SCDL – Management Accounting PGDBA – I Semester

Select The Blank

Question The costs incurred for recruitment and training of new workers and the resulting losses
wastages and reduced productivity due to the inefficiency and inexperience of new workers is referred
to as the _______.
Correct Answer Replacement costs

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

Question In process of establishing the standards, the following steps are involved
Correct Answer Study of technical details , Study of existing costing system , Decision about types
of standards to be used.

Question The cost that tends to remain constant irrespective of the level of activity is called
Correct Answer fixed cost

Question A business is an activity carried out with the intention of earning the profit.
Correct Answer True

Question Cost Accounting restrict itself with historical transactions

Correct Answer False

Question These are the methods of measuring labour turnover.

Correct Answer Replacement Method , Separation Method , Flux Method

Question Valuation of returns indicates the material returned by store department to production
department
Correct Answer False

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

Question ________ and ________ are examples of semi- variable overheads.

Correct Answer Maintenance cost
Correct Answer electricity

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

Question __________ Accounting is primarily protects the interest of the outsiders dealing with the
organization various capacities like investors, suppliers, customers etc.
Correct Answer Financial

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Question Purchased computers of Rs. 50,000 come under the heading of fixed asset
Correct Answer True

Question In Cash budget , Non operating cash inflow includes

Correct Answer Receipt of loan/borrowings , Issue of shares , Sale of fixed assets

Question Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 5000.
The total amount transfer to advertisement account is Rs.____
Correct Answer 15,000

Question Convention of Materiality __________________

Correct Answer Only those transactions will be considered which have material impact on
profitability , Insignificant transaction will be ignored , The cost of non-used should not be considered as
the item of cost

Question Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed cost is Rs.
18,02000. Find out the BEP in units,
Correct Answer 53000

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

Question It is the cost of opportunity foregone.

Correct Answer Opportunity Cost

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
Correct Answer at standard

Question Standard costing may not be useful for forecasting purposes

Correct Answer True

Question Factory overheads, administration overheads , selling and ________ overheads are the
form of ________ classification of overheads
Correct Answer distribution
Correct Answer function wise

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

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

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

Correct Answer True

Question Fixed cost is the cost that tend to remain ________ irrespective of ________
Correct Answer constant
Correct Answer level of activity

Question The bank pass book or the bank statement is the extract of the account in the name of the
business as it appears in the books the business.
Correct Answer False

Question Sales Budget is a forecast expressed in ________ and ________ terms.

Correct Answer quantity
Correct Answer Money

Question Due to compensating errors the arithmetical accuracy of the trial balance get affected.
Correct Answer False

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

Question LAST IN FIRST OUT (LIFO)

Correct Answer The price of the latest available lot is considered first , If that lot is exhausted, the
price of the 10% prior to that is considered , Physical issue of the material may not be made out of the
said lot

Question Standard Costs are used as tool for

Correct Answer Cost Control

Question Variable costs are the controllable costs at the ________ level of the management whereas
fixed costs can be controlled only on the ________ level of the management
Correct Answer Lower
Correct Answer Top

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

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Question Bin Card Includes
Correct Answer Entries in receipt column on basis of goods received note or material returned note
, Entries in issue column on basis of material requisition note , The balance quantity is calculated and
recorded

Question classification of the overheads as fixed and variable ,facilitates the preparation of flexible
budgets.
Correct Answer True

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

Question The following factors affects the budgeted advertisement cost

Correct Answer Percentage of profits , Availability of funds , Competitors policy

Question A bank reconciliation statement is prepared on a particular date.

Correct Answer True

Question Profit & Loss Account shows Gross Profit 13,000. Expenses incurred as Telephone charges
1500, Traveling expenses 3000, Salary paid 2000, discount allowed 500, depreciation 200. Calculate the
net profi
Correct Answer 5800

Question Balance sheet liability side includes

Correct Answer Loan & advances , Outstanding expenses , Creditors

Question ________ and ________ are non monetary incentives

Correct Answer Safety services
Correct Answer education facility

Question Accounting period Concept________________

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

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

Question These are the replacement costs of labour turnover.

Correct Answer cost of personnel administration , cost of selection and placement , increased
spoilage and defectives

Question These are the replacement costs of labour turnover.

Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased spoilage and
defectives

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Question Depreciation
Correct Answer Amount charged on Fixed Assets.

Question The sales day book of October 1991 was overcast by Rs. 10,000, which A/C to be debited.
Correct Answer Sales A/C

Question The cost accountancy is defined as “ the application of costing principles,methods and
techniques to the ________, art and practice of ________ ascertainment of the profitability and the
presenta
Correct Answer science
Correct Answer cost control

Question A Co. having net sales Rs. 7,50,000, opening stock 1,14,375, purchases, 483,375 closing
stock 1,47,750. Calculate the Gross Profit
Correct Answer 3,00,000

Question Standard Costing system facilitates ________ and ________ for each individual or
department
Correct Answer Delegation of authority
Correct Answer Fixation of responsibility

Question Creditor
Correct Answer Supplier

Question The overhead is aggregate of

Correct Answer Indirect labour cost , Indirect material cost , Indirect Expenses

Question The wage payment system should take into consideration the external obligations such as
the Minimum wages Act and the agreement entered into by the organization with the workers.
Correct Answer True

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

Question Trial balance is drawn on a particular date

Correct Answer True

Question Tallying of trial balance is conclusive evidence of the total accuracy of the books of
account.
Correct Answer False

Question A very wide scope of Management Accounting is the limitation by itself.

Correct Answer True

Question Sundry creditors transfer to asset side.

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Correct Answer False

Question ___________ Accounting is the process of classifying and recording of the expenditure in a
systematic manner with the intention of ascertaining the cost of cost centre with the intention of
controllin
Correct Answer Cost

Question This is one of the avoidable cause of labour turnover.

Correct Answer Relationship with supervisors and workers

Question Non-Operating / Financial Incomes are deducted from operating profit while calculating
Net profit.
Correct Answer False

Question Semi ________ overheads are neither ________ nor variable in nature.
Correct Answer fixed
Correct Answer variable

Question Standard Costing specifically relates to the function of

Correct Answer Production

Question Balance sheet indicates the expenditure & income from the business.
Correct Answer 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

Question Debtors
Correct Answer Who owes money to the business

Question Fixed assets do not give the returns during the same period during which they are paid
for
Correct Answer True

Question These are the special type of cost

Correct Answer Opportunity cost , Differential cost , Sunk cost

Question Discount received from the Creditors has been entered in the Creditors A/C but discount
amount has not been credited, for rectifying such error which account to be debited.
Correct Answer Suspense A/C

Question Under this method of time keeping , each worker is allotted an identification number and
a disc or token bearing that number.
Correct Answer Token or Disc Method

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Question Under marginal costing semi variable costs are also classified in their individual
components of fixed cost and variable cost.
Correct Answer True

Question Labour Rate Variance occurs due to

Correct Answer Change in wage structure , Use of different methods of payment , Wage difference

Question Break even point is a situation of no ________ no ________

Correct Answer profit
Correct Answer loss

Question It is an appropriate basis of apportionment of depreciation expenditure

Correct Answer value of assets

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

Question Replacement costs refer to all costs incurred for recruitment and training of new workers.
Correct Answer True

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

Question P/L A/C debit side includes

Correct Answer salary , discount allowed , postage & telegram

Question Ifidle time payment is abnormal , it should be classified as overheads.

Correct Answer False

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

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
Correct Answer revenues

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

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

Question Following are various forms of limiting factor

Correct Answer market , labour , machine availability

Question These are normal bases for primary apportionment of overheads.

Correct Answer value of assets , HP/KWh , number of light points

Question Due to errors of principle the arithmetical accuracy of the trial balance does not get
affected.
Correct Answer True

Question The situation of over absorption arises if the overheads absorbed are less than the actual
overheads.
Correct Answer False

Question Depreciation can be defined as a permanent , continuous and gradual reduction in the
book value of a fixed assets.
Correct Answer True

Question Balance sheet asset side includes

Correct Answer Furniture , Vehicle , Land & building

Question In case of the under or over absorption of the overheads arising out of the normal
circumstances , they are written off to costing profit and loss account.
Correct Answer False

Question Due to errors of principle the arithmetical accuracy of the trial balance get affected.
Correct Answer False

Question Trading a/c credit side includes

Correct Answer sales , goods lost by fire , closing stock

Question variable cost is the cost that tend to ________ in direct proportion with ________
Correct Answer vary
Correct Answer level of activity

Question Preliminaries for establishing Standard costing system includes

Correct Answer Establishment of cost centers , Design of accounts , Establishment of standards

Question Bank of Maharashtra A/C is a personal A/C

Correct Answer True

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Question Adverse labour time variance may be due to

Correct Answer Poor grade of labour , Defective plant & machinery , Poor quality of material

Question This is the best example of element wise classification of cost.

Correct Answer material

Question Highest in first out

Correct Answer This method assumes that the stock should always be shown at the minimum
value

Question Standard price creates complications in accounting system and increase clerical work.
Correct Answer False

Question Limitations of Management Accounting includes-------------------

Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate organizational
structure

Question Trade Discount

Correct Answer Amount received on purchases

Question In a Balance-Sheet right hand side is a Asset side & left hand side is liability side
Correct Answer True

Question The stages of cost control involves

Correct Answer To plan the operation , Execute the plan & measuring the actual performance ,
Computing the variations between planned & actual performance

Question __________ Accounting becomes a source of information for Management Accounting.

Correct Answer Financial

Question The levels indicated on the Bin card enables the ________ department to keep a watch on
the balance and replace the material as soon as it reached at ________ level.
Correct Answer Stores
Correct Answer Re-order level

Question Under Merrick Differential Piece rate System of wage payment above 100 % of efficiency
following rate is offered.
Correct Answer 130% of normal piece rate

Question This is an example of semi variable overheads.

Correct Answer electricity

Question Following error affect the trial balance

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

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Question A Budget center may be in the form of

Correct Answer A product , A department , A branch of the company

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

Question If ________ is not provided, the asset may appear in the Balance Sheet at an ________
amount
Correct Answer depreciation
Correct Answer overstated

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

Question Replacement costs of labour turnover are ________ and ________

Correct Answer training
Correct Answer breakages of machine

Question When the balance in the ledger account of the previous year are entered the current year’s
books, the balances are said to be bought forward.
Correct Answer True

Question Sales at 1,00,000 units are Rs. 1,00,000 , variable costs Rs. 40,000 and fixed cots is Rs.50,000.
What is Break even point ?
Correct Answer Rs. 83,333

Question The material physically received is compared with material ordered as per the this order
Correct Answer Purchase order

Question Interest Received amounted to Rs. 10,000/- is to be transfer to ___

Correct Answer Profit & Loss A/C credit side Rs. 10,000

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
Correct Answer Spent

Question Material Price Variance may occur due to

Correct Answer Change in price of material , Failure to take discounts , Weak purchase
organization

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Question Selling and distribution overheads includes
Correct Answer Indirect Material such as packing material, samples etc., , Indirect labour like
salaries to sales personnel manager , Indirect expenses like warehouse charges, advertisement

Question Idle time is the time required to complete particular job.

Correct Answer False

Question All items which do not involve cash flow will be considered for while preparing Cash
Budget.
Correct Answer False

Question The quantitative record of receipts, issues and closing balance of an item of material is
called Bin-Card.
Correct Answer True

Question The amount of money that is paid for is classified as ________ and ________ for the
purpose of accounting
Correct Answer Capital Expenditure
Correct Answer Revenue Expenditure

Question The material physically received compared with material order as per the purchase order
may reveal the following forms of discrepancies
Correct Answer Quantity received in excess , Quantity received in short , Quantity received of
different quality

Question Book keeping is clerical while accounting is managerial

Correct Answer True

Question ________ Legal charges and ________ are the accounts which are shown on the debit side
of Profit & Loss Account
Correct Answer Like office rent,
Correct Answer Audit fees

Question Cash received from credit sales, Cash account to be credited.

Correct Answer False

Question The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration
overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost?
Correct Answer 37,86,000

Question Cost Accountancy is a science, art and practice of a cost Accountant.

Correct Answer Science indicates the possession and the application of relevant systematic
knowledge. , Art indicates the skill and ability. , Practice indicates continuous effects on the part of cost
accountant.

Question Under stocking may have following consequences

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Correct Answer Payment for idle time to workers , Production hold ups resulting into disturbed
delivery schedule , Eleventh hour purchase

Question Per unit cost of variable overheads may reduce as the volume of output increases but the
total overheads remain constant.
Correct Answer False

Question A properly laid down system of Standard Costing helps in implementation of

Correct Answer Budgetary Control

Question Store ledger

Correct Answer Record of all receipts and issue transactions , Financial expressions of all
transactions , Maintenance of Store ledges provides a second check

Question It is necessary to ignore key factors while taking decision by marginal costing technique.
Correct Answer False

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

Question Financial statements are basically in two forms i.e. profitability statement and balance
sheet.
Correct Answer True

Question Financial Accounting discloses the financial performance & financial statements of the
business as a whole.
Correct Answer True

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

Question According to Reducing Balance Method, the depreciation is provided at a predetermined

percentage on the balance of cost of asset after deduction of the depreciation previously charged.
Correct Answer True

Question Discount received from the creditor has been entered in the creditor's account but
discount has not been credited; what type of error is this ________
Correct Answer Omission of posting an amount in the ledger

Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The
rectification of this error will result in ________
Correct Answer decrease in gross profit by Rs.2,020/-

Question The variable costs are controllable at the lower lever.

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Correct Answer True

Question A person in charge of a ________ may be held responsible for its proper functioning and
cost control.
Correct Answer Cost centre

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

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

Question Which of the following transactions should be excluded while preparing a cost sheet ?
Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit

Question Examples of indirect material are

Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes

Question The process of attributing proportions of items of costs amongst const centres is called
________.
Correct Answer Cost apportionment

Question Contents of Uniform Cost Manual are

Correct Answer Organization , Cost Accounting system , Presentation of information

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

Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging

to the different industries.
Correct Answer False

Question The ________ ledger carries the individual accounts, whereas the general ledger records
the consolidated effect of the individual transactions.
Correct Answer Control

Question Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be
the amount of debtors that must be disclosed in the balance sheet?
Correct Answer Rs.53,750/-

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/-

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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/-

Question Depreciation on assets is credited to the trading account.

Correct Answer False

Question Balance sheet is considered to be a part of the financial statements.

Correct Answer True

Question Long term loan borrowed from financial institution comes under the heading of long term
liabilities.
Correct Answer True

Question The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank pass
book balance as on the same date was Rs.8,015/-. Select the transactions representing the reasons for this
difference.
Correct Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/- ,
Bank interest not entered in the bank book Rs.90/-

Question Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the
bank book.
Correct Answer Credited

Question A materials requisition form normally contains the following aspects:

Correct Answer Quantity requisitioned , Per unit material cost , Job number

Question A complete list of all material required, with quantities, for a particular job is given in the
________.
Correct Answer Bill of material

Question A producer is using certain tool item in productive process. Annual requirement is 20,000
units of the tool. Cost of ordering a lot is Rs.160/-. Per unit price of the tool is Rs.360/-. Annual interest
cost is 10%, insurance cost is 0.5% of the average inventory in stores, and other storage expenses are
Rs.2.20 per unit. Calculate annual ordering cost.
Correct Answer Rs.8,000/-

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

Question Lack of efficient control on various aspects related to raw-material increases the material
cost component of the finished product.
Correct Answer True

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Question The perpetual inventory system enables management to ascertain stock without physical
verification.
Correct Answer True

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

Question It is the ________ method of measuring labour turnover which is a combination of

separation method and replacement method.
Correct Answer Flux

Question Measurement of ________ gives an idea of the degree of mobility of labour.

Correct Answer Labour turnover

Question Computation of gross wages, deductions and net wages payable is the function of the
________ department.
Correct Answer Personnel

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.

Question Annual fixed cost of a producer is Rs.500,000/-. The price of its product is Rs.60/- and per
unit variable cost is Rs.40. In the next year his fixed cost commitments are expected to go up by 20%. By
what percentage the break even point will go up in the next year.
Correct Answer 0.2

Question A firm earns profit when contribution is equal to fixed costs under variable costing.
Correct Answer False

Question Labour efficiency variance arises due to:

Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of
material

Question Actual costs determined on the basis of costing records maintained have following
limitations :
Correct Answer No practical utility from control point of view , No practical utility for price
fixation , Expensive

Question A standard that is never altered, after being established, is known as ________ standard.
Correct Answer Ideal

Question Standard costs are used for external reporting.

Correct Answer False

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Match The Following

Question Correct Answer

Book-Keeping Books of Accounts

Financial statement Profitability statement & Balance-sheet

Accounting Process of analyzing & interpretation

Profitability statement Indicates the amount of profit earned

Balance-sheet Financial status

Match The Following

Question Correct Answer

Quality control dept control the quality of the product

Time booking dept jobwise booking of time

Personnel department Selection & training to workers

Time Keeping Department Recording of workers time

Cost accounting dept Accumulation & classification of cost data

Match The Following

Question Correct Answer

Lighting Number of light points

Rent Area

Power Hp/KW

Depreciation Value of assets

canteen expenses number of workers

Match The Following

Question Correct Answer

Goodwill Real A/c

Nominal Account Wages A/C

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Capital A/C Personal A/C

Building A/C Real A/C

Salary A/C Nominal A/C

Match The Following

Question Correct Answer

Owner Businessman

Banker Financial Institution

Debtors Credit Transaction

Creditors Receive the money

Suppliers Sale the Goods

Match The Following

Question Correct Answer

Spirit of mutual trust Requisite for uniform costing

Avoids cut throat competition Advantage of uniform costing

Treatment given to research and development costs Fields covered by uniform costing

Advantageously applicable in similar industries Scope of uniform costing

Match The Following

Question Correct Answer

Deferred revenue expenditure Real account

Deferred revenue expenditure written off Nominal account

Loan Personal account

Drawings Proprietor's account

Question Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an example
of_______
Correct Answer Error of Commission

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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

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

Question Income received in advance transfer to current liabilities

Correct Answer True

Question If wages for the month of January, February and March are Rs.4,000, Rs.4,400 and Rs.4,600
respectively and if delay in payment of wages is ½ month , payment of wages for the month of February
is
Correct Answer 4,200

Question Management Accounting has a very ________ scope and it requires ________
organizational structure
Correct Answer wide
Correct Answer elaborate

Question For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is
5,000 units and consumption is 3,20,000 units, what will be the quantum of raw material to be purchased
Correct Answer 3,15,000

Question Important advantages of Uniform Costing can be said to be

Correct Answer It is a useful tool for management control , It avoids cut throat competition ,
Weaker units can take advantage of settled systems of better managed units

Question Actual costs may be affected due to inefficient functioning such as

Correct Answer Abnormal expenses , In efficient use of labour , In efficient use of material

Question Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard rate is
Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500.
Correct Answer Rs.4500/- ( Favorable )

Question Sales quantity may be forecasted after taking into consideration various factors such as
Correct Answer Analysis of past trends , Market research , Reports by salesmen

Question For taking make or buy decision marginal costing technique provide useful assistance.
Correct Answer True

Question The variable costs are controllable at the lower level.

Correct Answer True

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Match The Following
Question Correct Answer

Journal Book of original entry

Ledger Maintain all types of Accounts

Assets All the properties owned by the business

Liabilities All the amount owed by the business

Drawing Withdrawn for personal use

Question A budget manual is a document setting out the ________ of the persons and ________
required for the budget control.
Correct Answer Responsibilities
Correct Answer Forms and procedures

Question Credit balances in all the Personal & Real accounts appear on asset side.
Correct Answer False

Question Omission of posting an amount in the ledger

Correct Answer Error of Omission

Question Non-operating / financial expenses are added while calculating net profit.
Correct Answer False

Question A Budget Manual may contain the following particulars

Correct Answer Duties and responsibilities of various executives , Functions and duties of Budget
Officer , Scope of the Budget and area to be covered

Question Direct Cost includes

Correct Answer Direct material , Direct labour , Direct expenses

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

Question Bin Card is having all the information of item received and issued.
Correct Answer False

Question Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of
management
Correct Answer Cost control
Correct Answer Maximization of profits

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Question The material Requisition note contains

Correct Answer Number and date , Department demanding the material , Signature of the
authority approving the demand

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

Question Budget is prepared for a fixed period of time.

Correct Answer True

Question Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth
appear on account ___________
Correct Answer 12750

Question This is not the non monetary incentive.

Correct Answer Co-partnership

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

Question Cost Accounting is concerned with calculation of the profitability and state of affairs of
the organization as a whole.
Correct Answer False

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

Question Financial Accounting primarily protects the interests of the outsiders dealing with
organization in various capacities.
Correct Answer True

Match The Following

Question Correct Answer

Financial Accounting Systematic recording of business transactions

Cost Accounting Ascertainment of cost

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Management Accounting Analyzing & interpretation of financial data

Accounting Art of interpreting & classifying business transaction

Book Keeping Recording of business transactions

Match The Following

Question Correct Answer

Bills Payable Amount payable to supplier

Bills Receivable Amount received from the customer

Trade Discount Not accounted for in the books of Accounts

Cash Discount Accounted for in the books of Accounts

Bad debts Amount not received from customer

Question Amount invested in purchasing Fixed Asset is a revenue expenditure.

Correct Answer False

Question Going Concern Concept __________________

Correct Answer Indefinite longer period , Not likely to close down in shorter period , This affects
the values of asset and liabilities

Question Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to
depreciation 2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs as per the reducing
balance m
Correct Answer 20,000,18,000,16,200

Question Profit & Loss A/C credit side has

Correct Answer Gross profit , Commission received , Interested received

Question Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per year.
What is the total amount of the capital
Correct Answer 1,10,000

Question Cheques issued but not yet presented – the balance as per the bank pass book will be
higher.
Correct Answer True

Question This cost indicates historical cost which is incurred in past.

Correct Answer Sunk cost

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SCDL – Management Accounting PGDBA – I Semester
Question Labour cost is the cost of __________ paid to employees of the organization.
Correct Answer Remuneration

Question Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs,
35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost.
Correct Answer 10,50,000

Question For the proper interpretation and presentation of cost the overhead further classified as
Correct Answer Factory overheads , Office and administration overheads , Selling & distribution
overhead

Question A good wage payment system will punish the workers for the matters beyond the control
of the workers.
Correct Answer False

Question These are the features of fixed overheads

Correct Answer total cost remains the same , per unit cost may vary , not dependent on volume of
output

Question Under marginal costing technique only fixed costs are considered as relevant for decision
making.
Correct Answer False

Question Product mix refers to the proportion in which various products of a company can be sold.
Correct Answer True

Question The cost that varies in direct proportion with the level of activity is called
Correct Answer variable cost

Question Basic assumptions made by marginal costing are

Correct Answer per unit selling price remains constant at all the levels of activities. , whatever is
produced by the organisation is sold off. , per unit variable cost remain constant.

Question Calculate Volume Variance, If budgeted production is 20,000 units, actual production is
22,000 units and Standard rate per unit is Rs.1.5/-.
Correct Answer Rs.3,000/- ( Favorable )

Question Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/-
per unit and actual sales volume is 500 units.
Correct Answer Rs.200/- ( Favorable )

Question Uniform Costing disturbs the healthy competition in the industry

Correct Answer False

Question Uniform Costing Methods may be advantageously applied

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Correct Answer In single organization having number of branches. , Number of companies in same
industry. , Similar Industries such as cotton, jute etc.

Question In Cash budget , Operating cash outflow includes

Correct Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries

Question Characteristics of budget can be said to be

Correct Answer It may be prepared in terms of quantity or money or both , It is prepared for a
fixed period of time , It spells out objectives to be attained

Question Like initial formation expenses, ________ and R & D are the examples of Deferred
Revenue Expenditure
Correct Answer Initial Advertisement
Correct Answer R&D

Question If ________ books are the books which record the transactions in the chronological order,
________ is the book where transactions of a similar nature are pooled together
Correct Answer subsidiary
Correct Answer ledger

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 %
Correct Answer 80% to90%

Question ________ and ________ are examples of element wise classification ofoverhead costs
Correct Answer Idirect material
Correct Answer indirect labour

Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value.
Correct Answer 0.75

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

Question Which of the following costs is most likely to have a cost behaviour pattern described as ..a
fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10
paise to 8 paise per unit at 2,000 units?
Correct Answer Wages payment which is fixed for a minimum output quantity after which a bonus per
unit is paid which reduces when activity level exceeds 1,000 units

Question The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit
balance for this account.
Correct Answer False

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SCDL – Management Accounting PGDBA – I Semester
Question In case of defective material being returned by the stores department to the vendor, such
material should be valued at the________.
Correct Answer Purchase price

Question Piece rate system is suitable when quality of goods produced is of extreme importance.
Correct Answer False

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

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

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

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

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

Question Overheads chargeable to a product, using direct labour cost basis, may be calculated by
multiplying percentage of direct labour cost and ________.
Correct Answer Direct labour cost of the product

Question Causes for adverse material price variance are:

Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers.
, Excessive freight charges

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

Question 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were purchased
from Y @ Rs.6/- per unit. The organisation follows FIFO system of pricing of issues and the above
purchases have been recorded in stores ledger. 120 units have already been issued. 60 units received
from X are defective and are therefore returned. Find the value of the material returned to X.
Correct Answer Rs.300/-

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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

Question Category C items, as per the ABC analysis, usually refers to indirect material.
Correct Answer True

Question According to the standard costing principles, only adverse variance must be further
investigated.
Correct Answer False

Question Education facility to workers and their children, pension, superannuation fund are examples
of ________ incentives.
Correct Answer Non-monetary

Match The Following

Question Correct Answer

Closed the account with State Bank of India

Henceforth, there shall be no difference in overdraft balances

Debit side of bank book is overcast Overdraft as per bank book < Overdraft as per pass
book

Interest on debentures directly credited by bank Overdraft as per bank book > Overdraft as per pass
book

Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book = Overdraft as per pass
book

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

Question The purchase account should be debited when an order is placed with the supplier of
material.
Correct Answer False

Question The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials
are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of
30 days, no rebate is offered. The company purchase
Correct Answer October- NIL, November- Rs.26,750/-

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SCDL – Management Accounting PGDBA – I Semester
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

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

Question Select the non-monetary incentives

Correct Answer Health and safety services , Canteen facility, Loans at reduced rate of interest

Question Control on purchase of material is exercised by the storekeeper.

Correct Answer False

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

Correct Answer Assets

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

Match The Following

Question Correct Answer

Ledger Maintain all types of accounts

Audit Reviewing internal control system

Accounting Process of analyzing & interpretation

Journal Book of original entry

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

Question The characteristics of a good wage system are :

Correct Answer Flexible , Economical to use , Easy to understand

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

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SCDL – Management Accounting PGDBA – I Semester
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

Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair
wages.
Correct Answer True

Question Marginal costing is found to be unsuccessful in the following situations :-

Correct Answer Impossible to distinguish costs into fixed and variable component. , With respect to
capital intensive industries where fixed costs are very large and hence cannot be ignored , With respect
to service industries where employee costs are very large and almost fixed in nature

Question Master budget provides a basis for computing effect of changes in :

Correct Answer product mix of the company , sales volume , production facilities

Question Over absorption of overheads may take place due to the reasons like ________ overheads
being less than the ________ overheads
Correct Answer actual
Correct Answer estimated

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

Question While calculating the minimum level, normal lead time is not necessary
Correct Answer False

Question To Increase the existing production capacity, additional capital expenditure is required.
Correct Answer True

Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week
at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased
by 2
Correct Answer Rs. 83.60

Question Cost-sheet may be prepared separately for each

Correct Answer Different Cost Centre

Question The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs.
Calculate the depreciation according to straight line method
Correct Answer 10,000

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SCDL – Management Accounting PGDBA – I Semester
Question To ascertain the ________ of all the transactions recorded in the ledger account, the
account is required to be ________
Correct Answer Net effect
Correct Answer Balanced

Question In fixed overhead variance, the volume variance is further analyzed as

Correct Answer Variance Efficiency Variance , Capacity Variance , Calendar Variance

Question Accounts is a
Correct Answer Record of all transaction

Question Whatever is to be sold need not be produced.

Correct Answer True

Question Patents and Trade Marks Account is a Real Account.

Correct Answer True

Question Budget is prepared in terms of

Correct Answer Quantity and/or Money

Question Favorable variances need on investigation

Correct Answer False

Question Standard Costing may not be useful in

Correct Answer Small concerns , Industries having non-standardized products , Contract jobs

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

Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week
at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased
by 2
Correct Answer Rs. 75

Question Accounting refers to the process of analyzing & interpreting the information already
recorded in the books of accounts.
Correct Answer True

Question Double Entry Accounting System__________________

Correct Answer Every business transactions have two elements , When business receives
something, it has to pay something , Every debit has a corresponding credit

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

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

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

Question As soon as the suspense account balance is wiped out , it may be assumed that all
mistakes have been corrected.
Correct Answer False

Question Credit sale of Rs. 5000 to Bobby should be entered in the purchase book.
Correct Answer False

Question Manufacturing process involves study of

Correct Answer Designing the product , The quantity and quality , Material used

Question The Bin card and stores ledges do not match due to the following reasons:
Correct Answer Arithmetical errors in calculating , Non- posting a certain document , Posting a
wrong Bin card

Question Flux method is important method of wage payment.

Correct Answer False

Question The causes of idle time can be analysed as

Correct Answer Administrative causes , Productive causes , economic causes

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

Question Fixed cost tends to vary with time rather than with level of activity.
Correct Answer True

Question Limitations of marginal costing are

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

Question Flexible budget is an effective tool for evaluation of performance.

Correct Answer True

Question Material Mix Variance occurs where only one raw material is required
Correct Answer False

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

Question Standard may not be necessarily useful for this purpose.

Correct Answer Forecasting

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

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

Match The Following

Question Correct Answer

Ordering cost Associated with administrative efforts

Carrying cost Cost of holding the inventory

Total cost Ordering cost + carrying cost

Inventory control Maintain the inventory of any kind

E.O.Q Economic Ordering Quantity

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

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

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
Correct Answer variation

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

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SCDL – Management Accounting PGDBA – I Semester

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

Question Bin card is maintained by ________ department whereas ________ is maintained by

costing department.
Correct Answer Stores
Correct Answer Store ledger

Question Profitability statement indicates the amount of assets & liabilities.

Correct Answer False

Question Advance received from customers is ________ for the organisation.

Correct Answer A liability

Question The features of multiplicity of key factors are as follows :

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

Question Maintenance Department is a service cost centre.

Correct Answer True

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

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

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

Question If the owner brings in personal calculator for office use, ________ account should be
credited.
Correct Answer Capital

Question Variable cost + Profit = Sales

Correct Answer False

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

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SCDL – Management Accounting PGDBA – I Semester
Correct Answer Rs.9,333.33

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

Question Treating capital receipt as revenue income is an example of errors of commission.

Correct Answer False

Question Basic objective of Uniform Costing is . . .

Correct Answer comparison

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

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

Question Features of Sunk cost are . . .

Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past

Question For a manufacturing company, dividend received is a non-operating income.

Correct Answer True

Question Features of purchase requisition slip are :

Correct Answer Raised when the stock of a raw material has fallen to the re-order level. , Indicates
the type, quantity and quality of material required , The information about the price of material is
excluded

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

Question Crane expenses should be apportioned on the basis of ________.

Correct Answer Number of hours crane worked in the department

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

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SCDL – Management Accounting PGDBA – I Semester
Question Features of convention of consistency are . . .
Correct Answer The accounting policies and procedures should be followed consistently ,
Facilitates the comparison of financial statements , It facilitates comparison of financial statements on
period-to-period basis

Question Uniform costing is not a separate method of ________.

Correct Answer cost accounting

Question Suspense account is closed automatically after rectification of all the errors.
Correct Answer True

Question Manufacturing overheads represents all costs incurred in the factory including direct
material cost and direct labour cost.
Correct Answer False

Question Generally all the liabilities will have ________balance.

Correct Answer Credit

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

Question Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure
on 31st March, 2004.
Correct Answer Rs.500/-

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

Question Following are the examples of service cost centre

Correct Answer Stores department , Transport department , Accounting department

Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as
Overheads.
Correct Answer True

Question Pre-requisites of Uniform Costing are . . .

Correct Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry

Question You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol
at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and
dry day, the issue of petrol from 1,000 litres drum was as follows : To job X 200 litres; job Y 400 litres and
job Z 320 litres. After these issues the drum was empty. Calculate per litre charge for use of petrol,
quantum of loss and total quantum of petrol used for jobs X,Y and Z.

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SCDL – Management Accounting PGDBA – I Semester
Correct Answer Loss due to spillage and evaporation - 30 litres. , Rate of charge per litre of petrol -
Rs.30/-

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

Question Cheque received from a client on 28th September, 2004 must be entered in the bank book
only after it is credited in the pass book.
Correct Answer False

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

Correct Answer Bank statement

Question The column which refers to the page number of the ledger is known as ________.
Correct Answer Ledger folio

Question The direct material useage budget and direct material purchase budget differ because of
which of the following:
Correct Answer A planned change in the level of material stock

Question Loss is equal to fixed cost minus ________

Correct Answer Contribution

Question Profit = Contribution per unit X ________.

Correct Answer Margin of safety (units)

Question The different purposes served by standard costing technique are :

Correct Answer Cost control , Cost awareness , Performance appraisal

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

Question If a predetermined overhead rate is not employed an the volume of production is

increased over the level planned, the cost per unit would be expected to :
Correct Answer Decrease for fixed costs and remain unchanged for variable costs

Question The variance which measures the difference between what is paid for a given quantity of
materials and what should have been paid for, is known as ________ variance.
Correct Answer Direct material cost

Question Deferred revenue expenditure written off account is a real account.

Correct Answer False

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SCDL – Management Accounting PGDBA – I Semester
Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the
rate of depreciation.
Correct Answer 0.17

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

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

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

Question While preparing sales budget the following factors must be considered :
Correct Answer The number and types of products sold by the organisation , Whether the
organisation's market share is increasing or decreasing? , Details of seasonal fluctuations in sales

Question Techniques of management accounting include:

Correct Answer Marginal costing , Budgetary control , Standard costing

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

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

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

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

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

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SCDL – Management Accounting PGDBA – I Semester
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

Question The labour cost which can be identified with the individual cost centre is known as the
Direct Labour Cost.
Correct Answer True

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

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

Question The indirect material cost, indirect labour cost and indirect expenses cost, collectively are
termed as ________.
Correct Answer Overhead

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

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

Question Correct Answer

Purchase budget Forecast of quantity and value of materials

Budget committee Analyses the performance of different budget centres

Cash budget Assists in predicting shortage of cash

Budget Objective is performance evaluation

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

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SCDL – Management Accounting PGDBA – I Semester

Question Business Entity Concept ______________.

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

Question The danger level fixed below maximum level

Correct Answer False

Question Following example comes under service cost centre

Correct Answer Store department , Internal Transport department , Accounting/Costing department

Match The Following

Question Correct Answer

Straight Piece rate system The rate of payment is fixed per piece

Diemer system Halsey system & Gantt System

Time rate System Worker is paid on the basis of time attended by him

Payment by Result Workers are paid according to the production achieved by him

Differential Time rate Different hourly rates are fixed for different levels of efficiency

Question When bank balance as per pass book is considered then following to be added.
Correct Answer cheques deposited but not cleared , Interest debited by bank , bank charges debited by
bank

Question (No. of unit * Rate of depreciation per unit ) this formula is used for written down value
method.
Correct Answer False

Question Cash and---------------are the two systems of accounting.

Correct Answer Mercantile

Question This cost indicates increased or decreased cost due to the increased or decreased volume of
operations.
Correct Answer Differential cost

Match The Following

Question Correct Answer

Fixed cost + variable cost Total cost

Total cost – fixed cost variable cost

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sales- variable cost contribution

contribution – fixed cost profit

Total cost + profit Sales

Question Under the differential time rate method of wage payment between 90% to 100% of efficiency
following rate is offered.
Correct Answer Rs. 1.40 per hour

Question Margin of safety are the sales beyond

Correct Answer break even point

Question Indirect Labour Cost

Correct Answer Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper

Question The difference between sales and factory/ works cost is termed as ________ the difference
between sales and ________ termed as net profit
Correct Answer gross profit
Correct Answer cost of sales

Question For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out
the Material Usage variance if actual quantity is 500 kg and actual price is Rs.3.60/- per kg.
Correct Answer Rs.375/-( Adverse )

Question Labour Efficiency Standards are decided by considering following factors

Correct Answer Records of past performance, Time & Motion Study, Trial Runs

Question Depreciation does not involve cash out flow

Correct Answer True

Question The difference between standard cost and actual cost is termed as Variance.
Correct Answer True

Question Wage payment system should be properly tied up with quality control procedures to ensure
that the workers are paid only for good and quality production.
Correct Answer True

Question In Cash budget Operating cash inflow includes

Correct Answer Cash Sales, Collection from Debtors, Interest/Dividend received

Question If the product is labour intensive, more stress may be necessary on inventory control
procedure.
Correct Answer False

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Question A good wage payment system will not punish the workers for the matters beyond the control
of the workers.
Correct Answer True

Question The material issued to production department may be returned back to the stores because
material issued in excess requirement and
Correct Answer Material issued is defective

Question Following are called the element of Cost

Correct Answer Material , Labour , Expenses

Question Amount with drawn for personal purpose drawing A/C to be debited.
Correct Answer True

Question Under the repeated distribution method the overheads of ________ department are
distributed to other departments on agreed ________
Correct Answer service
Correct Answer percentage

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

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

Question Benefits available from revenue expenditure are received in the :

Correct Answer Same year

Match The Following

Question Correct Answer

Cost Centre Facilitate the fixation of responsibility

Cost Control Process of controlling costs of operations

Differential Cost Increase or Decrease in cost

Sunk Cost Historical Cost

Question Financial Accounting is …

Correct Answer Designed to supply information to internal/ external users , Referred as 'Historical'
form of accounting , Concerned with financial factors

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.

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Correct Answer Uniform costing

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

Question If the customer is not likely to pay the amount receivable from him, this amount should to
be treated as ________.
Correct Answer Bad debts

Question Creditors as on 31st March, 2004 amount to Rs.15,225/-. Provision for discount from
creditors is to made @ 5%. Find the impact of this provision on the net profit.
Correct Answer The net profit will increase by Rs.761.25

Question Under the Rowan plan bonus is a fixed percentage.

Correct Answer False

Question Margin of safety indicates ________ of operations.

Correct Answer Profitability

Question XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units
(packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the
product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum
price should it quote for this deal?
Correct Answer Rs.190/-

Question Period cost is the cost assigned to the products.

Correct Answer False

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

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

Match The Following

Question Correct Answer

Personal A/C Debit the receiver, Credit the giver

Real A/C Debit what comes in, Credit what goes out

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Nominal A/C Debit all the expenses, Credit all the incomes

Tangible assets Building, Machinery

In tangible assets Patents, Trade marks

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

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

Question Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting
to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0
Correct Answer True

Question Office & Administration overhead includes

Correct Answer Salary , Rent & Taxes , Stationary & postage

Question There is reverse relationship between the ordering cost and carrying cost
Correct Answer True

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

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

Question Where overheads chargeable to the department are Rs. 5000/- , direct labour hours
worked are 24000 then labour hour rate is Re. 0.2083 labour hour.
Correct Answer True

Question The selection of the base on which overheads should be apportioned depend on the
following principles.
Correct Answer service or use basis , survey basis , ability to pay basis

Question The Budget key factor may be in the form of sales, raw material, labour etc.
Correct Answer True

Question For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out
the Material Cost variance if actual quantity is 400 kg and actual price is Rs.6/- per kg.

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Correct Answer Rs.600/-( favorable )

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

Question Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard rate is
Rs.3/- and Actual hours are 13, 500.
Correct Answer Rs.9,000/- ( favourable )

Question Calendar Variance arises only if there is abnormal increase or decrease in

Correct Answer Actual number of working days

Match The Follow

Question Correct Answer

Token or Disc Method Token number & identification number allotted to worker

Time Recording Clock Method Ticket number & clock card allotted to worker

Daily Time sheets Time spent by worker on job is recorded

Weekly Time sheets Record of time for all the jobs during the week is made

Hand Written method Attendance register

Question Rs.5000 paid as ________ to ________ should be debited to salary account

Correct Answer Mahesh
Correct Answer salary

Question Uncontrollable variances are

Correct Answer Strike , Change in customers demand , Devaluation of currency

Question Indirect labour cost indicates that labour cost which cannot be identified with the
individual cost centre.
Correct Answer True

Question There is no need to open a suspense account if the trial balance does not agree.
Correct Answer False

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

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

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Correct Answer P& L Accounts
Correct Answer Balance sheet

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

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

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

Question Debit the receiver & credit the giver is a rule of Real a/c.
Correct Answer False

Question If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and
40 % are variable) then what will the amount of total factory overheads at 60% capacity
Correct Answer Rs.10,800/-

Match The Following

Question Correct Answer

Advance Not related in current year

Application Increase in Assets

Outstanding Amount still payable in current year

Prepaid Amount paid for next year

Drawing Amount of personal use

Question Head of the Department should sign the purchase requisition.

Correct Answer True

Question FIFO method

Correct Answer The price of the earliest available lot is considered first , If the lot is exhausted, the
price of the next available lot is considered , It is used for issue of material

Question If production overheads to be absorbed are Rs. 20000/- and machine hours worked are
5000 then the machine hour rate will be,
Correct Answer Re. 4 per machine hour.

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

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

Match The Following

Question Correct Answer

Discount received Suppliers

Outstanding expenses Liabilities

Depreciation Assets

Interest on capital Borrowed capital

Discount allowed Debtors

Question canteen facility to workers, health and safety services are examples of monetary
incentives.
Correct Answer False

Question This is the process of recording attendance time of the workers.

Correct Answer Time keeping

Question If actual cost is more than the standard cost then it is called favorable variance.
Correct Answer False

Question The aggregate of indirect material cost, indirect labour cost and indirect expenses is
termed as factory cost.
Correct Answer False

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

Correct Answer Profit and loss account

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

Question Penalty paid for delay in payment to creditors represents uncontrollable cost.
Correct Answer False

Question Subsidiary books include:

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Correct Answer Cash Book , Purchase Register , Sales Register

Question Balance sheet is a part of the ledger accounts maintained by the company.
Correct Answer False

Question Average stock = ________ + (Order size / 2)

Correct Answer Safety stock

Question Based on the journal entry given, identify what transaction has taken place. Suresh Account…
……….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on behalf of creditor Suresh)
Correct Answer Cash paid to Kailash should not be recovered from creditor Suresh

Match The Follow

Question Correct Answer

Real A/C Debit what comes in, Credit what goes out

Trade Discount Not accounted for in the books of Accounts

Cash Discount Accounted for in the books of Accounts

Rs.1 Personal A/C Debit the receiver, Credit the giver

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

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

Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and earned a
profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of Rs.75,000/-. You
are required to calculate the margin of safety for the first month.
Correct Answer Rs.300,000/-

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

Match The Following

Question Correct Answer

Operating income Cash Sales

Non-Operating income Issue of shares

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Plan of investment in fixed assets Capital Expenditure Budget

Plan for surplus/shortage of cash Cash Budget

Question Under the average cost method of valuing material issues, new issue price is determined after
________ issue.
Correct Answer Each

Question Narration must be mentioned in the ledger.

Correct Answer False

Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as
factory cost.
Correct Answer False

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

Question Items credited to Profit & Loss Account are…

Correct Answer Gross profit , Commission received , Interested received

Question Yield variance equal to zero indicates that the standard yield and actual yield are the same.
Correct Answer True

Question Balance sheet is statement of

Correct Answer All Assets and Properties

Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety
will be Rs.________.
Correct Answer 100,000/-

Question Inventory holding cost comprises of :

Correct Answer Cost of insurance , Rent of store house , Salary of store keeper

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

Question A low inventory turnover ratio should always be preferred.

Correct Answer False

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

Question Following errors affect the trial balance

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

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

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

Question Linking overhead to a cost unit is known as overhead absorption.

Correct Answer True

Question A factory received a carton containing two materials X and Y. The invoice relating to the
materials discloses the following details : Material X - 400 kg @ Rs.10/- per kg. =Rs.4,000/-; Material Y -
600 kg @ Rs.15/- per kg.= Rs.9,000/-; Sales @ 5% =Rs.650/-; Insurance @ 1% =Rs.130/-; Freight and handling
charges = Rs.220/-.
Correct Answer Material X -Rs.11.10; Material Y -Rs.16.68

Question An employee working under a bonus scheme saves 10 hours in a job for which the standard
time is 60 hours. Calculate the wages payable to him, if incentive bonus of 10% on the hourly rate is
payable when standard time (namely 100% efficiency) is achieved, and a further incentive bonus of 1%
on hourly rate for each 1% in excess of that 100% efficiency is payable. Assume that the normal rate of
payment is Rs.50/- per hour.
Correct Answer Rs.3,250/-

Question At 60% capacity utilisation the overhead recovery rate is Rs.35/- per unit. At 70% capacity the
rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production attains 90%
capacity utilisation?
Correct Answer Rs.28/- per unit

Question The production budget may be prepared in terms of :

Correct Answer Units produced , Production cost , Material cost, labour cost and overheads

Question Tom company has sales of Rs.200,000/- with variable expenses of Rs.150,000/-, fixed expenses
of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much would Tom have to increase its sales in
order to achieve an operating income of 10% of sales?
Correct Answer Rs.200,000/-

Question Angle formed by the intersection of total cost line and sales line is called angle of ________.
Correct Answer Incidence

Question All costs are controllable.

Correct Answer False

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

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

Question Warehousing cost is an item of ________

Correct Answer Distribution overheads

Question From the following, select current assets:

Correct Answer Sundry debtors , Stock , Pre paid expenses

Question The objectives of cost accounting are :

Correct Answer Cost control , Ascertain ment of cost of each product , Assist in managerial decision-
making

Question Which cost is defined as an estimated cost, prepared in advance of production or supply,
estimated within a prescribed set of working conditions?
Correct Answer Standard cost

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

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

Question Fundamentally, changes in price and changes in sales volume give rise to sales variances.
Correct Answer True

Question The ________ is responsible for material losses while in storage.

Correct Answer Store-keeper

Question A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not
debited to traveling A/c. The trial balance will NOT agree.
Correct Answer True

Question Accounts representing expenses will have ________balance.

Correct Answer Debit

Question It is discovered that sales effected on 31st March, 2004 worth Rs.42,000/- has not been
recorded in the books of accounts. Analyse the impact on the final statement of accounts.
Correct Answer The sundry debtors will increase by Rs.42,000/-

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

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

Question A journal entry is passed for trade discount, but no entry is passed for cash discount.
Correct Answer False

Question The assets which are suppoed to be used by the organisation to do business, are known as
________assets.
Correct Answer Fixed

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

Question The disadvantages of time rate system are :

Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase
productivity

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

Question One of the main objection to the contribution approach of costing is that it ignores fixed cost.
Correct Answer True

Question If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per
bank book will be ________ the overdraft as per pass book.
Correct Answer Lesser than

Question The cash flow format is used for preparing the cash budget by the ________ method.
Correct Answer Adjusted Profits/Losses

Question The ideal budget period for a company engaged in generation and distribution of electricity is
one year.
Correct Answer False

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

Question Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its
correct impact.

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Correct Answer The asset side of the balance sheet will increase by Rs.5,000/-

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

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

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

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

Question The objects of cost accountancy are . .

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

Question Depreciation can be defined as a permanent, continuous and gradual reduction in the
book value of a fixed asset.
Correct Answer True

Match The Following

Question Correct Answer

Error of Principle Trial Balance does not get affected

Error of Omission Transaction is totally omitted

Error of commission Wrong Posting

Compensating Error Wrong classification

Difference in trial balance Transferred to suspense account

Question The difference between sales and cost of sales is termed as ________.
Correct Answer Net Profit

Question ________ Accounting assists the management in establishing the plans to attain the
economic objectives and take proper decisions for the attainment of its objectives.
Correct Answer Management

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Question The capacity utilised to installed capacity ratio is 80% for the company. The capacity
utilisation ratio in respect of a machine for a particular month is 90%. The available working hours in a
month are 200 hours. The break of idle time is as follows : Waiting for job - 5hours, breakdown - 4 hours
and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the
machine is Rs.8/-.
Correct Answer Rs.96/-

Question Semi variable expenses fluctuate in direct proportion to volume.

Correct Answer False

Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the
Uniform costing system.
Correct Answer False

Question From the following, select intangible assets:

Correct Answer Goodwill , Patents , Trade Marks

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

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

Question The credit side of the sales book was overcast by Rs.2,000/-. As a result of this rectification,
what of the given impacts is likely to happen?
Correct Answer The liability side of the balance sheet will increase by Rs.2,000/-

Question It is said that the income statement represents wealth increase /decrease for the
organisation.
Correct Answer True

Question All personal expenses of the owner should be debited to the organisation's profit and loss
account.
Correct Answer False

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

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

Question ________ authorises the production department to issue requistion for materials.
Correct Answer Bill of material

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Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit of
finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering cost is
Rs.120/- per order and the holding cost is 10% per annum. If the company places each order for 2,000
units due to financial constraints, what is the extra annual cost?
Correct Answer Rs.80/-

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

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

Question A firm of boiler-house engineers provides engineering services to large number of

factories having boiler houses. The firm charges on the basis of number of hours its engineers have
worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys
Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An
engineer's annual remuneration comprises (for the year
Correct Answer Rs.182.29

Question Marginal costing is useful in the following areas :

Correct Answer Plant shut down decisions , Make or buy decisions , Profit planning

Question Cost volume profit analysis focuses attention on the ________ effect of a particular course
of action.
Correct Answer short run

Question ABC Ltd. has a proposal of utilising a cheaper raw material which will increase the
contribution from Rs.100/- per unit to Rs.125/- per unit. However, the use of cheaper raw material may
result in decrease in sales by 10% (to 450 units only). Find the impact of using the cheaper raw material
on the amount of contribution ( net increase or decrease in contribution).
Correct Answer Increase in contribution Rs.6,250/-

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

Question A ________ can be defined as a part of the orgainsation for which separate budget can be
prepared and implemented.
Correct Answer Budget centre

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

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Question The role of the budget committee may be taken as an advisory role to the Chief Executive.
Correct Answer True

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

Question The actual hours taken by the labour are compared with the standard hours allowed for
output to find out the labour yield variance.
Correct Answer True

Question From the following data, determine the net profit if sales are 20% above the break even
point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed overheads Rs.20,000/-
Correct Answer Rs.4,000/-

Match The Following

Question Correct Answer

Decrease in selling price will lead to Decrease in contribution

Increase in contribution will lead to Increase in profits

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

Decrease in variable cost will lead to Increase in profit volume ratio

Question As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its market price
as on the same day was Rs.66,584/-. Which value of closing stock should be considered in the final
statement of accounts for the year ended on 30th September, 2004?
Correct Answer Rs.66,584/-

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

Question In a Balance-Sheet right hand side is referred as assets side and left hand side is referred
as liabilities.
Correct Answer True

Question Profit and loss account indicates the profit earned as on a particular date.
Correct Answer False

Question The balance of the suspense account will ________ after all the errors are
Correct Answer become zero

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

Question A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is
the total amount of capital?
Correct Answer Rs. 12,000

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

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

Question Generally, all real accounts will have a ________ balance

Correct Answer Debit

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

Question The selective ________ controls are intended to control the ________ to particular sectors
without affecting the total credit, and also to change the composition of credit from undesirable to de
Correct Answer credit
Correct Answer credit flows

Question Journal is popularly known as 'Book of . . .

Correct Answer Original Entry

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

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

Match The Following

Question Correct Answer

Indirect Material Element wise classification

Administration overheads Function wise classification

Fixed overheads Variability wise classification

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Abnormal overheads Normality wise classification

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

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

Question Non-trading income is disclosed on the credit side of ________ account.

Correct Answer Profit and loss

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

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

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

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

Question While preparing the bank reconciliation statement as on 31st March, 2004 you find the
following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was
entered credited in the pass book on 3rd April, 2004.' In this background, which of the following
statement holds true as on 31st March, 2004?
Correct Answer Balance as per pass book < Balance as per bank book

Question Bank reconciliation statement is a systematic presentation of errors made by the

accountant.
Correct Answer False

Question The stores department is a ________ department.

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Correct Answer Service

Question The ________ is a perpetual inventory record.

Correct Answer Bin card

Question Selecting an appropriate method of valuation of inventory is important because :

Correct Answer It influences the figure of gross profit

Question Re-order level for materials is determined considering maximum consumption and
maximum delivery period.
Correct Answer True

Question Under some circumstances, it may be advisable to sell at prices equal to or below the
marginal cost ignoring fixed cost.
Correct Answer True

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

Question Select the advantages of standard cost system.

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

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

Question Judge the statement according to the criteria given : ' The accounting period for XYZ Ltd.
ends on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th
January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be
recorded in the books of accounts in January,
Correct Answer The statement and its reason are both incorrect

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

Question Expenditure on income-tax is an example of ________.

Correct Answer non-operating expenditure

Question Identify the items which are correctly classified.

Correct Answer Carriage inward - Factory overheads , Carriage outward - Selling and distribution
overheads , Sales research expenses -Selling and distribution overheads

Question Select the items which may be classified as administration overheads.

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

Question Overhead absorption is an exercise by which overhead is properly spread over production
for the period.
Correct Answer True

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

Question A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10
such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on
computers to be charged for the year.
Correct Answer Rs.40,953.70

Question The amount of income for the current period which is not received during the current
period, is called Accrued Income.
Correct Answer True

Question The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance as per
pass book as on the same date is Rs.10,123.60. Select the transactions representing the reasons for this
difference.
Correct Answer Interest credited by bank, not entered in the bank book, Rs.125.60 , Cheques
dishonoured not entered in the bank book Rs.200/- , Debit side of the cash book is overcast by Rs.100/-

Question The principal functions of the cost accounting department are :

Correct Answer Classifying labour cost according to jobs, processes, etc. , Preparation of different
reports based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be reduced.

Question Profit volume ratio is also known as ________.

Correct Answer Contribution to sales ratio

Question Margin of safety = Contribution / Profit volume ratio

Correct Answer False

Question Depreciation, interest and property tax continue even when the operations are
discontinued.
Correct Answer True

Question The reasons and objectives of budgets may be stated as :

Correct Answer To aid the planning of annual operations , To communicate the organisational
plans to the different departments , To motivate the managers to strive for attainment of the
organisational goals

Question The key factor determines the :

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

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Question Essentials for effective implementation of budgetary control system are

Correct Answer Commitment of top management , Clearly defined objectives , Continous budget
education

Question Which of the following is a correct definition of the key factor?

Correct Answer The factor which limits the activites of the undertaking

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

Correct Answer Master budget

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 untis of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000
units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales
mix variance and sales quantity variance.
Correct Answer Sales volume variance -Rs.120,000/- (Favourable) , Sales mix variance -Rs.44,000/-
(Favourable) , Sales Quantity variance-Rs.76,000/- (Favourable)

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

Question The following data relates to the month of October : Actual variable overheads Rs.60,000/-;
budgeted variable overheads Rs.80,000/-; actual output 900 units; budgeted output 1,000 units; standard
time for one unit - 2 hours. Calculate variable overhead efficiency variance.
Correct Answer Rs.4,000/- (Favourable)

Question Which of the following operations would normally be carried out first when preparing a
master budget?
Correct Answer Determining the budget period

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

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)

Question Select the examples of functional budgets:

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

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

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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

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/-

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

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

Question Budgetary control system provides a basis for establishment of the incentive systems.
Correct Answer True

Question A fixed budget is useful only when the actual level of activity corresponds to the
budgeted level of activity.
Correct Answer True

Question A low margin of safety indicates ________ fixed overheads.

Correct Answer higher

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

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

Question Price based on Uniform Costing may be taken to be reliable and representative of the
whole industry.
Correct Answer True

Question The budget manual must contain statement regarding:

Correct Answer Objectives of the orgainsation

Question Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the
standing instructions, and advise sent thereafter, may lead to:

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Correct Answer Balance as per bank book > Balance as per pass book

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

Question Since the pass book and the bank book record the ________ transactions, the bank balance
as per these books should be equal.
Correct Answer Same

Question A pre-determined factory overhead rate holds up product costing.

Correct Answer False

Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be
credited in the books of accounts for making an entry for receipt of the said amount?
Correct Answer Rent received in advance account

Question Bank reconciliation statement can be prepared on weekly basis.

Correct Answer True

Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit
allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash
account?
Correct Answer Rs.45,000/-
Question Financial Accounting ______________
Correct Answer Designed to supply information for internal/ external uses. , Deals with the
transaction during specific period. , It is compulsory

Question Cost Accounting ______________.

Correct Answer Concerned with specific activities. , Classified according to their nature. , It deals
with both i.e. past & present.

Question Features of double entry accounting system are . . .

Correct Answer Every business transaction has two elements , When business receives something,
it has to pay something , Every debit has a corresponding credit

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

Question Depreciation charged on office furniture on straight line basis is an example of ________.
Correct Answer Administration overheads

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.

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Correct Answer Drawings

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

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

Question While passing the journal entry, it is of utmost importance to ensure that the total of
amount debited is equal to the total of the amount credited.
Correct Answer True

Question The bin card and stores ledger, being independent records, comparison of these two
records should be avoided.
Correct Answer False

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

Question The cost of abnormal time may be recovered by inflating the hourly labour rate.
Correct Answer True

Question ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/-
and the variable costs are 60% of the selling price. In order to realize a profit of Rs.100,000/-, the selling
price per unit would have to be :
Correct Answer Rs.6.25

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

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

True/False
Question Amortization of goodwill should be considered while preparing cash budget.
Correct Answer False

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

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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/-

Question Labour turnover rate is best defined as :

Correct Answer The number of leavers replaced divided by the average of employees on the payroll

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

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

Question Interim dividend paid by the company should be debited to the profit and loss appropriation
account.
Correct Answer True

Question The short run financial plan which acts as a guide to achieve the predefined targets is known
as ________.
Correct Answer Budget

Question Indirect Cost is termed as ________.

Correct Answer Overhead

Question Interest on ________ is credited to Capital account.

Correct Answer Capital

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

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

Question Accounting is the art where transactions are …

Correct Answer Summarized , Classified , Recorded

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

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Correct Answer False

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

Question Any amount of profit earned in the past which is not distributed to the owner, belongs to the
creditors.
Correct Answer False

Question Management accounting is concerned with the following activities :

Correct Answer Decision making , Safeguarding assets , Planning and controlling activities

Question Budgeted profit and loss account and budgeted balance sheet are also known as ________.
Correct Answer Master budget

Question A grinding machine is an example of impersonal cost centre

Correct Answer True

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

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

Question A ________ inventory turnover period indicates efficient utilisation of material.

Correct Answer Low

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/-

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/-

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

Correct Answer True

Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of
efficiency is between________.

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Correct Answer 90% to 100%

Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth

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

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

Question Furniture account will always have a ________ balance.

Correct Answer Debit

Question Product costs under direct costing include:

Correct Answer Prime cost and variable factory overheads

Question Uniform costing may lead to monopolistic conditions within the industry, prices may be
raised and customers may suffer.
Correct Answer True

Question Items debited to Profit & Loss Account are…

Correct Answer Salary , Discount allowed , Postage & telegram

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)

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)

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

Question Budgetary control is one of the techniques of management accounting.

Correct Answer True

Question Management Accounting is a developed stage of Cost Accounting

Correct Answer True

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Question In the ledger account only credit entries relating to a particular account are posted.
Correct Answer False

Match The Following

Question Correct Answer

Global Tender Any supplier from the global market can fill the tender

Single Tender Tender from only one supplier

Limited Tender Tenders from reliable but few suppliers

Open Tender Any supplier from the local market can fill the tender

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

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.

Question Financial Accounting discloses the financial performance & Financial status of the business
as a whole
Correct Answer True

Question Cost Accounting is a legal requirement.

Correct Answer False

Question Cash account can have a credit balance.

Correct Answer False

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

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

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

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

Question 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

Question Cost Accounting and Management Accounting are similar to each other in many respects.
Correct Answer True

Question The reports generated by financial accounting are meant for the use by management for
effective decisions.
Correct Answer True

Question Token or disc method is a related to the system of ________.

Correct Answer Time-keeping

Question Cost Accounting may be considered to be a part of management Accounting.

Correct Answer True

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

Question It is said that marginal costs are used primarily in guiding decisions that are yet to be made.
Correct Answer True

Question Management Accounting is not at all a legal requirement

Correct Answer True

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

Question Which of the following cost is also termed as Prime Cost ?

Correct Answer Direct cost

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

Question Select the 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.

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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/-

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/-

Question The analysis which is also referred as 'what if' analysis is known as________.
Correct Answer Cost volume profit analysis

Question The balance sheet has three columns, viz. assets, liabilities and ledger folio.
Correct Answer False

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

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

Question Depreciation is caused by use factor, obsolescence and ________.

Correct Answer Time factor

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

Question All cash sales are recorded in the sales register.

Correct Answer False

Match The Following

Question Correct Answer

Transport facilities to employees Preventive cost of labour turnover

Relationship between supervisor and worker Avoidable cause of labour turnover

Dismissal of employee Unavoidable cause of labour turnover

Increased spoilage and defectives Replacement cost of labour turnover

Question Indirect material cost is an integral part of finished goods.

Correct Answer False

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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

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

Match The Following

Question Correct Answer

Normal Standards Anticipated to be achieved in future

Basic Standards Established for a longer period of time

Current Standards Established for a shorter period of time

Expected Standards Anticipated to be achieved in the budget period

True/False
Question Trading account is an important account which will be used to analyze how successful and
how efficiently the firm runs its business.
Correct Answer True

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

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/-

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

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

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

Question The overheads apportioned to three production departments A, B and C and two service
departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively.
Overheads of department P are shared by A, B, C and Q in the ratio of 4 : 3 : 2 : 1 and that of department

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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/-

Question Re-order quantity may be measured as :

Correct Answer Maximum stock level - re-order level + (minimum usage X minimum re-order period)

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

Question An error of partial omission can be rectified by either debiting or crediting the ________
account, as the case maybe.
Correct Answer suspense

Question The final result disclosed by trading account is the ________profit earned by the
organization.
Correct Answer Gross

Question Number of days inventory is held can be calculated by dividing number of days in a year by
________.
Correct Answer Inventory turnover ratio

Match The Following

Question Correct Answer

Total cost Cost of finished goods

Non operating income Profit on sale of investment

Selling and distribution overheads Advertisement expenses

Factory overheads Repair for factory building

Question The amount of profit which is retained by the organisation is transferred to 'Reserves and
Surplus' in the balance sheet.
Correct Answer True

Question Purchase of national saving certificates by the company from its profits, should be debited to
________ account.
Correct Answer Investments

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

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Question Material mix and material yield variance can be calculated even when only one raw material
is used for production.
Correct Answer False

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

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

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

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

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

Question The lowest profit volume ratio can be ________%.

Correct Answer 0

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

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/-

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

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

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

Question Trade Discount refers to the discount . . .

Correct Answer received on purchases

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

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/-

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

Question Money Measurement Concept__________________

Correct Answer Only those transactions and facts expressed in terms of money , This Concept imposes
severe restrictions on the kind of information available from financial statements , Due to several
restrictions it becomes drawback of financial accounting

Question A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10%
on building. The total amount of capital comes to Rs. __________
Correct Answer 11500

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

Question Following errors do not affect the trial balance

Correct Answer Error of Principle , Error of Omission , Error of Commission

Question A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to
building repair account
Correct Answer False

Match The Following

Question Correct Answer

Opportunity Cost Cost can be controlled

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Differential Cost Historical Cost

Sunk Cost Cannot be controlled

Controllable Cost Increase or Decrease in cost

Uncontrollable Cost Return or yield

Question Indirect material cost assist the manufacturing process is an integral part of finish goods.
Correct Answer False

Question Dividend received is a Non-operating Income.

Correct Answer True

Question A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000,
rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2
Correct Answer 14,59,200

Question Factory overheads are termed as

Correct Answer Production overheads , Works overheads , Manufacturing overheads

Question The aims of perpetual inventory system are as follows

Correct Answer Maintaining Bin cards , Maintaining store ledger , Continuous verification of physical
stock

Question These are the features of variable overheads

Correct Answer vary directly in proportion to volume of output. , per unit cost remains the same , total
overheads may increase or decrease as per volume of output.

Question The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss
Account and Balance Sheet.
Correct Answer True

Question If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is
500 kg then what will be the quantity of production
Correct Answer 4,500 kg

Question The treatment of ________ time in cost accounting depends upon the distinction between
normal and abnormal time.
Correct Answer Idle

Question Budgeted profit and loss account and budgeted balance sheet are also known as ________.
Correct Answer Master budget

Question Differential cost analysis is incorporated in the cost books.

Correct Answer False

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Question The process of recording attendance time of the workers is known as time booking.
Correct Answer False

Question Factory light, telephone expenses are examples of ________ expenses.

Correct Answer Indirect

Question For successful implementation of uniform costing system, it is very essential to devise
________, containing recommended cost accounting plan and procedures.
Correct Answer cost manual

Question The combination in which different products are sold by a company is known as
________.
Correct Answer Sales mix

Question Which of the following is usually prepared daily by employees for each job worked on?
Correct Answer Job card

Question Profit = Profit volume ratio X Margin of safety

Correct Answer True

Question The management of Horngreen Ltd. is deciding whether to continue working at loss or to
temporarily shut down the factory. State the qualitative aspects that must be considered before arriving
at a decision.
Correct Answer Loss of trained personnel , Loss of regular customers , Expenditure required to
restart the factory

Question Locate the error and its features in the following -

Correct Answer Compensating errors , Trial balance will not be affected , Trial balance will be
affected

Question Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be
debited for this transaction?
Correct Answer Maintenance of machine account

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

Multiple Choice Multiple Answer

Question International Motors manufactures crankshafts for jeeps and trucks. They have furnished
the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages
Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff
welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-.
Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost

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ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3.
Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct.
Correct Answer Cost per crankshaft for jeep is Rs.445.45 , Cost per crankshaft for truck is Rs.805.66
, General expenses should be apportioned on direct labour ratio

Multiple Choice Single Answer

Question The direct material usage budget and direct material purchase budget differ because of
which of the following?
Correct Answer A planned change in the level of material stock

Multiple Choice Multiple Answer

Question Plant and equipment can become a key factor in the following circumstances :-
Correct Answer Limited capacity due to lack of capital , Insufficient capacity due to shortage of
space , Limited number of hours for which the plant can be used

Multiple Choice Multiple Answer

Question Select the accounts to be disclosed on the liability side of the Balance sheet :-
Correct Answer Loan , Outstanding expenses , Creditors

Select The Blank

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

Select The Blank

Question ________ is any documentary evidence to justify that a particular transaction has taken
place.
Correct Answer Voucher

Select The Blank

Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes
earned by the organization.
Correct Answer Net

True/False
Question Receipts and payments method of cash budget is useful for preparing long term
estimates.
Correct Answer False

Multiple Choice Single Answer

Question The Asian Industries specialises in the manufacture of small capacity motors. The cost
structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost.
The fixed overheads of the company amount to Rs.240,000/- per annum. THe sale price of the motor is
Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order
to break-even.
Correct Answer 6,000 motors

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True/False
Question The purpose of profit and loss account is to brign together information which relates to
gross profit and the expenses for running the business.
Correct Answer True

True/False
Question If the storage cost of inventory increases, then the economic order quantity also increases.
Correct Answer False

Multiple Choice Single Answer

Question The reporting method used in the costing system should be based on the principle of
Correct Answer Management by exception

Multiple Choice Single Answer

Question XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased
to offset 20% reduction in selling price, so that the existing profit remains intact.
Correct Answer 0.6

Multiple Choice Single Answer

Question A company manufactures and sells four products, viz. A, B, C and D. The details are as
follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%, Product D-18%;
Incremental rupee sale for each Rupee spent on advertisement:-Product A- Rs.11/-, Product B-Rs.6/-,
Product C-Rs.12/-, Product D-Rs.10/-. Amount of advertisement available is only Rs.5,000/-.
Correct Answer Product B

True/False
Question Match
Correct Answer True

Multiple Choice Single Answer

Question An analysis of the time card of a worker on a machine shows that of the total 48 hours, he
worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine
break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You
are required to calculate the earnings of the worker.
Correct Answer Rs.500/-

Select The Blank

Question In case of seasonal industry, the budget period may be taken as ________.
Correct Answer One season

Multiple Choice Single Answer

Question The standard derpartmental overhead rate is Rs.15/- per hour. Based on the following
details, work out the activity level at which the overhead rate has been pre-determined. Activity level :
600 hours; overhead allowance Rs.12,000/-. Activity level : 800 hours; overhead allowance Rs.14,400/-.
Activity
Correct Answer 1,600 hours

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True/False
Question The total of the direct costs are termed as overheads.
Correct Answer False

Multiple Choice Single Answer

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

True/False
Question Market price may be treated as latest purchase price, realisable price or replacement price
Correct Answer True

True/False
Question Office and administration overheads consists of all overhead costs incurred from
procurement of material till the stage of selling the final product.
Correct Answer False

True/False
Question Sold goods to Ajay on credit Rs 10,000/- Ajay account to be credited
Correct Answer False

True/False
Question Goods lost by fire firstly transfers to Trading Account credit side & corresponding amount
is debited to P&L account.
Correct Answer True

Multiple Choice Multiple Answer

Question A manufacturer uses 200 units of component every month and he buys them entirely from
outside supplier. The order placing and receiving cost is Rs. 100 and annual carrying cost is Rs. 12.
Calculate Ec
Correct Answer 200 units

Select The Blank

Question Due to compensating errors the ________ accuracy of the trial balance ________ affected
Correct Answer arithmetical
Correct Answer doesnot

Select The Blank

Question Preventive costs of labour turnover are ________ and ________ .
Correct Answer welfare activities
Correct Answer medical services

Multiple Choice Multiple Answer

Question Basic three steps in Standard Costing are

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Correct Answer Setting standards , Comparing actuals with standards , Measurement of variance

True/False
Question If the excess quantity is already billed in the invoice, it will be approved and paid. If not
Debit note may be issued to the supplier for amending the amount.
Correct Answer False

Multiple Choice Single Answer

Question A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000
rectification of the suspense accounted debited to Rs
Correct Answer 500

Multiple Choice Single Answer

Question Depreciation charged on land & building, first debited to Profit & Loss A/C. and then to
be ---------------------
Correct Answer Deducted from land & building

Select The Blank

Question One of the limitations of the budgetory control is that it ________.
Correct Answer is an expensive affair

Multiple Choice Multiple Answer

Question Features of real account are . . .
Correct Answer Mainly deals with items which are having physical , Consists of some intangible
assets , examples include - Lane, Building, Vehicles

Select The Blank

Question A trading concern will have only ________ overheads and selling overheads.
Correct Answer administration

Select The Blank

Question ________ is an example of intangible asset.
Correct Answer Goodwill

Multiple Choice Single Answer

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

Multiple Choice Single Answer

Question Mr.X has Rs.200,000/- invested in his business firm. He wants a 15% return on his money.
From an analysis of recent cost figures, he finds that his variable cost of operating is 60% of sales, his
fixed costs are Rs.80,000/- per year. Mr.X estimates that even if he closed the doors of his business, he
would incur Rs.25,000/- as expenses per year. At what sales would he be better off by locking his
business up.
Correct Answer Rs.62,500/-

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Multiple Choice Single Answer
Question The budgeted level of activity of the production department of Style India Ltd. is 5,000
hours per period. From the given information find the cost for 3,500 hours per period. Indirect wages
Re.0.40 per hour;
Correct Answer Rs.2,480/-

Select The Blank

Question Normally, the planning for dividend payments and interest payments is based on the
________ budget.
Correct Answer Cash

Multiple Choice Single Answer

Question The statement, mainly applicable to company form of organization, which discloses the
manner in which the profit after tax is distributed is known as:
Correct Answer Profit & Loss Account Appropriation Account

Select The Blank

Question Generally, all real accounts will have a ________ balance
Correct Answer Debit

Multiple Choice Single Answer

Question The alternative courses of action for an integrated textile mill are:
Correct Answer Sell cloth

True/False
Question The problem of multiple key factors can be solved with the help of techniques like linear
programming, operations research, etc.
Correct Answer True

True/False
Question Fixed expenses will move up by jumps if the output exceeds the capacity.
Correct Answer True

Multiple Choice Single Answer

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

Multiple Choice Multiple Answer

Question Cost control procedure deals with :
Correct Answer Establishment of plans , Comparison of actual and planed performance ,
Computation of variance

Match The Following

Question Correct Answer

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Tool-room expenses Direct labour hours

Power Horse power of machine

Stores department Number of material requisitions

Boiler house Cubic feet of steam supplied

Multiple Choice Single Answer

Question The following data is extracted from the books of a manufacturing concern for the year
2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable
overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of
10% in the fixed expenses.
Correct Answer Rs.275,000/-

True/False
Question Bank charges debited in the pass book represent clerical mistake on the part of the bank
employees.
Correct Answer False

Multiple Choice Single Answer

Question A worker completes a job in a certain number of hours. The standard time allowed for the
job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate a bonus of Rs.20/-
under Halsey plan. Find out his total earnings under the Rowan plan.
Correct Answer Rs.84/-

Match The Following

Question Correct Answer

Dividend paid Profit and loss appropriation account

Freight inwards Manufacturing account

Sales Trading account

Freight outwards Profit and loss account

Multiple Choice Single Answer

Question The credit sales are as follows : February Rs.180,00,000/-, March Rs.192,00,000/- and April
Rs.108,00,000/-. 50% of credit sales are realised in the month following the sale, 30% in the second month
following the sale and the balance in the third month f
Correct Answer Rs.15,000,000/-

Multiple Choice Multiple Answer

Question The disadvantages of supplementary overhead rates are:

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Correct Answer It can be determined only after the end of the accounting period , Defeats the basic
concept of normal cost , Involves lot of clerical activity

Select The Blank

Question In the scheme of cost-________-profit analysis, an attempt is made to measure the
variations of cost with volume.
Correct Answer volume

Select The Blank

Question The ________ is of immense help in guiding the companies to operate their accounts on
uniform basis.
Correct Answer uniform cost manual

Multiple Choice Multiple Answer

Question The productive causes of idle time are :
Correct Answer Instructions are not clearly given , Power failures , Machine breakdown

Multiple Choice Multiple Answer

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

Match The Following

Question Correct Answer

Emerson's efficiency bonus system

Actual hours X Hourly rate + Bonus percentage (Actual hours X Hourly rate)

Piece rate system Output X Wage rate per unit

Barth Premium system Hourly Rate X (square root of Standard Hours X Actual Hours)

Time rate system Attendance time X Hourly wage rate

Multiple Choice Single Answer

Question If the overhead expenditure to be absorbed is the foreman's salary, the most appropriate
basis for absorption would be :
Correct Answer Direct labour hours

True/False
Question In case the standards are too difficult to achieve, they will provide additional incentive for
improvement.
Correct Answer False

Multiple Choice Single Answer

Question Standard cost specification per unit of product : 20 labour hours per unit @ Rs.22/- per
labour hour.Actual production and labour cost : Actual production 300 units; time used in production

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-5,500 hours; Idle time -600 hours; time paid for-6,100 hours, total wages paid -Rs.146,400/- . Compute
Idle time variance.
Correct Answer Rs.13,200/- (Adverse)

Multiple Choice Single Answer

Question Details of budgeted and actual fixed overheads and output for the year 2004 are as follows
: Budgeted fixed overheads -Rs.20,00,000/-; actual fixed overheads -Rs.21,50,000/-; budgeted output -
40,000 units and actual output- 45,000 units. Compute the per unit standard rate for fixed overheads.
Correct Answer Rs.50/-

Multiple Choice Single Answer

Question In considering a special order situation that will enable a company to make use of
presently idle capacity, which of the following costs would be irrelevant?
Correct Answer Depreciation

True/False
Question Factory overheads consist of all overhead costs incurred from the stage of procurement of
material till the production of finished goods.
Correct Answer True

Multiple Choice Multiple Answer

Question The management of Dick Ltd. is deciding whether to buy component Y from the supplier,
since the purchase cost is less than the manufacturing cost. State the non-financial aspects that must be
considered before arriving at a decision.
Correct Answer Reliability regarding quality of the material supplied by the supplier , Alternative
use of labour of engaged in manufacturing component Y , Regularity of material supplies from the
supplier

True/False
Question In marginal costing, decisions are guided by profit rather than contribution margin.
Correct Answer False

Multiple Choice Single Answer

Question Select the factor which can prove to be a very crucial key factor in case of an oil refinary.
Correct Answer Supply of crude oil

Multiple Choice Multiple Answer

Question The factors to be considered while preparing the direct materials budget are :
Correct Answer Adequacy of material storing space , Availability of funds , Material in stores but
reserved for specific purposes

Select The Blank

Question Excess direct labour wages will be disclosed by 'Direct labour________ variance'.
Correct Answer Rate

True/False

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Question The difference between sales and margin of safety is equal to budgeted sales.
Correct Answer False

Select The Blank

Question A ________ note is prepared when excess material is returned to stores.
Correct Answer Material returned

Select The Blank

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

Match The Following

Question Correct Answer

[( Actual sales - Break even sales) ]/ Actual sales Margin of safety as a percentage of actual
sales

Fixed cost / Contribution margin ratio Break even point

Fixed cost - (Sales X Profit volume ratio) Profit

(Sales X Profit volume ratio) -Fixed cost Loss

True/False
Question Marginal costing rewards sales whereas absorption costing rewards production.
Correct Answer True

Select The Blank

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

Multiple Choice Single Answer

Question The store-keeper should initiate action for the purchase of a material, when it reaches its :
Correct Answer Re-order level

Select The Blank

Question Under-recovery of overheads implies that the profit will be________ to the extent of total
under-recovered overheads.
Correct Answer Increased

Multiple Choice Single Answer

Question Judge the statement in italics based on the criteria given. On 31st March, 2004 Sita
Enterprises sent goods worth Rs.30,000/- on approval basis to Mr.Ram. These goods should be included
in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz.Sita
Enterprise.
Correct Answer The statement and the reason both are correct

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Multiple Choice Single Answer

Question Double entry system of accounting follows the principle of :
Correct Answer Every debit has corresponding credit

Multiple Choice Single Answer

Question Where, in the final statements of accounts, should we disclosed the closing balance of
income received in advance?
Correct Answer Balance sheet - on the liability side

True/False
Question Bank reconciliation statement must be prepared before the preparation of profit and loss
account and balance sheet.
Correct Answer True

True/False
Question In differential cost analysis, decisions are taken by comparing the incremental revenue with
differential costs.
Correct Answer True

True/False
Question Due to compensating errors the arithmetical accuracy of the trial balance is affected.
Correct Answer False

Select The Blank

Question A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit
completed, this type of labour cost may be classified as ________ cost.
Correct Answer Semi-variable

Multiple Choice Single Answer

Question Following data has been extracted from the records of a manufacturing company whose
level of operations varies during different months. Minimum activtity : 30,000 machine hours and
manufacturing overeheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing
overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads.
Correct Answer Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour

Multiple Choice Single Answer

Question You been informed that the carrying cost and ordering cost with best order size of 1,200
units is Rs.6,000/-. Unit cost of material is Rs.50/-. Annual storage cost per unit is 10% of the unit price of
material. Ordering cost is Rs.240/- per order. Ascertain annual material requirement, assuming that at
economic order quantity the total storage cost is equal to the total ordering cost.
Correct Answer 15,000 units

Select The Blank

Question Graphically, fixed cost line will be ________ the 'x-axis'.
Correct Answer Parallel to

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Select The Blank

Question ________ variance arises when the mix of materials used in the production is different
from the predetermined standard mix of operation.
Correct Answer Materials mix

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

Multiple Choice Single Answer

Question Over which of the following costs is the management likely to have least control?
Correct Answer Buildings insurance cost

Select The Blank

Question Loss of uninsured goods by fire was debited incorrectly to United India Assurance
Company's account instead of debiting it to ________ account.
Correct Answer Goods lost by fire

Multiple Choice Single Answer

Question The given data pertains to the month of April : Budgeted : Fixed overheads Rs.10,000/-;
output - 5,000 units; standard time for one unit - 4 hours. Actual : Fixed overheads -Rs.10,200/-; output -
5,200 units and actual hours worked - 20,100 hours. Calculate fixed overhead cost variance.
Correct Answer Rs.200/- (Favourable)

Multiple Choice Single Answer

Question Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If
his annual salary is Rs.500,000/-, what amount should be charged as office overheads?
Correct Answer Rs.300,000/-

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 Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- , Debtors
A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/-

Select The Blank

Question Adjustment entries always have ________ effects.
Correct Answer Two

Multiple Choice Single Answer

Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of
Vivek Enterprises. This payment should be treated as :-

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Correct Answer Drawings

Select The Blank

Question The various contents of a uniform cost manual are organization, cost accounting system and
________.
Correct Answer Presentation of information

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

Multiple Choice Single Answer

Question In the trial balance prepared on 31st March, 2004, the insurance premium account had a
debit balance of Rs.12,865/-. This amount is the premium of the policy which expired on 29th February,
2004. The policy has been renewed from 1st March, 2004 but the premium is not yet paid. Find the
amount of insurance premium still payable as on 31st March, 2004.
Correct Answer Rs.1,169.55

True/False
Question All the properties owned by the business are collectively referred to as the assets of the
business.
Correct Answer True

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

True/False
Question Primary distribution is effected on the basis of service rendered to the service departments
by the production departments.
Correct Answer False

Select The Blank

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

True/False
Question Debit Note is an intimation sent to person dealing with the business that his account is being
credited for the purpose indicated therein.
Correct Answer False

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

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Multiple Choice Single Answer

Question The following information relating to material X and its standard use for production has
been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumption of X = 10
litres per unit of product. Data relating to actual material purchases and production during the period:
Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate
material usage variance.
Correct Answer Rs.5,000/- (Favourable)

Multiple Choice Multiple Answer

Question The suspense account has a debit balance of Rs.40,000/-. Select the transactions which are
capable of nullifying this balance.
Correct Answer Conveyance expenses of Rs.25,000/- were posted on the wrong side of the account. ,
Purchased computer worth Rs.28,000/- was recorded in the ledger as , The total of the purchase book was
cast short by Rs.44,000/-

Multiple Choice Multiple Answer

Question Items credited to Trading Account are :-
Correct Answer Sales , Goods lost by fire , Closing stock

Multiple Choice Single Answer

Question As on 31st March, 2004, it was decided to write off Rs.800/- of debtors as bad debts. Also,
provision for bad and doubtful debts is to be made @ 5% and for discount on debtors @ 4%. Find the net
amount of debtors to be disclosed in the balance sheet, if the total debtors before the aforesaid
adjustments is Rs.98,623/-.
Correct Answer Rs.89,214.58

Select The Blank

Question If the time booked as per the job cards is less than the attendance time it indicates ________
during which the worker has not done any work though he was present in the factory.
Correct Answer Idle time

Multiple Choice Multiple Answer

Question The process of accounting has three streams of accounting ---------------,--------and
----------------------.
Correct Answer Financial Accounting , Cost Accounting , Management Accounting

Multiple Choice Single Answer

Question Select the information to be considered before installing a costing system :-
Correct Answer Labour intensity of the product

Multiple Choice Single Answer

Question The opening balance of cash account is Rs. 25,000/-, cash received from debtors Rs. 30,000/-,
sold goods on cash basis amounting to Rs. 50,000/-, paid to creditors Rs. 20,000/-, purchase furniture Rs.
5000/-. What is the closing balance of the cash account?
Correct Answer Rs. 80,000

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Multiple Choice Single Answer

Question The installation and operation of ___________ accounting requires a very elaborate
organizational structure and large number of rules & regulations
Correct Answer Management

TO BE ANSWERED: (You can reply to me if you get the answers so that I can update the same)

Where break even sales are Rs. 20000,fixed cost is Rs.10000and profit is Rs. 5000 then the margin of safety
will be Rs.
10000
1500
15000
2000

Valuation of material uses the following methods

FIFO and LIFO
Average price method
Market price
Special price

Goods distributed as free samples transfer to debit side of trading A/C .

True / False

In Citizen Ltd., Division X is a profit centre which produces three products, A, B and C. The details are as
follows : External market price per unit:-Product A- Rs.48/-, Product B- Rs.46/-, Product C-Rs.40/-.
Maximum external sales(units):-Product A- 800, Product B-500, Product C-300. Variable cost per unit:-
Product A- Rs.33/-, Product B- Rs.24/-, Product C-Rs.28/-.
A-800 units; B-500 units; C-300 units
A-800 units; B-250 units; C-200 units
A-400 units; B-500 units; C-300 units
A-400 units; B-800 units; C-300 units

XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit
-3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows :
actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked-
54,000 hours. Find variable overheads cost variance.
Rs.20,000/- (Adverse)
Rs.20,000/- (Favourable)
Rs.60,000/- (Adverse)
Rs.60,000/- (Favourable

A firm is able to break even at 60% capacity with budgeted fixed cost of Rs.300,000/-, budgeted selling
price Rs.20/- per unit and budgeted contribution Rs.6/- per unit. The firm can produce and sell at 90%
capacity but it is estimated that in that case

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Rs.88,500/-
Rs.75,000/-
Rs.82,500/-
Rs.72,500/-
The annual variable production overheads of a factory are Rs.70,000/-. The production manager
anticipates that in the next year, the production efficiency will decrease by 4%. Find out budgeted
production overheads for the next year.
Rs.72,800/-
Rs.78,200/-
Rs.72,916.67
Rs.79,216.67

XYZ & Co. is a partnership with X and Z as partners. The capital of X is Rs.58,000/- and that of Z is
Rs.75,000/-. Interest on capital is charged @ 12% p.a. and interest on drawings is charged @ 5% p.a. The
drawings of X totaled to Rs.15,000/- and that of Z totaled to Rs.12,000/-. The profit for the year after
considering interest on capital and drawings is Rs.125,000/- and the profits are shared in the ratio of their
capitals, i.e. 58 : 75. Find the balance of capital accounts after giving
X - Rs.118,721.28 and Z -Rs.153,888.72
X - Rs.120,221.28 And Z - Rs.155,088.72
X - Rs.119,471.28 And Z - Rs.154,488.72
X - Rs.135,448.28 And Z - Rs.138,511.72

Factory rent is a direct cost to the factory as a whole but indirect to the production departments.
True / False

The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract
should be defined as :
Direct labour cost
Indirect labour cost
Fixed labour cost
Non-controllable labour cost

The following information relating to material X and its standard use for production has been extracted
from the standard cost card: Price of material X = Rs.5/- per litre; consumptiion of X = 10 litres per unti of
product.Data relating to actual material purchases and production during the period: Purchases of X =
4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage
variance.
Rs.1,000/- (Favourable)
Rs.4,000/- (Adverse)
Rs.5,000/- (Favourable)
Rs.3,000/- (Adverse)

The following particulars are extracted from the books of a company relating to commodity "A" for the
half year ending 30th June, 2004. (a) Purchase of raw materials - Rs.1,32,000/- (b) Direct wages -
Rs.1,10,000/- (c) Rent, rates and insurance - Rs.44,000/- (d) Carriage inwards - Rs.1,584/- (e) Raw material

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as on 1st Jan, 2004 - Rs.22,000/- (f) Finished goods as on 1st Jan, 2004 - Rs.17,000/- (1600 tonnes) (g) Raw
Material as on 30th June, 2004 - Rs.24,464/- (h) Finished goods as on 30th June,
Rs.64,800/-
Rs.46,800/-
Rs.86,400/-
Rs.68,400/-

Annual maintenance of Rs.28,000/- was paid on 15th June, 2003 for a period of one year therefrom. Find
the amount of prepaid maitenance expenditure for the year ended 31st March.
Rs.28,000/-
Rs.22,167/-
Rs.7,000/-
Rs.5,833/

The Balance Sheet method of cash budget ignores any excess or shortage of cash during the budget
period.
True / False

Compound journal entry avoids duplication of effort.

True / False

Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of India. On 31st
January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-; Current
accountRs.2,250/- (overdraft). It is found that a deposit of Rs.1,500/- made into the savings account on
20th January, 2004 has been entered in the ledger in the of Current account. Find the correct ledger
balances of savings and current accounts.
Savings account-Rs.5,000/-, current account-Rs.3,750/- (overdraft
Savings account-Rs.5,000/-, current account-Rs.2,250/- (overdraft)
Savings account-Rs.6,500/-, current account-Rs.2,250/- (overdraft)
Savings account-Rs.6,500/-, current account-Rs.3,750/- (overdraft)

Which of the following source documetns in a cost accounting system is designed to exercise control
voer the delivery of and accurate recording of the receipts of goods?
Goods received note
Order to the supplier
Material requisition note
Purchase requisition slip

Select the cases where convention of conservation is applied :

Closing stock is valued at cost or market price whichever is lower
Providing for discount on debtors
Amorisation of goodwill (goodwill being written off to Profit and Loss Account)
Providing for discount on creditors

M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-,
Rs.80/- and Rs.50/-, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-,

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respectively. The quantitywise proportion in which these products are manufactured and sold are 20%,
30% and 50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to work out the
overall break even point qunatity for
30,000 units
90,000 units
40,000 units
80,000 units

A firm is earning a profit of Rs.60,000/- at the present sales level of Rs.500,000/-. It has a profit volume
ration of 60%, which remains unchanged. Fixed cost increases by 25% as soon as sales become twice the
break even point. Find the profit for sal
Rs.240,000/-
Rs.180,000/-
Rs.120,000/-
Rs.200,000/-

At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What
will the 401st unit sold contribute to profit?
Re.0
Re.0.50
Re.1.00
Rs.1.50

1. Advantage of budgetary control system 1. Motivates the managers to exceed the budgeted
targets

2. Fixed budget 2. Managerial tool which decreases effectiveness of managerial control

3. Disadvantage of budgetary control system 3. More elastic and practical

4. Flexible budget 4. Difficult to implement in fast changing industrial scenario

5. Restricts the efforts of the managers to the budgeted targets

6. Managerial tool which increases effectiveness of managerial control

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/-.
Rs.600,000/-
Rs.550,000/-
Rs.525,000/-
Rs.625,000/-

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Existing sales are Rs.100,000/- (500 units), variable costs are Rs.60,000/-, fixed costs are Rs.24,000/-. If
selling price is reduced by 10% which of the following is the breakeven sales quantity?
450 units
500 units
400 units
334 units

An operator engaged in machining certain components receives andordinary day rate of Rs.160/- per day
of 8 hours. The standard output for machining the components has been fixed at 80 pieces per hour (time
fixed for premium bonus). On a certain day, the output of the worker on this machine is 800 pieces. Find
the labour cost per 100 pieces if a bonus of Rs.25/- is paid per 100 pieces of the extra output.
Rs.25/-
Rs.20/-
Rs.15/-
Rs.10/-

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

A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price
for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is
8,000 kg. of alloy using 2,000 kg of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg.
Calculate the standard cost of copper.
Rs.200,000/-
Rs.150,000/-
Rs.350,000/-
Rs.180,000/-

Sold goods to Amitabh worth Rs. 15,000/- against 15% trade discount. In this case with what amount
should the sales account be credited?
Rs. 15,000
Rs. 12,750
Rs. 13,500
Rs. 13,750

Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material
price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance.
Material cost variance -Rs.400/- (Adverse)
Material usage variance -Rs.750/-
Material usage variance is favourable
Material usage variance is adverse

Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the
date of payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss
account as expenditure on account of insurance premium?
Rs.18,000/-

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Rs.14,250/-
Rs.10,500/-
Rs.3,750/-

The standard cost of actual hours when any employee remains idle due to abnormal circumstances is
known as Standard labour cost / Idle time variance / Labour cost variance / Standard cost.

Keeping company's liquid position sufficiently sound to meet its daily obligation is the main object of
preparing Cash Sales / Income / Expenditure / budget.

One of the major drawback of the contribution approach to costing is that it ignores fixed cost.
True / False

Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account
will be disclosed in the …
Profit and Loss Account - credit side
Balance Sheet - liability side
Balance Sheet - asset side
Trading Account - debit side

A withdrawal of Rs.500/- from Mr.Jone's account on 2nd October, 2004 has been entered by the bank in
the pass book of Mr.Johny's account.' If you are preparing the bank reconciliation statement considering
the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr.Johny, find out the balance as
per his bank book.
Rs.1,750/- (overdraft)
Rs.1,750/- (debit)
Rs.2,250/- (overdraft)
Rs.2,250/- (debit)

What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges
on the lathe machine were debited to Carriage inward account, Rs.1,100/- (b) Cost of installing the
machine stands debited to miscellaneous expenses account, Rs.200/-
Cost will increase by Rs.900/-
Cost will increase by Rs.1,300/-
Cost will decrease by Rs.1,300/-
Cost will decrease by Rs.900/-

From the following particulars, calculate the machine hour rate of overhead absorption. A company has
three production departments and two service departments. The overhead analysis sheet provides the
following totals of the overheads analysed to production and service departments. Production
Departments :X- Rs.48,000; Y-Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B-Rs.18,000. The
expenses of the service departments are apportioned as follows : Service department A - Production
department X-20%; Production department Y - 40%; Production department Z- 30%; Service department
B - 10%.Service department B- Production department X-40%; Production department Y - 20%;
production department Z- 20%; Service department A - 20%. Details of machine hours are as follows:

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Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-
1,000 hours.
X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936
X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316
X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936
X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952

From the given information compute the total cost variance. Material cost variance -Rs.4,400/-
(Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -Rs.22,000/-
(Adverse); variable overhead cost variance -Rs.6,000/- (adverse).
Rs.32,850/- (Adverse)
Rs.32,850/- (Favourable)
Rs.24,050/- (Adverse)
Rs.24,050/- (Favourable)

Judge the given statement according to the given criteria :- 'Provision for doubtful debts account' and
'provision for discount on debtors account' mean same account can be maintained under two account-
heads, since both are related to debtors and indicate a loss to the organization.
The statement and the reason both are correct
The statement and the reason both are incorrect
The statement is correct but the reason is incorrect
The statement is incorrect but the reason is correct

1. Ordering cost 1. Cost of holding the inventory

2. Carrying cost 2. Cost of issuing the inventory
3. Material cost 3. Cost of administrative efforts
4. Cost of material consumed 4. Can be obtained subtracting opening stock from the sum of
material cost and closing stock
5. Can be obtained subtracting closing stock from the sum of material cost and opening
stock
6. Sum of possession cost, ordering cost and purchase cost

The pass book showed a credit balance of Rs.1,000/-. This balance was after considering the dividend of
Rs.25/- collected by bank and Rs.5/- charged as collection expenses: these entries are not made in the
bank book. Find the balance as per bank book.
Rs.1,000/-
Rs.1,030/-
Rs.1,020/-
Rs.980/-

Compute fixed overheads calendar variance when fixed overhead volume variance is Rs.250/-
(Favourable); fixed overheads efficiency variance is Rs.2,150/- (Adverse) and fixed overheads capacity
variance is Rs.800/-(Favourable).
Rs.1,100/- (Adverse)
Rs.1,100/- (Favourable)
Rs.1,600/- (Adverse)

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Rs.1,600/- (Favourable)

Routing the purchase requisition through the purchase department entails unnecessary delay in
receiving the required materials.
True /False

Large angle of incidence indicates Lower /Adjusted /Higher /Same amount of profits.

The method of overhead apportionment which considers both the material cost as well as the labour
cost, is known as Supplementary rate /Prime cost percentage rate /Direct labour hour rate /Machine
hour rate method.

Standard labour cost of producing 500 metre of cloth has been specified as 20 hours work by skilled
workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per hour. For producing
500 metre cloth they worked for 30 hours each they were paid at the rate of Rs.17/- per hour and Rs.10/-
per hour, respectively. Calculate labour mix variance.
Rs.210/- (Adverse)
Rs.60/- (Adverse)
Rs.150/- (Adverse)
Rs.30/- (Adverse)

In a factory Ram and Shyam produce the same product using the same input of same material and at the
same normal wage rate. Bonus is paid to both of them in the form of normal time wage rate adjusted by
the proportion which time save bears to the standard time for the completion of the product. The time
allotted to the product is fifty hours. Ram takes thirty hours and Shyam takes forty hours to produce the
product. The factory cost of the product for Ram is Rs.3,100/- and for Shyam is Rs.3,280/-. The factory
overhead rate is Rs.12/- per hour. Calculate the cost of material used for the product, for each worker,
Ram and Shyam.
Rs.3,000/-
Rs.2,000/-
Rs.3,320/-
Rs.2,320/-

Provision for discount on debtors account should be credited to the Profit and Loss Account.
True /False

Consideration to the fact that the repairs and maintenance cost is less in the initial years of life of the
asset and hence needs to be counterbalanced by higher amount of depreciation in the :-
Straight line method
Written down value method
Endowment policy method
Sinking fund method

The following data is available for a company for the month of April, 2004 : Territory I : selling expenses
Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold -16,000; sales Rs.76,000/-. Territory II : selling
expenses Rs.4,200/-; distribution cost Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory

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III : selling expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales
Rs.52,000/-. The company adopts sales basis and quantity basis for application of selling and distribution
costs respectively. Compute the amount of selling and distribution costs chargeable to a consignment of
4,000 units of a product sold in each territory at Rs.2.50 per unit.
Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/-
Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/-
Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/-
Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/-

SRR Ltd. producing a single product, sells it at Rs.50/- per unit. Unit variable cost is Rs.35/- and fixed
costs amounts to Rs.12,00,000/- per annum. Calculate the increase in sales required if profits are to be
increased by Rs.2.4 lakhs
Rs.880,000/-
Rs.800,000/-
Rs.600,000/-
Rs.660,000/-

Re-order level should be higher than Monthly requirement /Average stock level /Annual
requirement /Minimum level but lesser than maximum stock level.

What is the balance of the cash account after considering the relevant transactions from the following set
: 4th July, 2004-Sold goods to Deshmukh & Co. for Rs.2,500/-; 5th July, 2004-Received Rs.5,000/- for rent of
June, 04; 7th July, 2004-Paid salaries by cheque for Rs.8,000/-; 15th July, 2004-Received commission, in
cash, from XYZ Ltd., Rs.3,000/-; 21st July, 2004-Paid salaries by cash Rs.2,500/-; 22nd July, 2004-Deposited
cash into Bank of India Rs.3,000/-; 25th July, 2004-Purchased furniture from Shantilal for Rs.10,000/-.
Shantilal has given a credit period of 45 days; 26th July, 2004-Paid cash for purchase of machine from
Elpro Ltd. For Rs.30,000/-; 28th July, 2004-Paid ready cash for advertisement inserted in newspaper,
Rs.200/-; 28th July, 2004-Withdrawn cash from Bank of India Rs.50,000/-.
Rs.22,300 (debit)
Rs.22,300 (credit)
Rs.33,200 (debit)
Rs.33,200 (credit)

Factory cost is Rs.13,10,800/-. The administrative overheads are salaries Rs.40,000/-, rent and rates
Rs.6,400/-, traveling expenses Rs.12,400/-, Depreciation Rs,2,400/-, Directors fees Rs.24,000/-, General
Charges Rs.24,800/-, Manager's salary Rs.38,400/-. What will be the office cost?
Rs.14,59,200/-
Rs.11,72,200/-
Rs.13,10,800/-
Rs.15,10,800/-

XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit
-3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows :
actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked-
54,000 hours. Find variable overheads cost variance.
Rs.20,000/- (Adverse)

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Rs.20,000/- (Favourable)
Rs.60,000/- (Adverse)
Rs.60,000/- (Favourable)

The concept of marginal costing is based on the important distinction between product costs and
Indirect /Direct /Variable /Period costs.

Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is Rs.180/- per unit.
Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company has a proposal that the
sales staff may be paid a commission of 10% of sales instead of fixed salaries totaling Rs.80,000/-. This
action is expected to increase the sales by 10%. Compute the amount of profit assuming the proposal is
accepted?
Rs.177,000/-
Rs.200,000/-
Rs.178,000/-
Rs.277,000/-

A company has a normal capacity of 120 machines, working 8 hours per day of 25 days in a month. The
fixed overheads are budgeted at Rs.144,000/- per month. The standard time required to manufacture one
unit of product is 4 hours. In April, 2004, the company worked 24 days of 840 machine hours per day
and produced 5,305 units of output. The actual fixed overheads were Rs.142,000/-. Compute calendar
variance.
Rs.6,360/- (Favourable)
Rs.17,280/- (Adverse)
Rs.5,760/- (Adverse)
Rs.16,680/- (Adverse)

Industries which have high fixed cost burden but low variable cost have Narrow /Smaller /Larger /Flat
angle of incidence.

Special aspects of co-partnership include:-

Workers are granted ownership rights
Indirect monetary remuneration
The morale of the workers is increased
The workers are rewarded for individual efficiency

The credit purchases are as follows : July Rs.80,000/- and August Rs.140,000/-. Creditors are paid either
on a 'prompt basis' (on the spot) or 30 days basis. It is estimated that 10% of the creditors are in the
prompt category. Find the amount paid :-
Rs.161,000/-
Rs.121,000/-
Rs.177,000/-
Rs.118,000/-

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The use of contribution per unit of limiting factor as the basis for ranking products to be produced and
sold is aimed at which of the following?
Maximization of turnover
Minimization of turnover
Maximization of short-term profit
Maximization of long-term profit

Obsolescence arises when a machine has to be discarded in favour of one better adopted to its purpose
and giving better result.
True /False

A manufacturing unit produces electronic circuits at the rate of 6 pieces an hour. The unit works in single
shift of 8 hours during a six-day week and remains close for 18 days a year on account of holidays.
Average idle hours per month is 20 for cleaning and maintenance of equipments. Against an average
annual output of 12,000 pieces during last ten years, the actual output achieved during the year was
10,800 pieces. The fixed overheads for the year amounted to Rs.540,000/-. You are required to calculate
the idle capacity costs on the assumption that overhead recovery rate is based on maximum capacity.
Rs.207,121.60
Rs.200,000/-
Rs.193,121.60
Rs.187,000/-

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