MCQ SEM-6

1.Marginal costs is taken as equal to

a) Prime Cost plus all variable overheads

b) Prime Cost minus all variable overheads
c) Variable overheads
d) None of the above
2.If total cost of 100 units is Rs 5000 and those of 101 units is Rs 5030 then increase of Rs 30
in total cost is

a) Marginal cost
b) Prime cost
c) All variable overheads
d) None of the above
3.Marginal cost is computed as

a) Prime cost + All Variable overheads

b) Direct material + Direct labor + Direct Expenses + All variable overheads
c) Total costs – All fixed overheads
d) All of the above
4.Marginal costing is also known as

a) Direct costing
b) Variable costing
c) Both a and b
d) None of the above
5.Which of the following statements are true?

A) Marginal costing is not an independent system of costing.

B) In marginal costing all elements of cost are divided into fixed and variable components.
C) In marginal costing fixed costs are treated as product cost.

D) Marginal costing is not a technique of cost analysis.

a) A and B
b) B and C
c) A and D
d) B and D
6.While computation of profit in marginal costing

a) Total marginal cost is deducted from total sales revenues

b) Total marginal cost is added to total sales revenues
c) Fixed cost is added to contribution
d) None of the above
7 Which of the following are the assumptions of marginal costing?

A) All the elements of cost can be divided into fixed and variable components.
B) Total fixed cost remains constant at all levels of output.

C) Total variable costs varies in proportion to the volume of output.

D) Per unit selling price remain unchanged at all levels of operating activity.

a) A and B
b) B and C
c) A and D
d) A, B C and D
8. In two periods total costs amounts to Rs 50000 and Rs 40000 against production of 20000
and 15000 units respectively. Determine marginal cost per unit and fixed cost.

a) Rs 2 and Rs 10,000
b) Rs 4 and Rs 5000
c) Rs 10 and Rs 8000
d) None of the above
9.Under High and Low Point method, the output at two different levels is compared with
the amount of __________ incurred at these two points.

a) Total fixed costs

b) Total costs
c) Total fixed costs
d) None of the above
10.Under method of least squares, a linear equation is developed in the form of ______
wherein Y is total cost, a=fixed cost, b= marginal cost and X is output.

a) Y=a+bX
b) Y=a-bX
c) Y=a*bX
d) None of the above
11.In Analytical method of calculating marginal costing, it is determined on the basis of
past records.- True
12.__________ refers to changes in total costs that occur due to changes in volume of
production or sales, product system, product mix or from the adoption of an alternative
course of action.

a) Differential costs
b) Marginal costs
c) Absorption costs
d) None of the above
13.As per J.M. Clark, when a decision has to be made involving ___________ , the
difference in cost between two policies may be considered to be the cost really incurred on
account of these n-units of business.

a) An increase of n-units of output

b) A decrease of n-units of output
c) An increase or decrease of n-units of output
d) None of the above.
14.Pertaining to the differential cost systems, which of the following statements are true?

A) Differential cost plus differential income shows net loss or net income

B) Differential cost is ascertained by comparing total costs of each alternative

C) Differential cost related to differential investments is calculated every time.

a) Only A
b) Only B
c) Only C
d) A, B, C
15.Which of the following statements are true?

a) Differential cost is also known as relevant cost.

b) Differential costs are estimated future costs.

c) Differential costs include only those costs which change as a result of the decision making
being considered.

d) All of the above

16.If direct labor is not affected by the change in the type of material, it will form a part of
differential cost.

a) True
b) False
17.The basic data used for differential cost analysis are

a) Cost
b) Revenue
c) Investment data
d) All of the above
18.The alternative which shows ____ difference between the incremental revenue and the
differential cost is the one considered to be the best choice for selection.

a) Maximum
b) Minimum
c) No
d) None of the above
19.Differential cost is a part of routine accounting records.

a) True
b) False
20. If there is no change in fixed cost at different levels of output,

a) Marginal costs > Differential cost

b) Marginal costs < Differential cost
c) Marginal cost and Differential cost are same
d) None of the above
21.Differential costs are obtained on the basis of

a) Absorption costing
b) Marginal costing
c) Both a & b
d) None of the above
22.In the case of differential costing, ________ is the main criteria for decision making.

a) Contribution
b) Ratios
c) Incremental/decremental revenue
d) None of the above
23.In certain decision areas like plant closure and change in capacity, ________is more
useful.

a) Differential costing
b) Marginal costing
c) Absorption costing
d) None of the above
24.The problems associated with marginal costing are

a. Difficulties in divisions of costs

b. Problem of valuation of stocks
c. Ignores time elements
d. All of the above
25.___________ is not suitable where selling price is determined on the basis of cost-plus
method.

a. Absorption costing
b. Marginal costing
c. Both a and b
d. None of the above
26.Which of the following are advantages of marginal costing?

a. Makes the process of cost accounting more simple

b. Helps in proper valuation of closing stock
c. Useful for standard and budgetary control
d. All of the above
27.Under absorption costing, managerial decisions are based on
a. Profit
b. Contribution
c. Profit volume ratio
d. None of the above
28.Which of the following statements are false?

A) When all the figures in a balance sheet are stated as percentage of the total, it is termed as
horizontal analysis.

B) When financial statements of several years are analyzed, it is termed as vertical analysis.

C) Vertical Analysis is also termed as dynamic analysis.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B , C
29.State which of them are true?

A) When ratios of previous years are compared with current years, they are called trend ratios.

B) Trend percentages and trend ratios are used in static analysis.

C) Reliability of financial analysis depends upon the reliability of financial data.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C
30.Comparison of financial statements highlights the trend of the _________ of the
business.

a) Financial position
b) Performance
c) Profitability
d) All of the above
31.Analysis of any financial Statement comprises

a) Balance sheet
b) P&L Account
c) Trading account
d) All of the above
32.Which of the following statements are true?

A) Common-size balance sheet shows relative value of the various items.

B) In the common size income statement, each product is represented as a percentage of the net
sales figure.
C) Common size income statements represent the various elements as a percentage of the gross
profit.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C
33.Which of the following statements are true?

A) External analysis depends entirely on issued financial statements.

B) Interpretation and analysis both are different.
C) Financial analysis covers interpretation.

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C
34.Which of the following are techniques, tools or methods of analysis and interpretation of
financial statements?

a) Ratio Analysis
b) Average Analysis
c) Trend Analysis
d) All of the above
35.Interpretation of accounts is the

a) Art and science of translating the figures

b) To know financial strengths and weaknesses of a business
c) To know the causes for the prevailing performance of business
d) All of the above
36.The term ‘Financial Statement’ covers

a) Profit & Loss Statement

b) Balance sheet and Profit & Loss Statement appropriation account
c) Profit & Loss Statement and Balance sheet
d) All of above are false
37.The form of balance sheet is

a) Vertical
b) Horizontal
c) Horizontal and vertical
d) Horizontal or vertical
38.The term current asset doesn’t cover

a) Car
b) Debtors
c) Stock
d) Prepaid expenses
39.P&L statement is also known as

a) Statement of operations
b) Statement of income
c) Statement of earnings
d) All of the above
40.Which of the following is true about financial statements?

A) Financial statement gives a summary of accounts.

B) Financial statements can be stated as recorded facts.

a) Only A
b) Only B
c) Both A and B
d) None of the above
41.The only feasible purpose of financial management is

a) Wealth Maximization
b) Sales Maximization
c) Profit Maximization
d) Assets maximization
42.Financial control report comes under
- Published on 19 Oct 15

a. Dynamic financial reports

b. Static financial reports
c. Extensive Activity report
d. None of the above
43.A balance sheet is a form of
- Published on 19 Oct 15

a. Dynamic financial reports

b. Static financial reports
c. Activity reports
d. None of the above
44.Analytical reports are based on the ______ comparison of results.
- Published on 19 Oct 15

a. Horizontal
b. Vertical
c. Symmetrical
d. None of the above.
45.___________ are just income statements, wherein the results of one particular year are
compared with the findings of past several years.
- Published on 19 Oct 15

a. Subsidiary trend reports

b. Analytical report
c. Activity reports
d. Master trend report
46.Which of the following is a kind of information report?
- Published on 19 Oct 15

a. Trend reports
b. Analytical report
c. Activity reports
d. All of the above
47.Volume variance arises when
- Published on 19 Oct 15

a. There is rise in overhead rate per hour

b. There is decline in overhead rate per hour
c. There is decrease or increase in actual output compared to the budgeted output
d. None of the above
48.The type of standard that is best suited for cost control objective is
- Published on 19 Oct 15

a. Normal standard
b. Basic standard
c. Expected standard
d. Ideal standard
49.The corrective actions after the analysis of variances has to be taken by
- Published on 19 Oct 15

a. Cost accountant
b. Management
c. Both a and b
d. None of the above
50.When actual price is higher or lower than the standard price, then it is
- Published on 19 Oct 15

a. Sales price variance

b. Sales volume variance
c. Sales mix variance
d. Sales quantity variance
51.The information of MIS comes from the
a. Internal source
b. External source
c. Both internal and external source
d. None of the above
52.The back bone of any organization is

a. information
b. employee
c. management
d. capital

53.The elements of control will consist of

a. Authority, Direction, Management

b. Authority, Direction, Information
c. Authority, Application, Management
d. Authority, Application, Information
54.Internal information for MIS may come from any one of the following department
.
a. Customers care department
b. HR department
c. Marketing department
d. Production department
55.One byte is made of

a. Four bits
b. Eight bits
c. Twelve bits
d. Sixteen bits
56.MIS normally found in a manufacturing organization will not be suitable in the ______.

a. Service sector
b. Banking sector
c. Agriculture sector
d. All of the above
57.GDSS is the short form of

a. Group Decision Support System

b. Group Discussion Support System
 c. Group Decision Service System
d. Group Discussion Support Source
58.Management information systems (MIS)

a. create and share documents that support day-today office activities

b. process business transactions (e.g., time cards, payments, orders, etc.)
c. capture and reproduce the knowledge of an expert problem solver
d. use the transaction data to produce information needed by managers to run the
business
59.The term used to describe those people whose jobs involve sponsoring and funding the
project to develop, operate, and maintain the information system is

a. information worker
b. internal system user
c. systems owner
d. external system user
60.The person who ensures that systems are developed on time, within budget, and with
acceptable quality is a

a. systems designer
b. project manager
c. systems owner
d. external system user
61.Which one of the following is not a business driver for an information system?

a. business process redesign

b. knowledge asset management
c. proliferation of networks and the Internet
d. security and privacy
62.A task of developing a technical blueprint and specifications for a solution that fulfills the
business requirements is undertaken in the following phase of the system development
process

a. system initiation
b. system implementation
c. system analysis
d. system design
63. Which of the following is not a parameter of a report?
A. Ability to acquire additional information
B. Quality of additional information acquired
C. Ability to arrive at a subjective evaluation
D. Ability to provide worthwhile recommendations

64. A factor, not achieved by collaboration among teams, known as:

A. Performance measures
B. Decreased cycle time
C. Limits costs
D. All of the above
65. If the goal of writing is to direct action or activity, it is the resulting in
communication is known as:
A. Communicating to instruct
B. Communicating to inform
C. Communicating to persuade
D. Communicating to develop interaction
66. To which of these people is the report not very crucial?
A. Engineers
B. Scientists
C. Teachers
D. Business executives
67. Which of these reports is raised annually?
A. Inventory reports
B. Confidential reports
C. Laboratory reports
D. Inspection reports
68. Which of these is not a part of a report?
A. Front matter
B. Gender
C. Front cover
D. Title page
69. Which of these reports are used in business?
A. Formal technical reports
B. Informal reports
C. Personal reports
D. Musical reports
70. ______ report includes breakdown of machinery.
A. Feasibility
B. Periodic
C. Trouble
D. Progress
71. Which of these forms is not used to write a non-formal report?
A. Filling in a blank form
B. App
C. Form of a letter
D. Memorandum
72. In which of these forms is a non-formal letter not written?
A. Filling in a blank form
B. Form of a letter
C. Form of a memorandum
D. Formal of a notice
73. Non- formal report written in the form of a letter is similar to a _____.
A. Complaint letter
B. Notice
C. Friendly letter
D. Business letter
74. A memorandum is almost like a _____.
A. Simple letter
B. Formal letter
C. Informal letter
D None of these
75.