Management Accounting - 6

LIST OF ATTEMPTED QUESTIONS AND ANSWERS


Select The Blank
Question Furniture account will always have a ________ balance.
Correct Answer Debit
Your Answer Nil


Multiple Choice Multiple Answer
Question Accounting is the art where transactions are …
Correct Answer Summarized , Classified , Recorded
Your Answer Summarized , Classified , Recorded


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


Select The Blank
Question The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production.
Correct Answer Total variable overhead
Your Answer Total variable overhead


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


Select The Blank
Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc.
Correct Answer Accounting period
Your Answer Accounting period


True/False
Question Standard costs are used for external reporting.
Correct Answer False
Your Answer False


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


Multiple Choice Single Answer
Question Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his annual salary is Rs.500,000/-, what amount should be charged as office overheads ?
Correct Answer Rs.300,000/-
Your Answer Rs.200,000/-


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


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


Multiple Choice Multiple Answer
Question Techniques of management accounting include:
Correct Answer Marginal costing , Budgetary control , Standard costing
Your Answer Marginal costing , Cost control , Budgetary control , Standard costing


Match The Following
Question Correct Answer Your Answer

Profit and loss account Commission received Dividend paid

Manufacturing account Work in Progress Land & Building

Balance Sheet Land & Building Closing stock of finished goods

Trading account Closing stock of finished goods Work in Progress

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


Multiple Choice Multiple Answer
Question If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit
Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer Increase the selling price , Increase the sales volume , Increase the selling efforts


Multiple Choice Multiple Answer
Question From the following, select intangible assets:
Correct Answer Goodwill , Patents , Trade Marks
Your Answer Patents , Trade Marks , Investments


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


Multiple Choice Single Answer
Question Find the budget which is inadequate as a cost control technique :
Correct Answer Fixed budget
Your Answer Fixed budget


True/False
Question Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices.
Correct Answer True
Your Answer True


Multiple Choice Single Answer
Question Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and closing stock Rs.1,47,750/-. Calculate the Gross Profit.
Correct Answer Rs.3,00,000/-
Your Answer Rs.3,00,000/-


Select The Blank
Question ________ is an example of intangible asset.
Correct Answer Goodwill
Your Answer Land


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


True/False
Question Goods sent to the customers on approval basis should be treated as sales.
Correct Answer False
Your Answer False


Multiple Choice Multiple Answer
Question Features of Sunk cost are . . .
Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past
Your Answer Indicates historical cost , Incurred in past , Relevant in decision making process


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


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


Multiple Choice Multiple Answer
Question Identify the steps involved in selecting the optimum product mix, when the limiting factor is number of labour hours and sales demand.
Correct Answer For each product find the contribution per unit and per labour hour , Award ranks to each of the products based on contribution per limiting factor , Priority is given to fulfill the market demand of the product which gives maximum contribution per labour hour.
Your Answer For each product find the contribution per unit and per labour hour , Award ranks to each of the products based on contribution per limiting factor , Priority is given to fulfill the market demand of the product which gives maximum contribution per labour hour.


Multiple Choice Multiple Answer
Question Techniques of management accounting include:
Correct Answer Marginal costing , Budgetary control , Standard costing
Your Answer Marginal costing , Cost control , Budgetary control


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


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


True/False
Question According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of cost of asset after deduction of the depreciation previously charged.
Correct Answer True
Your Answer True


Select The Blank
Question Crane expenses should be apportioned on the basis of ________.
Correct Answer Number of hours crane worked in the department
Your Answer Number of hours crane worked in the department


Multiple Choice Multiple Answer
Question Essentials for effective implementation of budgetary control system are
Correct Answer Commitment of top management , Clearly defined objectives , Continous budget education
Your Answer Commitment of top management , Clearly defined objectives , Continous budget education


Multiple Choice Single Answer
Question Commission payable to General Manager is 10 % of the net profits. If the net profit before charging commission is Rs.29,200/-, then what will be the amount of his net profit after commission?
Correct Answer Rs.26,545.45
Your Answer Rs.29,200/-


Select The Blank
Question A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be followed.
Correct Answer Budget
Your Answer Budget


True/False
Question A very wide scope of Management Accounting is the limitation by itself.
Correct Answer True
Your Answer True


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


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


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


Multiple Choice Single Answer
Question The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribuiton department shoud be charged as:
Correct Answer Service costs
Your Answer Service costs


Multiple Choice Single Answer
Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as
Correct Answer Drawings
Your Answer Capital


Select The Blank
Question Measurement of ________ gives an idea of the degree of mobility of labour.
Correct Answer Labour turnover
Your Answer Labour turnover


Multiple Choice Single Answer
Question Net profit for the year before charging commission to the manager, is Rs.111,775/-. The manager of the company is entitled to commission @ 8% on net profits after charging commission. Find the amount of commission due to the manager.
Correct Answer Rs.8,279.63
Your Answer Rs.8,942/-


Match The Following
Question Correct Answer Your Answer

Total cost Cost of finished goods Cost of finished goods

Non operating income Profit on sale of investment Profit on sale of investment

Selling and distribution overheads Advertisement expenses Advertisement expenses

Factory overheads Repair for factory building Repair for factory building

True/False
Question Control on purchase of material is exercised by the storekeeper.
Correct Answer False
Your Answer True


Multiple Choice Single Answer
Question A company wishes to earn a 15% profit margin on selling price when quoting for a job. Which of the following is the profit margin of cost which will achieve the required profit margin ?
Correct Answer 0.1765
Your Answer 0.15


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

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Posted in: Management Accounting (Set II)

Management Accounting - 5

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer
Question
The selection of the supplier may depend upon the following aspects:
Correct Answer
Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier
Your Answer
Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier

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

True/False
Question
Overhead absorption rate will be different at different capacity levels.
Correct Answer
True
Your Answer
True

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

Select The Blank
Question
The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production.
Correct Answer
Total variable overhead
Your Answer
Total variable overhead

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

Select The Blank
Question
Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by Management accounting.
Correct Answer
Management
Your Answer
Management

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

Select The Blank
Question
Uniform costing is not a separate method of ________.
Correct Answer
cost accounting
Your Answer
cost accounting

Multiple Choice Multiple Answer
Question
Which of the following budgets may be termed as a long term budget?
Correct Answer
Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company
Your Answer
Capital expenditure budget , Research and Development expenditure budget

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

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

Select The Blank
Question
Creche expenses may be appropriately approtioned on the basis of ________.
Correct Answer
Number of female workers
Your Answer
Number of female workers

Multiple Choice Single Answer
Question
Opening stock of Rs.1,80,000/-, purchases Rs.8,00,000/-, freight inward Rs.35,000/-, closing stock Rs.2,00,000/-, direct wages Rs.2,35,000/-. Calculate the prime cost.
Correct Answer
Rs.10,50,000/-
Your Answer
Rs.10,70,000/-

Multiple Choice Multiple Answer
Question
Limitations of Management Accounting includes-------------------
Correct Answer
Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure
Your Answer
Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure

Select The Blank
Question
Indirect Cost is termed as ________.
Correct Answer
Overhead
Your Answer
Overhead

Multiple Choice Multiple Answer
Question
Features of Financial Accounting includes-----------------
Correct Answer
It is a legal requirement , It protects the interest of outsiders , It considers historical transactions
Your Answer
It is a legal requirement , It protects the interest of outsiders , It considers historical transactions

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

Multiple Choice Single Answer
Question
A group of 10 men and 20 women workers were expected to produce 400 units of a product in an 8 hour day. The standard hourly rate was fixed at Rs.25/- and Rs.15/-, respectively.Actually, a group of 15 men and 10 women workers was deployed and paid for 8 hours a day at an hourly rate of Rs.22/- and Rs.18/-, respectively. Two hours were wasted for the entire group due to power failure and only 300 units were produced. Calculate labour rate variance.
Correct Answer
Rs.120/- (Favourable)
Your Answer
Rs.150/- (Favourable)

Multiple Choice Multiple Answer
Question
Techniques of management accounting include:
Correct Answer
Marginal costing , Budgetary control , Standard costing
Your Answer
Cost control , Budgetary control , Standard costing

True/False
Question
A grinding machine is an example of impersonal cost centre
Correct Answer
True
Your Answer
True

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

Multiple Choice Single Answer
Question
Uniform costing system is useful in the following areas
Correct Answer
Classification of cost accounts
Your Answer
Preparing financial statements

Multiple Choice Multiple Answer
Question
The features of multiplicity of key factors are as follows :
Correct Answer
More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique
Your Answer
More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique

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

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

Multiple Choice Multiple Answer
Question
A materials requisition form normally contains the following aspects:
Correct Answer
Quantity requisitioned , Per unit material cost , Job number
Your Answer
Quantity requisitioned , Job number

Multiple Choice Multiple Answer
Question
The production budget may be prepared in terms of :
Correct Answer
Units produced , Production cost , Material cost, labour cost and overheads
Your Answer
Units produced , Production cost , Material cost, labour cost and overheads

Multiple Choice Single Answer
Question
Panna Ltd. temporarily has excess production capacity. The idle plant facilties can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its:
Correct Answer
Variable costs
Your Answer
Variable costs

Multiple Choice Multiple Answer
Question
If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit
Correct Answer
Increase the selling price , Reduce cost of sales , Increase the selling efforts
Your Answer
Increase the selling price , Increase the sales volume , Reduce cost of sales

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

Multiple Choice Multiple Answer
Question
Select the advantages of standard cost system.
Correct Answer
Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency
Your Answer
Provides reliable basis for budgeting , Facilitates delegation of authority

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

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

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

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

Multiple Choice Single Answer
Question
Material price variance for a job is Rs.800/- (Favourable). Actual quantity of material used is 100 kg whereasthe standard quantity of material is 120% of actual quantity. Actual price paid for the material is 80% of the standard price. Calculate material cost variance.
Correct Answer
Rs.1,600/- (Favourable)
Your Answer
Rs.800/- (Favourable)

Select The Blank
Question
The process of recording the business transactions in a defined set of records is referred to as ________.
Correct Answer
Balance sheet
Your Answer
Profit and Loss Account

Match The Following
Question
Correct Answer
Your Answer
Daily Time sheets
Time spent by worker on job is recorded
Time spent by worker on job is recorded
Time Keeping Department
Recording of workers time
Recording of workers time
Time booking department
Jobwise booking of time.
Jobwise booking of time.
Time Recording Clock Method
Ticket number & clock card allotted to worker
Ticket number & clock card allotted to worker

True/False
Question
Purchased goods by paying Rs.35,000/-: In this case, the cash account should be debited.
Correct Answer
True
Your Answer
True

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

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

Match The Following
Question
Correct Answer
Your Answer
Book-Keeping
Books of Accounts
Books of Accounts
Financial statement
Profitability statement & Balance-sheet
Profitability statement & Balance-sheet
Accounting
Process of analyzing & interpretation
Process of analyzing & interpretation
Profitability statement
Indicates the amount of profit earned
Indicates the amount of profit earned
Balance-sheet
Financial status
Financial status

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

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

Multiple Choice Multiple Answer
Question
If you are required to enforce uniform costing system in your industry, how would you proceed ?
Correct Answer
Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Maintaining secrecy of the data collected
Your Answer
Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Allowing free access to all the units to the collected data

True/False
Question
All costs are controllable.
Correct Answer
False
Your Answer
False

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Posted in: Management Accounting (Set II)