CORRE

Question Option: A Option: B Option: C Option: D

ANSW
Debit the receiver &
credit the giver is _____ Personal Real Nominal all of the above A
account
Capital A/c is a _______
Personal Real Nominal all of the above A
A/c
Cash A/c is a ________
Personal Real Nominal None B
A/c
Which of the following
Building A/c Capital A/c Shyam A/c Rent A/c A
is a Real A/c?
Valuation of stock in
accounting follows the
principle of cost price Market Price Average Price Net realizable Value None A
or ____ which ever is
lower.
Cost of asset should
always be equal to the Double Entry Money measurement
Matching Concept Consistency B
cost of the liabilities. Bookkeeping Concept
This concept is
According to which
concept business is
Dual concept Divider concept Entity concept Landlord concept C
treated as a unit apart
from owner
Which of the following
is time span into which
the total life of a
business is divided for Fiscal year Calendar year Accounting period Accrual period C
the purpose of
preparing financial
statements?
What is not a value of
Predictive Value Feedback Value Timeliness Relibility D
accounting relevance?
What is not a value of Representational
Verifiability Timeliness Neutrality C
accounting reliability? Faithfulness
written policy set of broad accounting
Accounting standards set in the form of
documents issued by policies to be followed All options D
are: general principles.
expert accounting body by an entity.
As per the accounting Capital + Liabilities = Capital + Assets = Liabilities + Assets = Assets = Liabilities –
A
equation Assets Liabilities Capital Capital
In Double Entry System
Two accounts with
of Book-keeping every Two sides of the same The same account on
equal but opposite All of the above. A
business transaction account. two different dates.
effect.
affects:
Rs 5,00,000 spent on
advertising to introduce Deferred revenue
Capital expenditure. Revenue expenditure. None of the above. C
a new line of product expenditure.
is______.
The assets that can be
easily converted into
cash within a short Current assets Fixed assets Intangible assets Investments A
period, i.e., 1 year or
less are known as
Copyrights, Patents and
Current assets Fixed assets Intangible assets Investments C
Trademarks are,
The debts which are to
be repaid within a short
Current Liabilities Fixed liabilities Contingent liabilities All the above A
period (a year or less)
are referred to as,
Cost of goods sold + Excess of sales over Net profit fewer
Gross profit is Sales fewer Purchases B
Opening stock cost of goods sold expenses of the period
is root cause for Stewardship Management Human resource
Social accounting A
financial accounting accounting accounting accounting
Fixed assets are held Converting into cash Generating revenue Resale For Investments B
by business for _____
For every debit there
Money measurement
will be an equal credit Matching concept cost concept Dual aspect concept D
concept
according to
The type or branch of
accounting that
generates reports for
the use of external
Financial accounting Managerial accounting Tax accounting Tax accounting A
parties such as
creditors, investors and
government agencies is
known as:
Which one of the
following is not an
external user of Investor Creditor Manager Customer C
accounting
information?
What is the main Provide Useful,
Organize Financial Keep Track Of Minimize Company
purpose of financial Financial Information B
Information Company Expenses Taxes
accounting? To Outsiders
Which of these is not
included as a separate
Assets Revenues Liabilities Stockholder’S Equity B
item in the basic
accounting equation?
Which financial
statement uses the Statement Of
Income Statement Balance Sheet Cash Flow Statement B
expanded accounting Stockholder’S Equity
equation?
Asset accounts have
Debit Credit Contra All Of The Above A
what type of balance?
Which account
Expenses Withdrawals Treasury Stock Revenues D
increases equity?
Interest Received is Personal A/c Real A/c Nominal A/c all of the above C
Commission Paid Personal A/c Real A/c Nominal A/c all of the above C
Stock is Personal A/c Real A/c Nominal A/c None B
Furniture is Personal A/c Real A/c Nominal A/c None B
Union Bank of India is Personal A/c Real A/c Nominal A/c None A
Outstanding Rent is Personal A/c Real A/c Nominal A/c None A
Laptop is Personal A/c Real A/c Nominal A/c all of the above B
Prepaid Insurance is Personal A/c Real A/c Nominal A/c all of the above A
Which of the following
Prepaid Expenses Debtors Furniture Bills Receivable C
is not a current asset ?
Which of the following
Motor Car Goodwill Stock Building B
is not a tangible asset?
Current Assets is Land Building Machinery Stock D
Current Liabilities are Creditors Debentures Long Term loan Cash A
Prepaid Telephone bill
Personal A/c Real A/c Nominal A/c None A
is
Patent is Current Assets Fixed assets Current Liabilities Fixed Liabilities B
Purchase of Machinery
Capital expenditure. Capital Receipts Revenue Expenditure Revenue Receipts A
is
Managerial Accounting
Information Is Shareholders Creditor Managers Regulatory Agencies C
Generally Prepared For
Management
accounting is Service entities Manufacturing entities Not-for-profit entities All of these D
applicable to
Fixed assets are held
Converting into cash Generating revenue Resale None of the above B
by business for _____
Amount spent to Capital Expenditure. Revenue expenditure. Deferred revenue Capital Loss A
increasing the earning
capacity is a ______
expenditure
Which of the following Short term Investments
Cash A/c Out standing rent A/c Purchases A/c (goods) C
is not a Real Account? A/c
Value of goods
withdrawn by the
proprietor for his Capital A/c Sales A/c Drawings A/c Purchases A/c C
personal use should be
credited to ____
Which of the following Good will intangible Sundry debtors - current Loose tools tangible Outstanding expenses -
D
is incorrect? asset asset fixed asset current asset.
Which of the following
is not the main Systematic recording of Ascertaining profit or Ascertainment of Solving tax disputes
D
objective of transactions loss financial position with tax authorities
accounting?
Which of the following
Outstanding salaries
is not a nominal Salaries account Interest paid Commission received A
Account
Account?
Statement showing
balances in ledger Journal Ledger Trial Balance Trading A/c
account is called as
Sales Account (sale of Both Credit and Debit
Credit Balance Debit Balance None A
goods) will always has Balance
Loan A/c is Personal A/c Real A/c Nominal A/c None A
Selling finished goods
Capital expenditure. Capital Receipts Revenue Expenditure Revenue Receipts D
is
Purchasing Stock every
Capital expenditure. Capital Receipts Revenue Expenditure Revenue Receipts C
month is
_____________is the
Management
original form of Financial accounting Cost accounting NONE A
accounting
accounting
A person who owes
money to the business Debtor Creditor Investor None A
is a __________
A _________ is a person
to whom business Creditor Debtor proprietor None A
owes money
Asset acquired for long
period of time in the Fixed asset Current asset Fictitious asset None A
business is known as
_______________
represent the amount
Capital Revenue Asset Stock A
invested by the owner
into business.
___________ is not a
Goodwill Land Closing stock Machinery A
tangible asset
Accounting is Monetary &
Monetary Non- monetary Credit transactions only A
concerned with Nonmonetary
______________ is the
major source of
Purchase Sale Interest Commission B
revenue of any
business
Capital expenditure are
recorded in the Balance sheet Profit & loss account Trading account Trial Balance A
__________
Asset that can be
converted into cash
Current Assets Current Liablities Fixed Assets Fixed Liabilities A
within a year are called
_________asset
Debit is the asset
Increase Decrease No charge none A
means
Credit in the liability Increase Decrease No charge none A
means
A short description of
every transaction made Summary Description Narration none C
in the journal is called
Correc
Questions Option A Option B Option C Option D
Answe
According to accrual
concept of accounting, when cash is received when transaction when profit is when balance sheet is
B
financial or business or paid occurs computed prepared
transaction is recorded:
The John Marketing
Company provides
advertising services to
an investment
company in year A but
receives advertising fee revenue recognition economic entity
business entity concept going concern concept B
in year B. The John principle concept
Marketing Company
recognizes this revenue
in year A. This action of
John Marketing
Company is justified by:
there is no evidence
its balance sheet its income statement
A company is a going that it will or will have to it is a public limited
shows a strong for the current year C
concern if: cease operations within company
financial position shows huge profit
foreseeable future.
Which accounting
concept or principle
states that the
transactions of a business or economic
materiality concept of time period concept of matching principle of
business must be entity concept of D
accounting accounting accounting
recorded separately accounting
from those of its
owners or other
businesses?
The business or
economic entity sole proprietorship partnership form of Corporate form of
all of the above D
concept is applicable form of business business business
to:
Which of the following
states that a
transaction is not
Revenue recognition Monetary unit Time period
recorded in the books Matching principle C
principle assumption assumption
of accounts unless it is
measurable in terms of
money?
Which one of the
following states that
Time period Revenue recognition Economic entity
the life of a business Accrual concept A
assumption principle concept
can be divided into
equal time periods?
The revenue is not
recognized until it is
earned and realized or
Revenue recognition
at least realizable. To Separate entity concept Going concern concept Conservatism concept B
principle
which accounting
principle/concept this
statement belongs?
The auditor noticed
that the financial
statements of Meta
Company were missing
some footnotes economic entity
materiality concept going concern concept full disclosure concept D
important for users for concept
decision making. This
action of the
management is a
violation of:
In certain situations, revenue recognition monetary unit conservatism principle matching principle C
companies might principle assumption
recognize losses but
not gains. This action
belongs to:
The Modern
Enterprises reported all
assets in the balance cost principle or
materiality concept conservatism concept full disclosure concept D
sheet at current market historical cost concept
value. This action is a
violation of:
Which accounting
principle/concept
allows accountants to
ignore other accounting business entity concept conservatism concept materiality concept full disclosure concept C
principle/concept if the
amount in question is
immaterial?
Which of the following
is taken into account
Size of the amount as Cumulative effect of all Nature of the amount in
While determining the All of the above D
well as organization immaterial amounts question
materiality of an
amount?
Creating Provision
against fluctuation in
Convention of Convention of full Convention of Convention of
the price of investment A
conservatism disclosure materiality consistency
is an example of which
accounting convention
Management
accounting Opening books of Preparation of financial Control of business
None of these C
concentrates account statements activities
on_____________
Which is not a feature Business and owner are Personal affairs of the Business should not be This concept is
of separate entity treated as separate owner should not be dissolved in the near followed in all types of C
concept? entities considered future business organizations
This concept assumes
This concept provides This concept refuses that the business will
This concept discusses
Going concern may be the basis for the allocation of cost on operate for a long
the issue of the D
defined best as: formation of the different accounting period of time and will
realization of profit.
accounting equation. periods. not be dissolved in near
future.
The revenues of a The comparison of
This concept also Revenues should only
Matching concept does particular period must incomes and expenses
required allocation of be recorded if there is
not include one of the match with the of a period gives the net C
cost on different reasonable certainty
following: expenses of that profit or loss for that,
accounting periods. about its realization.
period. particular period.
Accounting
Depreciation Conservatism Full disclosure
conventions do not Consistency convention A
conventions convention convention
include:
This concept stresses This concept explains
This concept describes
that only those that the comparison of
Realization Concept This concept requires the problems that may
revenues should be incomes and expenses
does not include one of proper care while arise in the calculation D
recorded if there is of a particular period
the following features: calculating revenue. of incomes and
reasonable certainty can give net result of
expenses.
about its realization. that period.
According to
consistency convention
Consistent  Variable  Flexible Factual A
accounting principles
should be:
Full disclosure of all
Matching of incomes That business will not
Disclosure convention material facts which That when should profit
and expenses of a be dissolved in the near A
requires: can affect the financial be realized.
particular period. future.
statement.
The practice of Convention of Money measurement Convention of Convention of D
appending notes consistency concept conservatism disclosure
regarding contingent
liabilities in accounting
statements is in
pursuance to:
Business enterprise is
separate from its owner Money measurement
Matching concept Entity concept Dual aspect
concept C
according to _____ concept
concept
The policy of anticipate
no profit and provide
for all possible losses Consistency Disclosure Conservatism Matching C
arise due to
the
concept of _____
If the Market value of
closing Inventory is
less than its cost price, Marketable value Cost Price Selling Price None of these A
inventory will
he shown
at ____
Historical cost concept
requires the valuation Original cost Replacement value Net realizable value Market value A
of an asset at
The comparison of
financial statement of
one year with that of
Going concern Accrual Consistency Materiality C
another is possible only
when ----------------
concept is followed
Which of the following
is not the main Systematic recording of Ascertaining profit or Ascertainment of Solving tax disputes
D
objective of transactions loss financial position with tax authorities
accounting?
The rule debit all
expenses and losses
Personal account Real account Nominal accounts All C
and credit all income
and gains relates to
Expenses should be
Matching concept Assets = capital + Transactions recorded Anticipate no profit but
matched with the D
means liabilities at accrual concept recognize all losses
revenue of the period
For every debit there
Money measurement
will be an equal credit Matching concept cost concept Dual aspect concept D
concept
according to
Cost of goods sold + Cost of goods sold - Gross profit- Cost of
Sales are equal to: None of the above A
gross profit gross profit goods sold
An accounting that
deals with the
accounting and
Management
reporting of Financial accounting Cost accounting Real Accounting B
accounting
information to
management regarding
the detail information is
The primary objective Provide management
Recording the
of management Prepare final a/c complete and true None of these B
transactions
accounting is information
Identify which is an Nominal account- debit Real account- credit Nominal account- credit Personal account- debit
B
incorrect rule all expenses & losses what comes in all incomes & gains the receiver
Sales – Gross Profit =
Cost of goods sold Net sales Gross Sales Liabilities A
________
Which of the following
Outstanding salaries
is not a nominal Salaries account Interest paid Commission received A
Account
Account?
Small items like,
pencils, pens, files, etc.
are written off within a Materiality Consistency Conservatism Realisation A
year according
to _
concept.
Human resources will Accrual Going concern Money measurement None C
not appear in the concept
balance sheet
according to ______
concept
Consistency with All companies in the Accounting methods &
Any accounting method
reference to application same Industry should Income & assets have procedures shall be
can be followed as per C
of accounting use identical not been overstated followed uniform basis
convenience
procedures means accounting procedures year after year
Accounting does not
record non-financial Money measurement
Accrual Going concern Cost Concept C
transactions because concept
of
Which concept requires
that those transactions
which can be
Money measurement
expressed in terms of Business entity concept Dual aspect Matching Concept C
concept
money should be
recorded in the books
of account?
According to which
concept proprietor
(owner) of the business Periodicity Concept Entity Concept Materiality concept Consistency B
is treated as a creditor
of the business
The revenue
recognition principle
dictates that all types At the end of
Cash is received When they are earned When interest is paid C
of incomes should be accounting period
recorded or recognized
when
Every transaction has
two fold effects
according to Business entity concept Dual aspect Periodicity Concept Matching Concept B
_______________
concept
Which
principle/guideline
justifies a company
violating an accounting Materiality Consistency Conservatism Full disclosure concept A
principle because the
amounts are
immaterial?
Accountants might
recognize losses but
Materiality Consistency Conservatism Full disclosure concept C
not gains in certain
situations.
Every Debit has
equivalent Credit is rule Business entity concept Dual aspect Periodicity Concept Matching Concept B
of which concept
Accounting only
Non Monetory Both Monetory and Non
records which kind of Monetory transactions In kind A
transactions Monetory
transactions
Owner is different and
Entity is different as per Business entity concept Dual aspect Periodicity Concept Matching Concept A
which concept
...................... concept
assumes that business
enterprise and its
Business entity concept Dual aspect Periodicity Concept Matching Concept A
owners are two
separate independent
entities.
The goods drawn from
business for owner’s
Drawings Capital Assets Liabilities A
personal use are
called.......................
Going concern concept for a definite time for a definite time None All B
states that every period period
business firm will
continue to carry on its
activities ………..
Correc
Questions Option A Option B Option C Option D
Answe
All of the following are Profit + Fixed cost + Profit + Fixed cost = Contribution margin – Profit + Fixed cost =
D
true except Variable cost = Sales Sales – Variable cost Fixed cost = Profit Sales + Variable cost
A company has
budgeted sales of Rs.
48,000, breakeven
sales of Rs. 35,000 and
actual sales of Rs. 8000 13000 5000 21000 B
40,000 during a
particular period. What
will be the margin of
safety?
Which of the following
Replacement cost Sunk cost Marginal cost Standard cost B
is not a relevant cost?
Costs that change in
response to alternative
Relevant cost Differential costs Target costs Sunk costs B
courses of action are
called
The cost of obsolete
inventory acquired
several years ago, to be
Uncontrollable cost Sunk cost Avoidable cost Opportunity cost B
considered in a keep
vs. disposal decision is
an example of
Mr. Deepak is running
his own personal
Financial services
business. He has been
offered a job for a Sunk Cost Opportunity cost Avoidable cost Historical cost B
salary of Rs. 45,000 per
month which he does
not availed. Rs. 45,000
will be considered as
Assuming no returns
outwards or carriage Opening stock Less Closing stock plus Purchases plus closing
inwards, the cost of purchases plus closing purchases plus opening Sales less gross profit stock plus opening C
goods sold will be stock stock stock plus direct labor
equal to
A segment of the
business that
Profit Center Cost Center Cost driver All of these A
generates both revenue
and cost is called
Which of the following
is not a function of Cost ascertainment Planning and control Decision-making External reporting D
Cost Accounting ?
Which of the following
is not a method of Marginal costing Job costing Process costing Operating costing A
costing ?
Which of the following
is not a technique of Absorption costing Standard costing Multiple costing Marginal costing C
costing ?
All costs incurred in
The material cost of a The cost of operating a
Prime cost is The total of direct costs manufacturing a A
product department
product
Total costs incurred in
Works cost plus Aggregate of works,
production, Prime costs plus
Cost of sales is administration administration and A
administration and marketing overheads
overheads marketing overheads
marketing functions
 Variable costs are   Vary per unit of output   Be constant in total Vary, in total, from
Be constant per unit of
conventionally deemed as production volume when production period to period when A
output
to changes volume changes production is constant
Fixed costs Vary in total as Remain constant in Remain constant per Vary in total when B
production volume total but vary per unit unit as production production volume
 changes within a given when production volume changes does not change
range volume changes
Costs which do not
fluctuate as the level of
Relevant costs Opportunity costs Mixed costs Fixed costs D
activity changes within
a given range are
Which of the following
Maintenance expenses Salary of the works
is not an example of Telephone expenses Depreciation expenses C
of machines manager
semi-variable costs ?
Provide information to
The main purpose of Help in inventory Aid in the fixation of
Maximize profits management for C
cost accounting is to valuation selling price
decision making
Units sold=Opening Units Sold = Units
  Units sold = Sales + Units sold = Sales -
finished goods units + produced + Closing
  Which of the following Average units of Average units of
Units produced – finished goods units - A
is correct? finished goods finished goods
Closing finished goods Opening finished goods
inventory inventory
units units
Which of the following Rent of factory +
  Rent of factory + Head Rent of factory + Head office rent +
items of expense are to factory lighting bill +
office rent + salaries to factory lighting bill + Factory property tax + C
be add in Factory Factory employees
factory watchman Directors salaries Factory small tools
overhead cost ? salaries
A production or service
A unit of product or
An amount of location, function,   A centre for which an
service in relation to
A cost centre is expenditure attributable activity or item of individual budget is C
which costs are
to an activity equipment for which drawn up
ascertained
costs are accumulated
In furniture
manufacturing use of
nail, pins, glue, and
polish which use to Direct material cost Indirect material cost FOH cost Prime cost B
increase its esteem
value that cost is
treated as
Direct materials, direct
Direct materials, direct
Manufacturing costs labor, and Production and Production and
labor, marketing and A
typically consist of manufacturing shipping costs. marketing costs.
administrative costs.
overhead.
Cost of goods Cost of goods Cost of goods Cost of goods
manufactured Add manufactured Less manufactured Less manufactured Add
Cost of goods sold can Opening finished goods Opening finished goods Opening finished goods Opening finished goods
A
be calculated as follow inventory Less Closing inventory Less Closing inventory Add Closing inventory Add Closing
finished goods finished goods finished goods finished goods
inventory inventory inventory inventory
Which one of the
following is the Absorption costing Decision making Marginal costing
Contribution approach B
Traditional approach approach approach approach
for costing?
The salary of factory
Direct labor cost Indirect labor cost Conversion cost Prime cost B
clerk is treated as
Cost of goods sold=
opening stock+ net
purchases+ expenses
Opening stock Net purchases Expenses on Purchases Sales D
on Purchases – sales
Which part of formula
is wrong?
Difference of cost,
which occurs while
considering dependent cost independent cost incremental cost differential cost D
alternatives can be
classified as
Kind of costs that has
been occurred in past unrecorded costs recorded costs sunk costs bunked costs C
are also known as
To management,
Advantages of cost
Only to workers Only to government Only to consumers workers, consumers D
accounting accrue:
and government
………………..is a person or Cost unit Cost centre Cost object Cost estimation B
item for which cost
may be ascertained
………………cost refers to
those cost which have
already been incurred
Opportunity cost Sunk Cost Incremental cost Decremental cost B
and cannot be altered
by any decision in the
future.
Salary paid to factory
Prime cost Factory overhead Selling overhead Office overhead B
manager is an item of:
Excluded from Cost
Donations is an item of: Factory overhead Selling overhead Office overhead A
sheet
Provision for Bad Debt Excluded from Cost
Factory overhead Selling overhead Office overhead A
is an iterm of: sheet
Cost of goods sold + Cost of goods sold - Gross profit- Cost of
Sales are equal to: None A
gross profit gross profit goods sold
Carriage outward is
Prime cost Factory overhead Selling overhead Office overhead C
charged to
Direct material costs
are added into direct
discuss costs prime costs resale cost merchandise costs B
manufacturing costs to
calculate
Cost accounting aims
at ascertain ………………. Cost Net profit Gross profit Selling price A
of product
A company's telephone
bill consisting of a
Rs.200 monthly base
amount, plus long Variable cost Committed fixed cost Direct cost Semi variable cost D
distance charges,
would be classified as
a:
The work of factory
employees that can be
physically associated Manufacturing
Indirect materials Indirect labour Direct labour D
with converting raw overhead
material into finished
goods is classified as
A manufacturing
process requires small
amounts of glue. The A prime cost An indirect material A direct material Miscellaneous expense B
glue used in the
process is classified as
Lubricants, used
regularly in a
Miscellaneous expense Direct materials Indirect materials Immaterial items C
production process, are
classified as
Because of automation,
which component of Manufacturing
Direct labour Direct materials Advertising A
product cost is overhead
declining?
Aggregate of direct
Direct material costs Direct Wages Direct Expenses Prime Cost D
costs is known as:
Aggregate of prime
cost and Factory Work on cost Work Cost Cost of Production Direct Cost B
overhead is known as:
Aggregate of cost of
goods sold and selling
and distribution Total Cost Office Cost Cost of sales Selling overhead A
overheads is known as
:
Conversion cost
Raw material, Finished Finished goods,
includes cost of Raw material, WIP WIP, Finished goods B
goods Saleable goods
converting……….into……..
Calculate the prime Rs. 1,80,000 Rs. 2,00,000 Rs. 1,70,000 Rs. 2,10,000 C
cost from the following
information: Direct
material purchased: Rs.
1,00,000 Direct material
consumed: Rs. 90,000
Direct labour: Rs.
60,000 Direct
expenses: Rs. 20,000
Manufacturing
overheads: Rs. 30,000
relevant for decision Not relevant for cost to be incurred in
Sunk costs are: future costs B
making decision making future
Marginal costs is taken Prime Cost plus all Prime Cost minus all
Variable overheads None of the above A
as equal to variable overheads variable overheads
If total cost of 100
units is Rs 5000 and
those of 101 units is Rs Marginal cost Prime cost  All variable overheads None of the above A
5030 then increase of
Rs 30 in total cost is
Direct material + Direct
Marginal cost is Prime cost + All Total costs – All fixed
labor + Direct Expenses All of the above A
computed as Variable overheads overheads
+ All variable overheads
Marginal costing is also
Direct costing Variable costing Both a and b None of the above C
known as
While computation of Total marginal cost is Total marginal cost is
Fixed cost is added to
profit in marginal deducted from total added to total sales None of the above A
contribution
costing sales revenues revenues
What is the term
‘Marginal Costing ‘also Variable Costing Process Costing Uniform Costing StandardCosting A
known as?
Marginal costing is a
__________ and not the Process Technique System Method B
method of costing
______ Costing
considers all those
manufacturing costs
Standard Uniform Process Costing Marginal D
which vary directly with
the volume of output as
product costs
Marginal cost
necessitates _______ of
Combination Classification Codification Correctness B
costs into fixed and
variable.
Marginal costing is a
technique of recording Costs Variance Loss Transactions A
as well as reporting
In marginal Costing
Stocks of finished
goods and work in- Variable Fixed Historical Future cost A
progress are valued at
their ______ cost only
Profit volume analysis
is facilitated by the use
Margin of safety break-even charts Contribution Sales B
of _______ and profit
volume graphs.
The cost that varies on
the basis of volume of
Semi-Variable Fixed Variable None of the above C
output are known as
______ costs.
Variable cost is defined
as a cost which in
aggregate tends to vary
Direct Average Reverse Indirect A
in____ proportion to
changes in the volume
of output or turnover
_____costs are Fixed Variable Semi-variable None of the above B
classified into direct
variable cost and
indirect variable costs.
The cost which remains
fixed in total
irrespective of changes Fixed Variable Semi-variable None of the above A
in the volume of output
is known as _____Cost
_____ costs are
Fixed Variable Semi-variable None of the above A
uncontrollable in nature
______costs are
Fixed Variable Semi-variable None of the above B
controllable in nature.
Variable costs are
______charged to directly indirectly on average inversly A
production
Total cost - variable
Fixed Variable Semi-variable None of the above A
cost = _____ cost
_____ cost possess the
characteristics of both
Marginal Semi variable Fixed Standard B
fixed and variable
costs.
A _______ is a graphical
approach to the study
Profit volume ratio Break even chart Margin of safety None of the above B
of relationship of cost,
revenue and profit.
Break even chart is a
graphical
demonstration of _____ Incremental value
Break-even Analysis Cost-profit analysis None of the above A
used to study the analysis
relationship of cost-
revenue and profit.
A low _____ indicates
that with the decrease
in sales below the
Profit volume ratio Margin of safety Margin of safety Marginal A
break-even point,
profits will decrease
substantially
Break-even point
represents the level of
activity at which sales more than equal to not equal to less than B
revenue is ____total
cost.
The excess of normal
sales over sales at
contribution profit volume ratio Break even point margin of safety D
break even point is
termed as ______
______ is an important
indicator of the
strength or weakness Break even point Break even analysis contribution Margin of safety D
of a business
enterprise.
A ____ margin of safety
indicates the high average low None of the above A
soundness of business.
_______ is the difference
between sales value
Margin of safety Break even point Profit volume ratio Contribution D
and the marginal cost
of sales.
Contribution represents
the difference between
purchases sales production manufacturing B
____ and variable cost
of sales.
The ratio that sales cost break even point profit volume ratio Margin of safety C
expresses the
relationship of
contribution to sales
volume is known
as_____
Office staff salary is an
variable semi-variable fixed None of the above C
example of _____ cost.
A key factor is defined
as that factor which
sales production research None of the above B
limits the desired
volume of ______
If the selling price and
the variable cost per
unit both decrease at
Contribution margin per Contribution margin per Contribution margin per
10% and fixed costs do
unit and the unit decreases and the unit increases and the
not change, what is the
contribution margin Personal contribution margin contribution margin C
effect on the
ratio both remains ratio remains ratio remains
contribution margin per
unchanged unchanged unchanged
unit and the
contribution margin
ratio?
If the selling price and
the variable cost per
unit both decrease at
Contribution margin per Contribution margin per Contribution margin per
10% and fixed costs do Contribution margin per
unit and the unit decreases and the unit increases and the
not change, what is the unit and the
contribution margin contribution margin contribution margin C
effect on the contribution margin
ratio both remains ratio remains ratio remains
contribution margin per ratio both increases
unchanged unchanged unchanged
unit and the
contribution margin
ratio?
Which of the following
Maintenance expenses Salary of the works
is not an example of Telephone expenses Depreciation expenses C
of machines manager
semi-variable costs ?
While transporting
petrol, a little quantity
It cannot be abnormal
will be evaporated; Normal Loss Abnormal Loss It is incremental loss A
loss
such kind of loss is
termed as
The cost of electricity
bill of the factory is   Fixed cost Variable cost   Step cost Semi variable cost D
treated as
One which cannot be
One which varies in
One which tends to vary One which changes estimated with any
A variable cost is? proportion to the level B
with the level of activity. over time. great degree of
of fixed cost incurred.
accuracy.
  The amount of profit
The difference between
The term contribution‘ The actual amount of The budgeted profit per which goes towards
sales revenue and D
refers to? profit made per unit. unit. meeting the overheads
variable costs per unit.
of the business.
  The level of activity at The level of activity at
The break-even point is which the business which the business The fixed costs are The variable cost per
B
that at which operates most makes neither a profit lowest. unit is minimized.
economically. nor a loss.
Which of the following
It assumes that fixed It assumes that other   It assumes that costs
statements regarding It is a useful long-term
costs remain fixed over costs vary in proportion can be classified as A
marginal costing is planning technique.
relevant activity ranges. to activity. variable or fixed.
incorrect?
A firm, which makes 0.2 0.35 0.54 0.56999999999999995 B
yachts, has fixed costs
of Rs.260,000 per
month. The product
sells for Rs.35,000 per
boat, and the variable
costs of production are
Rs.15,000 per boat. The
boatyard can
manufacture 20 boats
each month. What is
the firms‘ margin of
safety at the moment?
Radha sells a product
for Rs. 6.25. The
variable costs are
Rs.3.75.Radha's break- 87500 35000 131250 104750 A
even units are 35,000.
What is the amount of
fixed costs?
The excess of budgeted The excess of budgeted
The excess of budgeted The excess of budgeted
The margin of safety or actual sales over or actual sales over
sales over the break- net income over actual C
can be defined as budgeted or actual budgeted or actual
even volume of sales net income
variable expenses fixed expenses
The contribution
margin ratio is
  (Sales - Fixed (Sales - Variable (Sales - Total None of the given
calculated by using B
Expenses)/Sales Expenses)/Sales Expenses)/Sales options
which one of the given
formula?
The break-even point in Fixed expenses and the Variable expenses and (Variable expenses and
Fixed expenses and the
units is calculated contribution margin the contribution margin the unit contribution C
unit contribution margin
using ratio ratio margin
Marginal costing is also
  Indirect costing Direct costing Variable costing Both 3 and 4 D
known as
Which of the following Sales = Contribution Sales = Contribution Sales = Variable Sales = Variable
represents a CVP margin (Rs.) + Fixed margin ratio + Fixed expenses + Fixed expenses –Fixed C
equation? expenses + Profits expenses + Profits expenses + profits expenses + profits
The capacity which is
based on the long-term
Theoretical capacity Operating capacity Normal capacity Derated capacity C
average of sales
expectancy is known as
XYZ Ltd. Has fixed
costs of Rs.60,000 p.a..
It manufactures a
single product, which it
sells for Rs.20 per unit. 1800 3000 5000 7500 D
Its contribution to sales
ratio is 40%. XYZ Ltd‘s
break-even point in
units is
Which of the following
is not a relevant cost Loss of contribution to
Variable cost of making General fixed cost Purchase price B
information in a make make the product
or buy decision ?
The fixed-variable cost
classification has a
Flexible Budget Master Budget Cash Budget Capital Budget A
special significance in
preparation of
When P/V ratio is 40%
and sales value is Rs.
4000 6000 10000 8000 B
10,000, the variable
cost will be
A firm sells bags for Rs.
14 each. The variable
cost for each unit is Rs.
6 12 14 8 A
8. What is the
contribution margin per
unit?
Shows entrepreneurs‘
Which of the following Is the point at which a
Occurs where its minimum level of Total contribution
is NOT true? A small company neither earns
revenue equals its activity required to keep margin equals total D
company's breakeven a profit nor incurs a
expenses the company in variable expenses
point loss
operation
Volvo Co. sells a single 15,077 units 18,200 units 539 units 1,000 units D
product for Rs. 28 per
unit. If variable costs
are 65% of sales and
fixed costs total Rs.
9,800, the break-even
point will be
What would be the
margin of safety ratio
based on the following
information? Sales
0.25 0.33 0.66 0.75 B
price=Rs. 100 per
unit,Variable cost=Rs.
25 per unit,Fixed
cost=Rs. 50 per unit
Radha sells a product
for Rs. 6.25. The
variable costs are
Rs.3.75.Radha's break- 87500 35000 131250 104750 A
even units are 35,000.
What is the amount of
fixed costs?
When P/V ratio is 40%
and sales value is Rs.
4000 6000 10000 8000 B
10,000, the variable
cost will be
A firm sells bags for Rs.
14 each. The variable
cost for each unit is Rs.
6 12 14 8 A
8. What is the
contribution margin per
unit?
Samarth Co. sells a
single product for Rs.
28 per unit. If variable
costs are 65% of sales 15,077 units 18,200 units 539 units 1,000 units D
and fixed costs total
Rs. 9,800, the break-
even point will be
Shows entrepreneurs‘
Which of the following Is the point at which a
Occurs where its minimum level of Total contribution
is NOT true? A small company neither earns
revenue equals its activity required to keep margin equals total D
company's breakeven a profit nor incurs a
expenses the company in variable expenses
point loss
operation
Calculate BEP Turnover
Rs 20000
Profits Rs
2000
Direct Material Rs 15000 Rs 20000 Rs 32000 Rs 25000 A
and Direct Labour Rs
12000
A company has
budgeted sales of Rs.
48,000, breakeven
sales of Rs. 35,000 and
actual sales of Rs. 8000 13000 5000 21000 C
40,000 during a
particular period. What
will be the margin of
safety?
Which of the following
Replacement cost Sunk cost Marginal cost Standard cost B
is not a relevant cost?
Costs that change in
response to alternative
Relevant cost Differential costs Target costs Sunk costs B
courses of action are
called
A company maintains a
margin of safety of 25%
on its current sales and
earns a profit of Rs.30
lakhs per annum. If the 200 lakhs 300 lakhs 325 lakhs None of the above B
company has a profit
volume (P/V) ratio of
40%, its current sales
amount to
A Limited has fixed 7500 8000 3000 1500 A
costs of Rs. 6,00,000
per annum. It
manufactures a single
product which it sells
for 200 per unit. Its
contribution to sales
ratio is 40%. A Limited‘s
break-even in units is
In two consecutive
periods, sales and
profit were Rs. 1,60,000
and Rs. 8,000
respectively in the first
period and Rs. 1,80,000
and Rs. 14,000 0.2 0.25 0.3 0.4 C
respectively during the
second period. If there
is no change in fixed
cost between the two
periods then P-V ratio
must be
Alpha Ltd.
Manufactures product
xyz for last 5 years. The
company maintains a
margin of safety of
24.00 laks 12.50 lakh 3.00 lakh 15 Lac C
37.5% with overall
contribution to sales
ratio of 40%. If the fixed
cost is Rs. 5 lakh, the
profit of the company is
Selling price per unit is
Rs. 15, total variable
cost per unit is Rs.9,
and total fixed costs
3,000 units 1,000 units 1,667 units 2,500 units D
are Rs. 15,000 of
Reliable co.‖ What is
the breakeven point in
units for Reliable co.‖?
While constructing a
Break even chart, the
gap between sales line
Fixed cost Break even point Contribution margin Variable cost C
and variable cost line
shows which of the
following?
The little Rock
Company shows Break
even sales is Rs. 40,
1.7999999999999999E- Required more data to
500 and Budgeted 0.19 0.81 A
2 calculate
Sales is ` 50,000.
Identify the Margin of
safety ratio?
Wages paid to a labour
who is engaged in
Direct Cost Indirect Cost Sunk Cost Imputed Cost A
production activities
can be termed as
Prime Cost plus
variable overheads is cost of sales production cost total cost marginal cost D
known as
Classification of Cost is
to find out gross profit to find out net profit to identify cost to identify efficiency C
useful for
Operating Costing is method of costing Technique of costing norm of costing procedure of costing A
Overhead cost is total
all indirect cost all direct cost indirect and direct cost all specific costs A
of
Operating costing is
job order business contractors sugar industries services industries D
suitable for
Batch costing is useful maximum quantity of minimum quantity of economic batch profit of batches C
to determine output output quantity
Find the value of
purchases if Raw
material consumed Rs.
90,000; Opening and
10000 20000 70000 1,60,000 C
closing stock of raw
material is Rs. 50,000
and Rs. 30,000
respectively.
Opening stock - Total Opening stock + Total
The cost of goods sold Total Purchases - Total Opening stock + Total
Purchases +Closing Purchases – Closing D
is equal to Sales. Purchase.
Stock+ Direct Costs. Stock + Direct Costs.
Which of the following
product cost is Manufacturing
Direct labor Direct material Work in Process A
Included in prime cost overhead
and conversion cost?
Which of the following
Replacement cost Sunk cost Marginal cost Standard cost B
is not a relevant cost?
Costs that change in
response to alternative
Relevant cost Differential costs Target costs Sunk costs B
courses of action are
called
The cost of obsolete
inventory acquired
several years ago, to be
Uncontrollable cost Sunk cost Avoidable cost Opportunity cost B
considered in a keep
vs. disposal decision is
an example of
One of the most
important tools in cost Direct cost Cost Sheet Budget Marginal Costing C
planning is:
 If Cost of opening
finished goodsRs.
2,000 Cost of goods to
be produced Rs. 6,000
Operating expenses Rs. 8000 4000 7000 9000 A
1,000.Which of the
following is the cost of
goods available for
sale?
All of the following are
They affect the future They cause an Relevant cost is a sunk They affect the future
features of a relevant C
cost increment in cost cost cash flows
cost except
Which of the following
is NOT a relevant cost Opportunity costs Relevant benefits Avoidable costs Sunk costs D
to decision making?
Mr. Deepak is running
his own personal
Financial services
business. He has been
offered a job for a Sunk Cost Opportunity cost Avoidable cost Historical cost B
salary of Rs. 45,000 per
month which he does
not availed. Rs. 45,000
will be considered as
Assuming no returns
outwards or carriage Opening stock Less Closing stock plus Purchases plus closing
inwards, the cost of purchases plus closing purchases plus opening Sales less gross profit stock plus opening C
goods sold will be stock stock stock plus direct labor
equal to
The cost that is subject
to actual payment or
Fixed cost Step cost Explicit cost Imputed cost C
will be paid for in future
is called
The components of Direct Material + Direct
Direct Labor + FOH Prime Cost only Prime Cost + FOH D
total factory cost are Labor
A cost center is A unit of production in A location which is Any location or None of these C
relation to which costs responsible for department which
are ascertained controlling direct costs incurs cost ;
Direct material cost
plus direct labour cost Prime cost Conversion cost Product cost All of these A
is called
A segment of the
business that
Profit Center Cost Center Cost driver All of these A
generates both revenue
and cost is called
Which of the following
is not a function of Cost ascertainment Planning and control Decision-making External reporting D
Cost Accounting ?
Which of the following
is not a method of Marginal costing Job costing Process costing Operating costing A
costing ?
Which of the following
is not a technique of Absorption costing Standard costing Multiple costing Marginal costing C
costing ?
The functional
classification of costs
Prime cost Production cost Administration cost Marketing cost A
include the following
except
All costs incurred in
The material cost of a The cost of operating a
Prime cost is The total of direct costs manufacturing a A
product department
product
Total costs incurred in
Works cost plus Aggregate of works,
production, Prime costs plus
Cost of sales is administration administration and A
administration and marketing overheads
overheads marketing overheads
marketing functions
 Variable costs are   Vary per unit of output   Be constant in total Vary, in total, from
Be constant per unit of
conventionally deemed as production volume when production period to period when A
output
to changes volume changes production is constant
Vary in total as Remain constant in
Remain constant per Vary in total when
production volume total but vary per unit
Fixed costs unit as production production volume B
changes within a given when production
volume changes does not change
range volume changes
Costs which do not
fluctuate as the level of
Relevant costs Opportunity costs Mixed costs Fixed costs D
activity changes within
a given range are
Which of the following
Maintenance expenses Salary of the works
is not an example of Telephone expenses Depreciation expenses C
of machines manager
semi-variable costs ?
Provide information to
The main purpose of Help in inventory Aid in the fixation of
Maximize profits management for C
cost accounting is to valuation selling price
decision making
Units sold=Opening Units Sold = Units
  Units sold = Sales + Units sold = Sales -
finished goods units + produced + Closing
  Which of the following Average units of Average units of
Units produced – finished goods units - A
is correct? finished goods finished goods
Closing finished goods Opening finished goods
inventory inventory
units units
Which of the following Rent of factory +
  Rent of factory + Head Rent of factory + Head office rent +
items of expense are to factory lighting bill +
office rent + salaries to factory lighting bill + Factory property tax + C
be add in Factory Factory employees
factory watchman Directors salaries Factory small tools
overhead cost ? salaries
Net Income before
Operating
Interest and tax is also Gross Profit Marginal Income Other Income A
Income/Profit
called
A production or service
A unit of product or
An amount of location, function,   A centre for which an
service in relation to
A cost centre is expenditure attributable activity or item of individual budget is A
which costs are
to an activity equipment for which drawn up
ascertained
costs are accumulated
Factory Over head cost   Factory Rent Property Tax Salaries of Factory Office rent D
includes all except Clerk
are future costs that
effect the current Sunk Cost Standard Cost Relevant Cost Irrelevant Cost C
management decision.
Which of the following
costs is part of the Cost of transporting Wages of factory Depreciation of truck
Cost of indirect
prime cost for raw materials from the workers engaged in used for deliveries to A
production materials
manufacturing suppliers premises machine maintenance customers
company?
Direct material opening
Material available for Total material Material ending
inventory add net Material consumed B
use purchased inventory
purchases is called
In furniture
manufacturing use of
nail, pins, glue, and
polish which use to Direct material cost Indirect material cost FOH cost Prime cost B
increase its esteem
value that cost is
treated as
Direct materials, direct
Direct materials, direct
Manufacturing costs labor, and Production and Production and
labor, marketing and A
typically consist of manufacturing shipping costs. marketing costs.
administrative costs.
overhead.
Fixed costs can be
  Variable costs can be
Which of the following represented by a
represented by a Fixed costs are zero Variable costs are zero
statements regarding straight line starting at
straight line where when production is when production is D
graphs of fixed and the origin and
costs are the same for equal to zero. equal to zero.
variable costs is true? continuing through
each data point.
each data point.
Calculate the amount
of direct labor if: Direct
material = Rs. 15,000; 6429 30000 10500 35000 D
Direct labor = 70% of
prime cost
Provide information to
The main purpose of Help in inventory Aid in the fixation of
Maximize profits. management for C
cost accounting is to valuation selling price
decision making
Cost of goods Cost of goods Cost of goods Cost of goods
manufactured Add manufactured Less manufactured Less manufactured Add
Cost of goods sold can Opening finished goods Opening finished goods Opening finished goods Opening finished goods
A
be calculated as follow inventory Less Closing inventory Less Closing inventory Add Closing inventory Add Closing
finished goods finished goods finished goods finished goods
inventory inventory inventory inventory
Beta company
purchased a machine
worth Rs 200,000 in the
last year. Now that
machine can be use in
  Project cost Sunk cost Opportunity cost Relevant cost D
a new project which
company has received
this year. Now the cost
of that machine is to be
called:
The components of Direct material + Indirect material + Direct material + Direct labor + Indirect
factory overhead are as Indirect material + Indirect labor + Others Indirect expenses + labor + Indirect B
follows Direct expenses indirect cost Indirect labor expenses
If Direct Material = Rs.
12,000; Direct Labor =
Rs. 8000 and other
12000 14000 20000 22000 D
Direct Cost = Rs. 2000
then what will be the
Prime Cost?
The salary of factory
Direct labor cost Indirect labor cost Conversion cost Prime cost B
clerk is treated as
Which one of the Contribution approach Absorption costing Decision making Marginal costing B
following is the approach approach approach
Traditional approach
for costing?
Annual requirement is
7800 units;
consumption per week
is 150 units. Unit price
Rs. 5, order cost Rs. 10
395 units 300 units 250 units 150 units B
per order. Carrying cost
Rs. 1 per unit and lead
time is 3 week, The
Economic order
quantity would be
At the start of the
quarter there were
14,630 workers. 750
employees left during
5.1299999999999998E- 9.2299999999999993E- 9.3200000000000005E- 9.2799999999999994E-
the quarter while 600 D
2 2 2 2
joined the organization
during the same period.
Using the flux method,
the labour turnover was
The cost of obsolete
inventory acquired
several years ago, to be
Uncontrollable cost Sunk cost Avoidable cost Opportunity cost B
considered in a keep
vs. disposal decision is
an example of
If the minimum stock
level and average stock
level of raw material
―A‖ are 4,000 and 8,000 units 11,000 units 10,000 units 9,000 units C
9,000 units respectively,
find out its reorder
quantity.
An average cost is also
Variable cost Unit cost Total cost Fixed cost B
known as
While calculating the Multiplying the required Multiplying the ordered Multiplying the required
Dividing required unit by
EOQ, number of orders units with ordered quantity with cost per units with cost per A
ordered quantity
is calculated by quantity order order
While calculating the
%age of annual required
EOQ, carrying cost is %age of unit cost ; %age of ordering cost Total unit cost A
units
taken as the
The total cost of factory
The term cost The costs that can be The costs that cannot
overhead needs to be None of the given
allocation is described identified with specific be identified with A
distributed among options
as cost centers. specific cost centers.
specific cost centers.
Maximum
consumption-900 units
per week,Minimum
consumption-300 units
4500 units 3900 units 1200 units None of these A
per week,Re-order
period-5 week. Based
on this data Re-order
level is
The time lag between
indenting and receiving Lead time Idle time Stock out time None of these A
material is called
In case of rise in price
levels, the most
suitable method for LIFO FIFO Simple average Weighted average A
valuing materials
issued is
The FIFO assumption
Overstates profit and Overstates profit and Understates profit and
of cost flow when Overstates profit and
understates closing shows closing stock at overstates closing C
applied in a period of closing stock
stock current prices stock
rising prices
Where-----------------is Ordering cost Carrying cost Ordering and carrying Per unit order cost C
equal, that point is cost
called Economic order
quantity.
A store ledger card is Purchase requisition
Stock ledger Bin card Material card B
similar to the card
   Maximum
Average consumption x Normal consumption x Minimum consumption
The danger Level can consumption x Lead
Lead time to get urgent Lead time to get urgent x Lead time to get A
be calculated? time to get urgent
supplies supplies urgent supplies
supplies
   (Maximum
  [(Maximum
Which of the following Reorder level – consumption x Lead
consumption -
is correct for maximum (Minimum consumption time) – (Minimum All of the given options A
Minimum consumption)
level? x Lead time) + EOQ consumption x Lead
Lead time]+ EOQ
time) + EOQ
The Process of cost Cost unit gather Whole items of cost Common costs are
apportionment is Cost may be controlled overheads as they pass can be charged to cost shared among cost D
carried out so that through cost centers centers centers
Which of the following
is NOT an assumption   Annual demand is Quantity discounts are
Ordering cost is known Carrying cost is known D
of the basic economic- known available
order quantity model?
The first in, first out
The issue price is The goods are always
method of pricing raw   The issue price is The issue price is
recalculated each time issued strictly in the
material issues, always at the latest always at the earliest D
new deliveries are physical order in which
exhibits which one of price. price.
made into stock. they are received.
the following features?
The FIFO inventory
costing method (when
using under perpetual
inventory system)
First to be allocated to Last to be allocated to Last to be allocated to First to be allocated to
assumes that the cost D
the ending inventory the cost of goods sold the ending inventory the cost of good sold
of the earliest units
purchased is allocated
in which of the
following ways?
Which of the following
is a factor that should Economic Order
Average consumption Emergency lead time Danger level B
be taken into account Quantity
for fixing re-order level?
National chains of tyre
fitters stock a popular
tyre for which the
following information is
available: Average
usage = 140 tyres per
day,Minimum usage =
90 tyres per day,
2800 3000 4900 5800 C
Maximum usage = 175
tyres per day, Lead time
= 10 to 16 days,Re-
order quantity = 3000
tyres,Based on the
above data calculate
the maximum level of
stock possible
The method assumes
that the goods received
most recently in the
stores or produced Weighted average Most recent price
FIFO LIFO D
recently are the first method method
ones to be delivered to
the requisitioning
department.
In a perpetual inventory Forecasts of future Recording the cost of Recording Sales Forecasts of future B
system, an inventory sale. goods sold. Revenue. operating results.
flow assumption (i.e.
LIFO or FIFO) is used
primarily for
determining costs
which are used in
Which of the following
inventory valuation
Weighted average
methods shows higher FIFO method LIFO method Simple average method A
method
profits during the
period of rising prices?
Which of the following
bases would be most
Kilowatt capacity of
appropriate to Cubic capacity of
Number of outlet points Amount metered out machines in B
apportion the cost of premises
department
electric power to
factory departments?
A method of dealing
with overheads
involves spreading
common costs over Overhead
Overhead absorption Overhead identification Overhead analysis B
cost centres on the apportionment
basis of benefit
received. This is known
as :
The process of cost Cost units gather Whole items of cost Common costs are
Costs may be
apportionment is overheads as they pass can be charged to cost shared among cost D
controlled
carried out so that through cost centres centres centres
A firm requires 16,000
nos. of a certain
component, which is
buys at Rs. 60 each.
The cost of placing an
order and following it
up is Rs. 120 and the 1000 900 800 600 C
annual storage charges
works out to 10% of the
cost of the item. To get
maximum benefit the
firm should place order
for
About 50 items are
required every day for a
machine. A fixed cost
of Rs. 50 per order is
incurred for placing an
order. The inventory 1,200 items 1,400 items 1,600 items 1,800 items C
carrying cost per item
amounts to Rs. 0.02
per day. The lead
period is 32 days.
Compute reorder level.
Danger level has no
Generally, the danger
Below Above Equal relation to minimum B
level of stock is fixed
level
When prices are rising
over time, which of the
following inventory
FIFO LIFO Weighted Average Cannot be determined B
costing methods will
result in the lowest
gross margin/profits?
Ordering cost is equal Ordering cost is higher Ordering cost is lesser
EOQ is a point where Total cost is maximum A
to carrying cost than carrying cost than the carrying cost
All of the following are Profit + Fixed cost + Profit + Fixed cost = Contribution margin – Profit + Fixed cost =
D
true except Variable cost = Sales Sales – Variable cost Fixed cost = Profit Sales + Variable cost
A company has 8000 13000 5000 21000 C
budgeted sales of Rs.
48,000, breakeven
sales of Rs. 35,000 and
actual sales of Rs.
40,000 during a
particular period. What
will be the margin of
safety?
Which of the following
Replacement cost Sunk cost Marginal cost Standard cost B
is not a relevant cost?
Costs that change in
response to alternative
Relevant cost Differential costs Target costs Sunk costs B
courses of action are
called
The cost of obsolete
inventory acquired
several years ago, to be
Uncontrollable cost Sunk cost Avoidable cost Opportunity cost B
considered in a keep
vs. disposal decision is
an example of
A company maintains a
margin of safety of 25%
on its current sales and
earns a profit of Rs.30
lakhs per annum. If the 200 lakhs 300 lakhs 325 lakhs None of the above B
company has a profit
volume (P/V) ratio of
40%, its current sales
amount to
A Limited has fixed
costs of Rs. 6,00,000
per annum. It
manufactures a single
product which it sells 7500 8000 3000 1500 A
for 200 per unit. Its
contribution to sales
ratio is 40%. A Limited‘s
break-even in units is
In two consecutive
periods, sales and
profit were Rs. 1,60,000
and Rs. 8,000
respectively in the first
period and Rs. 1,80,000
and Rs. 14,000 0.2 0.25 0.3 0.4 C
respectively during the
second period. If there
is no change in fixed
cost between the two
periods then P-V ratio
must be
Alpha Ltd.
Manufactures product
xyz for last 5 years. The
company maintains a
margin of safety of
24.00 laks 12.50 lakh 3.00 lakh 15 Lac C
37.5% with overall
contribution to sales
ratio of 40%. If the fixed
cost is Rs. 5 lakh, the
profit of the company is
All of the following are
They affect the future They cause an Relevant cost is a sunk They affect the future
features of a relevant C
cost increment in cost cost cash flows
cost except
In decision making all
costs already incurred
Ignored Considered Partially ignored Partially considered A
in past should always
be
What will be the impact
Per unit cost will Per unit cost will Per unit cost remain Normal loss has no
of normal loss on the A
increase decrease unchanged relation to unit cost
overall per unit cost ?
An average cost is also
Variable cost Unit cost Total cost Fixed cost B
known as
Selling price per unit is 3,000 units 1,000 units 1,667 units 2,500 units D
Rs. 15, total variable
cost per unit is Rs.9,
and total fixed costs
are Rs. 15,000 of
Reliable co.‖ What is
the breakeven point in
units for Reliable co.‖?
While constructing a
Break even chart, the
gap between sales line
Fixed cost Break even point Contribution margin Variable cost C
and variable cost line
shows which of the
following?
Which of the following
is NOT a relevant cost Opportunity costs Relevant benefits Avoidable costs Sunk costs D
to decision making?
The little Rock
Company shows Break
even sales is Rs. 40,
1.7999999999999999E- Required more data to
500 and Budgeted 0.19 0.81 A
2 calculate
Sales is ` 50,000.
Identify the Margin of
safety ratio?
If the selling price and
the variable cost per
unit both decrease at
Contribution margin per Contribution margin per Contribution margin per
10% and fixed costs do Contribution margin per
unit and the unit decreases and the unit increases and the
not change, what is the unit and the
contribution margin contribution margin contribution margin C
effect on the contribution margin
ratio both remains ratio remains ratio remains
contribution margin per ratio both increases
unchanged unchanged unchanged
unit and the
contribution margin
ratio?
Which of the following
Maintenance expenses Salary of the works
is not an example of Telephone expenses Depreciation expenses C
of machines manager
semi-variable costs ?
While transporting
petrol, a little quantity
It cannot be abnormal
will be evaporated; Normal Loss Abnormal Loss It is incremental loss A
loss
such kind of loss is
termed as
The cost of electricity
bill of the factory is   Fixed cost Variable cost   Step cost Semi variable cost D
treated as
One which cannot be
One which varies in
One which tends to vary One which changes estimated with any
A variable cost is? proportion to the level B
with the level of activity. over time. great degree of
of fixed cost incurred.
accuracy.
  The amount of profit
The difference between
The term contribution‘ The actual amount of The budgeted profit per which goes towards
sales revenue and D
refers to? profit made per unit. unit. meeting the overheads
variable costs per unit.
of the business.
  The level of activity at The level of activity at
The break-even point is which the business which the business The fixed costs are The variable cost per
B
that at which operates most makes neither a profit lowest. unit is minimized.
economically. nor a loss.
Which of the following
It assumes that fixed It assumes that other   It assumes that costs
statements regarding It is a useful long-term
costs remain fixed over costs vary in proportion can be classified as A
marginal costing is planning technique.
relevant activity ranges. to activity. variable or fixed.
incorrect?
A firm, which makes 0.2 0.35 0.54 0.56999999999999995 B
yachts, has fixed costs
of Rs.260,000 per
month. The product
sells for Rs.35,000 per
boat, and the variable
costs of production are
Rs.15,000 per boat. The
boatyard can
manufacture 20 boats
each month. What is
the firms‘ margin of
safety at the moment?
Radha sells a product
for Rs. 6.25. The
variable costs are
Rs.3.75.Radha's break- 87500 35000 131250 104750 A
even units are 35,000.
What is the amount of
fixed costs?
The excess of budgeted The excess of budgeted
The excess of budgeted The excess of budgeted
The margin of safety or actual sales over or actual sales over
sales over the break- net income over actual C
can be defined as budgeted or actual budgeted or actual
even volume of sales net income
variable expenses fixed expenses
The contribution
margin ratio is
  (Sales - Fixed (Sales - Variable (Sales - Total None of the given
calculated by using B
Expenses)/Sales Expenses)/Sales Expenses)/Sales options
which one of the given
formula?
The break-even point in Fixed expenses and the Variable expenses and (Variable expenses and
Fixed expenses and the
units is calculated contribution margin the contribution margin the unit contribution C
unit contribution margin
using ratio ratio margin
Marginal costing is also
  Indirect costing Direct costing Variable costing Both 3 and 4 D
known as
Which of the following Sales = Contribution Sales = Contribution Sales = Variable Sales = Variable
represents a CVP margin (Rs.) + Fixed margin ratio + Fixed expenses + Fixed expenses –Fixed C
equation? expenses + Profits expenses + Profits expenses + profits expenses + profits
The capacity which is
based on the long-term
Theoretical capacity Operating capacity Normal capacity Derated capacity C
average of sales
expectancy is known as
XYZ Ltd. Has fixed
costs of Rs.60,000 p.a..
It manufactures a
single product, which it
sells for Rs.20 per unit. 1800 3000 5000 7500 D
Its contribution to sales
ratio is 40%. XYZ Ltd‘s
break-even point in
units is
Which of the following
is not a relevant cost Loss of contribution to
Variable cost of making General fixed cost Purchase price B
information in a make make the product
or buy decision ?
The fixed-variable cost
classification has a
Flexible Budget Master Budget Cash Budget Capital Budget A
special significance in
preparation of
When P/V ratio is 40%
and sales value is Rs.
4000 6000 10000 8000 B
10,000, the variable
cost will be
A firm sells bags for Rs.
14 each. The variable
cost for each unit is Rs.
6 12 14 8 A
8. What is the
contribution margin per
unit?
Shows entrepreneurs‘
Which of the following Is the point at which a
Occurs where its minimum level of Total contribution
is NOT true? A small company neither earns
revenue equals its activity required to keep margin equals total D
company's breakeven a profit nor incurs a
expenses the company in variable expenses
point loss
operation
Volvo Co. sells a single 15,077 units 18,200 units 539 units 1,000 units D
product for Rs. 28 per
unit. If variable costs
are 65% of sales and
fixed costs total Rs.
9,800, the break-even
point will be
What would be the
margin of safety ratio
based on the following
information? Sales
0.25 0.33 0.66 0.75 B
price=Rs. 100 per
unit,Variable cost=Rs.
25 per unit,Fixed
cost=Rs. 50 per unit
Sr.No Question Option A Option B

Modern Method of
R M Carter Luco Paciolli
Accounting was introduced by
1

The main objective of To recordallthe business Tomaintain the accounting

accounting is transactins records
2
Consider the following
statements: 1) Accounting
records only monetary
Only 1 is correct Only 2 is correct
transactions 2)Accounting
records both quantitative and
3 qualitative transactions
Outstanding expenses and
Mercantilebasis of
income will be taken into Cash basis of accounting
accounting
4 accounting under -------
The Following system
records only the actual cash
Cash basis Accrual basis
receipts and payments ---------
5-

In Accounts recording is only non financial

only financial tranaction
made of transaction
6
Ascertaining the cost of
Recording of financial
Cost Accounting is releted to goods produced or services
transactions
7 rendered
__________is an individual
who has set up in business on Sole Trader Partner
8 his own.
Two or more individuals join
together to run a business are propritorship partnership
9 called ____________.
___________refers to a
company that is permitted to
offer its securities for sale to the Public Ltd Companies Partnerships
private with the maximum of 50
10 members.
 ___________refers to a
company that is permitted to
offer its securities for sale to the Partnerships Private Limited Companies
general public, typically through
11 a stock exchange.

__________is a legally
constituted organisation whose
Non-Profit Organisation Private Limited Companies
primary motive is to render the
service without any commercial
12 or monetary benefits.

___________involves
recording, classifying and
Management Acconting Financial Accounting
summarizing the business events
and transactions occurred during
13 the particular period of time.
___________helps to discover
the cost of goods produced
Management Acconting Financial Accounting
goods or services rendered by
14 the business.
_________deals with the
processing of financial and cost
Financial Accounting Cost Accounting
accounting data for managerial
15 decision making.
________ is an information
system which provides the
Accounting Banking
useful information for making
16 business decisions.
________refers to a person or a
group of persons who has
Accountant Owner
provided capital for running the
17 business.

Generally, the person who is

Accountant Banker
taking care of all activities in a
18 company is called as a________.
The person who is interested to
invest his/her money in a
company is known as Accountant Banker
potential/prospective
19 __________.
The person who is extending
credit to a company is called creditors debtors
20 _______.
 The person who is responsible
for supplying the accounting creditors Accountant
information to the management
21 is known as________.
___________is a segment which
offers the wide variety of
services to the public like
Private Accounting Managed Accounting
auditing, tax services,
consulting (management
22 advisory) services.
The term ‘________’ refers to
something that must be
cost product
sacrificed to obtain a particular
23 thing.
______ is the technique and
Accounting Costing
24 process of ascertaining costs.
_________ Accounting is the
process of classifying,
recording, allocating and
Management Financial
reporting the various costs
incurred in the operation of an
25 enterprise.
________ Accountancy is the
application of costing and cost
accounting principles methods
and techniques to the science, Management Financial
art and practice of cost control
and ascertainment of
26 profitability.
__________ accounting
provides information about the
Cost Management
composition of total cost of the
27 product or service.
_________ are immensely
benefited by the installation of government Creditors
28 costing system.
__________ is the amount of
expenditure incurred on a given
Cost product
thing and to ascertain the cost of
29 a given thing.
Materials which are present in
the finished product or can be
indirect materials direct materials.
identified in the product are
30 called ______.
 Labour which can be identified
or attributed wholly to a
particular job, product or
process or expended in indirect labour specific labour
converting raw materials into
finished products is called
31 _________.

___________includes all
expenses other than direct
material or direct labour which indirect expenses specific expenses
are specially incurred for a
particular product or process.
32

Materials which do not normally

form part of the finished product indirect materials specific materials
are known as ____________.
33

Labour costs which cannot be

allocated but can be apportioned
to or absorbed by cost units or direct labour indirect labour
cost centers is known as
________________.
34
Expenses other than direct
expenses are known as direct expenses specific expenses
35 ______________.
The items which are directly
related to the product and form
production article
the product are called
36 the_______

_______ cost is the total cost

Production article
incurred from the production.
37

_________ deals with whole

items of cost while
Allocation dispersion
apportionment deals with ‘parts
or portions’ of items of cost.
38

_________ are apportioned on

the basis of direct labour hours Materials Overheads
of different departments.
39
Overheads are distributed on the
basis of ________ worked in labour hours directed hours
40 each department.
 _________ is used as basis to
apportion indirect wages and Indirect Wages Indirect Material
41 general overheads.

________ in each department is

taken as basis to apportion
Number of employees Indirect Material
overheads cost incurred for the
welfare of workers.
42
The ________ by different
departments is taken as basis to
apportion expenses like rent,
light consumet area occupied
property tax, lighting heating
and building maintenance
43 expenses.
The ________ of various
departments is taken as basis to tap-points staple-points
44 apportion lighting expenses.

Service department’s cost is to

be transferred to the production
department by following apportionment management
suitable methods. This is known
as _______________.
45

__________ is derived by
dividing the overhead expenses
incurred during the period by Actual Rate Predetermined Rate
actual quantity or value
produced during the period.
46

__________is determined in
advance of the actual production
and is computed by dividing the
budgeted overheads by the Average Rate Predetermined Rate
budgeted production of units
(or) by its value for the
accounting period.
47
_______is a compromise
between the actual rate and Average Rate Managed Rate
48 predetermined rate.
When a single overhead rate is
computed for the factory as a
Spot Adapted
whole, it is called as single or
49 _______ rate.
 _________ charges are not
related to the machine operation
Standing Hanging
time and they are constant in
50 nature.

_________ expenses are

generally related to the machine
operating time, such expenses as labor Machine
depreciation of machines,
power, fuel, repairs, etc.
51
The administration overhead is
mostly in the nature of direct manual
52 ____________ costs.

______ cost is the amount at

any given volume of output
by which aggregate costs are
Marginal standard
changed if the volume of
output is increased or
decreased by one unit.
53

_______ costing is a method

considers only the variable
cost as cost of production,
standard marginal
leaving out period costs to be
absorbed from the marginal
contribution.
54
_____ costing is the practice
of charging all costs, both
fixed and variable to standard Process
operations, process or
55 products.
Cost-volume-profit analysis
is the analysis of ______ two four
56 variables.
Cost-volume-profit analysis
helps the management in profit productivity
57 ______ planning.
_________ is the difference
between sales and marginal Profit Contribution
58 cost.
A high P/V ratio indicates
productivity efficiency
59 high ___________.
_______ is the ratio of
Manual Ratio
60 contribution to sales. Normal Ratio
 At a/an/the ________ point a
business man neither earns break even MOS
61 any profit nor incurs any loss.
________ is the difference
between actual sales and BEP Margin of safety
62 break even sales.
The angle at which the sales
line crosses the total cost line
exclusion inclusion
is called the ‘Angle of
63 __________’.
Graphical representation of
break-even point (or cost
P/V Chart normal chart
colume-profit) is known as
64 the ____________.
__________ costing is an
extremely valuable technique Marginal absorption
65 with the management.
The __________ costing
technique furnishing all
possible facts relating to a
standard marginal
particular issue which is
under the consideration of
66 management.
In costing ,products
companies use either
marginal standard
_______ costing or marginal
67 costing.
A/an ______ is a plan of
budget statistics
68 action expressed in figures.
__________ refers to the
mechanism of preparing marketing Budgeting
69 budgets.
_______ control is a system
of management and Marginal Standard
70 accounting control.
Budgetary control establishes
divisional and accoutnability authority
departmental_____________.
71
_____ Budgets are usually for
Short period Long period
72 a period of one year.
_______ Budgets are for a
longer period say 5 to 10 Short period Long period
73 years.
 _________Budgets are for a
very short period, say, a
Fixed Static
month or a quarter and are
74 related to current conditions.
A ______ budget is an
estimate of expected sales Fixed Static
75 during the budget period.
_______ budget is an
estimate of quantity of goods
Production Static
that must be produced during
76 the budget period.
The materials budget deals
with only the ______ indirect direct
77 materials.
Factory overheads include
indirect material, indirect
direct current
labour and
78 __________expenses.
________ budget gives an
estimate of receipts and
Fixed Static
payments of cash during the
79 budget period.
___________budget is the
summary budget
incorporating the functional
Master Static
budgets which is finally
approved, adopted and
80 employed.
Fixed budget is also called
Master static
81 __________ budget.
Flexible budget is also called
Master static
82 __________ budget.
Option C Option D Answers

J R Batilbai M S Gosav B

Toascertain
analyse and
To know the amount due
interpretthe
from customer and due to D
result of
suppliers
business
operation

Both are correct Both are wrong A

double entry
Single entry System B
system

Single entry
Mercantile basis A
system.

personal
financial & non financial
transactions of A
transactions
the proprietors
Management information
Non of the above B
systems

Creditor Debtor A

joint venture NGO B

Private Limited Companies joint venture C

joint venture Public Limited Companies D

joint venture Public Limited Companies A

Costing Auditing B

Cost Accounting Auditing C

Auditing Management Accounting D

Insurance Posting A

Banker Creditor B

Manager Creditor C

Manager investor D

manager investor A
debtors investor B

Public Accounting Self-Accounting C

article rate A

Managing Directing B

Cost Human Resource C

Human Resource Cost D

Financial Human Resource A

externals debtors B

article rate A

specific materials extreme materials B

direct labour extreme labour C

managed expenses Direct expenses D

extreme materials loaded material A

specific labour extreme labour B

indirect expenses extreme expenses C

jobs elements D

jobs elements A

aggregation summation A

Labour Revenues B

machine hours average hours C

Direct Material Direct wages D

Direct Material Direct wages A

light points rod-points B

light points rod-points C

collection re-apportionment D

Moving Average Rate Special Rate A

Moving Average Rate Special Rate B

Moving Average Rate Special Rate C

managed blanket D
Welding Underwritting A

advanced specific B

indirect sunk C

process Control A

process Control B

Absorption Control C

five three D

efficiency budgetory A

Fixed Cost Variable Cost B

profitability turnover C

MOS Ratio P/V Ratio D

Pivote intersect A

Contribution Profit B

incidence excedence C

Pivote Chart break-even chart D

nominal standard A

absorption nominal B

absorption nominal C

operation method A

managing apportionment B

Budgetary Government C

profitability responsibility. D

Medium period Average period A

Medium period Average period B

Current Flexible C

Current sales D

Current sales A

Current specific B

indirect specific C

Current Cash D

Current Cash A

Current Cash B

variable Cash C
 Managerial Accounting
MCQ 1st Semester

1. Managerial accounting information is generally prepared for

…………………
a. Shareholders
b. Creditors
c. Managers
d. Regulatory agencies
Ans-C

2. Which of the following is not an internal user of management information

a. Creditor
b. Department manager
c. Controller
d. Treasurer
Ans-A

3. Management accounting is applicable to-

a. Service entities
b. Manufacturing entities
c. Non profit entities
d. All of these
Ans- D

4. Creating Provision against fluctuation in the price of investment is an example of whichaccounting

convention
a. Convention of conservatism
b. Convention of full disclosure
c. Convention of materiality
d. Convention of consistency
Ans-A

5. The work of factory employees that can be physically associated with converting rawmaterial into
finished goods is classified as-
a. Manufacturing overhead
b. Indirect materials
c. Indirect labour
d. Direct labour
Ans-D

6. Double entry system is used in which type of accounting.

a. Cost
b. Financial
c. Management
d. All

7. Management accounting concentrates on

a. Opening books of account
b. Preparation of financial statements
c. Control of business activities
d. None of these
Ans-C

8. Which type of asset class includes those assets which have only definite use and become valueless
when the yield is over?
a. Fixed asset
b. Current asset
c. Fictitious asset
d. Wasting asset
Ans- D

9. An accounting that deals with the accounting and reporting of information to

managementregarding the detail information is
a. Financial accounting
b. Management accounting
c. Cost accounting
d. Real Accounting
Ans- B

10. The primary objective of management accounting is

a. Prepare final a/c
b. Provide management complete and true information
c. Both (a) & (b)
d. None of these
Ans- B

11. Bad debt amount should be credited to

a. Debtors account
b. Bad debts account
c. Sales account
d. Creditors account
Ans- A

12. Identify which is wrong rule

a. Nominal account- debit all expenses & losses
b. Real account- credit what comes in
c. Nominal account- credit all incomes & gains
d. Personal account- debit the receiver
Ans-B

13. Cost of goods sold= opening stock+ net purchases+ expenses on Purchases – sales Which part of
formula is wrong?
a. opening stock
b. net purchases
c. expenses on Purchases
d. sales
Ans- D

14. Return of goods by a customer should be debited to

a. Customer’s account
b. Sales return account
c. Goods account
d. Purchase account
Ans- B

15. Sales made to Mahesh for cash should be debited to

a. Cash account
b. Mahesh Account
c. Sales account
d. Purchase account
Ans- A

16. Rent paid to landlord should be credited to

a. Landlords account
b. Rent account
c. Cash account
d. Expense account
Ans- C

17. Cash discount allowed to a debtor should be credited to

a. Discount account
b. Customer’s account
c. Sales account
d. Cash account
Ans-B

18. Opening stock +Direct Expenses (Carriage on Raw material)-Closing Stock = …………………
a. Sales, Purchases
b. Sales, Sales return
c. Purchases, Cost of goods produced
d. Purchases, Cost of goods sold
Ans-C
19. Financial accounting is concerned with –
a. Recording of business expenses and revenue
b. Recording of costs of products and services
c. Recording of day to day business transactions
d. None of the above
Ans-C

20. The nature of financial accounting is:

a. Historical
b. Forward looking
c. Analytical
d. Social
Ans-A

21. The main object of cost accounting is:

a. To record day to day transactions of the business
b. To reveal managerial efficiency
c. To ascertain true cost of products and services
d. To determine tender price
Ans-C

22. Cost accounting emerged mainly on account of:

a. Statutory requirements
b. Competition in the market
c. Labour unrest
d. Limitations of financial accounting
Ans- D

23. Advantages of cost accounting accrue :

a. Only to workers
b. Only to government
c. Only to consumers
d. To management, workers, consumers and government
Ans- D

24. Cost accounting is applied to :

a. Public undertakings only
b. Large business enterprise only
c. Small business concerns only
d. Manufacturing and service concern
Ans- D

25. Marginal costing is concerned with:

a. Fixed cost
b. Variable cost
c. Semi variable cost
d. None of the above
Ans-B

26. Is a person or item for which cost may be ascertained?

a. Cost unit
b. Cost Centre
c. Cost object
d. Cost estimation
Ans- B

27 Salary paid to factory manager is an item of:

a. Prime cost
b. Factory overhead
c. Selling overhead
d. Office overhead
Ans-B

28. cost refers to those cost which have already been incurred and cannot be altered by any decision
in the future.
a. Opportunity cost
b. Sunk Cost
c. Incremental cost
d. Decremental cost
Ans-B

29. Amortization of intangible Asset Such as Goodwill which has indefinite life is an example of
accounting concept
a. Conservatism Concept
b. Continuity Concept
c. Realisation Concept
d. Measurement Concept
Ans-A

30. If loan have been guaranteed by managers and directors is called as

a. Loan
b. Unsecured Loan
c. Secured Loan
d. Advance by Manager & director
Ans-C

31. cost will still be incurred although a plant is shut down temporarily.
a. Cost of raw material
b. Advertising
c. Depreciation
d. Carriage
Ans-C

32 .Accounting principles are generally based upon:

a. Practicability
b. Subjectivity
c. Convenience in recording
d. None of the above
Ans- A
33 .The system of recording based on dual aspect concept is called:
a. Double account system
b. Double entry system
c. Single entry system
d. All the above
Ans-B

34. The practice of appending notes regarding contingent liabilities in accounting statements is in
pursuance to:
a. Convention of consistency
b. Money measurement concept
c. Convention of conservatism
d. Convention of disclosure
Ans-D

35. Sales are equal to:

a. Cost of goods sold + gross profit
b. Cost of goods sold - gross profit
c. Gross profit- Cost of goods sold
d. None of the above
Ans- A

36. Interest on drawings is:

a. Expenditure for the business
b. Cost for the business
c. Gain for the business
d. None of the above
Ans-C

37. Goods given as samples should be credited to:

a. Advertisement account
b. Sales account
c. Purchase account
d. None of the above
Ans- C
38. Outstanding salaries are shown as:
a. Added to Salaries while preparing P & La/c
b. Shown in liability side of Balance sheet under current Liability.
c. (a) &(b) above
d. None of the above
Ans- C

39. Income tax paid by a sole proprietor on his business income should be:
a. Debited to trading account
b. Debited to profit and loss account
c. Deducted from capital account in the balance sheet
d. None of the above
Ans- C

40. All direct & indirect expenses related to business are charged:
a. Profit and loss account
b. Trading account
c. Trading account Profit and Loss account
d. Directly to Balance sheet
Ans- C

41. According to schedule VI Companies Act which item is not shown on Asset side of Balance sheet
a. Investment
b. Current Loan & Advances
c. Provision
d. Lease Holds
Ans- C

42 .Trade Payables are recorded in…………….

a. Asset side of B/S
b. Liability side of B/S
c. P & L a/c
d. None of the above
Ans – B

43. Investment of X company profit in shares of other company PQR Pvt. ltd are recorded
in……………….
a. Asset side of Balance Sheet
b. Liability side of Balance Sheet
c. Profit & Loss a/c
d. Not recorded in Balance Sheet
Ans – A

44. Preliminary expenses are recorded in………………..

a. Equity and liabilities-Liability side of B/S
b. Current liabilities- Liability side of B/S
c. Fixed assets- Asset side of B/S
d. Asset side of B/S
Ans- D

45. Variable cost per unit

a. Remains fixed
b. Fluctuates with volume of production
c. Varies in consideration with the volume of sales
d. None of the above
Ans- B

46. The books to be compulsorily maintained by a company are:

a. Cash book and ledger

b. Sales and purchase book
c. Journal
d. Both a and b
e. All of a, b, c above
Ans-E

57. Carriage outward is charged to

a. Debit side Profit & Loss a/c
b. Debit side Trading a/c
c. Credit side of Profit & Loss a/c
d. Credit side of trading a/c
Ans-B

58. Cash Purchases:

a. Increases assets
b. Results in no change in the total assets
c. Decreases assets
d. Increases liability
Ans-C

59. Purchases of goods on credit from A is recorded as:

a. Debit purchases a/c; credit cash a/c
b. Debit A a/c ;credit purchases a/c
c. Debit purchases a/c ; credit A a/c
d. Debit A a/c ; credit stock a/c
Ans- C

60. Which of the following is not an example of real a/c:

a. Machinery
b. Building
c. Cash
d. Creditor
Ans- D
61. Payment received from debtor:
a. Decreases the total assets
b. Increases the total assets
c. Results in no change in total assets
d. Increase the total liabilities
Ans-C

62. Payment of salary is recorded by:

a. Debiting salary a/c; crediting cash a/c
b. Debiting cash a/c; crediting salary a/c
c. Debiting employee a/c ; crediting cash a/c
d. Debiting employee a/c ; crediting salary a/c
Ans- A

63. Cost of asset should always be equal to the cost of the liabilities. This concept is
a. Double Entry Bookkeeping
b. Matching Concept
c. Consistency
d. Money measurement Concept
Ans- B

64. Which of the following is not a fixed asset?

a. Building
b. Bank Balance
c. Plant Patents
d. Goodwill
Ans- B

65. The basic concepts related to p& l a/c are:

a. Realization Concept
b. Matching Concept
c. Cost Concept
d. Both a and b above
Ans- D

66. P& l a/c is prepared for a period of one year by following:

a. Consistency concept
b. Conservatism concept
c. Accounting period concept
d. Cost Concept
Ans- C
67 Insurance prepaid is shown as:
a. Current assets
b. Current liabilities
c. Fixed asset
d. Fixed liability
Ans- A

68. Outstanding salary is shown as:

a. An asset in the balance sheet
b. A liability
c. By adjusting it in the P & L a/c
d. Both a and c above
e. Both b and c above
Ans- E

69. Reserve for doubtful debts appearing in the trial balance should be:
a. credited to P & L a/c
b. Shown as liability side in balance sheet
c. Reduced from related asset in the balance sheet
d. Both a and b
e. Both a and c
Ans- E

70. All those to whom business owes money are:

a. Debtors
b. Investors
c. Creditors
d. Shareholders
Ans- C

71. According to which concept business is treated as a unit apart from owner
a. Dual concept
b. Divider concept
c. Entity concept
d. Landlord concept
Ans- C

72. Authorized capital, also known as

a. Nominal capital
b. Paid up capital
c. Issues capital
d. None of these
Ans- A
73.True & fair profit and loss a/c of a company know by
a. Preparing trial balance
b. Preparing respective ledger of account
c. Preparing trading a/c
d. Preparing trading & profit & loss a/c
Ans- D

74. Credit balance of profit & loss a/c shown on

a. Asset side of balance sheet
b. Liability side of balance sheet
c. Not shown in balance sheet
d. Half on asset side and half on liability side
Ans- B

75. Under which concept it is assumed that the enterprises has neither the intention nor the
necessity of liquidation or of curtailing materiality the scale of operation
a. Revenue realization concept
b. Matching cost concept
c. Going concern concept
d. None of these
Ans- C

76.Making the provision for doubtful debts and discount on debtors in anticipation of actual bad
debts and discount is an example for which concept
a. Conservatism concept
b. Continuity concept
c. Realization concept
d. All of these
Ans- A

77. Financial accounting use data

a. Projected data
b. External data only
c. Historic data
d. Manager data only
Ans- C

78 Payment received from Debtor

a. Decreases the Total Assets
b. Increases the Total Assets
c. Results in no change in the Total Assets
d. Increases the Total Liabilities
Ans- C
79. Bookkeeping is an of correctly recording of business transition.
a. Art and Science
b. Art
c. Science
d. Art or Science
Ans- B

80. Journal Entries are known as book of Entry.

a. Original
b. Duplicate
c. Personal
d. Nominal
Ans- A

81. What comes in is to be debited, what goes out is to be credited.

a. Rules of Personal
b. Rules of Real
c. Rules of Nominal
d. All of these
Ans- B

82. Which of the following account balance will be shown on debit side of Trial Balance?
a. Outstanding expenses
b. Cash a/c
c. Short term loan
d. creditors
Ans- D

83. The reduction in the value of the fixed assets which can arise due to time factor is
a. Discount
b. Depreciation
c. Reduction
d. None of the above
Ans- B

84. If closing stock appears in the trial balance, it should be

a. Credited to the trading account
b. Credited to the profit and loss account
c. Deducted from the purchases in the trading account
d. Shown on the liability side of the Balance sheet
Ans- A

85. Outstanding expenses are charged to

a. Asset side of balance sheet
b. Liability side of balance sheet
c. Not charged to balance sheet
d. None of these
Ans- B
86. liabilities in balance sheet include the following items
a. Long term loan
b. Short term loan
c. Owner’s fund
d. All of these
Ans- D

87. prepaid expense is treated as

a. Current asset
b. Current liability
c. Short term liability
d. None of these
Ans- A

88. Cost accounting aims at ascertain of product

a. Cost
b. Net profit
c. Gross profit
d. Selling price
Ans- A

89. The purpose of financial accounts is reporting to

a. Management only
b. Government only
c. Investor only
d. All of these
Ans- C

90. Accounting does not record non-financial transactions because of:

a. Accrual concept
b. Cost concept
c. Continuity concept
d. Money measurement concept
Ans- D

91. Proposed dividends" is shown in the Balance Sheet of a company under the head:
a. Provisions
b. Reserves and Surplus
c. Current Liabilities
d. Other Liabilities
Ans- A

92. Fixed assets and current assets are categorized as per concept of:
a. Separate entity
b. Going concern
c. Consistency
d. Time period
Ans- B

93. Proprietor (owner) is treated as creditor of business due to:

a. Periodicity concept
b. Materiality Principle
c. Entity Concept
d. Consistency concept
Ans-C

94. Which financial statement represents the accounting equation ASSETS =

LIABILITIES + OWNER'S EQUITY
a. Income Statement
b. Cash Flow Statement
c. Balance Sheet
d. Fund Flow Statement
Ans- C

95. Which of the following is a liability?

a. Loan from Mr.Y
b. loan to Mr.y
c. Both (a) (b)
d. None of these
Ans- A

96. Accounting does not record non-financial transactions because of:

a. Accrual concept
b. Cost concept
c. Continuity concept
d. Money measurement concept
Ans- D

90. Accounting does not record non-financial transactions because of:

a. Accrual concept
b. Cost concept
c. Continuity concept
d. Money measurement concept
Ans- D

91. Proposed dividends" is shown in the Balance Sheet of a company under the head:
a. Provisions
b. Reserves and Surplus
c. Current Liabilities
d. Other Liabilities
Ans- A

92. Fixed assets and current assets are categorized as per concept of:
a. Separate entity
b. Going concern
c. Consistency
d. Time period
Ans- B

93. Proprietor (owner) is treated as creditor of business due to:

a. Periodicity concept
b. Materiality Principle
c. Entity Concept
d. Consistency concept
Ans- C

94. Which financial statement represents the accounting equation ASSETS =

LIABILITIES + OWNER'S EQUITY
a. Income Statement
b. Cash Flow Statement
c. Balance Sheet
d. Fund Flow Statement
Ans- C

95. Which of the following is a liability?

e. Loan from Mr.Y
f. loan to Mr.y
g. Both (a) (b)
h. None of these
Ans-A

96. Accounting does not record non-financial transactions because of:

a. Accrual concept
b. Cost concept
c. Continuity concept
d. Money measurement concept
Ans-D
97. Fixed assets and current assets are categorized as per concept of:
a. Separate entity
b. Going concern
c. Consistency
d. Time period
Ans-B

98. Which of the following is correct

a. Profit does not alter capital
b. Capital can only come from profit
c. Profit reduces capital
d. Profit increases capital
Ans- D

99. Which of the following best describes a trial balance?

a. It is a list of balances on the books
b. It is a special account
c. Shows the financial position of a business
d. Shows all the entries in the books
Ans- A

100. Net profit is calculated in

a. Trading a/c
b. Balance sheet
c. Profit & loss a/c
d. Trial balance.
Ans- C

101.The concept of separate entity is applicable to which of following types of businesses?

a. Sole proprietorship
b. Corporation
c. Partnership
d. All of them
Ans- D

102. Which of the following is time span into which the total life of a business is divided for the
purpose of preparing financial statements?
a. Fiscal year
b. Calendar year
c. Accounting period
d. Accrual period
Ans- C

103. Interest , rent, electricity bill are types of account

a. Personal a/c
b. Impersonal a/c
c. Real a/c
d. Nominal a/c
Ans- D

104. Which of the following should not be called sales?

a. Good sold on credit
b. Office fixtures sold
c. Sale of item previously included in purchase
d. Good sold for cash
Ans- B

105. Material concept tell about

a. Disclosure of loss
b. Disclosure of profit
c. Disclosure of all information which are important for investor
d. Disclosure of all information which are important for management
Ans- C

106. Which of the following is not regarded as the fundamental accounting concept?
a. The going concern concept
b. The separate entity concept
c. The prudence (conservatism) concept
d. Correction concept
Ans- D

107. Using "lower of cost and net realisable value(Market Value)" for the purpose of inventory
valuation is the implementation of which of the following concepts?
a. The going concern concept
b. The separate entity concept
c. The prudence concept
d. Matching concept
Ans-C

108.The concept of separate entity is applicable to which of following types of businesses?

a. Sole proprietorship
b. Corporation
c. Partnership
d. All of them
Ans –D

109. The revenue recognition principal dictates that all types of incomes should be recorded or
recognized when
a. Cash is received
b. At the end of accounting period
c. When they are earned
d. When interest is paid
Ans- C

110. The allocation of owner's private expenses to his/her business violates which of the following?
a. Accrual concept
b. Matching concept
c. Separate business entity concept
d. Consistency concept
Ans- C

111.The going concern concept assumes that

a. The entity continue running for foreseeable future
b. The entity continue running until the end of accounting period
c. The entity will close its operating in 10 years
d. The entity can't be liquidated
Ans- A

112. Which of the following is time span into which the total life of a business is divided for the
purpose of preparing financial statements?
a. Fiscal year
b. Calendar year
c. Accounting period
d. Accrual period
Ans- C

113. Showing purchased office equipments in financial statements is the application of which
accounting concept?
a. Historical cost convention
b. Materiality
c. Prudence
d. Matching concept
Ans- B

114. Information about an item is _____________ if its omission or misstatement might influence
the financial decision of the users taken on the basis of that information
a. Concrete
b. Complete
c. Immaterial
d. Material
Ans-D
115."Financial information should be neutral and bias free" is the dictation of which one of the
following?
a. Completeness concept
b. Faithful representation Concept
c. Objectivity Concept
d. Duality Concept
Ans- C

116 Accounting principles are divided into two types. These are ---
a. Accounting Concepts
b. Accounting Conventions
c. Accounting Standards
d. Accounting Concepts &Accounting Conventions
Ans- D

117.Which of the following is not related with Money Measurement Concept ?

a. All business transaction should be expressed only in money
b. The transactions which cannot be expressed in money, will not be recorded in accounting
books
c. Business is treated as separate from the proprietor
d. None of These
Ans- B

118. Which of the following equation is related with Dual Aspect Concept ?
a. Total Assets = Total Liabilities
b. Total Assets = Capital + Outsider’s Liabilities
c. Capital = Total Assets - Outsider’s Liabilities
d. All of the above
Ans- D

119.If the total assets of the company amount to Rs 1,50,000 and owner’s equity is Rs 70,000, the
amount of liabilities will be –
a. Rs 70,000
b. Rs 80,000
c. Rs 90,000
d. Rs 1,00,000
Ans- B

120. Profit from sale of assets is example for –

a. Revenue Profit
b. Capital Profit
c. Loss
d. None of these
Ans- B
121. Depreciation is a charge against –
a. Profit
b. Assets
c. Company
d. Books of A/c
Ans- A

122. Which expenses is a Capital Nature?

a. Depreciation
b. Wages
c. Salary
d. Stationary
Ans- A

123. Balance Sheet is a statement of…………….

a. Assets
b. Liabilities
c. Capital
d. All of these
Ans- D

124. Accounting is the process of matching……..

a. Benefits & Costs
b. Revenues & Costs
c. Cash Inflow & Cash Outflow
d. Potential & Real Performance
Ans- B

125. Which one of the following is not an example of Intangible Assets?

a. Patents
b. Trade Marks
c. Copyright
d. Land
Ans- D

126. The prime function of accounting is to

a. To record economic data
b. Provide the information basis of action.
c. Classifying and recording business transaction
d. Attainment of economic goal
Ans- C

127. The basic function of financial accounting is to

a. Record all business transaction
b. Interpret financial data
c. Assist the management in performing function effectively
Ans- B

128. Management Accounting provides invaluable services to management in performing

a. All management function
b. Interpret financial data

c. Controlling function
d. None of these
Ans- A

129. Book keeping is mainly concerned with

a. Recording of financial data relating to business operation
b. Designing the systems in recording classifying, summarizing the recorded data
c. Interpreting the data for internal and external users
Ans- A

130. According to the money measurement concept the following will be recorded in the books of
accounts of the business
a. Health of the managing director of the company
b. Quality of company goods
c. Value of plant and machinery
d. Health of labour in factory
Ans- C

131. The convention of conservatism when applied to the balance sheet result in.
a. Understand the asset
b. Understand the liabilities
c. Overstatement of capital
d. None of these
Ans – A

132. The convention of conservatism is applicable a)

a. In providing for discount on creditors
b. In making provision for bad doubtful debts
c. Providing depreciation
d. None of these
Ans- B

133. The amount brought in by the proprietor in the business should be credited to
a. Cash a/c
b. Capital a/c
c. Drawing a/c
d. Bank a/c
Ans –B

134. The amount of salary paid to Suresh should be debited to

a. The account of Suresh
b. Salaries a/c
c. Cash a/c
d. Bank a/c
Ans- B

135. The return of goods by the customer should be debited to

a. Customer a/c
b. Sales return a/c
c. Goods a/c
d. Purchase return a/c
Ans- B

136. sales made by Mahesh for cash should be debited to

a. Cash a/c
b. Mahesh a/c
c. Sales a/c
d. Sales return a/c
Ans- A

137. The rent paid to land lord to be credited to

a. Land lord a/c
b. Rent a/c
c. Cash a/c
d. Tenant a/c
Ans –C

138. To make simulation more popular, we need to avoid

a. Large cost over runs
b. Prolonged delays
c. User dissatisfaction with simulation results
d. All of the above
Ans- D

139. The cash discount allowed to a debtor should be credited to

a. Discount a/c
b. Customer a/c
c. Sales a/c
d. None of these
Ans –B

140. The primary objective of cost accounting is

a. Ascertain the cost of goods and services
b. Ascertain the profit
c. Presentation of all data
d. None of these
Ans- A

141. The convention of disclosure implies that all material information should be
a. Disclosed in the account
b. Disclosed in the accounts which is required to owner
c. Not disclosed
d. None of these
Ans -A

142. In accounting all business transaction are recorded as having

a. Single aspect
b. Dual aspect
c. Triple aspect
d. None of these
B
143. Custom and traditions which guide the accountant while preparing the accounting statements
a. Accounting convention
b. Accounting concepts
c. Accounting principles
d. None of these
Ans – C

144. Rules of action or conduct adopted by the accountants universally while recording accounting
transaction
a. Accounting convention
b. Accounting concepts
c. Accounting principles
d. None of these
Ans – C

145. system in which accounting entries are made on the basis of amounts having become due for
payment or receipt is called
a. Cash concept
b. Accrual concept
c. Matching concept
d. On-going concept
Ans- B
146. Debit the receiver credit the giver rule for
a. Real a/c
b. Personal a/c
c. Nominal a/c
d. None of these
Ans- B

147. Debit what come in Credit what goes out rule for
a. Real a/c
b. Personal a/c
c. Nominal a/c
d. None of these
Ans- A

148. Debit all expenses and losses Credit all gains and income.
a. Real a/c
b. Personal a/c
c. Nominal a/c
d. None of these
Ans-C

149. A book containing a chronological record of business transaction & original record
a. Journal
b. Ledger
c. Trial balance
d. None of these
Ans- A

150. Transferring the debit and credit item from the journal to the respective accounts is called
a. Compound Journal
b. Ledger
c. Trial balance
d. None of these
Ans- B

151. A statement containing the various ledgers balances on particular date

a. Compound Journal
b. Ledger
c. Trial balance
d. None of these
Ans-C
152. The transferring of debit and credit items from journal to the respective accounts in the ledger
is called as
a. Ledger
b. Posting
c. Forward journal
d. None of these
Ans- B

153. Which of the following items would not fall under the definition of an asset?
a. Land
b. Machine
c. Cash
d. Owner Equity
Ans- D

154. Which one of the following items would fall under the definition of a liability
a. Cash
b. Debtor
c. Owner’s equity
d. None of these
Ans- C

155. Which of the following statements are false?

a. All liability is a debt for your business
b. Debtor are a asset for business
c. The accounting equation shows how much of your assets belong to the owner, and how
much belong to people outside business
d. None of the above
Ans- D

156. A business has the following items in it: Land Rs.1,000,000 Machinery Rs.20,000 Cash Rs.10,000
Debt Rs.0 Owner’s equity ? What is the valve of owner’sequity?
a. Rs.1020000
b. Rs.1010000
c. Rs.1030000
d. None of the above
Ans- C

157. A business has the following items in it: Owners’ equity Rs.6,00, 000
Liabilities Rs.14,00,000. What is the value of Assets……………
a. 600,000
b. 1,400,000
c. 2,000,000
d. None of these
Ans- C

158. A business has the following items in it: Land Rs.1, 500,000 Machinery Rs.80, 000 Cash
Rs.20,000 Owners equity Rs.900, 000 Loan Rs.500, 000 Creditors?
a. Rs.200, 000
b. Rs.700, 000
c. Rs.800, 000
d. Rs1, 100,000
Ans- A

159. A business has following items in it Land ? Vehicles Rs.600,000 Debtors Rs. 1,20,000 Cash
Rs.30,000 Owners’Equity Rs.1,000,000 Loan 5,00,000 Creditors Rs.50,000 What is the value of the
land…………………..

a. 1,000,000
b. 1,550,000
c. 800,000
d. None of these
Ans- C

160. Which of the following equations properly represents a derivation of the fundamental
accounting equation?

a) Assets + liabilities = Owner Equity

b) Asset = OwnerEquity
c) Cash = Assets
d) Assets – Liabilities = Owner Equity

a. Only (a)
b. Both (a) (b)
c. All (a)(b)(c)(d)
d. None of these
Ans- D

161. Retained earnings will change over time because of several factors. Which of the following
factors would explain an increase in retained earnings?

a. Net Loss
b. Net income
c. Dividend
d. Investment by share holder.
Ans- B

162. Which of these items would be accounted for as an expense?

a. Repayment of bank Loan
b. Dividend to stock holders
c. The purchase of land
d. Payment of current period rent
Ans- D

163. Which of the following would not be included on a balance sheet?

a. Accounts payable
b. Accounts receivable
c. Sales
d. Cash
Ans-C

164. XYZltd. has provided the following information about its balance sheet: Cash Rs.100 Accounts
Receivable Rs.500 Stock holder equity Rs.700 Accounts Payable Rs.200 Bank Loan Rs.1,000 Based on
the information provided, how much are XYZ ltd. Total liabilities?
a. Rs.200
b. Rs.1900
c. Rs.1200
d. Rs.1700
Ans- B

165. The full disclosure principle, as adopted by the accounting profession, is best described by
which of the following?
a. All information related to an entity's business and operating objectives is required to be
disclosed in the financial statements.
b. Information about each account balance appearing in the financial statements is to be
included in the notes to the financial statements.
c. Enough information should be disclosed in the financial statements so a person wishing to
invest in the stock of the company can make a profitable decision.
d. Disclosure of any financial facts significant enough to influence the judgment of an informed
reader
Ans- D

166. Which of the following is a real (permanent) account?

a. Goodwill
b. Sales
c. Accounts Receivable
d. Both Goodwill and Accounts Receivable
Ans- D

167. Which of the following statements is not an objective of financial reporting?

a. Provide information that is useful in investment and credit decisions.
b. Provide information regarding policy of organization
c. Provide information that is useful in assessing cash flow prospective
d. None of theses
Ans- B

168. The Cash account on the balance sheet should not include which of the following items?
a. Travel advances to employees
b. Currency
c. Money orders
d. Deposits in transit
Ans- A

169. Of the following account types, which would be increased by a debit?

a. Liabilities and expenses.
b. Assets and equity.
c. Assets and expenses.
d. Equity and revenues
Ans-C

170. The following comments all relate to the recording process. Which of these statements is
correct?
a. The general ledger is a chronological record of transactions.
b. The general ledger is posted from transactions recorded in the general journal.
c. The trial balance provides the primary source document for recording transactions into the
general journal.
d. Transposition is the transfer of information from the general journal to the general ledger.
Ans- B

171. The following comments each relate to the recording of journal entries. Which statement is
true?
a. For any given journal entry, debits must exceed credits.
b. It is customary to record credits on the left and debits on the right.
c. The chart of accounts reveals the amount to debit and credit to the affected accounts.
d. Journalization is the process of converting transactions and events into debit/credit format.
Ans- D

172. The trial balance is …………………………..

a. Is a formal financial statement.
b. Is used to prove that there are no errors in the journal or ledger.
c. Provides a listing of every account in the chart of accounts.
d. Provides a listing of the balance of each account in active use.
Ans- D

173. Which of the following errors will be disclosed in the preparation of a trial balance?
a. Recording transactions in the wrong account.
b. Duplication of a transaction in the accounting records.
c. Posting only the debit portion of a particular journal entry.
d. Recording the wrong amount for a transaction to both the account debited and the account
credited.
Ans- C

174. The basic sequence in the accounting process can best be described as:
a. Transaction, journal entry, source document, ledger account, trial balance.
b. Source document, transaction, ledger account, journal entry, trial balance.
c. Transaction, source document, journal entry, trial balance, ledger account.
d. Transaction, source document, journal entry, ledger account, trial balance.
Ans- D

175. Inventory accounts should be classified in which section of a balance sheet?

a. Current assets
b. Investments
c. Property, plant, and equipment
d. Intangible assets
Ans- A

176. Investment in Bonds should be disclosed on the balance sheet.

a. On liability side of balance sheet
b. On Assets side of balance sheet
c. On both side of Balance sheet
d. None of these
Ans- B

177. Contingent liabilities should be recorded in the accounts when:

a. It is probable that the future event will occur.
b. The amount of the liability can be reasonably estimated.
c. Both (a) and (b).
d. Either (a) or (b).
Ans- C

178. Which of the following functions is managerial accounting intended to facilitate?

a. Planning
b. Decision making
c. Control
d. All of these
Ans- D

179. Which of the following statements about differences between financial and managerial
accounting is incorrect?

a. Managerial accounting information is prepared primarily for external parties such as

stockholders and creditors; financial accounting is directed at internal users.
b. Financial accounting is aggregated; managerial accounting is focused on products and
departments.
c. Managerial accounting pertains to both past and future items; financial accounting focuses
primarily on past transactions and events.
d. Financial accounting is based on generally accepted accounting practices; managerial
accounting faces no similar constraining factors.
Ans- A
180 Cost accounting information can be used for:
a. Budget control and evaluation.
b. Determining standard costs and variances.
c. Pricing and inventory valuation decisions.
d. All of these
Ans- D

181. Manufacturing costs are also known as product costs. Which of the following best describes
those costs which are considered to be manufacturing costs?
a. Direct materials, direct labor, and factory overhead.
b. Direct materials and direct labor only.
c. Direct materials, direct labor, factory overhead, and administrative overhead.
d. Direct labor and factory overhead.
Ans- C

182. A company's telephone bill consisting of a Rs.200 monthly base amount, plus long distance
charges, would be classified as a:
a. Variable cost
b. Committed fixed cost
c. Direct cost
d. Semi variable cost
Ans- D

183. Accounting principles are

a. As definite as principles of physics and chemistry
b. Unlike principles of physical sciences.
c. Verifiable through observations and records
d. Thoughts of accountant
Ans- B

184 Accounting concepts are based on

a. Certain assumptions
b. Certain facts and figures
c. Certain accounting records
d. Practice experience
Ans- B
185. Business entity concept distinguishes between:
a. Individual and business
b. Business and business
c. Owners
d. Debtors and creditors
Ans- A

186.The cost concept records the figures at

a. Market values
b. Actual amount paid
c. Actual amount or market values whichever is less.
d. MRP maximum retail price
Ans- B

187. Going concern concept assumes

a. Business as a dissolving concern
b. Business on relishing values
c. Business as a going concern
d. Asset = liability
Ans- C

188. Financial account provide summary of:

a. Asset
b. Liability
c. Accounts
Ans- C

189.Financial statements are:

a. Estimates of facets
b. Anticipated facts
c. recorded facts
Ans –C

190. Retained earnings statement depicts:

a. Appropriation of profits
b. Estimates of profits
c. Estimates of costs
Ans- A

191. User of financial statement is:

a. Management
b. Creditors
c. Bankers
d. All of the above
Ans- D

192. Current liability does not include

a. Sundry creditors
b. Acceptances
c. Unclaimed dividend
d. Short term investment
Ans- D

193. Financial accounting deals with:

a. Determination of cost
b. Determination of profit
c. Determination of price
d. Determination of selling price
ans –B

194. Financial account record only

a. Actual figures
b. Budgeted figures
c. Standard figures
d. Management Figure
Ans- A

195. The term Management Accounting was first used in

a. 1910
b. 1939
c. 1950
d. 1960
Ans- C

196. Management Accounting relates to

a. Recording of accounting data
b. Recording of cost data
c. Presentation of account data
d. None of the above
Ans – C

197. Content of income statement

a. Trading account
b. Profit and loss account
c. Balance sheet
d. All of the above
Ans-D
198. Which does not comes under the head of asset:
a. Fixed asset
b. Investment
c. Current asset
d. Owners equity
Ans- D

199. Which items does not come under the balance sheet
a. sales
b. Share capital
c. Reserves and surplus
d. Unsecured loan
Ans- A

200. The word accounting can be classified in to:

a. Financial accounting and management accounting
b. Financial accounting and cost accounting
c. Financial accounting, management accounting and cost accounting
d. Cannot be classified C
201. If a company has contingent liabilities, they appear in the …………..
a. Balance Sheet
b. Director’s Report
c. Foot note down the balance sheet
d. Chairman’s report
Ans- A

202. Modern Method of Accounting was introduced by

a. M. S. Gosav
b. Wheldon
c. Luco Pacioli
d. R. N. Carter
Ans- C

203. A budget is a plan of action expressed in…

a. Financial terms
b. Non‐financial terms
c. Both
d. Subjective matter
Ans- C

204. Budget is prepared for a…

a. Indefinite period
b. Definite period
c. Period of one year
d. Six months
Ans-B

205. A budget is tool which helps the management in planning and control of…
a. All business activities
b. Production activities
c. Purchase activities
d. Sales activities
Ans- A

206. Budgetary control system acts as a friend, philosopher and guide to the…
a. Management
b. Share holders
c. Creditors
d. Employees
Ans- A

207. Budgetary control system defines the objectives and policies of the…
a. Production department
b. Finance department
c. Marketing department
d. All
Ans- D

208 Budgetary control system facilitates centralized control with…

a. Decentralized activity
b. Centralized activity
c. Both
d. None
Ans- C

209.Budgetary control facilitates easy introduction of the…

a. Marginal costing
b. Ratio analysis
c. Standard costing
d. Subjective matter
Ans- C

210.Budgetary control helps the management in…

a. Obtaining bank credit
b. Issue of shares
c. Getting grants from government
d. All of these
Ans- A

211. Budgetary control system helps the management to eliminate…

a. Undercapitalization
b. Overcapitalization
c. Both
d. Subjective matter
Ans- C

212. Budgetary control provides a basis for…

a. Bonus shares
b. Rights shares
c. Remuneration plans
d. None
Ans- C

213. Budgetary control helps to introduce a suitable incentive and remuneration basedon…
a. Changes in government policies
b. Inflationary conditions
c. Both
d. None
Ans-B

214. Budgetary control replace management in decision‐making.

a. Can
b. Cannot
c. Sometimes
d. Inadequate data
Ans- B

215. The success of budgetary control system depends upon the willing cooperation of…
a. Shareholders
b. Management
c. Creditors
d. All the functional areas of management
Ans- D

216. Recording of actual performance is….

a. An advantage of budgetary control
b. A step in budgetary control
c. A limitation of budgetary control
d. None
Ans- B

217. Revision of budgets is…

a. Unnecessary
b. Can’t determine
c. Necessary
d. Inadequate data
Ans- C

218. Frequent revision of budgets will…

a. Affects its reliability
b. Increase the accuracy
c. Both
d. Subjective matter
Ans- A

219. Usually the production budget is stated in terms of…

a. Money
b. Quantity
c. Both
d. None
Ans-C

220.Budget period is the…

a. Period of budget committee
b. Period of budget centres
c. Period for which a budget is prepared
d. Period of budget officer
Ans- C

221 Budget period depends upon…

a. The type of budget
b. The nature of business
c. The length of trade cycles
d. All of these
Ans- D

222. A key factor is one which restricts…

a. The volume of production
b. The volume of sales
c. The volume of purchase
d. All of the above
Ans- A
223 ……………….plan serving as a pattern for and a control over future operations is known as budget.
a. Operational
b. Financial
c. Functional
Ans- B
224 ………………… control is the most useful technique in implementing the objectives of
the company with minimum possible cost and maximum possible efficiency.
a. Budgetary
b. Inventory
c. Capability
Ans- A

225………………….Co-ordination and control are three basis aspects concerned with budgetary control.
a. Centralizing
b. De-centralizing
c. Planning
Ans- C

226 ………………..is a section of the organisation of an undertaking defined for The purpose of
budgetary control.
a. Cost centre
b. Budget centre
c. Cost Unit
Ans- B

227. A document which sets out the responsibilities of the persons engaged in the routine
of and the forms and records required for budgetary control is known as

a. Budget Policy
b. Budget Book
c. Budget Manual
Ans- C

228. On the basis of, budget is classified into long term budget, short term budget and current
budget.
a. Functions
b. Control
c. Time
Ans- C

229. On the basis of flexibility budget is classified into two types such as fixed budget and budget.
a. variable
b. Semi-variable
c. Constant
Ans- A

230. Variable budget is also known as______budget.

a. Fixed
b. Semi-variable
c. Flexible
Ans –C
231. The budget prepared according to_____________ is known as functional budgets.
a. Period
b. Controls
c. Functions
Ans- C

232 ……………….. budget is a budget which is designed to remain unchanged irrespective of the
volume of output or turnover achieved.
a. Flexible
b. Cash
c. Fixed
Ans- C

233. A Flexible budget is one which permits the change in accordance with the changes in the level
of activity.
a. Fixed
b. Flexible
c. Sales
Ans- B
234. Flexible budgets are more useful in actual practice because it is more realistic and has great
practical utility in the business.
a. realistic
b. non-realistic
c. Predictable
Ans- A
235. A __________budget is the budget which shows the quantity and value of goods to be
purchased during the budget period to meet the day-to-day needs of the business.
a. Sales
b. Cash
c. Purchase
Ans- C

236. One of the basic purpose to prepare___________ budget is to estimate the cash
requirements for the purchases to be made during the budgeted period.
a. purchase
b. cash
c. sales
Ans- A

237 Purchase budget is prepared by the___________manager.

a. Finance
b. Stores
c. Purchase
Ans- C
238 Plant utilization budget and Manufacturing overhead budgets are types of
a. Production budget
b. Sales budget
c. Cost budget
d. None of the above
Ans- A

239. R&D budget and Capital expenditure budget are examples of

a. Short-term budget
b. Current budget
c. Long-term budget
d. None of the above
Ans- C

240. Capacity ratio * Efficiency ratio = Activity ratio.

a. True
b. False
Ans- A

241.The scare factors is also known as

a. Key factor
b. Abnormal factor
c. Linking factor
d. None of the above
Ans- A

243. A budgeting process which demands each manager to justify his entire budget in
detail from beginning is
a. Functional budget
b. Master budget
c. Zero base budgeting
d. None of the above
Ans- C