None of these 30.Depreciation arises because of ______________. A) Fall in the market value of the asset B) Physical wear and tear C) Fall in the value of money D) None of the above
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31.Depreciation is ______________ account. A) Real B) Personal C) Nominal D) None of the above 32.Gross working capital represents ________. A) Total Current Assets B) Total Current Liabilities C) The Excess of current assets over current liabilities D) None of these 33. The first step in preparing budget is ____. A) Cash budget B) Production budget C) Sales budget D) Materials budget 34. Which of the following is usually a long tern budget? A) Sales budget B) Cash Budget C) Capital Expenditure Budget D) Fixed Budget 35. In case of a limited company, the term financial statements include _____. A) Profit and loss & Balance sheet B) Profit and loss Account C) Profit and loss Account, Profit and loss Appropriation A/c and Balance Sheet D) None of these 36. The assets of a business can classify as _____. A) Only fixed assets B) Only current assets C) Fixed assets and Current assets D) None of the above 37. Gross profit ratio is ____. A) Net profit / Net sales C) Gross profit / Net sales B) Gross profit / Gross sales D) None of these

38. Increase in share premium account is ______. A) An application of fund B) A source of fund C) No flow of fund D) None of these 39. Cash budget means ______. A) Flexible budget C) Proposed receipts and payments B) Proposed sale D) Proposed production

40. Management accounting is known as _________. A) General information B) Accounting information C) Information related to people D) Information related to students

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41. Income statement is known as _______. A) Profit and Loss Account B) Balance Sheet C) Fund flow statement D) None of the above 42. The Current assets does not include _________. A) Payments of advances C) Long term loan 43. Sale of furniture is ___. A) Application of fund C) Working Capital B) Bills receivable D) Bank B) Source of Fund D) None

44. The incorporation of the entire functional budget is called ________. A) Production Budget B) Sales Budget C) Master Budget D) Flexible budget 45. Budget manual covers _________. A) Duties and Powers of officers C) All functions of a company B) Reports & Statements of Accounts D) None of the above

46. Management accounting is derived from _________. A) Financial Accounting B) Cost Accounting C) Financial Accounting and Cost Accounting D) None of these 47. Management Accountant can prepare _______. A) Profit and Loss Account B) Balance Sheet C) Fund flow and Cash Flow D) None of these 48. Ratio Analysis is a tool of _____. A) Working capital analysis C) Profit Analysis 49. Tax paid is ____. A) Income C) Source 50. Cash budget is ________. A) Incomplete expenditure C) Assets and Liabilities B) Financial Analysis D) None B) Application D) None B) Receipts and Payments D) None of the above

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51. The System that helps in ascertaining the cost and selling price of a product is ______. A) Financial Accounting B) Management Accounting C) Cost Accounting D) None of the above 52. For decision making, management accounting uses_______. A) Only quantitative data B) Only qualitative data C) Both (A) and (B) D) None of these 53. Ratio analysis is useful to _____ . A) Management C) Shareholders 54. Liquidity is measured by _________. A) Current ratio C) Gross profit ratio 55. Current assets include _______. A) Inventory C) Machinery B) Creditors D) All the above B) Operating ratio D) Net profit ratio B) Bank O/D D) Bills payable

56. A detailed plan of operations for some specific future period is called ____. A) Cash flow statement B) Fund Flow Statement C) Budget D) Forecast 57. Management accounting is ________. A) Compulsory for a partnership firm B) Compulsory for a company C) Compulsory for any type of organization D) Optional to any type of organization 58. Flow of funds means _____. A) Change in funds C) Change in outflow 59. Debt equity ratio is _______. A) A long term solvency C) a short term solvency ratio B) Change in inflow D) Change in cash B) a profitability ratio D) a ratio between capital and fixed assets

60. Fixed cost is a cost which _______. A) Remains fixed up to maximum capacity B) Remains changing C) Changes with sales D) Changes after a point 61. A budget changes with level of activity is _______. A) Fixed budget B) Flexible budget C) Cash budget D) None

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62. Financial Statements are _______. A) Estimated facts C) Recorded facts

B) Anticipated facts D) None

63. Which of the following is non-current asset _____. A) Goodwill B) Cash balance C) Bills receivable D) Debtors 64. Budgetary control is a system of controlling _____. A) Costs B) Purchases and Sales C) Profit D) None of these 65. Depreciation of Machinery ____. A) Source of fund B) Application of fund C) Both (A) and (B) D) None of the above 66. Cash flow statement is prepared by taking one of the following _______. A) Opening balance of cash B) Closing balance of cash C) Expenses D) None of these 67. The ideal ratio for current is ________ A) 2:1 B) 1:1 C) 1:2 D) 2:3 68. A fund flow statement is better substitute for an _________ statement. A) Profit & Loss B) Balance Sheet C) Income & Expenditure D) None 69. Decision making is the primary function of _______. A) Management accountant B) Middle management C) Top management D) None 70. For measuring overall profitability of a concern one of the following is used ________. A) Net profit before tax B) Net profit after tax C) Net profit before interest and taxed D) Operating profit 71. Which one of the following is considered about as current liability and fixed liability A) Provision for depreciation B) Provision for bad debts C) Proposed dividend D) Reserve fund 72. Cash budget is a _________ term budget. A) Short B) Long C) Medium D) None

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73. Liquid Ratio is also termed as ________. A) Turnover ratio B) Acid test ratio C) Proprietary ratio D) Current ratio 74. In marginal costing, stock is valued at A) Variable cost B) Fixed cost C) Total cost D) None of the above 75. Margin of safety is equal to A) Variable cost/ P/V ratio C) Total sales-Break even sales. B)Fixed cost *P/V ratio. D) Profit / Sales

76. Retained earnings refer to ________. A) Appropriation of profits B) Non-operating profits C) Estimated profits D) Operating profits 77. Break-Even point is calculated by the formula A) Marginal cost /Standard cost * Sales B) Fixed cost/ Contribution *Sales C) Fixed cost /Total cost *Contribution D) Fixed Cost/ Profit 78. P/V ratio is 30% and margin of safety is Rs. 3, 30,000 the amount profit is A) Rs. 88,000 B) Rs. 99,000 C) Rs. 77,000 D) Rs. 99,900. 79. When fixed cost is Rs. 10,000 and P.V. Ratio is 50% the break even point will be A) Rs.20, 000 B) Rs. 10,000 C) Rs. 40,000 D) None of these 80. Contribution per unit / Selling price per unit = A) BEP in unit B) BEP in Rs C) Profit volume ratio D) Fixed Cost 81. Difference in sales volume will affect A) Variable cost per unit B) Total fixed cost C) Break even sales D) None of these 82. Contribution = Sales - VC = Fixed Cost + __________. A) BEP B) Profit C) Margin of safety D) None of these 83. A BEP is A) Sales - Variable cost C) Profit B) Sales Margin of safety D) None of these

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84. Profit is equal to

A) Fixed cost - variable cost C) Contribution Fixed Cost B) Sales contribution D) Sales Variable Cost

85. Costing is a technique of ________. A) Income determination B) External reporting C) Ascertaining cost D) Internal reporting 86. _____ is useful not only to ascertain the cost but also to control the cost. A) Management Accounting B) Cost Accounting C) Auditing D) Income Tax 87. Cost Accounting is a tool of ______. A) Financial Accounting B) Management Accounting C) Auditing D) Company Accounts 88. Cost Accounting is based on _______ figures. A) Actual B) Estimated C) Accrual D) Historical 89. Direct material + Direct Labour + Direct Expenses = ________. A) Factory on Cost B) Prime Cost C) Cost of goods sold D) Total cost 90. Which of the following is the main aim of cost Accounting? A) Cost Control B) Cost Ascertainment C) Price Fixation D) All the above 91 Direct materials is an example of _______. A) Fixed cost B) Variable cost C) Semi-variable cost D) office on cost 92. Prime cost + Factory over head + Opening work in progress Closing work in progress is _________ A) Prime cost B) Works cost C) Cost of sales D) Cost of goods sold 93. Factory cost + Office and administration over head + Opening stock of finished goods Closing stock of finished goods is____________. A) Prime cost B) Works cost C) Cost of sales D) Cost of goods sold 94. Rent is an example for ________ A) Fixed Cost B) Variable Cost B) Semi-Variable Cost D) Semi-Fixed Cost
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95. Advertisement is a _________________ A) Administrative Expenditure B) Factory Expenditure C) Selling Expenditure D) None of these 96. Cost means__________ A) Price C) Expenses B) Value D) All the above

97. Costing techniques are applied in the ____________ A) Personnel B) Production C) Finance D) Administration 98. Prime Cost + Factory Overheads = A) Cost of Production B) Cost of Sales C) Cost of Works D) None of these 99. Cost per Unit = A) Cost of Sales + Profit/ No. of Units B) Cost of Works + Profit / No. of Units C) Cost of Production + Profit / No. of Units D) None of these 100. All the indirect costs are known as __________ A) Works Cost B) Costs C) Overhead D) All the above ***** Prepared By: S.VINOTH, Faculty, RVSIMSR

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