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Posted Date: 13 Aug 2008      Posted By:: Miloni Modi    Member Level: Silver    Points: 5 (Rs. 1)

2006 Symbiosis International Education Centre Post Graduate Diploma Business Administration Management Accounting University Question paper Course: Post Graduate Diploma Business Administration   University/board: Symbiosis International Education Centre MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Choose the correct answer. Benefits available from revenue expenditure are received in the :- a) Same year b) Next year c) Future year d) Previous year Ans. A 2. Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. a) true b) false Ans. A 3. Choose the correct answer. Uniform costing system is useful in the following areas :- a) Classification of cost accounts b) Preparing financial statements c) Completing statutory audit d) Getting loans Ans. A 4. Re-order level for materials is determined considering maximum consumption and maximum delivery period. a) true b) false Ans. A 5. Profit volume ratio is also known as ______________________________. Contribution to cost ratio; Cost to contribution ratio; Sales to contribution ratio; Contribution to sales ratio Ans. Contribution to sales ratio 6. Choose all that apply Management Accounting is :- a)____ Designed particularly for internal use b)____ Helpful in estimating the future along with past period c)____ Useful in furnishing the necessary information to the management d)____ A legal requirement. Ans. A,b,c 7. Choose the correct answer. A textile mill has two production departments, spinning and weaving and two service departments, S and R. Variable cots of operating the two service departments, their output and quantum of service rendered to other department is as follows : Department S : Service rendered to spinning department - 30%, weaving department - 20% and department R - 50%; variable cost Rs.120,000/- and output -1,000 tons. Department R : Service rendered to spinning department - 25%, weaving department - 35% and department S - 40%; variable cost Rs.260,000/- and output - 2,000 tons. Calculate the total cost of service received by spinning and weaving departments. a) Spinning department -Rs.196,000/-; Weaving department -Rs.184,000/- b) Spinning department -Rs.148,000/-; Weaving department -Rs.169,000/- c) Spinning department -Rs.169,000/-; Weaving department -Rs.148,000/- d) Spinning department -Rs.184,000/-; Weaving department -Rs.196,000/- Ans. D 8. Choose the correct answer. From the given information compute the total cost variance. Material cost variance – Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/-(adverse). a) Rs.32,850/- (Adverse) b) Rs.32,850/- (Favourable) c) Rs.24,050/- (Adverse) d) Rs.24,050/- (Favourable) Ans. C 9. The final result disclosed by trading account is the ___________ profit earned by the organization. Gross; Net; Marginal; Incremental Ans. Gross 10. Measurement of _______________ gives an idea of the degree of mobility of labour. Labour cost; Labour turnover; Idle time; Standard time Ans. Labour turnover 11. Choose all that apply Select the accounts to be disclosed on the assets side of the Balance sheet :- a)____ Furniture b)____ Loan to Bank of U.S.A. c)____ Loan from Bank of America d)____ Land & building Ans. A,b,d 12. Choose all that apply The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision :- a)____ Loss of trained personnel b)____ Loss of regular customers c)____ Expenditure required to restart the factory d)____ Expenditure relating to expanding the business Ans. A,b,c 13. A ______________________ can be defined as a part of the organization for which separate budget can be prepared and implemented. Responsibility centre; Budget centre; Cost centre; Profit centre Ans. Budget centre 14. Choose the correct answer. Journal is popularly known as 'Book of :- a) Original Entry b) Secondary Entry c) Rectification Entry d) Adjustment Entry Ans. A 15. In order to rectify the totaling mistake, wherein the sales return ledger was undercast by Rs.2,000/-, the suspense account should be ___________ with Rs.2,000/- Appended; Adjusted; Debited; Credited Ans. Credited 16. Match the following 1. Bank Book (1) 1. Maintained by the trader/ businessman 2. Pass Book (4) 2. Issued by the Bank 3. Bank reconciliation (6) 3. Issued by the organization statement 4. Advise stating dividend (2) 4. Maintained by the Bank collected on your behalf 5. Maintained by the Government 6. Prepared by the organization 17. Match the following 1. Contribution - Fixed cost (6) 1. Contribution 2. Total cost + Profit (4) 2. Variable cost 3. Fixed cost + Variable cost (5) 3. Semi-variable cost 4. Total cost - Fixed cost (2) 4. Sales 5. Total cost 6. Profit 18. Choose the correct answer. A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of copper. a) Rs.200,000/- b) Rs.150,000/- c) Rs.350,000/- d) Rs.180,000/- Ans. c 19. Choose all that apply Cost control procedure deals with :- a)____ Establishment of plans b)____ Computation of profit c)____ Comparison of actual and planed performance d)____ Computation of variance Ans. A,c,d 20. In calculation of total sales margin variance, the ____________ cost of sales is deducted from the actual sales revenue. Standard; Planned; Scheduled; Actual Ans. Standard 21. Choose the correct answer. The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004. a) Rs.75,980/- b) Rs.75,981/- c) Rs.63,980/- d) Rs.51,981/- Ans. B 22. Choose the correct answer. Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System. a) Rs.120/- b) Rs.160/- c) Rs.180/- d) Rs.200/- Ans. c 23. Profitability statement indicates the amount of assets & liabilities. a) true b) false Ans. B 24. Choose all that apply Actual costs determined on the basis of costing records maintained have following limitations :- a)____ No practical utility from control point of view b)____ No practical utility for price fixation c)____ Expensive d)____ Very difficult to understand Ans. A,b,c 25. Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit). a) true b) false Ans. B 26. Choose all that apply Features of convention of conservation are :- a)____ Anticipates all future losses and expenses b)____ Ignores all future incomes and profits, unless they are actually realized c)____ Applicable to valuation of current assets d)____ Applicable to valuation of non-current asset Ans. A,b,c 27. Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between __________________. 90% to 100%; 80% to 100%; 70% to 90%; 50% to 75% Ans. 90% to 100% 28. Choose all that apply Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system? a)____ Capital investment b)____ Plant size c)____ Location d)____ Loans taken Ans. A,b,c 29. Choose all that apply Merits of break even point analysis are as follows:- a)____ Useful diagnostic tool. b)____ Used for analyzing the risk implication of alternative actions. c)____ Used to graphically represent complicated data. d)____ Useful in the long run. Ans. A,b,c 30. The ___________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions. Control; Journal; Main; Original Ans. Control 31. Overhead absorption rate will be different at different capacity levels. a) true b) false Ans. A ?32. Choose the correct answer. At 60% capacity utilization the overhead recovery rate is Rs.35/- per unit. At 70% capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production attains 90% capacity utilization? a) Rs.35/- per unit b) Rs.32/- per unit c) Rs.30/- per unit d) Rs.28/- per unit Ans. 33. Accounting is an art of recording, classifying & summarizing in a significant manner. a) true b) false Ans. A 34. In case the standards are too difficult to achieve, they will provide additional incentive for improvement. a) true b) false Ans. B 35. Balance sheet indicates the expenditure & income from the business. a) true b) false Ans. B 36. Interim dividend paid by the company should be debited to the profit and loss appropriation account. a) true b) false Ans. A 37. Choose the correct answer. Which document is a part of the perpetual inventory system? a) Bin card b) Purchase order c) Material requisition note d) Goods received note Ans. A 38. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect __________________________. P's A/c and Q's A/c; Cash A/c and P's A/c; P's A/c; Q's A/c Ans. P's A/c and Q's A/c 39. Choose all that apply Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000 a)____ Ram is a creditor b)____ Ram is an employee c)____ Rs.10,000/- has been paid to Ram d)____ The payment is made by cheque Ans. A,c,d 40. According to the standard costing principles, only adverse variance must be further investigated. a) true b) false Ans. B 41. Fixed expenses will move up by jumps if the output exceeds the capacity. a) true b) false Ans. A 42. The Balance Sheet method of cash budget ignores any excess or shortage of cash during the budget period. a) true b) false Ans. A 43. If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ___________________. Net profit; Loss; Gross profit; Contribution Ans. Loss 44. If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material. a) true b) false Ans. A 45. The closing stocks should ___________________ the cost of the goods which sent on approval basis. Be increased by; Exclude; Be decreased by; Not get affected by Ans. Be increased by 46. Choose the correct answer. Hourly wage rate is Rs.25/- and the time allowed for a job is 15 hours. Harry completed the job in 12 hours. Calculate the effective hourly earnings for Harry under Halsey Plan. a) Rs.25/- b) Rs.30/- c) Rs.28.12 d) Rs.33.12 Ans. C 47. Choose all that apply Features of Taylor's differential piece rate system are as follows :- a)____ Strong incentive to inefficient and new workers. b)____ Minimal clerical work is involved in calculating the wages c)____ Helps in building up an efficient labour force d)____ Strong incentive to efficient and ambitious workers. Ans. B,c,d P.T.O. ?48. Choose the correct answer. The details regarding a food product manufactured by ABC Co. for the last one week are as follows : Standard cost (for one unit) : direct material -10 units @ Rs.1.50; direct wages - 5 hours @ Rs.8/-; production overheads -5 hours @ Rs.10/-. Actual (for whole activity) : direct materials -Rs.6,435/-; direct wages -Rs.16,324/-. Analysis of variances : direct materials price variance -Rs.585/- (Adverse); direct material usage variance -Rs.375/- (Favourable); direct wages rate variance -Rs.636/- (Favourable); direct wages efficiency variance -Rs.360/- (Adverse); production overheads expenditure variance -Rs.400/- (Favourable) and production overheads volume variance -Rs.750/- (Favourable). You are required to calculate the amount of production overheads incurred. a) Rs.16,900/- b) Rs.19,600/- c) Rs.20,750/- d) Rs.17,250/- Ans. 49. The process of accounting split into three steams i.e. financial, cost, management accounting. a) true b) false Ans. A 50. Choose all that apply The productive causes of idle time are :- a)____ Instructions are not clearly given b)____ Power failures c)____ Machine breakdown d)____ Excess machine capacity Ans.a b c 51. 1) Financial statements are basically in two forms i.e. profitability statement and balance sheet. a) true b) false Ans. A MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS Re-order level should be higher than ________________but lesser than maximum stock level. Annual requirement;Monthly requirement;Average stock level;Minimum level Ans. mini 2. Match the following: 1. Debit side of bank book is overcast (1 ) 1. Overdraft as per bank book < over draft as per pass book 2. Interest on debentures directly credited by bank (5 ) 2. Overdraft as per bank book = Balances per pass book 3. Received sanction for a loan of Rs.10 lakhs ( 2) 3. Overdraft as per bank bank book = Overdraft as per pass book 4. Closed the account with State Bank of India (2 ) 4. Henceforth, there shall be no difference in overdraft balances 5. Overdraft as per bank book > Overdraft as per pass book 6. Henceforth, there shall be maximum differences in overdraft balances 3. Match the following: 1. Plan of investment in fixed assets (2) 1. Capital Expenditure Budget 2. Plan for surplus/shortage of cash (3) 2. Income and expenditure budget 3. Operating income (1) 3. Revenue expenditure budget 4. Non-Operating income (4) 4. Cash Budget 5. Issue of shares 6. Cash Sales ?4. Choose all that apply. You have received tenders from two suppliers - X & Co. and Y & Co. The details regarding price and other terms and conditions are as follows : X & Co. : Price Rs.5/- per unit; trade discount 15% and cash discount 4% if bills are paid within a fortnight; freight Rs.2/- per 100 units. Y & Co. : Price Rs.4/- per unit upto 2,000 units; no cash discount but 15% per annum interest is charged if bills are paid within a fortnight from receipt of materials; freight Rs.3/- per 100 units. 10,000 units are required every month. The organization pays 50% of total monthly bills every fortnight. Compare the total cost for the organization for transacting with X & Co. and Y & Co. and advise the supplier with whom the order should be placed. a)___ Cost to the organization :Y & Co. -Rs.40,425.94 b)___ Cost to the organization : Y & Co.-Rs.41,850/- c)___ Order should be placed with Y & Co. d)___ Total cost is lower with Y & Co. Ans. 5. A forecast is mere estimate of what is likely to happen, but ____________is the action plan to be followed. Budget;Estimate;Performance report;Cost report Ans. 6. Choose all that apply. Select the various methods adopted for treatment of under or over absorbed overheads :- a)____ Use of supplementary rates b)____ Carrying over the amount to remaining period c)____ Writing off to the Costing Profit and Loss Account d)____ Writing off to the Financial Profit and Loss Account Ans. 7. Choose the correct answer. A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan. a) Rs.8,000/- b) Rs.8,800/- c) Rs.9,666.67 d) Rs.9,333.33 Ans.d 8. Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer. a) true b) false Ans. 9. Choose the correct answer. In a certain factory Type A and Type B machines have been designed to produce the same product but Type A is less automatic than Type B and requires somewhat more labour to operate. Pertinent costs are as follows : Type A : set up cost Rs.400/-; variable cost per unit Rs.4.90. Type B : set up cost Rs.600/-; variable cost per unit Rs.4.40. Find the level of activity at which the total cost of both these machines will be same? a) 400 units b) 500 units c) 600 units d) 700 units Ans. 10. The variance that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as _______________variance. Sales margin price;Total sales margin;Sales margin yield;Sales margin volume Ans. 11. Choose all that apply. The disadvantages of supplementary overhead rates are:- a)____ It can be determined only after the end of the accounting period b)____ Defeats the basic concept of normal cost c)____ Involves lot of clerical activity d)____ It can be determined only in the beginning of the accounting period Ans. 12. Choose all that apply Features of Sunk cost are :- a)____ Indicates historical cost b)____ Not relevant in decision making process c)____ Incurred in past d)____ Relevant in decision making process Ans. 13. Indirect Cost is termed as ____________. Prime cost;Overhead;Direct expenses;Production cost Ans. 14. Margin of safety = Contribution / Profit volume ratio a) true b) false Ans. 15. Financial Accounting discloses the financial performance & financial statements of the business as a whole. a) true b) false Ans. 16. Choose all that apply The principal functions of the cost accounting department are :- a)____ Classifying labour cost according to jobs, processes, etc. b)____ Preparation of different reports based on direct, indirect labour cost, etc c)____ To focus on areas where labour cost may be reduced. d)____ Preparation of wage sheet and procedural aspects of wage payment Ans. 17. Choose all that apply Preference Shares can be classified as :- a)____ Simple Shares b)____ Cumulative Shares c)____ Redeemable Shares d)____ Deferred Shares Ans. A,b,c 18. Choose the correct answer. Accounting policy adopted by different companies may differ when it comes to valuation of :- a) Inventory b) Debtors c) Credit sales d) Credit purchases Ans. 19. Indirect material indicates that material which can be identified with the individual cost centre. a) true b) false Ans. 20. Loss of uninsured goods by fire was debited incorrectly to United India Assurance Company's account instead of debiting it to _____________________-account. Profit and loss;Insurance;General expenses;Goods lost by fire Ans. 21. Receipts and payments method of cash budget is useful for preparing long term estimates. a) true b) false Ans. 22. Choose all that apply These are the preventive costs of labour turnover :- a)____ Cost of maintaining good relations with the workers b)____ Cost of medical services c)____ Training costs d)____ Cost of welfare facilities Ans. 23. Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting a) true b) false Ans. 24. Choose all that apply Select the cases where convention of conservation is applied :- a)____ Closing stock is valued at cost or market price whichever is lower b)____ Providing for discount on debtors c)____ Amortization of goodwill (goodwill being written off to Profit and Loss Account) d)____ Providing for discount on creditors Ans. Entry for dishonour of cheque appears only in the pass book, this entry should be in the bank book. Passed , ignored,adjusted, promoted Ans. If the ordering cost s, then the economic order quantity will Increase. Increase,remain constant,become nil,decrease Ans. 27. Choose all that apply Marginal costing technique is useful in taking decisions relating to which of the following courses of action? a)____ Decision to drop a product line b)____ Decision to accept a special offer at price lower than the normal selling price c)____ Decision to accept a special offer at price higher than the normal selling price d)____ Decision regarding temporary shut-downs Ans. 28. Choose the correct answer. A good purchase system, for materials, prevents production hold-ups due to:- a) Lack of material b) Excess receipt of material c) Untrained workers d) Lack of machines Ans. 29. The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as system. Uniform accounting,uniform costing,cost accounting,cost Ans. 30. Choose the correct answer. An important feature of management accounting is :- a) Considers only historical data b) Optimizing the use of resources c) Minimizing the number of resources d) Considers only financial data Ans. 31. Choose the correct answer. The following data is extracted from the books of a manufacturing concern for the year 2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of 10% in the fixed expenses a) Rs.250,000/- b) Rs.275,000/- c) Rs.350,000/- d) Rs.375,000/- Ans. 32. Choose all that apply Locate the error and its features in the following :- a)____ Compensating errors b)____ Trial balance will not be affected c)____ Trial balance will be affected d)____ The level of unemployment decreases rapidly Ans 33. Choose all that apply Select the entries which need to be rectified :- a)____ Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) b)____ Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased) c)____ Joshi's A/c ........... Dr. to Bank A/c. (Being entry for dishonour of cheque which was originally issued by Joshi) d)_____ Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for) Ans. 34. The combination in which different products are sold by a company is known as . Production mix,standard mix,sales mix,actual mix Ans. 35.Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole a)true b)false Ans. 36.Accounting is an art of recording, classifying & summarizing in a significant manner a)true b)false Ans. 37. Generally all the liabilities will have balance Debit,credit,nil,positive Ans. 38. Choose all that apply Essentials for effective implementation of budgetary control system are a. ____ Commitment of top management b. ____ Clearly defined objectives c. ____ Continuous budget education d. ____ Zero involvement of top management Ans. 39..Choose the correct answer The reporting method used in the costing system should be based on the principle of a) Management by exception b) Management by objectives c) Cost control d) Cost reduction Ans. 40. Choose the correct answer. Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004 a) Rs.500/- b) Rs.600/- c) Rs.700/- d) Rs.800/- Ans. 41. Choose the correct answer. At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What will the 401st unit sold contribute to profit?( a) Re.0 b) Re.0.50 c) Re.1.00 d) Rs.1.50 Ans. 42. Factory rent is a direct cost to the factory as a whole but indirect to the production departments a.true b.false Ans. 43 The difference between sales and margin of safety is equal to budgeted sales. a.true b.false Ans. 44. Choose all that apply. The factors which influence the selection of the method for absorption of overheads are a) ____ Type of industry b) ____ Nature of products c) ____ Manufacturing process d) ____ Demand for products Ans. 45. The difference between sales and cost of sales is termed as Gross profit,net profit,operating margin,contribution margin Ans. 46. Under time rate system a worker is paid on the basis of production achieved by him in a given time. a) true b) false Ans. 47. . Piece rate system is suitable when quality of goods produced is of extreme importance a. True b.false Ans 48. P&L statement which is a period statement & relates to a certain period tells about results of operations. A.true b.false Ans. 49 Choose the correct answer Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. a) Rs.29.98 b) Rs.30/- c) Rs.30.98 d) Rs.29/- Ans. 50. Choose the correct answer 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.(not over) a) Rs.233,250/- b) Rs.232,250/- c) Rs.3,00,000/- d) Rs.350,000/- Ans. 51. Choose the correct answer. XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. a) Rs.20,000/- (Adverse) b) Rs.20,000/- (Favourable) c) Rs.60,000/- (Adverse) d) Rs.60,000/- (Favourable) Ans. MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Choose all that apply S Ltd. operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. For one unit of product the standard material input is 20 litres at a standard price of Rs.2/- per litre. The standard wage rate is Rs.6/- per hour and 5 hours are allowed to produce one unit. Fixed production overhead is absorbed at the rate of 100% of direct wages cost. During the month just ended the following occurred : acutal price paid for materials purchased Rs.1.95 per litre; total direct wages cost was Rs.156,000/- and fixed production overheads was Rs.158,000/-. Direct material price variance-Rs.8,000/- (Fabourable); direct material usage variance – Rs.5,000/- (Adverse); direct labour rate variance -Rs.5,760/-(Adverse); direct labour efficiency variance -Rs.2,760/- (Favourable) and fixed produciton overheads expenditure variance -Rs.8,000/-(Adverse). Calculate budgeted output in units for the month, actual hours worked and number of litres purchased during the month. a)____ Budgeted output - 5,000 units b)____ Actual hours worked - 24,040 hours c)____ Litres purchased - 160,000 litres d)____ Litres purchased - 157,500 litres Ans. 2. A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not debited to traveling A/c. The trial balance will NOT agree. a) true b) false Ans. A 3. Purchase of national saving certificates by the company from its profits, should be debited to _____________ account. Capital;Savings;Investments;Borrowings Ans. Investments 4. Variable cost + Profit = Sales. a) true b) false Ans. B 5. A business is an activity carried out with the intention of earning the profit. a) true b) false Ans. A 6. Choose all that apply Features of material usage variance are :- a)____ Measures the difference between the quantity of materials actually used and that should have been used. b)____ Measures the difference between the quantity of materials actually purchased and that should have been purchased. c)____ Considers standard price X actual quantity d)____ Considers standard price X standard quantity Ans. A,c,d 7. Marginal costing rewards sales whereas absorption costing rewards production. a) true b) false Ans. A 8. The term _________ indicates expenditure incurred on or attributable to a given thing. Revenue;Loss;Expense;Cost Ans. Cost 9. Under the average cost method of valuing material issues, new issue price is determined after ________________ issue. Each;Every alternative;The next;Previous Ans. Each 10. An adjustment relating to outstanding expenses will ____________ the net profit. Decrease;Enhance;Increase;Not affect Ans. Decrease 11. Choose the correct answer. In a factory, bonus to workmen is paid according to the Rowan plan. The allotted time for a job is 40 hours and the normal rate of wages is Rs.1.25 per hour. The factory overhead charges are 50 paisa per hour for the hours taken. The factory cost of a work order, executed by one worker, X, is Rs.161.875 and that by another, Y, is Rs.155.46. The cost of material in each case is Rs.100/-. Calculate the amount of time taken by the workman X to complete the work order. a) 25 hours b) 28 hours c) 30 hours d) 32 hours Ans. 12. Choose the correct answer. A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on computers to be charged for the year. a) Rs.36,000/- b) Rs.40,953.70 c) Rs.37,353.70 d) Rs.32,400/- Ans. B 13. Negative profit volume ratio means variable cost is ___________ the selling price. One-fifth of;More than;Less than;Equal to Ans. More than 14. Choose all that apply Features of convention of consistency are :- a)____ The accounting policies and procedures should be followed consistently b)____ Facilitates the comparison of financial statements c)____ The accounting policies and procedures should be changed consistently. d)____ It facilitates comparison of financial statements on period-to-period basis Ans. A,b,d 15. The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance. a) true b) false Ans. A 16. Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices. a) true b) false Ans. A 17. Choose the correct answer. An analysis of the time card of a worker on a machine shows that of the total 48 hours, he worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You are required to calculate the earnings of the worker. a) Rs.470/- b) Rs.500/- c) Rs.510/- d) Rs.450/- Ans. B 18. Choose the correct answer. The profit volume ratio of BB & Co,. dealing in precision instruments, is 50% and the margin of safety is 40%. You are required to work out the break-even point and the net profit if the sale volume is Rs.50,00,000/- a) Break even point-Rs.300,000/-, net profit-Rs.100,000/- b) Break even point-Rs.30,00,000/-, net profit-Rs.10,00,000/- c) Break even point-Rs.20,00,000/-, net profit-Rs.5,00,000/- d) Break even point-Rs.200,000/-, net profit-Rs.50,000/- Ans. B 19. Choose all that apply The objectives of cost accounting are :- a)____ Cost control b)____ Cost reduction c)____ Ascertainment of cost of each product d)____ Assist in managerial decision-making Ans. A,c,d 20. The greater the volume of production, the greater is the unit cost of production. a) true b) false Ans. B 21. Choose the correct answer. An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year ended 31st March, 2004. a) The net profit will not be affected b) The purchases will be increase by Rs.18,000/- c) The purchases will be decrease by Rs.18,000/- d) The creditors will increase by Rs.18,000/- Ans. A 22. Match the following 1. Trade Discount (1) 1. Not accounted for in the books of Accounts 2. Cash Discount (5) 2. Every asset has corresponding liability 3. Rs.1 Personal A/C (3) 3. Debit the receiver, Credit the giver 4. Real A/C (4) 4. Debit what comes in, Credit what goes out 5. Accounted for in the books of Accounts 6. Every profit has corresponding loss 23. Choose all that apply International Motors manufactures crankshafts for jeeps and trucks. They have furnished the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct. a)____ Cost per crankshaft for jeep is Rs.445.45 b)____ Cost per crankshaft for truck is Rs.805.66 c)____ Cost per crankshaft for truck is Rs.1,139.75 d)____ General expenses should be apportioned on direct labour ratio Ans. 24. Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. a) true b) false Ans. A 25. The treatment of _____________ time in cost accounting depends upon the distinction between normal and abnormal time. Productive;Standard;Attendance;Idle Ans. Idle 26. Choose the correct answer. The following information is available regarding two orders for the same product. Order I : material Rs.20,000/-; wages Rs.25,000/-; selling price Rs.120,000/- and percentage of profit on cost 20%. Order II : material Rs.30,000/-; wages Rs.40,000/-; selling price Rs.195,000/- and percentage of profit on cost 25%. Factory overheads are charged on a fixed percentage basis on wages and office overheads are based on percentage to works cost. Find out percentage of office overheads. a) 20% of works cost b) 60% of works cost c) 100% of works cost d) 140% of works cost Ans. 27. Choose the correct answer. The gross profit before considering closing stock in the trading account is Rs.117,560/-. Total current assets excluding closing stock is Rs.267,500/-. The value of closing stock is Rs.45,060/-. Find the gross profit and total of current assets considering the closing stock. a) Gross profit -Rs.72,500/-; Total current assets-Rs.222,400/- b) Gross profit -Rs.117,560/-; Total current assets-Rs.267,500/- c) Gross profit -Rs.162,620/-; Total current assets-Rs.312,560/- d) Gross profit -Rs.162,560/-; Total current assets-Rs.310,560/- Ans. C 28. Choose the correct answer. Ram is the owner of Dashrath & Sons. He is entitled to annual salary of Rs.8,000/-. Find its impact on profit of the enterprise. a) The net profit will not be affected b) The gross profit will decrease by Rs.8,300/- c) The net profit will increase by Rs.8,300/- d) The net profit will decrease by Rs.8,000/- Ans. D 29. Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. a) true b) false Ans. A 30. Choose the correct answer. The type of costs presented to management for elimination of a product-line should be limited to :- a) Relevant costs b) Standard costs c) Controllable costs d) Conversion costs Ans. A 31. Choose all that apply Features of convention of conservation are :- a)____ Anticipates all future losses and expenses b)____ Ignores all future incomes and profits, unless they are actually realized c)____ Applicable to valuation of current assets d)____ Applicable to valuation of non-current asset Ans. A,b,c 32. Choose all that apply From the following select the examples of errors of commission :- a)____ Purchases of fixed assets recorded in the purchase register b)____ Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- c)____ Received cash from Sham, credited to Ram's account d)____ Paid transport charges, credited to transport charges account Ans. B,c,d 33. Choose all that apply The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision :- a)____ Loss of trained personnel b)____ Loss of regular customers c)____ Expenditure required to restart the factory d)____ Expenditure relating to expanding the business Ans. A b c 34. Choose the correct answer. The integrated form of all functional budgets is known as :- a) Budget manual b) Operating budget c) Master budget d) Budgeted Balance Sheet Ans. C 35. Token or disc method is a related to the system of ______________________. Time-keeping;Recording idle time;Time-booking;Recording units produced Ans. Time-keeping 36. Choose the correct answer. Where, in the final statements of accounts, should we disclose the closing balance of income received in advance? a) Trading account b) Profit and Loss account c) Balance sheet - on the asset side d) Balance sheet - on the liability side Ans. D 37. Match the following 1. Freight inwards (4) 1. Balance sheet 2. Sales (6) 2. Profit and loss account 3. Freight outwards (2) 3. Capital account 4. Dividend paid (5) 4. Manufacturing account 5. Profit and loss appropriation account 6. Trading account 38. Choose all that apply Select the various methods adopted for treatment of under or over absorbed overheads:- a)____ Use of supplementary rates b)____ Carrying over the amount to remaining period c)____ Writing off to the Costing Profit and Loss Account d)____ Writing off to the Financial Profit and Loss Account Ans. A,b,c 39. A firm earns profit when contribution is equal to fixed costs under variable costing. a) true b) false Ans. B 40. The expenses relating to maintenance and creation of demand for the product should be included in the _________________________ budget. Financial;Production;Selling expenses;Administrative expenses Ans. Selling expenses 41. Balance sheet indicates the financial status of the business at given period. a) true b) false Ans. A 42. Choose all that apply The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance as per pass book as on the same date is Rs.10,123.60. Select the transactions representing the reasons for this difference :- a)____ Interest credited by bank, not entered in the bank book, Rs.125.60 b)____ Cheques dishonoured not entered in the bank book Rs.200/- c)____ Debit side of the cash book is overcast by Rs.100/- d)____ Debit side of the cash book is undercast by Rs.100.60 Ans. A,b,c 43. Choose all that apply The advantages of Halsey plan are :- a)____ Bonus goes on increasing with increase in time saved. b)____ Bonus goes on decreasing with increase in time saved c)____ Provides more incentive to speed up production d)____ Guaranteed time rate payment is made Ans. A,c,d 44. Choose all that apply Different types of tenders are :- a)____ Singly tender b)____ Multiple tender c)____ Open tender d)____ Global tender Ans. A,c,d 45. Choose all that apply From the following, select intangible assets:- a)____ Goodwill b)____ Patents c)____ Trade Marks d)____ Investments Ans. A,b,c 46. Choose the correct answer. Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations :- a) Differential cost b) Opportunity cost c) Sunk cost d) Variable cost Ans. A 47. Choose the correct answer. Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system? a) Capital investment b) Plant size c) Location d) Loans taken Ans. A,b,c 48. The _______________________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Variable overhead volume; Total fixed overhead; Total variable overhead; Variable overhead efficiency Ans. 49. Accounting is an art of recording, classifying & summarizing in a significant manner. a) true b) false Ans. A 50. Choose the correct answer. A company manufactures and sells four products, viz. A, B, C and D. The details are as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%, Product D-18%; Incremental rupee sale for each Rupee spent on advertisement:- Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product D-Rs.10/-. Amount of advertisement available is only Rs.5,000/-. On which product should the company spend this amount of Rs.5,000/-? a) Product A b) Product B c) Product C d) Product D Ans. 51 Profitability statement indicates the amount of assets & liabilities. a) true b) false Ans. B 52. Choose the correct answer. Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units. a) 66 days b) 66.9 days c) 67 days d) 67.9 days Ans. 53. Balance sheet indicates the expenditure & income from the business. a) true b) false Ans. B 54. If the owner brings in personal calculator for office use, _______________ account should be credited. Capital;Cash;Donation;Drawings Ans. Capital 55. If the profit volume ratio is 25%, then the variable cost is equal to ___________ of sales value. 0.25;1;0.75;0.5 Ans. 56. The process of accounting split into three steams i.e. financial, cost, management accounting. a) true b) false Ans. A MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Narration must be mentioned in the ledger. a) true b) false Ans. B 2. According to the standard costing principles, only adverse variance must be further investigated. a) true b) false Ans. B 3. Trading account is used to analyze how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. a) true b) false Ans. A 4. Choose all that apply. Special aspects of co-partnership include:- a)____ Workers are granted ownership rights b)____ Indirect monetary remuneration c)____ The morale of the workers is increased d)____ The workers are rewarded for individual efficiency Ans. A,b,c 5. Choose all that apply. The key factor determines the :- a)____ Level of activity b)____ Capacity utilization c)____ Level of sales d)____ Capacity installation Ans. A,b,c 6. The purchase account should be debited when an order is placed with the supplier of material a) true b) false Ans. B 7. Cost volume profit analysis focuses attention on the ______________effect of a particular course of action. Short and long run; Medium run; Short run; Long run Ans. Short run 8. Choose the correct answer. Quantify the increase in profit on account of following errors : (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses. a) Rs.41,650/- b) Rs.45,000/- c) Rs.43,200/- d) Rs.44,750/- Ans. C 9. Choose the correct answer. XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units (packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum price should it quote for this deal? a) Rs.150/- b) Rs.170/- c) Rs.190/- d) Rs.200/- Ans. C 10. Choose all that apply. The main advantages of profit sharing are :- a)____ Employees try to increase productivity b)____ Incentives are shared by all the employees c)____ Augments employees' efficiency d)____ Incentives are shared by the management Ans. A,b,c 11. Choose the correct answer. SRR Ltd. producing a single product, sells it at Rs.50/- per unit. Unit variable cost is Rs.35/- and fixed costs amounts to Rs.12,00,000/- per annum. Calculate the increase in sales required if profits are to be increased by Rs.2.4 lakhs a) Rs.880,000/- b) Rs.800,000/- c) Rs.600,000/- d) Rs.660,000/- Ans. 12. Choose the correct answer. If the raw material prices are suffering from inflation, which of the following methods of valuing stocks will give the lowest gross profit? a) First-in-first-out b) Last-in-first-out c) Simple average d) Standard cost Ans. 13. Choose the correct answer. Double entry system of accounting follows the principle of :- a) Every debit has corresponding credit b) Every asset has corresponding liability c) Every expenditure has corresponding income d) Every profit has corresponding loss Ans. A 14. An error of partial omission can be rectified by either debiting or crediting the ________________ account, as the case maybe. Adjusted profit and loss;Credit;Suspense;Profit and loss Ans. Suspense 15. Choose the correct answer. Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry? a) Uniform costing b) Standard costing c) Absorption costing d) Multiple costing Ans. A 16. Piece rate system is suitable when quality of goods produced is of extreme importance. a) true b) false Ans b 17. Match the following: 1. Spirit of mutual trust (2) 1. Scope of uniform costing 2. Avoids cut throat competition (6) 2. Requisite for uniform costing 3. Treatment given to research and development costs (3) 3. Fields covered by uniform costing 4. Advantageously applicable in similar industries (1) 4. Process of uniform costing 5. Disadvantage of uniform costing 6. Advantage of uniform 18. If the customer is not likely to pay the amount receivable from him, this amount should to be treated as __________________. Long term debts;Accrued income;Current liability;Bad debts Ans. Bad debts 19. If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material a) true b) false Ans. A 20. Choose the correct answer. Judge the given statement according to the given criteria :- Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory. a) The statement and the reason both are correct b) The statement and the reason both are incorrect c) The statement is correct but the reason is incorrect d) The statement is incorrect but the reason is correct Ans. A 21. Choose the correct answer. The store-keeper should initiate action for the purchase of a material, when it reaches its :- a) Maximum level b) Minimum level c) Average level d) Re-order level Ans. D 22. Choose all that apply. From the following, select current assets:- a)____ Sundry debtors b)____ Stock c)____ Pre paid expenses d)____ Goodwill Ans. A,b,c 23. If the total amount on the ______________-side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance Credit;Deflated;Nil;Debit Ans. Debit 24. A written order sent to inform the purchasing department of a need for materials is called a ___________________. Goods received note; Purchase order; Material requisition note; Purchase requisition note Ans. Purchase requisition note 25. The process of recording the business transactions in a defined set of records is referred to as __________________. Trading account;Profit and Loss Account;Balance sheet;Trial Balance Ans. Balance sheet 26. Choose the correct answer. In a factory Beduax Point Premium system is in operation. The following are the particulars with regard to a job in a factory : allowed time for the job =600 B's; time taken = 480 minutes (or B's); rate = Rs.12/- per hour. Calculate the amount of bonus. a) Rs.114/- b) Rs.96/- c) Rs.104/- d) Rs.106/- Ans. A 27. Choose the correct answer. As a part of the data presented in support of a proposal to increase the production of clock radios, the sales manager of Wittman Electronics reported the total additional cost required for the proposed increased production level. The increase in total cost is known as :- a) Controllable cost b) Opportunity cost c) Out-of-pocket cost d) Incremental cost Ans. D 28. Financial statements are basically in two forms i.e. profitability statement and balance sheet. a) true b) false Ans. A 29. Choose all that apply Select the steps to be followed while preparing bank reconciliation statement :- a)____ Compare the transactions in the bank book and the pass book b)____ Check the totals and the balancing of both the books c)____ Confirm that the opening balances of both the books are tallying d)____ Confirm that the closing balances of both the books are tallying Ans. A,b,c 30. Choose all that apply The factors which influence the selection of the method for absorption of overheads are:- a)____ Type of industry b)____ Nature of products c)____ Manufacturing process d)____ Demand for products Ans. 31. Choose all that apply. From the available information calculate sales value variance and budgeted sales quantity of X. Actual sales of X -500 units; budgeted price per unit -Rs.12/-; actual price per unit-Rs.15/- and sales volume variance -Rs.1,200/- (Favourable). a)____ Budgeted sales - 400 units b)____ Sales value variance -Rs.2,700/- c)____ The sales value variance is adverse d)____ The sales value variance is favourable Ans. A,b,d 32. Goods returned by Pawan worth Rs.1,000/- is debited to Pawan's Account. In order to rectify the mistake, ________________-account should be debited. Miscellaneous;Pawan's;Suspense;Personal Ans. Suspense 33. Bank reconciliation statement can be prepared on weekly basis. a) true b) false Ans. A 34. Choose all that apply Merits of break even point analysis are as follows:- a)____ Useful diagnostic tool. b)____ Used for analyzing the risk implication of alternative actions c)____ Used to graphically represent complicated data. d)____ Useful in the long run. Ans. A,b,c 35. Choose all that apply If you are required to enforce uniform costing system in your industry, how would you proceed? a)____ Collecting data from all units of your industry b)____ Ensuring that the data collected is complete and correct c)____ Maintaining secrecy of the data collected d)____ Allowing free access to all the units to the collected data Ans. A,b,c 36. A standard that is never altered, after being established, is known as ______________ standard. Projected;Ideal;Attainable;Basic Ans. Ideal 37. Choose the correct answer. The main object of establishing the maximum stock level for material is :- a) To ensure that inventory exceeds this limit b) To ensure that inventory never exceeds this limit c) To maintain safety stock to take care of emergencies d) To avoid production stoppage due to lack of material Ans. B 38. Choose all that apply. For the given transaction find the wrong entry that has been passed in the books of accounts, the correct entry that should have been passed and the rectification entry required to rectify the mistake. "On 1st September, 2004 the total of the previous month's wages was debited to 'Manufacturing Wages Account". During the previous month, a new machine was installed, and the firm's own employees had spent time thereon; the previous month's wages for all such employees amounted to :- a)____ Manufacturing Wages A/c. . . Dr. Rs.14,100/- To Machinery A/c Rs.14,100/- b)____ Machinery A/c. . . Dr. Rs.14,100/- To Manufacturing Wages A/c Rs.14,100/- c)____ Machinery A/c . . . Dr. Rs.14,100/- To Cash A/c Rs.14,100/- d)____ Rs.14,100/- To Cash A/c Rs.14,100/- Ans. 39. Choose the correct answer. Which of the following costs is most likely to have a cost behaviour pattern described as a fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10 paisa to 8 paise per unit at 2,000 units? a) Photocopying equipment with a fixed hire charge plus a reducing charge per unit b) Wages payment which is fixed for a minimum output quantity after which a bonus per unit is paid which reduces when activity level exceeds 1,000 units c) Royalty payment per unit which reduces after 2,000 units d) Material cost 12 paise per unit for the first 1,000 units followed by 10 paise per unit upto 2,000 units and 8 paise per unit thereafter. Ans. 40. Absorption costing is more suitable for decision making than marginal costing a) true b) false Ans. B 41. Primary distribution is effected on the basis of service rendered to the service departments by the production departments. a) true b) false Ans. 42. _____________-system of wage payment is a combination of Halsey system and Gantt system. Diemer;Barth premium;Halsey-Weir;Rowan premium Ans. Diemer 43. Choose the correct answer. As cost centers facilitate the control function, in many cases, they are termed as :- a) Responsibility centers b) Decision centers c) Service centers d) Accounting centers Ans. A 44. Choose all that apply. Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction. a)____ The purchases will increase by Rs.6,450/- b)____ The closing stock will increase by Rs.6,450/- c)____ The gross profit will increase by Rs.6,450/- d)____ The gross profit will not be affected Ans. C 45. Under the ______________-of wage payment the worker is paid on the basis of production achieved irrespective of the time taken for its performancex Merrick piece-rate system; Taylor's piece rate system; Straight piece rate system; Differential time rate Ans. Straight piece rate system 46. Choose the correct answer A firm of boiler-house engineers provides engineering services to large number of factories having boiler houses. The firm charges on the basis of number of hours its engineers have worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An engineer's annual remuneration comprises (for the year 2003) : basic pay Rs.2,00,000/-, house rent allowance 30%, dearness allowance 20% and other allowances 15%. Employer also contributes 10% of basic pay towards provident fund, which is taken as part of the salary. Calculate the rate of charge(on total cost basis) for an hour's work done by the engineer for the client. a) Rs.182.29 b) Rs.182.00 c) Rs.183.29 d) Rs.183.00 46Ans. 47. Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting. a) true b) false Ans. A 48. The concept of marginal costing is based on the important distinction between product costs and _________costs. Indirect; Direct; Variable; Period Ans. Period 49. P&L statement which is a period statement & relates to a certain period tells about results of operations. a) true b) false Ans. A 50. Match the following: 1. Plan of investment in fixed assets (3) 1. Issue of shares 2. Plan for surplus/shortage of cash (6) 2. Cash Sales 3 Operating income (2) 3. Capital Expenditure Budget 4. Non-Operating income (1) 4. Income and expenditure budget 5. Revenue expenditure budget 6. Cash Budget 51. Financial Accounting discloses the financial performance & financial statements of the business as a whole. a)true b)false Ans. A 52. 1) Financial statements are basically in two forms i.e. profitability statement and balance sheet. a)true b)false Ans. A 53. Choose the correct answer. Following data has been extracted from the records of a manufacturing company whose level of operations varies during different months. Minimum activity : 30,000 machine hours and manufacturing overheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads. a) Fixed overheads Rs.480,000/- and variable overheads Rs.4/- per machine hour b) Fixed overheads Rs.480,000/- and variable overheads Rs.8/- per machine hour c) Fixed overheads Rs.280,000/- and variable overheads Rs.8/- per machine hour d) Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour Ans. 54. Choose the correct answer. Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account? a) Rs.50,000/- b) Rs.45,000/- c) Rs.40,000/- d) Rs.55,000/- Ans. B 55. Choose all that apply. The objectives of Uniform costing system are as follows :- a)____ To fix a common selling price for the industry as a whole b)____ To compare efficiency of each unit against industry's overall performance c)____ To compile reliable cost data for inter-firm comparison of costs d)____ To fix a common selling price so as to maximize profits of each unit Ans. A,b,c MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Choose the correct answer. From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments :X- Rs.48,000; Y- Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B-Rs.18,000. The expenses of the service departments are apportioned as follows : Service department A - Production department X-20%; Production department Y - 40%; Production department Z- 30%; Service department B - 10%.Service department B- Production department X-40%; Production department Y - 20%; production department Z- 20%; Service department A - 20%. Details of machine hours are as follows: Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-1,000 hours. a) X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 b) X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 c) X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 d) X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 Ans. 2. The sum of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. a) true b) false Ans. 3. Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as _______________________ in the balance sheet. Current liabilities;Investments;Capital;Long term liabilities Ans. 4. Choose all that apply The features of multiplicity of key factors are as follows :- a)____ Only one key factor b)____ More than one key factors c)____ Refers to a complex situation d)____ Can be resolved by using linear programming technique Ans. 5. Choose all that apply Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance. a)____ Material cost variance -Rs.400/- (Adverse) b)____ Material usage variance -Rs.750/- c)____ Material usage variance is favourable d)____ Material usage variance is adverse Ans. 6. Choose all that apply Techniques of management accounting include:- a)____ Marginal costing b)____ Cost control c)____ Budgetary control d)____ Standard costing Ans. 7. Choose the correct answer. A perpetual inventory system may be defined as :- a) The checking of physical stock against the quantity and quality of new material required b) The documentation system which records all stores transactions on a continuous basis c) The checking of stock on the same date in each accounting period d) Ensuring that stocktaking procedures conform to a previously agreed procedure Ans. 8. Obsolescence arises when a machine has to be discarded in favour of one better adopted to its purpose and giving better result. a) true b) false Ans. 9. Choose the correct answer. A wholesaler supplies 40 cricket bats to different shopkeepers on each working day. Presently the wholesaler is purchasing bats in lots of 200 at a cost of Rs.60,000/- per lot. On every order he incurs a handling charge of Rs.150/- and freight charge of Rs.250/- per order. Multiple and fractional lots can also be ordered. All orders are supplied the next day. The wholesaler finances investment in inventory by paying 2% monthly interest on borrowed funds. Incremental storage cost per bat is Rs.8/-. How many bats should be ordered at a time to minimize total annual inventory cost, assuming that there are 300 working days in a year? a) 1,200 bats b) 746 bats c) 500 bats d) 346 bats 9Ans. 10. Choose all that apply Plant and equipment can become a key factor in the following circumstances :- a)____ Limited capacity due to lack of capital b)____ Insufficient number of workers to work in the plant c)____ Insufficient capacity due to shortage of space d)____ Limited number of hours for which the plant can be used Ans. 11. Choose all that apply Select the examples of functional budgets:- a)____ Sales budget b)____ Production budget c)____ Research and development budget d)____ Capital expenditure budget Ans. 12. Choose the correct answer. The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract should be defined as :- a) Direct labour cost b) Indirect labour cost c) Fixed labour cost d) Non-controllable labour cost Ans. 13. New companies can adopt Uniform costing system as a ready-made system. a) true b) false Ans. 14. Preparation of direct material ____________ budget is the responsibility of the Purchase manager. Purchase;Stores;Tool room;Production Ans. 15. Choose the correct answer. Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc. a) The statement and the reason are both incorrect b) The statement is correct but the reason is incorrect c) The statement is incorrect but the reason is correct d) The statement and the reason are both correct 15Ans. 16. Choose the correct answer. Find the budget which is inadequate as a cost control technique :- a) Flexible budget b) Budgeted Balance Sheet c) Fixed budget d) Sales budget Ans. 17. _______________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting Cost;Financial;Inflation;Management Ans. 18. Choose all that apply In which of the following situations, the flexible budget should be preferred? a)____ Sales are too difficult to predict b)____ Supply level of input cannot be predicted c)____ Standard level of production activity d)____ Varying levels of production activity Ans. 19. Depreciation charged on office furniture on straight line basis is an example of ________________________________. Factory overheads; Selling overheads; Distribution overheads; Administration overheads Ans. 20. Choose all that apply The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might have brought this change. a)____ Accrued commission income of Rs.32,960/- was not entered in the books b)____ Rent for the month of March was payable and yet to be recorded Rs.19,280/- c)____ Rent for the month of March was receivable and yet to be recorded Rs.19,280/- d)____ Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account Ans. 21. Choose all that apply Features of Taylor's differential piece rate system are as follows :- a)____ Strong incentive to inefficient and new workers. b)____ Minimal clerical work is involved in calculating the wages c)____ Helps in building up an efficient labour force d)____ Strong incentive to efficient and ambitious workers. Ans. 22. Choose the correct answer. Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. a) Rs.29.98 b) Rs.30/- c) Rs.30.98 d) Rs.29/- Ans. 23. Choose the correct answer. XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased to offset 20% reduction in selling price, so that the existing profit remains intact? a) 0.2 b) 0.4 c) 0.6 d) 0.8 Ans. 24. Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. a) true b) false Ans. 25. Choose the correct answer. Product costs under direct costing include:- a) Prime cost only b) Prime cost and variable factory overheads c) Prime cost and fixed factory overheads d) Prime cost, variable and fixed factory overheads Ans. 26. The process of attributing proportions of items of costs amongst cost centres is called _________________________________________. Cost allocation;Cost apportionment;Overhead absorption;Absorption of indirect costs Ans. 27. Choose the correct answer. Interest on bank loan, was paid till the quarter ending 30th September, 2003, Rs.36,000/-. Find the amount to be debited to the profit and loss account for the year ending on 31st March, 2004, assuming the loan is not yet repaid as on this date. a) Rs.72,000/- b) Rs.70,000/- c) Rs.36,000/- d) Rs.30,000/- Ans. 28. Match the following 1. Indirect Material ( ) 1. Function wise classification 2. Administration overheads ( ) 2. Variability wise classification 3. Fixed overheads ( ) 3. Element wise classification 4. Abnormal overheads ( ) 4. Procedure wise classification 5. Normality wise classification 6. Controllability wise classification 29. Match the following 1. Change in total cost/ Change in (4) 1. Margin of safety ratio activity level 2. Total sales X Profit volume ratio (6) 2. Variable cost per unit 3. Selling price ( Actual sales–Break (2) 3. Profit even sales) 4. Change in profit/ Change in (5) 4. Profit volume ratio activity level 5. Margin of safety 6. Total contribution Select The Blank Question The short run financial plan which acts as a guide to achieve the predefined targets is known as ________. Correct Answer Budget Your Answer Budget True/False Question Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. Correct Answer False Your Answer True True/False Question If the storage cost of inventory increases, then the economic order quantity also increases. Correct Answer False Your Answer True True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. 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 Select the factor which can prove to be a very crucial key factor in case of an oil refinery :- Correct Answer Supply of crude oil Your Answer Labour Multiple Choice Multiple Answer Question The components of the selling and distribution cost budget are :- Correct Answer Distribution expenses , Publicity expenditure , Salary of sales-office workers Your Answer Distribution expenses , Publicity expenditure , Salary of shop-floor workers Select The Blank Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________. Correct Answer Decrease in gross profit by Rs.2,020/- Your Answer No effect on gross profit Select The Blank Question A ________ inventory turnover period indicates efficient utilization of material. Correct Answer Low Your Answer Low Multiple Choice Multiple Answer Question Master budget provides a basis for computing effect of changes in :- Correct Answer Product mix of the company , Sales volume , Production facilities Your Answer Product mix of the company , Sales volume , Production facilities , Number of competitors Multiple Choice Multiple Answer Question The reasons and objectives of budgets may be stated as :- Correct Answer To aid the planning of annual operations , To communicate the organizational plans to the different departments , To motivate the managers to strive for attainment of the organizational goals Your Answer To aid the planning of annual operations , To communicate the organizational plans to the different departments , To motivate the managers to strive for their promotions Select The Blank Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization. Correct Answer Net Your Answer Net Match The Following Question Correct Answer Your Answer Transport facilities to employees Preventive cost of labour turnover Preventive cost of labour turnover Relationship between supervisor and worker Avoidable cause of labour turnover Avoidable cause of labour turnover Dismissal of employee Unavoidable cause of labour turnover Unavoidable cause of labour turnover Increased spoilage and defectives Replacement cost of labour turnover Replacement cost of labour turnover Multiple Choice Multiple Answer Question Actual costs determined on the basis of costing records maintained have following limitations :- Correct Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Your Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Multiple Choice Multiple Answer Question These are the methods of measuring labour turnover :- Correct Answer Replacement Method , Separation Method , Flux Method Your Answer Replacement Method , Separation Method , Flux Method True/False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Your Answer True Select The Blank Question A trading concern will have only ________ overheads and selling overheads. Correct Answer Administration Your Answer Distribution Multiple Choice Single Answer Question The profit volume ratio of X Ltd. is 50% and the margin of safety to sales ratio is 40%. You are required to calculate the net profit if sale volume is Rs.100,000/- Correct Answer Rs.20,000/- Your Answer Rs.40,000/- True/False Question 1) Financial statements are basically in two forms i.e. profitability statement and balance sheet. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question A company produces 2.50 units of a product from one kg of raw material, which is purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per order. The incremental carrying cost of raw material is Re.0.50 per kg per month. In addition, the cost of working capital finance on the investment in inventory of raw materials is Rs.9/- per kg per annum. The annual production of the product is 100,000 units. Select the statements which are true for this problem. Correct Answer 20 orders should be placed in a year , Economic order quantity is 2,000 kg , Storage cost is Rs.15/- per kg Your Answer Economic order quantity is 2,000 kg , Storage cost is Rs.15/- per kg , 50 orders should be placed in a year True/False Question Financial Accounting discloses the financial performance & financial statements of the business as a whole. Correct Answer True Your Answer True Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Your Answer Parallel to Multiple Choice Single Answer Question A business's telephone bill should normally be classified into which one of the following categories? Correct Answer Semi-variable cost Your Answer Variable cost Select The Blank Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________. Correct Answer 90% to 100% Your Answer 90% to 100% True/False Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Your Answer False Select The Blank Question The systematic process of identifying and reporting variance is known as ________. Correct Answer Variance analysis Your Answer Standard costing Multiple Choice Single Answer Question If the quantity of material purchased and quantity used are different, then which quantity should be used to compute the material price variance? Correct Answer Quantity of material purchased Your Answer Quantity of material purchased Multiple Choice Multiple Answer Question Essentials for effective implementation of budgetary control system are :- Correct Answer Commitment of top management , Clearly defined objectives , Continuous budget education Your Answer Commitment of top management , Clearly defined objectives , Continuous budget education Select The Blank Question The sources which have been used by an organization to raise funds indicate ________for the organization. Correct Answer A liability Your Answer A source of income True/False Question Differential cost analysis is incorporated in the cost books. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Piece rate systems are very useful in the following circumstances:- Correct Answer Units of output are measurable , Job is standardized , The flow of work is regular Your Answer Units of output are measurable , Job is standardized , The flow of work is regular Multiple Choice Multiple Answer Question Identify the causes due to which the cost of labour may be high :- Correct Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Your Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Multiple Choice Multiple Answer Question Which of the following transactions should be excluded while preparing a cost sheet? Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit Your Answer Sale of scrap material , Interest on loan , Bad debts Multiple Choice Single Answer Question If the proprietor has taken away goods worth Rs.5,500/- for personal use, find its impact on the proprietor's account in the organization. Correct Answer The capital will decrease by Rs.5,500/- Your Answer The balance of drawings account will increase by Rs.5,500/- Match The Following Question Correct Answer Your Answer Balance-sheet Financial status Financial status 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 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 , Maintaining secrecy of the data collected , Allowing free access to all the units to the collected data True/False Question In case the standards are too difficult to achieve, they will provide additional incentive for improvement. Correct Answer False Your Answer True Multiple Choice Single Answer Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Correct Answer Investment account - Rs.170,000/- Your Answer Cash account - Rs.170,000/- Multiple Choice Single Answer Question Which of the following is a correct definition of the key factor? Correct Answer The factor which limits the activities of the undertaking Your Answer The factor which maximized sales 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 True/False Question A journal entry is passed for trade discount, but no entry is passed for cash discount. Correct Answer False Your Answer False True/False Question Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit). Correct Answer False Your Answer True Multiple Choice Multiple Answer Question Causes for adverse material price variance are:- Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Your Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges True/False Question Balance sheet indicates the financial status of the business at given period. Correct Answer True 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 True/False Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Correct Answer True Your Answer True True/False Question Balance sheet indicates the expenditure & income of the business. Correct Answer False Your Answer False True/False Question P&L statement which is a period statement & relates to a certain period tells about results of operations. Correct Answer True Your Answer True Multiple Choice Single Answer Question Which section of the Companies Act, 1956, states that cost audit is compulsory for certain industries? Correct Answer 209(1) (d) Your Answer 209(1) (d) Select The Blank Question The various contents of a uniform cost manual are organization, cost accounting system and ________. Correct Answer Presentation of information Your Answer Presentation of information True/False Question Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost. Correct Answer False Your Answer False True/False Question Goods sent to the customers on approval basis should be treated as sales. Correct Answer False Your Answer True Multiple Choice Multiple Answer Question Features of material usage variance are :- Correct Answer Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity Your Answer Measures the difference between the quantity of materials actually used and that should have been used. , Measures the difference between the quantity of materials actually purchased and that should have been purchased. , Considers standard price X actual quantity , Considers standard price X standard quantity Select The Blank Question Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Correct Answer Investments Your Answer Savings Multiple Choice Multiple Answer Question In practical circumstances, control ledgers may be maintained for the following categories:- Correct Answer Sundry debtors , Sundry creditors , Advance to Staff Your Answer Sundry debtors , Sundry creditors , Advance to Staff True/False Question Trading account is used to analyze how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Correct Answer True Your Answer True True/False Question Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question From the following, select current assets:- Correct Answer Sundry debtors , Stock , Pre paid expenses Your Answer Sundry debtors , Stock , Pre paid expenses Multiple Choice Single Answer Question The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as:- Correct Answer Labour rate variance Your Answer Labour rate variance True/False Question Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Correct Answer False Your Answer False True/False Question The reports generated by financial accounting are meant for the use by management for effective decisions. Correct Answer True Your Answer True True/False Question Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The objectives of Uniform costing system are as follows :- Correct Answer To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of costs Your Answer To compile reliable cost data for inter-firm comparison of costs , To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance Select The Blank Question ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Correct Answer Management Your Answer Management True/False Question Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. Correct Answer True Your Answer True Select The Blank Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Your Answer Personnel Select The Blank Question Margin of safety indicates ________ of operations. Correct Answer Profitability Your Answer Profitability Multiple Choice Multiple Answer Question Labour efficiency variance arises due to:- Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material Your Answer Inefficient supervisor , Poor working conditions , Change in material mix Multiple Choice Multiple Answer Question Examples of indirect material are :- Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes Your Answer Consumable stores , Glue used in book binding , Rear-view mirror of a two wheeler Match The Following Question Correct Answer Your Answer Total cost - Fixed cost Variable cost Variable cost Contribution - Fixed cost Profit Profit Total cost + Profit Sales Sales Fixed cost + Variable cost Total cost Total cost True/False Question Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Change in profit/ Change in activity level Profit volume ratio Profit volume ratio Change in total cost/ Change in activity level Variable cost per unit Profit Total sales X Profit volume ratio Total contribution Total contribution Selling price ( Actual sales - Break even sales) Margin of safety Margin of safety ratio Select The Blank Question The process of finding the reasons for the difference in the balance as per bank book and pass book is known as ________. Correct Answer Reconciliation Your Answer Reconciliation Select The Blank Question The difference between sales and prime cost is known as ________. Correct Answer Gross Profit Your Answer Net Profit Multiple Choice Single Answer Question Standard labour cost of a job has been specified as 50 hours work by skilled workers @ Rs.20/- per hour and 150 hours work by unskilled workers @ Rs.10/- per hour. Actual time taken was 70 hours by skilled workers @ Rs.18/- per hour and 170 hours by unskilled workers @ Rs.13/- per hour. Calculate labour yield variance. Correct Answer Rs.500/- (Adverse) Your Answer Rs.500/- (Adverse) Select The Blank Question The stores department is a ________ department. Correct Answer Service Your Answer Valuable Multiple Choice Multiple Answer Question Cost control procedure deals with :- Correct Answer Establishment of plans , Comparison of actual and planed performance , Computation of variance Your Answer Establishment of plans , Computation of profit , Comparison of actual and planed performance True/False Question The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost. Correct Answer True Your Answer True True/False Question Under the Rowan plan bonus is a fixed percentage. Correct Answer False Your Answer False Multiple Choice Single Answer Question Which of the following is the most efficient use of the clock card? Correct Answer To facilitate payment for time spent on the work premises Your Answer To facilitate payment for time spent on the work premises Multiple Choice Single Answer Question It is said that adoption of uniform costing creates customer confidence because :- Correct Answer Prices are reliable Your Answer Prices are reliable Select The Blank Question Profit = Contribution per unit X ________. Correct Answer Margin of safety (units) Your Answer Sales (units) True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Techniques of management accounting include:- Correct Answer Marginal costing , Budgetary control , Standard costing Your Answer Marginal costing , Budgetary control , Standard costing Multiple Choice Single Answer Question An important feature of management accounting is :- Correct Answer Optimizing the use of resources Your Answer Considers only historical data True/False Question Category C items, as per the ABC analysis, usually refers to indirect material. Correct Answer True Your Answer False Multiple Choice Single Answer Question A withdrawal of Rs.500/- from Mr.Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr.Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr.Johny, find out the balance as per his bank book. Correct Answer Rs.1,750/- (debit) Your Answer Rs.1,750/- (debit) Multiple Choice Multiple Answer Question These are the preventive costs of labour turnover :- Correct Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Your Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Multiple Choice Multiple Answer Question The causes of idle time can be analyzed as :- Correct Answer Administrative causes , Productive causes , Economic causes Your Answer Administrative causes , Productive causes , Economic causes Select The Blank Question Baum Differential Plan is a combination of Taylor's differential piece rate system and Halsey system and is also known as ________. Correct Answer Milwankee plan Your Answer Milwankee plan Multiple Choice Single Answer Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Correct Answer Rent received in advance account Your Answer Rent received in advance account Multiple Choice Multiple Answer Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of :- Correct Answer Interest on loans taken from other , Interest on loans granted to others , Depreciation on plant and machinery Your Answer Depreciation on plant and machinery , Preliminary expenses written off , Interest on loans taken from other , Interest on loans granted to others True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Your Answer True Select The Blank Question The variance that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer Sales margin volume Your Answer Total sales margin Multiple Choice Multiple Answer Question In practical circumstances, control ledgers may be maintained for the following categories:- Correct Answer Sundry debtors , Sundry creditors , Advance to Staff Your Answer Sundry debtors , Sundry creditors , Advance to Staff True/False Question All cash sales are recorded in the sales register. Correct Answer False Your Answer True Select The Blank Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety will be Rs.________. Correct Answer 100,000/- Your Answer 100,000/- Select The Blank Question ________ account can be defined as the record of all the transactions pertaining to a person, asset, liability income or expenditure which have taken place in a specified period. Correct Answer Ledger Your Answer Ledger Multiple Choice Single Answer Question A good purchase system, for materials, prevents production hold-ups due to:- Correct Answer Lack of material Your Answer Lack of material True/False Question According to last-in-first-out method of material issue pricing, issues prices are close to current economic values. Correct Answer True Your Answer True True/False Question Profitability statement indicates the amount of assets & liabilities. Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Dividend paid Profit and loss appropriation account Profit and loss appropriation account Freight inwards Manufacturing account Manufacturing account Sales Trading account Trading account Freight outwards Profit and loss account Profit and loss account Multiple Choice Multiple Answer Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost? Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Your Answer The level of control of the used of material in the production cycle , An increase in the maximum material inventory level , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Multiple Choice Multiple Answer Question Labour turnover means :- Correct Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force Your Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force True/False Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. Correct Answer False Your Answer False True/False Question A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Correct Answer True Your Answer True True/False Question One of the major drawback of the contribution approach to costing is that it ignores fixed cost. Correct Answer True Your Answer False Select The Blank Question Non-trading income is disclosed on the credit side of ________ account. Correct Answer Profit and loss Your Answer Profit and loss True/False Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Your Answer False Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Your Answer Parallel to Select The Blank Question Depreciation is caused by use factor, obsolescence and ________. Correct Answer Time factor Your Answer Time factor Select The Blank Question Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Correct Answer Long term liabilities Your Answer Current liabilities Multiple Choice Single Answer Question Which of the following documents contains information as to quantity and value of material stock? Correct Answer Stores ledger Your Answer Material requisition note Multiple Choice Multiple Answer Question Direct Cost includes :- Correct Answer Direct material , Direct labour , Direct expenses Your Answer Direct material , Direct labour , Direct expenses 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 Select the steps to be followed while preparing bank reconciliation statement :- Correct Answer Compare the transactions in the bank book and the pass book , Check the totals and the balancing of both the books , Confirm that the opening balances of both the books are tallying Your Answer Compare the transactions in the bank book and the pass book , Check the totals and the balancing of both the books , Confirm that the opening balances of both the books are tallying True/False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Your Answer True Multiple Choice Single Answer Question What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges on the lathe machine were debited to Carriage inward account, Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous expenses account, Rs.200/- Correct Answer Cost will increase by Rs.1,300/- Your Answer Cost will decrease by Rs.900/- True/False Question Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. Correct Answer False Your Answer True Select The Blank Question If the time booked as per the job cards is less than the attendance time it indicates ________ during which the worker has not done any work though he was present in the factory. Correct Answer Idle time Your Answer Idle time Multiple Choice Multiple Answer Question Special aspects of co-partnership include:- Correct Answer Workers are granted ownership rights , Indirect monetary remuneration , The morale of the workers is increased Your Answer Workers are granted ownership rights , The morale of the workers is increased , The workers are rewarded for individual efficiency True/False Question One of the main objection to the contribution approach of costing is that it ignores fixed cost. Correct Answer True Your Answer False True/False Question If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material. Correct Answer True Your Answer False True/False Question Linking overhead to a cost unit is known as overhead absorption. Correct Answer True Your Answer False True/False Question Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. Correct Answer True Your Answer True Multiple Choice Single Answer Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonored cheque, originally received from Mr.A. The fact of dishonor was not recorded in the bank book. Find the balance as per pass book. Correct Answer Rs.128/- (overdraft) Your Answer Rs.106/- (credit) Match The Following Question Correct Answer Your Answer Differential Cost Increase or Decrease in cost Increase or Decrease in cost Sunk Cost Historical Cost Historical Cost Cost Centre Facilitate the fixation of responsibility Facilitate the fixation of responsibility Cost Control Process of controlling costs of operations Process of controlling costs of operations 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 In a factory Beduax Point Premium system is in operation. The following are the particulars with regard to a job in a factory : allowed time for the job =600 B's; time taken = 480 minutes (or B's); rate = Rs.12/- per hour. Calculate the amount of bonus. Correct Answer Rs.114/- Your Answer Rs.104/- Multiple Choice Multiple Answer Question The quarterly production of a company's product which has a steady market is 20,000 units. Each unit of product requires 0.5 kg of raw material. The cost of placing one order for raw material is Rs.100/- and the inventory carrying cost is Rs.2/- per kg per annum. The lead time for procurement of raw material is 36 days and a safety stock of 1,000 kg of raw materials is maintained by the company. The company has been able to negotiate the following discount structure with the raw material supplier : For order quantity below 7,000 kg -discount per order is NIL. For order quantity between 7,000 kg and 8,000 kg., discount per order is Rs.400/-. For order quantity between 8,000 kg and 16,000 kg., discount per order is Rs.2,000/-. For order quantity between 16,000 kg and 30,000 kg., discount per order is Rs.3,200/-. Find the statements which indicate the correct costs for the different order sizes. Correct Answer If order size is 6,667 units, total cost is Rs.6,867/- , If order size is 10,000 units, total cost is Rs.8,400/- , If order size is 20,000 units, total cost is Rs.17,000/- Your Answer If order size is 10,000 units, total cost is Rs.8,400/- , If order size is 20,000 units, total cost is Rs.17,000/- , If order size is 5,000 units, total cost is Rs.5,400/- Select The Blank Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Your Answer Personnel Select The Blank Question ________ system of wage payment is a combination of Halsey system and Gantt system. Correct Answer Diemer Your Answer Diemer Multiple Choice Single Answer Question Standard labour cost of producing 500 metre of cloth has been specified as 20 hours work by skilled workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per hour. For producing 500 metre cloth they worked for 30 hours each they were paid at the rate of Rs.17/- per hour and Rs.10/- per hour, respectively. Calculate labour mix variance. Correct Answer Rs.30/- (Adverse) Your Answer Rs.60/- (Adverse) Multiple Choice Single Answer Question Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account will be disclosed in the :- Correct Answer Balance Sheet - liability side Your Answer Balance Sheet - liability side 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 Multiple Choice Multiple Answer Question Different types of tenders are :- Correct Answer Singly tender , Open tender , Global tender Your Answer Singly tender , Open tender , Global tender Multiple Choice Multiple Answer Question Causes for adverse material price variance are:- Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Your Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Select The Blank Question Under the Merrick's differential piece rate system of wage payment if the efficiency level of a worker is below 83%, then he is paid wages at ________ piece rate. Correct Answer Normal Your Answer Normal MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Choose all that apply. Subsidiary books include:- a)____ Cash Book b)____ Purchase Register c)____ Sales Register d)____ Pass Book Ans. A,b,c 2. Choose the correct answer. Product costs under direct costing include:- a) Prime cost only b) Prime cost and variable factory overheads c) Prime cost and fixed factory overheads d) Prime cost, variable and fixed factory overheads Ans. B 3. An item of cost that is direct for one business organization may be indirect for another business organization. a) true b) false Ans. A 4. Choose the correct answer. Annual maintenance of Rs.28,000/- was paid on 15th June, 2003 for a period of one year therefrom. Find the amount of prepaid maintenance expenditure for the year ended 31st March. a) Rs.28,000/- b) Rs.22,167/- c) Rs.7,000/- d) Rs.5,833/- Ans. D 5. If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can be stated as _____________ sq.ft. tiles. 100000;200000;300000;400000 Ans. 300000 6. A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. a) true b) false Ans. A 7. Match the following: 1. Spirit of mutual trust (2) 1. Scope of uniform costing 2. Avoids cut throat competition (3) 2. Requisite for uniform costing 3. Treatment given to research (5) 3. Advantage of uniform costing and development costs 4. Advantageously applicable in (1) 4. Process of uniform costing similar industries 5. Fields covered by uniform costing 6. Disadvantage of uniform costing 8. Bank reconciliation statement is a systematic presentation of errors made by the accountant. a) true b) false Ans. B 9. If the ordering cost _____________s, then the economic order quantity will Increase. Become NIL;Decrease;Remain constant;Increase Ans. Increase 10. Choose the correct answer. Alpha Bros. manufactures and sells four products-A, B, C and D. The sales mix in value comprises 33-1/3%, 41-2/3%, 16-2/3% and 8-1/3%, respectively, out of the total sales of Rs.60,000/-. Operating costs are 60%, 68%, 80% and 40%, respectively of the selling price. Fixed costs are Rs.14,700/- per month. You are required to find out the break even point for the products on an overall basis for Alpha Bros. a) Rs.42,000/- b) Rs.24,000/- c) Rs.60,000/- d) Rs.56,000/- Ans. 11. Choose all that apply. Pre-requisites of Uniform Costing are :- a)____ Spirit of mutual trust b)____ Free Exchange of ideas c)____ Tendency of withholding information d)____ No rivalry Ans. A,b,d 12. Choose the correct answer. The capacity utilized to installed capacity ratio is 80% for the company. The capacity utilization ratio in respect of a machine for a particular month is 90%. The available working hours in a month are 200 hours. The break of idle time is as follows : Waiting for job - 5 hours, breakdown - 4 hours and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the machine is Rs.8/-. a) Rs.72/- b) Rs.56/- c) Rs.88/- d) Rs.96/- 12Ans. D 13. The _______________ adjustment is necessary to reflect the cost for the use of fixed asset during the year. Price;Depreciation;Cost;Closing Ans. Depreciation 14. Choose all that apply. The features of multiplicity of key factors are as follows :- a)____ Only one key factor b)____ More than one key factors c)____ Refers to a complex situation d)____ Can be resolved by using linear programming technique Ans. B,c,d 15. 1) Financial statements are basically in two forms i.e. profitability statement and balance sheet. a) true b) false Ans. A 16. Education facility to workers and their children, pension, superannuation fund are examples of __________________ incentives. Monetary;Non-monetary;Motivational;Compulsory Ans. Non-monetary 17. In calculation of total sales margin variance, the _____________ cost of sales is deducted from the actual sales revenue. Actual;Planned;Scheduled;Standard Ans. Standard 18. Choose the correct answer. Which of the following aspects is ignored by financial accounting? a) Sales tax b) Income tax c) Incentives and salary of employees d) Efficiency and loyalty of employees Ans. D 19. GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. a) true b) false Ans. B 20. Choose all that apply. Identify the budgets for which the production manager should be held responsible :- a)____ Materials budget b)____ Production budget c)____ Production overheads budget d)____ Plant utilization budget Ans. B,c,d 21. Choose the correct answer. The following data is available for a company for the month of April, 2004 : Territory I : selling expenses Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold – 16,000; sales Rs.76,000/-. Territory II : selling expenses Rs.4,200/-; distribution cost Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory III : selling expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales Rs.52,000/-. The company adopts sales basis and quantity basis for application of selling and distribution costs respectively. Compute the amount of selling and distribution costs chargeable to a consignment of 4,000 units of a product sold in each territory at Rs.2.50 per unit. a) Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/- b) Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/- c) Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- d) Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- Ans. D 22. Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. a) true b) false Ans. B 23. Choose the correct answer. Which document facilitates estimating material cost of a particular job, before completion of that job? a) Bill of exchange b) Bill of material c) Material requisition note d) Purchase order Ans. B 24. Choose all that apply. The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision :- a)____ Loss of trained personnel b)____ Loss of regular customers c)____ Expenditure required to restart the factory d)____ Expenditure relating to expanding the business Ans. A,b,c 25. In differential cost analysis, decisions are taken by comparing the incremental revenue with differential costs. a) true b) false Ans. A 26. Choose the correct answer. If the annual labour turnover rate as per the flux method is 19.25%, what is equivalent monthly rate? a) 0.1925 b) 0.0963 c) 0.0321 d) 0.0161 Ans. D 27. Choose the correct answer. A firm of boiler-house engineers provides engineering services to large number of factories having boiler houses. The firm charges on the basis of number of hours its engineers have worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An engineer's annual remuneration comprises (for the year 2003) : basic pay Rs.2,00,000/-, house rent allowance 30%, dearness allowance 20% and other allowances 15%. Employer also contributes 10% of basic pay towards provident fund, which is taken as part of the salary. Calculate the rate of charge(on total cost basis) for an hour's work done by the engineer for the client. a) Rs.182.29 b) Rs.182.00 c) Rs.183.29 d) Rs.183.00 Ans. 28. Financial Accounting discloses the financial performance & financial statements of the business as a whole. a) true b) false 28Ans. A 29. 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. a) true b) false Ans. A 30. Absorption costing is more suitable for decision making than marginal costing. a) true b) false Ans. B 31. Choose all that apply. International Motors manufactures crankshafts for jeeps and trucks. They have furnished the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct. a)____ Cost per crankshaft for jeep is Rs.445.45 b)____ Cost per crankshaft for truck is Rs.805.66 c)____ Cost per crankshaft for truck is Rs.1,139.75 d)____ General expenses should be apportioned on direct labour ratio Ans. A,b,d 32. Choose all that apply. The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct? a)____ Inventory turnover period for material P is 40.5 days b)____ Material P is faster moving material c)____ Material Q is faster moving material d)____ Consumption of material Q is Rs.860,000/- Ans. 33. Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting a) true b) false Ans. A 34. Match the following: 1. Cost Centre (3) 1. Indirect cost 2. Cost Control (4) 2. Historical Cost 3. Differential Cost (6) 3. Facilitate the fixation of responsibility 4. Sunk Cost (2) 4. Process of controlling costs of operations 5. Penalty paid 6. Increase or Decrease in cost 35. _________________ is any documentary evidence to justify that a particular transaction has taken place. Counter file;Payment Advice;Voucher;Invoice Ans. Voucher 36. Factory light, telephone expenses are examples of ______________ expenses. Selling;Direct;Indirect;Distribution Ans. Indirect 37. Choose all that apply. Inventory holding cost comprises of :- a)____ Cost of insurance b)____ Rent of store house c)____ Cost of material d)____ Salary of store keeper Ans. A,b,d 38. In the scheme of cost- _____________-profit analysis, an attempt is made to measure the variations of cost with Volume. Selling price;Selling costs;Volume;Contribution Ans. Volume 39. In case of seasonal industry, the budget period may be taken as _______________. 10 years;5 years;One season;One month Ans. One season 40. The balance sheet has three columns, viz. assets, liabilities and ledger folio. a) true b) false Ans. B 41. Choose the correct answer. If debtors in the trial balance are of Rs.23,000/-. Provision for doubtful debts is to be made @ 5% and discount on sundry debtors is to be provided @ 2%. Calculate the total amount which should be debited to profit and loss account. a) Rs.1,193/- b) Rs.1,193.70 c) Rs.1,196/- d) Rs.1,196.70 41Ans. B 42. If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ___________________. Over-absorbed;Equal to the actual;True and fair;Under-absorbed Ans. Over-absorbed 43. Choose all that apply. These are the replacement costs of labour turnover :- a)____ Cost of personnel administration b)____ Inefficiency of new workers c)____ Cost of selection and placement d)____ Increased spoilage and defectives Ans. B,c,d 44. Choose the correct answer. Which of the following is a valid classification of the salary paid to the foreman in charge of the packing department? a) Indirect departmental cost b) Direct departmental cost c) Direct product cost d) Service department cost Ans. C 45. Choose all that apply. Select the examples of functional budgets:- a)____ Sales budget b)____ Production budget c)____ Research and development budget d)____ Capital expenditure budget Ans. A,b,c 46. Choose all that apply. Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance. a)____ Material cost variance -Rs.400/- (Adverse) b)____ Material usage variance -Rs.750/- c)____ Material usage variance is favourable d)____ Material usage variance is adverse Ans. A,b,d 47. Choose the correct answer. Following data has been extracted from the records of a manufacturing company whose level of operations varies during different months. Minimum activity : 30,000 machine hours and manufacturing overheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads. a) Fixed overheads Rs.480,000/- and variable overheads Rs.4/- per machine hour b) Fixed overheads Rs.480,000/- and variable overheads Rs.8/- per machine hour c) Fixed overheads Rs.280,000/- and variable overheads Rs.8/- per machine hour d) Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour Ans. D 48. Fundamentally, changes in price and changes in sales volume give rise to sales variances. a) true b) false Ans. A 49. Contribution represents pool of resources available for meeting all costs other than _________________. Historical costs;Variable costs;Sunk costs;Fixed costs Ans. Variable costs 50. Choose all that apply. Techniques of management accounting include:- a)____ Marginal costing b)____ Cost control c)____ Budgetary control d)____ Standard costing Ans. A,c,d MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Choose the correct answer. Mr.X has Rs.200,000/- invested in his business firm. He wants a 15% return on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 60% of sales, his fixed costs are Rs.80,000/- per year. Mr.X estimates that even if he closed the doors of his business, he would incur Rs.25,000/- as expenses per year. At what sales would he be better off by locking his business up. a) Rs.42,500/- b) Rs.52,500/- c) Rs.62,500/- d) Rs.72,500/- Ans. 2. Choose the correct answer. Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units. a) 66 days b) 66.9 days c) 67 days d) 67.9 days Ans. 3. Choose all that apply The quarterly production of a company's product which has a steady market is 20,000 units. Each unit of product requires 0.5 kg of raw material. The cost of placing one order for raw material is Rs.100/- and the inventory carrying cost is Rs.2/- per kg per annum. The lead time for procurement of raw material is 36 days and a safety stock of 1,000 kg of raw materials is maintained by the company. The company has been able to negotiate the following discount structure with the raw material supplier : For order quantity below 7,000 kg -discount per order is NIL. For order quantity between 7,000 kg and 8,000 kg., discount per order is Rs.400/-. For order quantity between 8,000 kg and 16,000 kg., discount per order is Rs.2,000/-. For order quantity between 16,000 kg and 30,000 kg., discount per order is Rs.3,200/-. Find the statements which indicate the correct costs for the different order sizes. a)____ If order size is 6,667 units, total cost is Rs.6,867/- b)____ If order size is 10,000 units, total cost is Rs.8,400/- c)____ If order size is 20,000 units, total cost is Rs.17,000/- d)____ If order size is 5,000 units, total cost is Rs.5,400/- Ans. 4. Choose the correct answer. From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments :X- Rs.48,000; Y- Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B-Rs.18,000. The expenses of the service departments are apportioned as follows : Service department A - Production department X-20%; Production department Y - 40%; Production department Z- 30%; Service department B - 10%.Service department B- Production department X-40%; Production department Y - 20%; production department Z- 20%; Service department A - 20%. Details of machine hours are as follows: Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-1,000 hours. a) X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 b) X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 c) X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 d) X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 Ans. 5. Choose all that apply. S Ltd. operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. For one unit of product the standard material input is 20 litres at a standard price of Rs.2/- per litre. The standard wage rate is Rs.6/- per hour and 5 hours are allowed to produce one unit. Fixed production overhead is absorbed at the rate of 100% of direct wages cost. During the month just ended the following occurred : acutal price paid for materials purchased Rs.1.95 per litre; total direct wages cost was Rs.156,000/- and fixed production overheads was Rs.158,000/-. Direct material price variance-Rs.8,000/- (Fabourable); direct material usage variance -Rs.5,000/- (Adverse); direct labour rate variance -Rs.5,760/- (Adverse); direct labour efficiency variance -Rs.2,760/- (Favourable) and fixed produciton overheads expenditure variance -Rs.8,000/-(Adverse). Calculate budgeted output in units for the month, actual hours worked and number of litres purchased during the month. a)____ Budgeted output - 5,000 units b)____ Actual hours worked - 24,040 hours c)____ Litres purchased - 160,000 litres d)____ Litres purchased - 157,500 litres Ans. 6. Choose the correct answer. The following data is available for a company for the month of April, 2004 : Territory I : selling expenses Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold – 16,000; sales Rs.76,000/-. Territory II : selling expenses Rs.4,200/-; distribution cost Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory III : selling expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales Rs.52,000/-. The company adopts sales basis and quantity basis for application of selling and distribution costs respectively. Compute the amount of selling and distribution costs chargeable to a consignment of 4,000 units of a product sold in each territory at Rs.2.50 per unit. a) Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/- b) Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/- c) Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- d) Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- 6Ans. 7. Choose the correct answer. Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is Rs.180/- per unit. Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company has a proposal that the sales staff may be paid a commission of 10% of sales instead of fixed salaries totaling Rs.80,000/-. This action is expected to increase the sales by 10%. Compute the amount of profit assuming the proposal is accepted? a) Rs.177,000/- b) Rs.200,000/- c) Rs.178,000/- d) Rs.277,000/- Ans. 8. Choose the correct answer. The quantity of raw material in the purchases budget may be higher than the quantity of raw material in the production budget because :- a) The stock levels are being reduced b) The raw material prices are falling c) The company obtains discount for bulk purchases d) The units sold will be higher than units made Ans. 9. Choose all that apply. The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost Rs.105,000/- ; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the correct answers:- a)____ Sales Rs.128,000/- b)____ Return on capital employed c)____ Rs.15,000/- d)____ Working capital Rs.32,000/-Ans. MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Match the following 1. Debit side of bank book (4) 1. Henceforth, there shall be maximum is overcast differences in overdraft balances 2. Interest on debentures (5) 2. Henceforth, there shall be no difference directly credited by bank in overdraft balances 3. Received sanction for a (3) 3. Overdraft as per bank book = loan of Rs.10 lakhs Balances per pass book 4. Closed the account with (2) 4. Overdraft as per bank book < State Bank of India Overdraft as per pass book 5. Overdraft as per bank book > Overdraft as per pass book 6. Overdraft as per bank book = Overdraft as per pass book 2. _______________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Inflation; Cost; Management; Financial Ans. Management 3. The __________________________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Variable overhead efficiency; Variable overhead volume; Total variable overhead; Total fixed overhead Ans. Total variable overhead 4. Choose the correct answer. Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations :- a) Differential cost b) Opportunity cost c) Sunk cost d) Variable cost Ans. A 5. Choose all that apply Which of the following transactions should be excluded while preparing a cost sheet? a)____ Sale of scrap material b)____ Interest on loan c)____ Bad debts d)____ Expenses on criminal law suit Ans. B,c,d 6. The closing stocks should ____________________ the cost of the goods which sent on approval basis. Be decreased by; Exclude; Not get affected by; Be increased by Ans. Be increased by 7. Choose all that apply Marginal costing is found to be unsuccessful in the following situations :- a)____ Impossible to distinguish costs into fixed and variable component. b)____ Existence of key factor which will limit the volume of output. c)____ With respect to capital intensive industries where fixed costs are very large and hence cannot be ignored d)____ With respect to service industries where employee costs are very large and almost fixed in nature Ans. A,c,d 8. Choose all that apply You are using petrol as one of the raw materials. Daily you purchase 1,000 liters of petrol at Rs.28.50 per liter. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 liters drum was as follows : To job X 200 liters; job Y 400 liters and job Z 320 liters. After these issues the drum was empty. Calculate per liter charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z. a)____ Loss due to spillage and evaporation - 30 liters. b)____ Rate of charge per liter of petrol - Rs.30/- c)____ Rate of charge per liter of petrol - Rs.30.98 d)____ Total petrol used for jobs X, Y and Z - 920 liters Ans. A,b 9. Penalty paid for delay in payment to creditors represents uncontrollable cost. a) true b) false Ans. B 10. A complete list of all material required, with quantities, for a particular job is given in the ______________________________. Bill of material; Bill of exchange; Purchase order; Material requisition Ans. Bill of material 11. Choose all that apply The production budget may be prepared in terms of :- a)____ Units produced b)____ Production cost c)____ Material cost, selling cost and overheads d)____ Material cost, labour cost and overheads Ans. A,b,d 12. Creche expenses may be appropriately apportioned on the basis of ______________. Total number of employees; Direct labour cost; Number of female workers; Direct labour hours Ans. Number of female workers 13. Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. a) true b) false Ans. B 14. ______________________ variance arises when the mix of materials used in the production is different from the predetermined standard mix of operation. Sales margin mix; Materials mix; Labour mix; Product mix Ans. Materials mix 15. Choose the correct answer. A cost incurred in the past and irrelevant for decision making is known as :- a) Discretionary cost b) Controllable cost c) Sunk cost d) Standard cost Ans. C 16. Choose all that apply Labour turnover means :- a)____ Influx and exit of employees b)____ Quantitative measurement of instability of working force c)____ Rate of change in the average working force d)____ Influx and exit of customers Ans. A,b,c 17. Choose all that apply Select the examples of functional budgets:- a)____ Sales budget b)____ Production budget c)____ Research and development budget d)____ Capital expenditure budget Ans. A,b,c 18. Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. a) true b) false Ans. A 19. Choose the correct answer. A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total cost. What is the break even point for the company? a) 68,182 units b) 68,100 units c) 61,182 units d) 61,100 units Ans. A 20. Choose all that apply From the following select the examples of errors of commission :- a)____ Purchases of fixed assets recorded in the purchase register b)____ Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- c)____ Received cash from Sham, credited to Ram's account d)____ Paid transport charges, credited to transport charges account Ans. B,c,d 21. Accounts representing expenses will have ____________ balance. Debit; Nil; Negative; Credit Ans. Debit 22. Receipts and payments method of cash budget is useful for preparing long term estimates. a) true b) false Ans. 23. Match the following 1. Basic Standards (6) 1. Once established can never be altered 2. Current Standards (5) 2. Anticipated to be unachievable in future 3. Expected Standards (3) 3. Anticipated to be achieved in the budget period 4. Normal Standards (4) 4. Anticipated to be achieved in future 5. Established for a shorter period of time 6. Established for a longer period of time 24. If the customer is not likely to pay the amount receivable from him, this amount should to be treated as __________________. Bad debts; Long term debts; Accrued income; Current liability Ans. Bad debts 25. Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. a) true b) false Ans. B 26. Purchased goods by paying Rs.35,000/-: In this case, the cash account should be debited. a) true b) false Ans. A 27. Profit = Contribution per unit X ___________________________. Sales (units); Production (units); Break even point (units); Margin of safety (units) Ans. Margin of safety (units) 28. Choose all that apply From the following, select current assets:- a)____ Sundry debtors b)____ Stock c)____ Pre paid expenses d)____ Goodwill Ans. A,b,c 29. Choose all that apply Select the transactions which can be entered in the Journal proper :- a)____ Opening entries b)____ Closing entries c)____ Average entries d)____ Rectification entries Ans. A,b,d 30. Choose all that apply Which of the following budgets may be termed as a long term budget? a)____ Capital expenditure budget b)____ Research and Development expenditure budget c)____ Budget of a transportation company d)____ Budget of a two-wheeler manufacturing company Ans. A,b,c 31. Choose all that apply Features of double entry accounting system are :- a)____ Every business transaction has two elements b)____ When business receives something, it has to pay something c)____ Every entry is to be recorded twice d)____ Every debit has a corresponding credit Ans. A,b,d 32. Choose the correct answer. M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as :- a) Business expenditure b) Capital expenditure c) Drawings d) Capital Ans. C 33. One of the main objection to the contribution approach of costing is that it ignores fixed cost. a) true b) false Ans. 34. Financial Accounting discloses the financial performance & financial statements of the business as a whole. a) true b) false Ans. A 35. Financial statements can be presented in two forms i.e. profitability statement and balance sheet. a) true b) false Ans. A 36. Choose the correct answer. A company has a normal capacity of 120 machines, working 8 hours per day of 25 days in a month. The fixed overheads are budgeted at Rs.144,000/- per month. The standard time required to manufacture one unit of product is 4 hours. In April, 2004, the company worked 24 days of 840 machine hours per day and produced 5,305 units of output. The actual fixed overheads were Rs.142,000/-. Compute calendar variance. a) Rs.6,360/- (Favourable) b) Rs.17,280/- (Adverse) c) Rs.5,760/- (Adverse) d) Rs.16,680/- (Adverse) Ans. 37. Choose the correct answer. Find the budget which is inadequate as a cost control technique :- a) Flexible budget b) Budgeted Balance Sheet c) Fixed budget d) Sales budget Ans. C 38. Choose the correct answer. Judge the given statement according to the given criteria :- Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory. a) The statement and the reason both are correct b) The statement and the reason both are incorrect c) The statement is correct but the reason is incorrect d) The statement is incorrect but the reason is correct Ans. C 39. Financial, cost and management accounting are the three steams of accounting. a) true b) false Ans. A 40. Choose the correct answer. XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a. on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004? a) Since interest is not due on 31st March, 2004, no entry should be passed b) Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55 c) Interest account should be debited with Rs.15,000/- and outstanding interest account should be credited with Rs.15,000/- d) Since interest is due on 31st March, 2004, entry should be passed for its payment Ans. B 41. Choose all that apply The factors to be considered while preparing the direct materials budget are :- a)____ Adequacy of material storing space b)____ Packing material lying in stores but reserved for specific purposes c)____ Availability of funds d)____ Material in stores but reserved for specific purposes Ans. A,c,d 42. Choose the correct answer. The integrated form of all functional budgets is known as :- a) Budget manual b) Operating budget c) Master budget d) Budgeted Balance Sheet Ans. C 43. The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. a) true b) false Ans. B 44. Graphically, fixed cost line will be __________________ the 'x-axis'. Intersecting; Tangential to; Perpendicular to; Parallel to Ans. Parallel to 45. Choose the correct answer. It is difficult to apply Uniform costing system for an industry which has labour intensive companies as well as capital intensive companies, because :- a) The cost structure is the same b) The cost structure is different c) The quality is the same d) The quality is different Ans. B 46. Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting a) true b) false Ans. A 47. Revenue expenditure indicates the amount of funds spent during a certain period with the intention to receive the returns in future. a) true b) false Ans. B 48. Purchase day book for the month of April was under cast by Rs.1000/- ____________ account should be credited. Cash; Purchase; Suspense; Sales Ans. Suspense 49. Choose all that apply Features of material usage variance are :- a)____ Measures the difference between the quantity of materials actually used and that should have been used. b)____ Measures the difference between the quantity of materials actually purchased and that should have been purchased. c)____ Considers standard price X actual quantity d)____ Considers standard price X standard quantity Ans. A,c,d 50. Choose the correct answer. The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio? a) 0.5 b) 0.666 c) 0.333 d) 0.25 Ans. 51. P&L statement which is a period statement & relates to a certain period tells about results of operations. a) true b) false Ans. A 52. Choose the correct answer. 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? a) 0.15 b) 0.1765 c) 0.155 d) 0.1304 Ans. 53. Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. a) true b) false Ans. B 54. Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. a) true b) false Ans. B 55. Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. a) true b) false Ans. A MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Price based on Uniform Costing may be taken to be reliable and representative of the whole industry. a) true b) false Ans. 2. If the profit volume ratio is 25%, then the variable cost is equal to _____________of sales value. 1;0.75;0.25;0.5 Ans. 3. Choose all that apply. Causes for adverse material price variance are:- a)____ Uneconomical size of purchase orders b)____ Failure to avail discounts allowed by suppliers c)____ Economical size of purchase orders d)____ Excessive freight charges Ans. 4. In the ledger account only credit entries relating to a particular account are posted. a) true b) false Ans. 5. Choose the correct answer. The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonored cheque, originally received from Mr.A. The fact of dishonor was not recorded in the bank book. Find the balance as per pass book. a) Rs.128/- (overdraft) b) Rs.128/- (credit) c) Rs.106/-(overdraft) d) Rs.106/- (credit) Ans. 6. Choose the correct answer. Opening stock valued at Rs.7,400/-; Purchases Rs.24,700/-; Wages Rs.5,400/-; Sales Rs.48,600/-; Closing stock Rs.7,000/-. Calculate Gross Profit? a) Rs.25,100/- b) Rs.15,000/- c) Rs.18,100/- d) Rs.11,800/- Ans. 7. Choose the correct answer. A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual break even point. a) 80,000 units b) 90,000 units c) 64,000 units d) 74,000 units Ans. 8. Time rate system is suitable for workers of the maintenance department. a) true b) false Ans. 9. All personal expenses of the owner should be debited to the organization's profit and loss account. a) true b) false Ans. 10. Choose the correct answer. Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. a) Rs.29.98 b) Rs.30/- c) Rs.30.98 d) Rs.29/- Ans. 11. Choose the correct answer. The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from to ascertain the cost, is known as :- a) Cost accounting b) Management accounting c) Costing d) Financial accounting Ans. 12. Choose the correct answer. Material price variance for a job is Rs.800/- (Favourable). Actual quantity of material used is 100 kg where as the 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 a) Rs.800/- (Favourable) b) Rs.800/- (Adverse) c) Rs.1,600/- (Favourable) d) Rs.1,600/- (Adverse) Ans. 13. Choose all that apply. Locate the error and its features in the following :- a)____ Compensating errors b)____ Trial balance will not be affected c)____ Trial balance will be affected d)____ Error of principle Ans. 14. The process of finding the reasons for the difference in the balance as per bank book and pass book is known as ___________________. Reconsideration;Rectification;Reevaluation;Reconciliation Ans. 15. Choose all that apply. Select the advantages of standard cost system :- a)____ Provides reliable basis for budgeting b)____ Facilitates delegation of authority c)____ Promotes economy and efficiency d)____ Assists plant shut down decisions Ans. 16. In a Balance-Sheet, right hand side is referred as assets side and left hand side is referred as liabilities. a) true b) false Ans. 17. Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole. a) true b) false Ans. 18. Depreciation charged on office furniture on straight line basis is an example of _________________________. Distribution overheads;Selling overheads;Factory overheads;Administration overheads Ans. 19. Time-keeping facilitates the preparation of payroll. a) true b) false Ans. 20. Choose all that apply. From the following transactions find the value of closing stock on 4/10/04, 7/10/04 and 12/10/04 using the simple average method of issue pricing. 1/10/04 - Purchased 400 units @ Rs.5/-. 4/10/04 - Issued to production 120 units. 5/10/04 - Purchased 200 units @ Rs.6/-. 7/10/04 - Issued to production 180 units. 11/10/04 - Purchased 100 units @ Rs.7/-. 12/10/04 - Issued to production 160 units. a)____ 4/10/04 - 280 units @ Rs.1,400/- b)____ 7/10/04 - 300 units @ Rs.1,610/- c)____ 7/10/04 - 300 units @ Rs.1,700/- d)____ 12/10/04 - 240 units @ Rs.1,350/ Ans. 21. Choose all that apply. For the following transactions find out the value of material issued using FIFO (First in first out) method. 1/7/04 - Opening balance 200 units @ Rs.10/- 3/7/04 - Issued to production department 80 units. 4/7/04 - Purchased 300 units @ Rs.11/-. 6/7/04 - Issued to production department 150 units. 8/7/04 - Purchased 250 units @ Rs.13/-. 11/7/04 - Issued to production department 170 units. a)____ 3/7/04 - 80 units @ Rs.10/- b)____ 6/7/04 - 120 units @ Rs.10/- and 30 units @ Rs.11/- c)____ 11/7/04 - 170 units @ Rs.11/- d)____ 11/7/04 - 170 units @ Rs.13/- Ans. 22. The difference between sales and prime cost is known as . Net Profit;Operating Margin;Contribution Margin;Gross Profit Ans. 23. Choose the correct answer. The direct material usage budget and direct material purchase budget differ because of which of the following? a) The level of material scrap forecast to occur b) The level of efficiency of men or machines c) A planned change in the level of finished goods stock d) A planned change in the level of material stock Ans. 24. Choose the correct answer. Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry? a) Uniform costing b) Standard costing c) Absorption costing d) Multiple costing Ans. 25. Payment by method lowers the cost of production through their impact on fixed costs. Results,cheques,time,cash Ans. 26. Match the following: 1. Non operating income ( 4 ) 1. Bad debts 2. Selling and distribution overheads ( 3 ) 2. Repair for factory building 3. Factory overheads ( 2) 3. Advertisement expenses. 4. Total cost ( 6 ) 4. Profit on sale of investment 5. Loss on sale of investment 6. Cost of finished goods 27. The various contents of a uniform cost manual are organization, cost accounting system and . Size of organization, Presentation of information,organization structure,number of departments, Ans. 28. The method of overhead apportionment which considers both the material cost as well as the labour cost, is known as method. Supplementary rate,prime cost percentage rate,machine hour rate,direct labour hour rate Ans. 29. Choose all that apply The reasons and objectives of budgets may be stated as :- a)____ To aid the planning of annual operations b)____ To communicate the organizational plans to the different departments c)____ To motivate the managers to strive for attainment of the organizational goals d)____ To motivate the managers to strive for their promotions Ans. 30. The reports generated by financial accounting are meant for the use by management for effective decisions. a) true b) false Ans. 31. Match the following: 1. Ordering cost (1) 1 Can be obtained subtracting closing stock from the sum of material cost and opening stock 2. Carrying cost (3) 2. Can be obtained subtracting opening stock from the sum of material cost and closing stock 3. Material cost (5) 3. Sum of possession cost, ordering cost and purchase cost 4. Cost of material consumed (2) 4. Cost of holding the inventory 5. Cost of administrative efforts 6. Cost of issuing the inventory 32. Choose all that apply You have received tenders from two suppliers - X & Co. and Y & Co. The details regarding price and other terms and conditions are as follows : X & Co. : Price Rs.5/- per unit; trade discount 15% and cash discount 4% if bills are paid within a fortnight; freight Rs.2/- per 100 units. Y & Co. : Price Rs.4/- per unit upto 2,000 units; no cash discount but 15% per annum interest is charged if bills are paid within a fortnight from receipt of materials; freight Rs.3/- per 100 units. 10,000 units are required every month. The organization pays 50% of total monthly bills every fortnight. Compare the total cost for the organization for transacting with X & Co. and Y & Co. and advise the supplier with whom the order should be placed. a)____ Cost to the organization :Y & Co. -Rs.40,425.94 b)____ Cost to the organization : Y & Co.-Rs.41,850/- c)____ Order should be placed with Y & Co. d)____ Total cost is lower with Y & Co. Ans. 33. Category A items, as per ABC analysis, represent % of the total number of items in inventory. Less than 10, 50 to 70,more than 10 ,70 to 100 Ans. 34. The final result disclosed by trading account is the profit earned by the organization. Gross,net , marginal,incremental Ans. 35. Choose all that apply Items debited to Profit & Loss Account are : a)____ Salary b)____ Discount allowed c)____ Purchases of raw material d)____ Postage & telegram Ans. 36. Choose all that apply The selection of the supplier may depend upon the following aspects:- a)____ Geographical location of the supplier b)____ Price quoted by the supplier c)____ Goodwill of the supplier d)____ Profit making ability of the supplier Ans. 37. Choose the correct answer. Standard labour cost of a job has been specified as 50 hours work by skilled workers @ Rs.20/- per hour and 150 hours work by unskilled workers @ Rs.10/- per hour. Actual time taken was 70 hours by skilled workers @ Rs.18/- per hour and 170 hours by unskilled workers @ Rs.13/- per hour. Calculate labour yield variance. a) Rs.500/- (Adverse) b) Rs.100/- (Adverse) c) Rs.140/- (Adverse) d) Rs.370/- (Adverse) Ans. 38. Choose all that apply Pre-requisites of Uniform Costing are :- a)____ Spirit of mutual trust b)____ Free Exchange of ideas c)____ Tendency of withholding information d)____ No rivalry Ans. 39. Match the following: 1. Sales revenue maximization (5) 1. Traditional approach 2. Advertising through electronic media (2) 2. Business organizations of the new millennium 3. Profit maximization (1) 3. Rothschild 4. Equity shares (4) 4. Maximum risk 5. Baumol 6. Bureaucracy and red tapeism 40. Choose all that apply For the month of November, a firm has budgeted sales of 20,000 units of X at a price of Rs.10/- and sale of 30,000 units of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales quantity variance. a)____ Sales volume variance -Rs.120,000/- (Favourable) b)____ Sales mix variance -Rs.44,000/- (Favourable) c)____ Sales Quantity variance-Rs.76,000/- (Favourable) d)____ Sales volume variance -Rs.76,000/- (Favourable) Ans. 41. A note is prepared when excess material is returned to stores Material returned,material requisition,material transfer,goods recived Ans. 42. Choose the correct answer. Low inventory ratio indicates :- a) Efficient utilization of material b) Inefficient utilization of material c) Decrease in stock of material d) Increase in sales Ans. 43. Choose the correct answer. Judge the statement in italics based on the criteria given :- On 31st March, 2004 Sita Enterprises sent goods worth Rs.30,000/- on approval basis to Mr. Ram. These goods should be included in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz. Sita Enterprise. a) The statement and the reason both are correct b) The statement and the reason both are incorrect c) The statement is correct but the reason is incorrect d) The statement is incorrect but the reason is correct Ans. 44. The short run financial plan which acts as a guide to achieve the predefined targets is known as . Manul,budgeted profit & loss account,budgeted balance sheet,budget Ans. 45. Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. a) true b) false Ans 46. The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. a) true b) false Ans. 47. Choose the correct answer. The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation. a) 0.15 b) 0.2 c) 0.17 d) 0.13 Ans. 48. Choose all that apply A materials requisition form normally contains the following aspects:- a)____ Vendors' name b)____ Quantity requisitioned c)____ Per unit material cost d)____ Job number Ans. 49. Debit all the expenses and credit all the income is the rule of the Real Account. a)true b)false ans. 50. If excess of cash is estimated in the cash budget, it may be possible to utilize it to give bonus to the employees. a)true b)false ans. 51. Budgetary control is one of the techniques of management accounting. a)true b)false ans. 52 A pre-determined factory overhead rate holds up product costing. a)true b)false ans. MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. The term 'scheduled costs' is used interchangeably with the word 'standard costs'. a) true b) false Ans. B 2. The selection of ________ may depend upon the various factors like characteristics of the business organization, tax considerations, statutory requirements etc. Ans. Accounting period 3. Choose all that apply. Piece rate systems are very useful in the following circumstances:- Ans. Units of output are measurable , Job is standardized , The flow of work is regular 4. The column which refers to the page number of the ledger is known as ________. Ans. Ledger folio 5. Choose all that apply. Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Ans. Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- 6. Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. a) true b) false Ans. A 7. Choose all that apply. The key factor determines the :- Ans. Level of activity , Capacity utilization , Level of sales 8. Choose all that apply. The advantages of Halsey plan are :- Ans. Bonus goes on increasing with increase in time saved. , Provides more incentive to speed up production , Guaranteed time rate payment is made 9. Choose all that apply. Direct Cost includes :- Ans. Direct material , Direct labour , Direct expenses 10. Choose all that apply. If you are required to enforce uniform costing system in your industry, how would you proceed? Ans. Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Maintaining secrecy of the data collected 11. Match the following: Question Answer 1. [( Actual sales - Break even sales) ]/ 1. Margin of safety as a percentage of Actual sales actual sales 2. Fixed cost / Contribution margin ratio 2. Break even point 3. Fixed cost - (Sales X Profit volume ratio) 3. Profit 4. (Sales X Profit volume ratio) -Fixed cost 4. Loss 12. All costs are controllable. a) true b) false Ans. B 13. Choose all that apply. The selection of the supplier may depend upon the following aspects:- Ans. Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier 14. Choose the correct answer. Which section of the Companies Act, 1956, states that cost audit is compulsory for certain industries? Ans. 209(1) (d) 15. A ________ inventory turnover period indicates efficient utilization of material. Ans. Low 16. Choose the correct answer. The Asian Industries specializes in the manufacture of small capacity motors. The cost structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per annum. The sale price of the motor is Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order to break- even. Ans. 6,000 motors 17. Choose the correct answer. Information for the year 2003-04 is given below : Opening stock 1,000 units @ Rs.15/- per unit. Purchases during the year 30,000 units @ Rs.17/- per unit. Sales during the year 25,000 units @ Rs.20/- per unit. Find the gross profit for the year, valuing the closing stock on the basis of first in first out method (FIFO). Ans. Rs.77,000/- 18. Choose the correct answer. Presentation of information to enable managerial decision making is one of the objects of which of the following? Ans. Cost Accounting 19. Choose the correct answer. Which of the following aspects is ignored by financial accounting? Ans. Efficiency and loyalty of employees 20. A business is an activity carried out with the intention of earning the profit. a) true b) false Ans. A 21. Choose the correct answer. Debtors as on 31st March, 2004 stood as Rs.75,400/-. Out of this amount, Rs.15,884/- is receivable from ABC & Co. Also, Rs.21,555/- included in the creditors, indicates amount due to ABC & Co. Total creditors as on 31st March, 2004 = Rs.88,466/-. Find the amount of debtors and creditors that should be disclosed in the balance sheet as on 31st March, 2004. Ans. Debtors - Rs.59,516/-; Creditors - Rs.66,911/- 22. Choose all that apply. Identify the fixed expenses from the following :- Ans. Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers, etc. , Salary paid to factory supervisor 23. Choose the correct answer. Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact. Ans. The asset side of the balance sheet will increase by Rs.5,000/- 24. Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Ans. Long term liabilities 25. Balance sheet indicates the financial status of the business at given period. a) true b) false Ans. A 26. Choose the correct answer. Which of the following source documents in a cost accounting system is designed to exercise control over the delivery of and accurate recording of the receipts of goods? Ans. Goods received note 27. Choose all that apply. Labour turnover means :- Ans. Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force 28. The lowest profit volume ratio can be ________%. Ans. 0 29. Profit and loss account indicates the profit earned as on a particular date. a) true b) false Ans. B 30. Control on purchase of material is exercised by the storekeeper. a) true b) false Ans. B 31. Interest on ________ is credited to Capital account. Ans. Capital 32. While preparing trial balance, the balance as per ________ book is considered as bank balance. Ans. Bank 33. Expenditure on repairs may be ideally allocated on the basis of ________. Ans. Cost of repairs spread over the working life of the machine 34. Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset. a) true b) false Ans. A 35. Choose all that apply A company produces 2.50 units of a product from one kg of raw material, which is purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per order. The incremental carrying cost of raw material is Re.0.50 per kg per month. In addition, the cost of working capital finance on the investment in inventory of raw materials is Rs.9/- per kg per annum. The annual production of the product is 100,000 units. Select the statements which are true for this problem. Ans. 20 orders should be placed in a year , Economic order quantity is 2,000 kg , Storage cost is Rs.15/- per kg 36. Under the accelerating premium system incentive increases at a fast rate with the decrease in output. a) true b) false Ans. B 37. Material mix and material yield variance can be calculated even when only one raw material is used for production. a) true b) false Ans. B 38. Choose all that apply From the available information calculate sales value variance and budgeted sales quantity of X. Actual sales of X -500 units; budgeted price per unit -Rs.12/-; actual price per unit-Rs.15/- and sales volume variance -Rs.1,200/- (Favourable). Ans. Budgeted sales - 400 units , Sales value variance -Rs.2,700/- , The sales value variance is favourable 39. Choose all that apply. The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct? Ans. Inventory turnover period for material P is 40.5 days , Material P is faster moving material , Consumption of material Q is Rs.860,000/- 40. The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. a) true b) false Ans. A 41. Under Bedaux Point system the standard time is divided into standard minutes and each standard minute identified as ________. Ans. Bedaux point or B 42. Match the following: Question Answer 1. Cost of material consumed 1. Can be obtained subtracting closing stock from the sum of material cost and opening stock 2. Ordering cost 2. Cost of administrative efforts 3. Carrying cost 3. Cost of holding the inventory 4. Material cost 4. Sum of possession cost, ordering cost and purchase cost 43. If the owner brings in personal calculator for office use, ________ account should be credited. Ans. Capital 44. Choose the correct answer. If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to :- Ans. Decrease for fixed costs and remain unchanged for variable costs 45. The indirect material cost, indirect labour cost and indirect expenses cost, collectively are termed as ________. Ans. Overhead 46. Choose the correct answer. The cost that indicates historical cost, which is incurred in past, is known as :- Ans. Sunk cost 47. Trading account is used to analyze how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. a) true b) false Ans. A 48. Choose the correct answer. An operator engaged in machining certain components receives an ordinary day rate of Rs.160/- per day of 8 hours. The standard output for machining the components has been fixed at 80 pieces per hour (time fixed for premium bonus). On a certain day, the output of the worker on this machine is 800 pieces. Find the labour cost per 100 pieces if a bonus of Rs.25/- is paid per 100 pieces of the extra output. a) Rs.25/- b) Rs.20/- c) Rs.15/- d) Rs.10/- Ans. 49. Choose all that apply A company produces 2.50 units of a product from one kg of raw material, which is purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per order. The incremental carrying cost of raw material is Re.0.50 per kg per month. In addition, the cost of working capital finance on the investment in inventory of raw materials is Rs.9/- per kg per annum. The annual production of the product is 100,000 units. Select the statements which are true for this problem. a)____ 20 orders should be placed in a year b)____ Economic order quantity is 2,000 kg c)____ Storage cost is Rs.15/- per kg d)____ 50 orders should be placed in a year Ans. 50. Large angle of incidence indicates __________amount of profits. a)Adujusted b)Same c)Higher d)Lower 51. Choose the correct answer. If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to :- a) Decrease for fixed costs and remain unchanged for variable costs b) Remain unchanged for fixed costs and increase for variable costs c) Decrease for fixed costs and increase for variable costs d) Increase for fixed costs and increase for variable costs Ans. 52. Choose the correct answer. In a unit, 10 men work as a group. When the production of the group exceeds the standard output of 200 pieces per hour each man is paid an incentive for the excess production, in addition to his wages at hourly rate. The percentage which the excess production, over the standard, bears to the standard production is calculated: The incentive is at half of this percentage. Each man is paid an incentive considering the rate of Rs.20/- per hour multiplied by this percentage. There is no relation between the individual workman's hourly rate and the bonus rate. In a week, the hours worked are 500 and total production is 120,000 pieces. Compute the total amount of bonus for the week. a) Rs.2,000/- b) Rs.1,500/- c) Rs.1,000/- d) Rs.500/- Ans. 53. Choose the correct answer. Judge the sentence according to criteria given below : "It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used." a) The assertion and the reason are both correct b) The assertion is correct but the reason is incorrect c) The assertion is incorrect but the reason is correct d) The assertion and the reason are both incorrect Ans. 54. Choose the correct answer. The direct material usage budget and direct material purchase budget differ because of which of the following? a) The level of material scrap forecast to occur b) The level of efficiency of men or machines c) A planned change in the level of finished goods stock d) A planned change in the level of material stock Ans. Select The Blank Question The short run financial plan which acts as a guide to achieve the predefined targets is known as ________. Correct Answer Budget Your Answer Budget True/False Question Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. Correct Answer False Your Answer True True/False Question If the storage cost of inventory increases, then the economic order quantity also increases. Correct Answer False Your Answer True True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. 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 Select the factor which can prove to be a very crucial key factor in case of an oil refinery :- Correct Answer Supply of crude oil Your Answer Labour Multiple Choice Multiple Answer Question The components of the selling and distribution cost budget are :- Correct Answer Distribution expenses , Publicity expenditure , Salary of sales-office workers Your Answer Distribution expenses , Publicity expenditure , Salary of shop-floor workers Select The Blank Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________. Correct Answer Decrease in gross profit by Rs.2,020/- Your Answer No effect on gross profit Select The Blank Question A ________ inventory turnover period indicates efficient utilization of material. Correct Answer Low Your Answer Low Multiple Choice Multiple Answer Question Master budget provides a basis for computing effect of changes in :- Correct Answer Product mix of the company , Sales volume , Production facilities Your Answer Product mix of the company , Sales volume , Production facilities , Number of competitors Multiple Choice Multiple Answer Question The reasons and objectives of budgets may be stated as :- Correct Answer To aid the planning of annual operations , To communicate the organizational plans to the different departments , To motivate the managers to strive for attainment of the organizational goals Your Answer To aid the planning of annual operations , To communicate the organizational plans to the different departments , To motivate the managers to strive for their promotions Select The Blank Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization. Correct Answer Net Your Answer Net Match The Following Question Correct Answer Your Answer Transport facilities to employees Preventive cost of labour turnover Preventive cost of labour turnover Relationship between supervisor and worker Avoidable cause of labour turnover Avoidable cause of labour turnover Dismissal of employee Unavoidable cause of labour turnover Unavoidable cause of labour turnover Increased spoilage and defectives Replacement cost of labour turnover Replacement cost of labour turnover Multiple Choice Multiple Answer Question Actual costs determined on the basis of costing records maintained have following limitations :- Correct Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Your Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Multiple Choice Multiple Answer Question These are the methods of measuring labour turnover :- Correct Answer Replacement Method , Separation Method , Flux Method Your Answer Replacement Method , Separation Method , Flux Method True/False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Your Answer True Select The Blank Question A trading concern will have only ________ overheads and selling overheads. Correct Answer Administration Your Answer Distribution Multiple Choice Single Answer Question The profit volume ratio of X Ltd. is 50% and the margin of safety to sales ratio is 40%. You are required to calculate the net profit if sale volume is Rs.100,000/- Correct Answer Rs.20,000/- Your Answer Rs.40,000/- True/False Question 1) Financial statements are basically in two forms i.e. profitability statement and balance sheet. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question A company produces 2.50 units of a product from one kg of raw material, which is purchased at Rs.60/- per kg. The handling cost is Rs.360/- and freight is Rs.390/- per order. The incremental carrying cost of raw material is Re.0.50 per kg per month. In addition, the cost of working capital finance on the investment in inventory of raw materials is Rs.9/- per kg per annum. The annual production of the product is 100,000 units. Select the statements which are true for this problem. Correct Answer 20 orders should be placed in a year , Economic order quantity is 2,000 kg , Storage cost is Rs.15/- per kg Your Answer Economic order quantity is 2,000 kg , Storage cost is Rs.15/- per kg , 50 orders should be placed in a year True/False Question Financial Accounting discloses the financial performance & financial statements of the business as a whole. Correct Answer True Your Answer True Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Your Answer Parallel to Multiple Choice Single Answer Question A business's telephone bill should normally be classified into which one of the following categories? Correct Answer Semi-variable cost Your Answer Variable cost Select The Blank Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________. Correct Answer 90% to 100% Your Answer 90% to 100% True/False Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Your Answer False Select The Blank Question The systematic process of identifying and reporting variance is known as ________. Correct Answer Variance analysis Your Answer Standard costing Multiple Choice Single Answer Question If the quantity of material purchased and quantity used are different, then which quantity should be used to compute the material price variance? Correct Answer Quantity of material purchased Your Answer Quantity of material purchased Multiple Choice Multiple Answer Question Essentials for effective implementation of budgetary control system are :- Correct Answer Commitment of top management , Clearly defined objectives , Continuous budget education Your Answer Commitment of top management , Clearly defined objectives , Continuous budget education Select The Blank Question The sources which have been used by an organization to raise funds indicate ________for the organization. Correct Answer A liability Your Answer A source of income True/False Question Differential cost analysis is incorporated in the cost books. Correct Answer False Your Answer False Multiple Choice Multiple Answer Question Piece rate systems are very useful in the following circumstances:- Correct Answer Units of output are measurable , Job is standardized , The flow of work is regular Your Answer Units of output are measurable , Job is standardized , The flow of work is regular Multiple Choice Multiple Answer Question Identify the causes due to which the cost of labour may be high :- Correct Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Your Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Multiple Choice Multiple Answer Question Which of the following transactions should be excluded while preparing a cost sheet? Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit Your Answer Sale of scrap material , Interest on loan , Bad debts Multiple Choice Single Answer Question If the proprietor has taken away goods worth Rs.5,500/- for personal use, find its impact on the proprietor's account in the organization. Correct Answer The capital will decrease by Rs.5,500/- Your Answer The balance of drawings account will increase by Rs.5,500/- Match The Following Question Correct Answer Your Answer Balance-sheet Financial status Financial status 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 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 , Maintaining secrecy of the data collected , Allowing free access to all the units to the collected data True/False Question In case the standards are too difficult to achieve, they will provide additional incentive for improvement. Correct Answer False Your Answer True Multiple Choice Single Answer Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Correct Answer Investment account - Rs.170,000/- Your Answer Cash account - Rs.170,000/- Multiple Choice Single Answer Question Which of the following is a correct definition of the key factor? Correct Answer The factor which limits the activities of the undertaking Your Answer The factor which maximized sales 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 True/False Question A journal entry is passed for trade discount, but no entry is passed for cash discount. Correct Answer False Your Answer False True/False Question Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit). Correct Answer False Your Answer True Multiple Choice Multiple Answer Question Causes for adverse material price variance are:- Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Your Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges True/False Question Balance sheet indicates the financial status of the business at given period. Correct Answer True 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 Plain Text Attachment [ Scan and Save to Computer ] True/False Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Correct Answer True Your Answer True True/False Question Balance sheet indicates the expenditure & income of the business. Correct Answer False Your Answer False True/False Question P&L statement which is a period statement & relates to a certain period tells about results of operations. Correct Answer True Your Answer True Multiple Choice Single Answer Question Which section of the Companies Act, 1956, states that cost audit is compulsory for certain industries? Correct Answer 209(1) (d) Your Answer 209(1) (d) Select The Blank Question The various contents of a uniform cost manual are organization, cost accounting system and ________. Correct Answer Presentation of information Your Answer Presentation of information True/False Question Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost. Correct Answer False Your Answer False True/False Question Goods sent to the customers on approval basis should be treated as sales. Correct Answer False Your Answer True Multiple Choice Multiple Answer Question Features of material usage variance are :- Correct Answer Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity Your Answer Measures the difference between the quantity of materials actually used and that should have been used. , Measures the difference between the quantity of materials actually purchased and that should have been purchased. , Considers standard price X actual quantity , Considers standard price X standard quantity Select The Blank Question Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Correct Answer Investments Your Answer Savings Multiple Choice Multiple Answer Question In practical circumstances, control ledgers may be maintained for the following categories:- Correct Answer Sundry debtors , Sundry creditors , Advance to Staff Your Answer Sundry debtors , Sundry creditors , Advance to Staff True/False Question Trading account is used to analyze how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Correct Answer True Your Answer True True/False Question Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question From the following, select current assets:- Correct Answer Sundry debtors , Stock , Pre paid expenses Your Answer Sundry debtors , Stock , Pre paid expenses Multiple Choice Single Answer Question The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as:- Correct Answer Labour rate variance Your Answer Labour rate variance True/False Question Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Correct Answer False Your Answer False True/False Question The reports generated by financial accounting are meant for the use by management for effective decisions. Correct Answer True Your Answer True True/False Question Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting Correct Answer True Your Answer True Multiple Choice Multiple Answer Question The objectives of Uniform costing system are as follows :- Correct Answer To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of costs Your Answer To compile reliable cost data for inter-firm comparison of costs , To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance Select The Blank Question ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Correct Answer Management Your Answer Management True/False Question Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. Correct Answer True Your Answer True Select The Blank Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Your Answer Personnel Select The Blank Question Margin of safety indicates ________ of operations. Correct Answer Profitability Your Answer Profitability Multiple Choice Multiple Answer Question Labour efficiency variance arises due to:- Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material Your Answer Inefficient supervisor , Poor working conditions , Change in material mix Multiple Choice Multiple Answer Question Examples of indirect material are :- Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes Your Answer Consumable stores , Glue used in book binding , Rear-view mirror of a two wheeler Match The Following Question Correct Answer Your Answer Total cost - Fixed cost Variable cost Variable cost Contribution - Fixed cost Profit Profit Total cost + Profit Sales Sales Fixed cost + Variable cost Total cost Total cost True/False Question Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Change in profit/ Change in activity level Profit volume ratio Profit volume ratio Change in total cost/ Change in activity level Variable cost per unit Profit Total sales X Profit volume ratio Total contribution Total contribution Selling price ( Actual sales - Break even sales) Margin of safety Margin of safety ratio Select The Blank Question The process of finding the reasons for the difference in the balance as per bank book and pass book is known as ________. Correct Answer Reconciliation Your Answer Reconciliation Select The Blank Question The difference between sales and prime cost is known as ________. Correct Answer Gross Profit Your Answer Net Profit Multiple Choice Single Answer Question Standard labour cost of a job has been specified as 50 hours work by skilled workers @ Rs.20/- per hour and 150 hours work by unskilled workers @ Rs.10/- per hour. Actual time taken was 70 hours by skilled workers @ Rs.18/- per hour and 170 hours by unskilled workers @ Rs.13/- per hour. Calculate labour yield variance. Correct Answer Rs.500/- (Adverse) Your Answer Rs.500/- (Adverse) Select The Blank Question The stores department is a ________ department. Correct Answer Service Your Answer Valuable Multiple Choice Multiple Answer Question Cost control procedure deals with :- Correct Answer Establishment of plans , Comparison of actual and planed performance , Computation of variance Your Answer Establishment of plans , Computation of profit , Comparison of actual and planed performance True/False Question The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost. Correct Answer True Your Answer True True/False Question Under the Rowan plan bonus is a fixed percentage. Correct Answer False Your Answer False Multiple Choice Single Answer Question Which of the following is the most efficient use of the clock card? Correct Answer To facilitate payment for time spent on the work premises Your Answer To facilitate payment for time spent on the work premises Multiple Choice Single Answer Question It is said that adoption of uniform costing creates customer confidence because :- Correct Answer Prices are reliable Your Answer Prices are reliable Select The Blank Question Profit = Contribution per unit X ________. Correct Answer Margin of safety (units) Your Answer Sales (units) True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Your Answer True Multiple Choice Multiple Answer Question Techniques of management accounting include:- Correct Answer Marginal costing , Budgetary control , Standard costing Your Answer Marginal costing , Budgetary control , Standard costing Multiple Choice Single Answer Question An important feature of management accounting is :- Correct Answer Optimizing the use of resources Your Answer Considers only historical data True/False Question Category C items, as per the ABC analysis, usually refers to indirect material. Correct Answer True Your Answer False Multiple Choice Single Answer Question A withdrawal of Rs.500/- from Mr.Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr.Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr.Johny, find out the balance as per his bank book. Correct Answer Rs.1,750/- (debit) Your Answer Rs.1,750/- (debit) Multiple Choice Multiple Answer Question These are the preventive costs of labour turnover :- Correct Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Your Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Multiple Choice Multiple Answer Question The causes of idle time can be analyzed as :- Correct Answer Administrative causes , Productive causes , Economic causes Your Answer Administrative causes , Productive causes , Economic causes Select The Blank Question Baum Differential Plan is a combination of Taylor's differential piece rate system and Halsey system and is also known as ________. Correct Answer Milwankee plan Your Answer Milwankee plan Multiple Choice Single Answer Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Correct Answer Rent received in advance account Your Answer Rent received in advance account Plain Text Attachment [ Scan and Save to Computer ] Multiple Choice Multiple Answer Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of :- Correct Answer Interest on loans taken from other , Interest on loans granted to others , Depreciation on plant and machinery Your Answer Depreciation on plant and machinery , Preliminary expenses written off , Interest on loans taken from other , Interest on loans granted to others True/False Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Your Answer True Select The Blank Question The variance that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer Sales margin volume Your Answer Total sales margin Multiple Choice Multiple Answer Question In practical circumstances, control ledgers may be maintained for the following categories:- Correct Answer Sundry debtors , Sundry creditors , Advance to Staff Your Answer Sundry debtors , Sundry creditors , Advance to Staff True/False Question All cash sales are recorded in the sales register. Correct Answer False Your Answer True Select The Blank Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety will be Rs.________. Correct Answer 100,000/- Your Answer 100,000/- Select The Blank Question ________ account can be defined as the record of all the transactions pertaining to a person, asset, liability income or expenditure which have taken place in a specified period. Correct Answer Ledger Your Answer Ledger Multiple Choice Single Answer Question A good purchase system, for materials, prevents production hold-ups due to:- Correct Answer Lack of material Your Answer Lack of material True/False Question According to last-in-first-out method of material issue pricing, issues prices are close to current economic values. Correct Answer True Your Answer True True/False Question Profitability statement indicates the amount of assets & liabilities. Correct Answer False Your Answer False Match The Following Question Correct Answer Your Answer Dividend paid Profit and loss appropriation account Profit and loss appropriation account Freight inwards Manufacturing account Manufacturing account Sales Trading account Trading account Freight outwards Profit and loss account Profit and loss account Multiple Choice Multiple Answer Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost? Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Your Answer The level of control of the used of material in the production cycle , An increase in the maximum material inventory level , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Multiple Choice Multiple Answer Question Labour turnover means :- Correct Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force Your Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force True/False Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. Correct Answer False Your Answer False True/False Question A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Correct Answer True Your Answer True True/False Question One of the major drawback of the contribution approach to costing is that it ignores fixed cost. Correct Answer True Your Answer False Select The Blank Question Non-trading income is disclosed on the credit side of ________ account. Correct Answer Profit and loss Your Answer Profit and loss True/False Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Your Answer False Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Your Answer Parallel to Select The Blank Question Depreciation is caused by use factor, obsolescence and ________. Correct Answer Time factor Your Answer Time factor Select The Blank Question Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Correct Answer Long term liabilities Your Answer Current liabilities Multiple Choice Single Answer Question Which of the following documents contains information as to quantity and value of material stock? Correct Answer Stores ledger Your Answer Material requisition note Multiple Choice Multiple Answer Question Direct Cost includes :- Correct Answer Direct material , Direct labour , Direct expenses Your Answer Direct material , Direct labour , Direct expenses 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 Select the steps to be followed while preparing bank reconciliation statement :- Correct Answer Compare the transactions in the bank book and the pass book , Check the totals and the balancing of both the books , Confirm that the opening balances of both the books are tallying Your Answer Compare the transactions in the bank book and the pass book , Check the totals and the balancing of both the books , Confirm that the opening balances of both the books are tallying True/False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Your Answer True Multiple Choice Single Answer Question What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges on the lathe machine were debited to Carriage inward account, Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous expenses account, Rs.200/- Correct Answer Cost will increase by Rs.1,300/- Your Answer Cost will decrease by Rs.900/- True/False Question Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. Correct Answer False Your Answer True Select The Blank Question If the time booked as per the job cards is less than the attendance time it indicates ________ during which the worker has not done any work though he was present in the factory. Correct Answer Idle time Your Answer Idle time Multiple Choice Multiple Answer Question Special aspects of co-partnership include:- Correct Answer Workers are granted ownership rights , Indirect monetary remuneration , The morale of the workers is increased Your Answer Workers are granted ownership rights , The morale of the workers is increased , The workers are rewarded for individual efficiency True/False Question One of the main objection to the contribution approach of costing is that it ignores fixed cost. Correct Answer True Your Answer False True/False Question If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material. Correct Answer True Your Answer False True/False Question Linking overhead to a cost unit is known as overhead absorption. Correct Answer True Your Answer False True/False Question Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. Correct Answer True Your Answer True Multiple Choice Single Answer Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonored cheque, originally received from Mr.A. The fact of dishonor was not recorded in the bank book. Find the balance as per pass book. Correct Answer Rs.128/- (overdraft) Your Answer Rs.106/- (credit) Match The Following Question Correct Answer Your Answer Differential Cost Increase or Decrease in cost Increase or Decrease in cost Sunk Cost Historical Cost Historical Cost Cost Centre Facilitate the fixation of responsibility Facilitate the fixation of responsibility Cost Control Process of controlling costs of operations Process of controlling costs of operations 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 In a factory Beduax Point Premium system is in operation. The following are the particulars with regard to a job in a factory : allowed time for the job =600 B's; time taken = 480 minutes (or B's); rate = Rs.12/- per hour. Calculate the amount of bonus. Correct Answer Rs.114/- Your Answer Rs.104/- Multiple Choice Multiple Answer Question The quarterly production of a company's product which has a steady market is 20,000 units. Each unit of product requires 0.5 kg of raw material. The cost of placing one order for raw material is Rs.100/- and the inventory carrying cost is Rs.2/- per kg per annum. The lead time for procurement of raw material is 36 days and a safety stock of 1,000 kg of raw materials is maintained by the company. The company has been able to negotiate the following discount structure with the raw material supplier : For order quantity below 7,000 kg -discount per order is NIL. For order quantity between 7,000 kg and 8,000 kg., discount per order is Rs.400/-. For order quantity between 8,000 kg and 16,000 kg., discount per order is Rs.2,000/-. For order quantity between 16,000 kg and 30,000 kg., discount per order is Rs.3,200/-. Find the statements which indicate the correct costs for the different order sizes. Correct Answer If order size is 6,667 units, total cost is Rs.6,867/- , If order size is 10,000 units, total cost is Rs.8,400/- , If order size is 20,000 units, total cost is Rs.17,000/- Your Answer If order size is 10,000 units, total cost is Rs.8,400/- , If order size is 20,000 units, total cost is Rs.17,000/- , If order size is 5,000 units, total cost is Rs.5,400/- Select The Blank Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Your Answer Personnel Select The Blank Question ________ system of wage payment is a combination of Halsey system and Gantt system. Correct Answer Diemer Your Answer Diemer Multiple Choice Single Answer Question Standard labour cost of producing 500 metre of cloth has been specified as 20 hours work by skilled workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per hour. For producing 500 metre cloth they worked for 30 hours each they were paid at the rate of Rs.17/- per hour and Rs.10/- per hour, respectively. Calculate labour mix variance. Correct Answer Rs.30/- (Adverse) Your Answer Rs.60/- (Adverse) Multiple Choice Single Answer Question Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account will be disclosed in the :- Correct Answer Balance Sheet - liability side Your Answer Balance Sheet - liability side 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 Multiple Choice Multiple Answer Question Different types of tenders are :- Correct Answer Singly tender , Open tender , Global tender Your Answer Singly tender , Open tender , Global tender Multiple Choice Multiple Answer Question Causes for adverse material price variance are:- Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Your Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Select The Blank Question Under the Merrick's differential piece rate system of wage payment if the efficiency level of a worker is below 83%, then he is paid wages at ________ piece rate. Correct Answer Normal Your Answer Normal MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Balance sheet is a part of the ledger accounts maintained by the company. a) true b) false Ans. B 2. Accounting is an art of recording, classifying & summarizing in a significant manner. a) true b) false Ans. A 3. Credit balance in interest account indicates income for the organization. a) true b) false Ans. A 4. Choose all that apply. Features of Taylor's differential piece rate system are as follows :- a)____ Strong incentive to inefficient and new workers b)____ Minimal clerical work is involved in calculating the wages c)____ Helps in building up an efficient labour force d)____ Strong incentive to efficient and ambitious workers. Ans. B,c,d 5. Choose all that apply. The components of the selling and distribution cost budget are :- a)____ Distribution expenses b)____ Publicity expenditure c)____ Salary of shop-floor workers d)____ Salary of sales-office workers Ans. A,b,d 6. One of the main objection to the contribution approach of costing is that it ignores fixed cost a) true b) false Ans. A 7. Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ______________-in the balance sheet. Investments;Long term liabilities;Capital;Current liabilities Ans. Long term liabilities 8. Choose the correct answer. A written request sent to a supplier for specified goods at an agreed upon price is often called as :- a) Goods received note b) Purchase order c) Material requisition note d) Purchase requisition slip Ans. B 9. Choose the correct answer. Included in the trial balance is the sales promotion suspense account with a debit balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its impact on profit of the company. a) The gross profit will increase by Rs.6,300/- b) The gross profit will decrease by Rs.6,300/- c) The net profit will increase by Rs.6,300/- d) The net profit will decrease by Rs.6,300/- Ans. D 10. Choose all that apply. The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might have brought this change. a)____ Accrued commission income of Rs.32,960/- was not entered in the books b)____ Rent for the month of March was payable and yet to be recorded Rs.19,280/- c)____ Rent for the month of March was receivable and yet to be recorded Rs.19,280/- d)____ Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account Ans. A,b,d 11. Choose the correct answer. From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments :X- Rs.48,000; Y-Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B- Rs.18,000. The expenses of the service departments are apportioned as follows : Service department A - Production department X-20%; Production department Y – 40%; Production department Z- 30%; Service department B - 10%.Service department B- Production department X-40%; Production department Y - 20%; production department Z- 20%; Service department A - 20%. Details of machine hours are as follows: Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-1,000 hours. a) X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 b) X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 c) X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 d) X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 11Ans. C 12. Choose the correct answer. A dividend warrant of Rs.2,076/- was paid direct to the bank and nothing appeared in the cash book. This is an example of :- a) Direct deposit into the bank b) Direct payment by the bank c) Cheque deposited but not cleared d) Cheque issued but not presented Ans. A 13. Choose the correct answer. From the given information, calculate the earnings of Lal, Mohan and Krishna. Rolland Ltd. operates in one of its departments, a group incentive scheme. A minimum hourly rate is guaranteed to each of the six employees in the group, if actual output for the week is less than the standard output. If actual output is greater than the standard output, the hourly rate of each employee is increased by 4% for every additional 600 units of output produced. The standard output for the group is 12,000 units for a 40-hour week. During the week ending 31st December, each employee in the group worked 40 hours; actual output and minimum hourly rates were as follows :Lal - 2,500 units and Rs.60/-; Hari - 2,700 units and Rs.100/-; Mohan - 2,400 units and Rs.60/-; Shyam - 2,500 units and Rs.80/-; Gopal - 2,460 units and Rs.60/-; Krishna - 2,440 units and Rs.40/-. a) Lal - Rs.3,500/-; Mohan - Rs.3,000/-; Krishna - Rs.2,000/- b) Lal - Rs.3,840/-; Mohan - Rs.3,500/-; Krishna - Rs.2,880/- c) Lal - Rs.4,800/-; Mohan - Rs.3,840/-; Krishna - Rs.1,020/- d) Lal - Rs.2,880/-; Mohan - Rs.2,880/-; Krishna - Rs.1,020/- Ans. 14. Fixed overhead volume variance = Expenditure variance + Capacity variance + ________________variance Productivity;Expenditure;Price;Calendar Ans. Calendar 15. Choose the correct answer. Compute actual total cost based on the data given below: Total standard cost (standard material cost + standard labour cost) -Rs.19,633.33; labour rate variance- Rs.900/- (adverse); material price variance -Rs.90/- (Favourable); material yield variance -Rs.700/- (Favourable); labour yield variance -Rs.333.33 (Favourable). a) Rs.19,410/- b) Rs.17,610/- c) Rs.19,856.66 d) Rs.21,656.66 15Ans. 16. Control on purchase of material is exercised by the storekeeper.. a) true b) false Ans. B 17. Match the following: 1. Selling and distribution budget ( ) 1. Scrap generated during production 2. Administration budget ( ) 2. Cost of demand creation 3. Materials budget ( ) 3. Carriage inwards 4. Cash budget ( ) 4. Cost of spoilage and defective work 5. Interest on loan 6. Salary of CEO 18. A ____________note is prepared when excess material is returned to stores. Material returned;Goods received;Material requisition;Material transfer Ans. Material returned 19. Primary distribution is effected on the basis of service rendered to the service departments by the production departments. a) true b) false Ans. B 20. Choose the correct answer. A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on computers to be charged for the year. a) Rs.36,000/- b) Rs.40,953.70 c) Rs.37,353.70 d) Rs.32,400/- Ans. B 21. Choose the correct answer. Balance sheet is statement of :- a) Purchases and Sales b) Income and Expenses c) Receivables and Payables d) All Assets and Properties Ans. D 22. Choose all that apply. From the following, select current assets:- a)____ Sundry debtors b)____ Stock c)____ Pre paid expenses d)____ Goodwill Ans. A,b,c 23. Non-trading income is disclosed on the credit side of ___________________account. Trading;Profit and loss appropriation;Profit and loss;Manufacturing Ans. Profit and loss 24. The _________________________is a perpetual inventory record. Material requisition note;Job card;Goods received note;Bin card Ans. Bin card 25. Indirect Cost is termed as ____________________. Overhead;Prime cost;Direct expenses;Production cost Ans. Overhead 26. Choose the correct answer. In a factory Ram and Shyam produce the same product using the same input of same material and at the same normal wage rate. Bonus is paid to both of them in the form of normal time wage rate adjusted by the proportion which time save bears to the standard time for the completion of the product. The time allotted to the product is fifty hours. Ram takes thirty hours and Shyam takes forty hours to produce the product. The factory cost of the product for Ram is Rs.3,100/- and for Shyam is Rs.3,280/-. The factory overhead rate is Rs.12/- per hour. Calculate the cost of material used for the product, for each worker, Ram and Shyam a) Rs.3,000/- b) Rs.2,000/- c) Rs.3,320/- d) Rs.2,320/- Ans. 27. Choose the correct answer. The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is a) Re.0.68 b) Re.0.84 c) Re.0.93 d) Re.0.98 Ans. D 28. While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored. a) true b) false Ans. B 29. Choose all that apply. Accounting is the art where transactions are :- a)____ Summarized b)____ Classified c)____ Recorded d)____ Processed Ans. A,b,c 30. Choose all that apply Management accounting is concerned with the following activities :- a)____ Decision making b)____ Safeguarding assets c)____ Planning and controlling activities d)____ Minimizing workload on management Ans. A,b,c 31. Choose all that apply. XYZ Ltd. has purchased a consignment of material P and Q. The following are the costs in purchasing : Material P - 5,000 kg @ Rs.10/- per kg.; Material Q - 8,000 kg @ Rs.5/- per kg, sales tax @ 3% amounting to Rs.2,700/- and railway freight Rs.650/-. Other handling charges have been estimated at Rs.260/- common to both materials. In addition material P involves special handling costs of Rs.160/- in stores. Normal breakage of materials in transit and in storage has been estimated at 5% in case of P and 10% in case of Q. Determine the per kg. issue price for P and Q so as to recover the normal losses of materials as well as costs incidental to purchases and storage. Also calculate the amount of normal loss.. a)____ Issue price for material P -Rs.10.95 b)____ Issue price for material Q -Rs.5.80 c)____ Normal loss for materials P and Q -Rs.1,050/- d)____ Issue price for material P -Rs.11/- Ans. 32. The short run financial plan which acts as a guide to achieve the predefined targets is known as ______________________. Budgeted Profit & loss account; Budget; Manual; Budgeted Balance Sheet Ans. Budget 33. Accounting is an art of recording, classifying & summarizing in a significant manner. a) true b) false 33Ans. A 34. Choose all that apply If you are required to enforce uniform costing system in your industry, how would you proceed?:- a)____ Collecting data from all units of your industry b)____ Ensuring that the data collected is complete and correct c)____ Maintaining secrecy of the data collected d)____ Allowing free access to all the units to the collected data. Ans. A,b,c 35. Choose all that apply. Select the items which may be classified as administration overheads :- a)____ Depreciation on office furniture b)____ Depreciation on plant and machinery c)____ Director's remuneration d)____ Telephone expenses Ans. A,c,d 36. Interest receivable is a _______________for the organization. . Long term asset;Current asset;Liability;Current liability Ans. Current asset 37. Choose the correct answer An analysis of the time card of a worker on a machine shows that of the total 48 hours, he worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You are required to calculate the earnings of the worker. a) Rs.470/- b) Rs.500/- c) Rs.510/- d) Rs.450/- Ans. B 38. Choose all that apply. A gang of 10 men, 20 women and 30 boys at the standard rate of Rs.15/-, Rs.10/- and Rs.8/- per hour, respectively, is expected to produce 5,000 units in a week of 40 working hours. In a particular week the gang which consisted of 12 men, 16 women and 40 boys was paid at the rate of Rs.13/-, Rs.11/- and Rs.5/- per hour, respectively. This gang actually produced 6,000 units. Due to a serious machine break-down three hours work was totally lost during the week. Calculate labour efficiency variance (exclusive of idle time) for each category of workers, viz. men, women and boys. a)____ Men -Rs.540/- (Favourable) b)____ Women -Rs.3,680/- (Favourable) c)____ Boys - Rs.320/- (Adverse) d)____ Women -Rs.368/- (Adverse) 38Ans. 39. Choose the correct answer. A perpetual inventory system may be defined as :- a) The checking of physical stock against the quantity and quality of new material required b) The documentation system which records all stores transactions on a continuous basis c) The checking of stock on the same date in each accounting period d) Ensuring that stocktaking procedures conform to a previously agreed procedure. Ans. B 40. Profitability statement indicates the amount of assets & liabilities. a) true b) false Ans. B 41. Balance sheet indicates the expenditure & income from the business. a) true b) false Ans. B 42. The cash flow format is used for preparing the cash budget by the _____________________ method Adjusted Profits/Losses; Balance Sheet; Receipts and Payments; Cash flow statement Ans. Adjusted Profits/Losses 43. Choose the correct answer. Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to:- a) Reduction in cash in hand b) Balance as per bank book < Balance as per pass book c) Balance as per bank book > Balance as per pass book d) Increase in cash in hand Ans. C 44. Choose all that apply. For the following transactions find out the value of material issued using FIFO (First in first out) method. 1/7/04 - Opening balance 200 units @ Rs.10/- 3/7/04 - Issued to production department 80 units. 4/7/04 - Purchased 300 units @ Rs.11/-. 6/7/04 – Issued to production department 150 units. 8/7/04 - Purchased 250 units @ Rs.13/-. 11/7/04 - Issued to production department 170 units.. a)____ 3/7/04 - 80 units @ Rs.10/- b)____ 6/7/04 - 120 units @ Rs.10/- and 30 units @ Rs.11/- c)____ 11/7/04 - 170 units @ Rs.11/- d)____ 11/7/04 - 170 units @ Rs.13/- 44 Ans. A,b,c 45. A ________________________can be defined as a part of the organization for which separate budget can be prepared and implemented. Profit centre;Cost centre;Budget centre;Responsibility centre Ans. Budget centre 46. Choose the correct answer. Cash budget is extremely useful since it:- a) Gives information about estimated cash inflows only b) Gives information about estimated cash outflows only c) Gives information about estimated cash inflows and outflows d) Gives information about estimated material inflows and outflows Ans. C 47. Receipts and payments method of cash budget is useful for preparing long term estimates. a) true b) false Ans. B 48. If the owner brings in personal calculator for office use, ______________account should be credited. Drawings;Donation;Capital;Cash Ans. Capital 49. For a manufacturing company, dividend received is a non-operating income. . a) true b) false Ans. A 50. Match the following: 1. Accounting (3) 1. Profitability statement & Balance-sheet 2 Profitability statement (2) 2. Indicates the amount of profit earned 3 Balance-sheet (4) 3. Process of analyzing & interpretation 4 Book-Keeping (5) 4. Financial status 5. Financial statement (1) 5. Books of Accounts 51. Financial Accounting discloses the financial performance & financial statements of the business as a whole. a)true b)false Ans. A 52. Choose all that apply. Locate the steps involved in rectifying the errors in the books of accounts :- a) _____ Find the wrong entry passed b) _____ Find the correct entry to be passed c) ____ Find the person responsible for the wrong entry d) ____ Find the entry that will resolve the mistake in the books Ans. A,b,d 53. Choose all that apply Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. a) ____ Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- b) ____ Profit and Loss A/c .......... Dr. Rs.5000/- c) ____ Rs.6,000/- to Rao's A/c Rs.6,000/- d) ____ Rs.250/- to General Expenses A/c Rs.250/- Ans. A,c,d 54. Choose the correct answer A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan. a) Rs.8,000/- b) Rs.8,800/- c) Rs.9,666.67 d) Rs.9,333.33 Ans. 55. The process of accounting split into three steams i.e. financial, cost, management accounting. a) true b) false Ans. A 56. Match the following 1. Audit (4) 1. Maintain all types of accounts 2. Accounting (5) 2. Process of estimating profits 3. Journal (6) 3. List of all types of accounts 4. Ledger (1) 4. Reviewing internal control system 5. Process of analyzing & interpretation 6. Book of original entry MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. Choose the correct answer. Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all units belonging to that industry? Ans. Uniform costing 2. Token or disc method is a related to the system of ________. Ans. Time-keeping 3. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________ Ans. P's A/c and Q's A/c 4. Purchase day book for the month of April was under cast by Rs.1000/- ________ account should be credited. Ans. Suspense 5. Choose the correct answer. The profit volume ratio of X Ltd. is 50% and the margin of safety to sales ratio is 40%. You are required to calculate the net profit if sale volume is Rs.100,000/- Ans. Rs.20,000/- 6. A firm earns profit when contribution is equal to fixed costs under variable costing. a) true b) false Ans. B 7. Choose the correct answer. The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company. Ans. Rs.34,408.09 8. Choose the correct answer. Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc. Ans. The statement and the reason are both incorrect 9. Choose the correct answer. The Asian Industries specializes in the manufacture of small capacity motors. The cost structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per annum. The sale price of the motor is Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order to break-even. Ans. 6,000 motors 10. If the time booked as per the job cards is less than the attendance time it indicates ________ during which the worker has not done any work though he was present in the factory. Ans. Idle time 11. Bank reconciliation statement can be prepared on weekly basis. a) true b) false Ans. A 12. Balance sheet indicates the financial status of the business at given period. a) true b) false Ans. A 13. Choose the correct answer. The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumption of X = 10 litres per unit of product. Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Ans. Rs.5,000/- (Favourable) 14. The bin card and stores ledger, being independent records, comparison of these two records should be avoided. a) true b) false Ans. B 15. Choose all that apply. Select the accounts to be disclosed on the assets side of the Balance sheet :- Ans. Furniture , Loan to Bank of U.S.A. , Land & building 16. Choose the correct answer. Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit. Ans. The net profit will not be affected 17. Choose all that apply. Identify the steps involved in selecting the optimum product mix, when the limiting factor is number of labour hours and sales demand :- Ans. 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. 18. Penalty paid for delay in payment to creditors represents uncontrollable cost. a) true b) false Ans. 19. A complete list of all material required, with quantities, for a particular job is given in the ________. Ans. Bill of material 20. Match the following: Question Answer 1. Time Recording Clock Method 1. Ticket number & clock card allotted to worker 2. Daily Time sheets 2. Time spent by worker on job is recorded 3. Time Keeping Department 3. Recording of workers time 4. Time booking department 4. Jobwise booking of time. 21. Choose all that apply. Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/- (adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour yield variance. Ans. Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- , Labour yield variance is favourable 22. High time wages means necessarily high cost of production. a) true b) false Ans. B 23. A business is an activity carried out with the intention of earning the profit. a) true b) false Ans. A 24. Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. a) true b) false Ans. A 25. Match the following: Question Answer 1. Operating income 1. Cash Sales 2. Non-Operating income 2. Issue of shares 3. Plan of investment in fixed assets 3. Capital Expenditure Budget 4. Plan for surplus/shortage of cash 4. Cash Budget 26. Preparation of direct material ________ budget is the responsibility of the Purchase manager. Ans. Purchase 27. Choose all that apply. Select the various methods adopted for treatment of under or over absorbed overheads :- Ans. Use of supplementary rates , Carrying over the amount to remaining period , Writing off to the Costing Profit and Loss Account 28. Interim dividend paid by the company should be debited to the profit and loss appropriation account. a) true b) false Ans. A 29. Choose all that apply. Features of purchase requisition slip are :- Ans. Raised when the stock of a raw material has fallen to the re-order level. , Indicates the type, quantity and quality of material required , The information about the price of material is excluded 30. The process of finding the reasons for the difference in the balance as per bank book and pass book is known as ________. Ans. Reconciliation 31. Choose the correct answer. 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. Ans. Rs.8,279.63 32. The difference between sales and prime cost is known as ________. Ans. Gross Profit 33. Choose all that apply The key factor determines the :- Ans. Level of activity , Capacity utilization , Level of sales 34. Choose all that apply The disadvantages of supplementary overhead rates are:- Ans. It can be determined only after the end of the accounting period , Defeats the basic concept of normal cost , Involves lot of clerical activity 35. Choose all that apply Features of material usage variance are :- Ans. Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity 36. In practical circumstances, the ________ are referred to as application of funds. Ans. Assets 37. Choose the correct answer. Which of the following is a correct definition of the key factor? Ans. The factor which limits the activities of the undertaking 38. Under ABC analysis, category A represents items with high volumes. a) true b) false Ans. B 39. Choose the correct answer. A worker completes a job in a certain number of hours. The standard time allowed for the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate, a bonus of Rs.20/- under Halsey plan. Find out his total earnings under the Rowan plan. Ans. Rs.84/- 40. Choose all that apply Following errors affect the trial balance :- Ans. Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger 41. Choose all that apply Piece rate systems are very useful in the following circumstances:- Ans. Units of output are measurable , Job is standardized , The flow of work is regular 42. The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization. Ans. Net 43. Choose all that apply The organization chart shows the following aspects :- Ans. Functional responsibility of different functional managers , Delegation of authority to various managers , Inter-functional relationships of these managers 44. If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business. Ans. Drawings 45. Narration must be mentioned in the ledger. a) true b) false Ans. B 46. Category C items, as per the ABC analysis, usually refers to indirect material. a) true b) false Ans. A 47. Choose the correct answer. Determine re-order level from the following : Maximum daily consumption - 200 units; maximum delivery period - 12 days; average daily consumption - 150 units and average delivery period - 8 days. Ans. 2,400 units 48. Choose the correct answer. A firm has purchased a plant to manufacture a new product, the cost data for which is given below : Estimated annual sales 24,000 units. Estimated costs : Materials Rs.4/- per unit; labour Re.0.60 per unit; overheads Rs.24,000/- per year; administrative expenses Rs.28,800/- per year and selling expenses are 15% of sales; Calculate the selling price per unit if profit per unit is Rs.1.02. a) Rs.9.02/- b) Rs. 9.20/- c) Rs. 7.82/- d) Rs.7.74/- Ans. 49. Choose the correct answer. A wholesaler supplies 40 cricket bats to different shopkeepers on each working day. Presently the wholesaler is purchasing bats in lots of 200 at a cost of Rs.60,000/- per lot. On every order he incurs a handling charge of Rs.150/- and freight charge of Rs.250/- per order. Multiple and fractional lots can also be ordered. All orders are supplied the next day. The wholesaler finances investment in inventory by paying 2% monthly interest on borrowed funds. Incremental storage cost per bat is Rs.8/-. How many bats should be ordered at a time to minimize total annual inventory cost, assuming that there are 300 working days in a year? a) 1,200 bats b) 746 bats c) 500 bats d) 346 bats 49Ans. 50. Match the following 1. Advantage of budgetary 1. Motivates the managers to exceed the budgeted control system ( ) targets 2. Fixed budget ( ) 2. Restricts the efforts of the managers to the budgeted targets 3. Disadvantage of budgetary 3. Managerial tool which increases effectiveness control system ( ) of managerial control 4. Flexible budget ( ) 4. Difficult to implement in fast changing industrial scenario 5. More elastic and practical 6. Managerial tool which decreases effectiveness of managerial control 51 Choose all that apply Special aspects of co-partnership include:- a)____ Workers are granted ownership rights b)____ Indirect monetary remuneration c)____ The morale of the workers is increased d)____ The workers are rewarded for individual efficiency Ans. 52. Choose the correct answer. Interest on bank loan, was paid till the quarter ending 30th September, 2003, Rs.36,000/-. Find the amount to be debited to the profit and loss account for the year ending on 31st March, 2004, assuming the loan is not yet repaid as on this date. a) Rs.72,000/- b) Rs.70,000/- c) Rs.36,000/- d) Rs.30,000/- Ans. DEMO QUESTION PAPER OF MANAGEMENT ACCOUNTING 1)The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as: a.Labour efficiency variance b.Total Labour variance c.Labour rate variance d.Idle time variance 2)Which of the following is a correct definition of the key factor? a.The factor which limits the activities of the undertaking b.The factor which maximised sales c.The factor which the top management feel is important d.The amount of cash available during the budget period 3)Select the correct journal entry for the following transaction. "Received ERs. 475/- from M/S. Aloha & Co. in full settlement of Rs.500/-". a.Cash account: Dr. Rs.475/- Discount account: Dr. Rs.25/- To M/S. Aloha & Co. A/B CPR. Rs.475/- b.Cash account: Dr. Rs.475/- To M/S. Aloha & Co. A/B CPR. Rs.475/- c.Cash account: Dr. Rs.500/- To M/S. Aloha & Co. A/B CPR. Rs.500/- d.Cash account: Dr. Rs.475/- To M/S. Aloha & Co. A/B CPR. Rs.450/- To Discount account CPR. Rs.25/- 4)XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units (packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum price should it quote for this deal? a.Rs.150/- b.Rs.170/- c.Rs.190/- d.Rs.200/- 5)From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments: X - Rs.48,000; Y-Rs.42,000; Z - Rs.30,000. Service Departments: A - Rs.14,040; B - Rs.18,000. The expenses of the service departments are apportioned as follows: Service department A - Production department X - 20%; Production department Y - 40%; Production department Z - 30%; Service department B - 10%. Service department B - Production department X - 40%; Production department Y - 20%; Production department Z - 20%; Service department A - 20%. Details of machine hours are as follows: Production department X - 1,000 hours; Production department Y - 1,000 hours; Production department Z - 1,000 hours. a.X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 b.X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 c.X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 d.X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 6)While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy: 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004? a.Balance as per pass book < Balance as per bank book b.Balance as per pass book = Balance as per bank book c.Balance as per pass book >Balance as per bank book d.Balance as per pass book < Balance as per pass book 7)Judge the statement according to the criteria given : The accounting period for XYZ Ltd. ends on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be recorded in the books of accounts in January". a.The statement and its reason are both correct b.The statement is correct but its reason is incorrect c.The statement is incorrect but its reason is correct d.The statement and its reason are both incorrect 8)The cost that indicates historical cost, which is incurred in past, is known as . . . a.Sunk cost b.Differential cost c.Opportunity cost d.Fixed cost 9)A firm has purchased a machine for manufacturing a new product, the cost data for which is given below. a.Rs.9.00/- b.Rs.9.20/- c.Rs.9.24/- d.Rs.9.30/- 10)Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. a.Rs.29.98 b.Rs.30/- c.Rs.30.98 d.Rs.29/- 11)A withdrawal of Rs.500/- from Mr. Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr. Johny's account. If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr. Johny, find out the balance as per his bank book. a.Rs.1,750/- (debit) b.Rs.1,750/- (overdraft) c.Rs.2,250/- (overdraft) d.Rs.2,250/- (debit) 12)The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio? a.0.5 b.0.666 c.0.333 d.0.25 13)Which of the following operations would normally be carried out first when preparing a master budget? a.Determining the budget period b.Calculating the overhead absorption rates c.Identifying the principal budget factor d.Preparing a forecast profit and loss account 14)Purchased 200 shares of Bart Forge Ltd. for Rs.850/- per share, which account should be debited? a.investment account - Rs.170,000/- b. Investment account - Rs.850/- c. Cash account - Rs.850/- d. Cash account - Rs.170,000/- 15)which variance is used to analyse the effect of change in the quantity of output from a given mix of inputs? a. Materials mix variance b. Materials yield variance c. Labour mix variance d. Labour efficiency variance 16)State the features of these transactions: (i) Commission paid Rs.250/- was posted twice to Commission account. (ii) Rs.5,000/- representing goods sold to A, was posted to the credit to commission received account. (iii) Sold machine for Rs.8000/-, was credited to Sales account. a. The debit side of the trial balance will be in excess by Rs.250/- b. The debit side of the trial balance will be in excess by Rs.13,250/- c. Involves an error of principle d. Involves an error of commission 17)Select the transactions which can be entered in the Journal paper. a.Opening entries b.Closing entries c.Rectification entries d.Average entries 18)Marginal costing is useful in the following areas: a.Plant shut down decisions b.Make or buy decisions c.Profit planning d.Apportionment of overheads 19)The different purposes served by standard costing technique are: a.Cost control b. Cost awareness c. Performance appraisal d. Profit planning 20)Select the various methods adopted for treatment of under or over absorbed overheads. a.Use of supplementary rates b. Carrying over the amount to remaining period c. Writing off to the Costing Profit and Loss Account d. Writing off to the Financial Profit and Loss Account 21)The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank pass book balance as on the same date was Rs.8,015/-. Select the transactions representing the reasons for this difference. a.Bank charges not entered in the bank book Rs.90/- b.Cheques deposited but not cleared Rs.1,200/- c.Unpresented cheques Rs.2,625/- d.Bank interest not entered in the bank book Rs.90/- 22)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 a.Increase the selling price b.Reduce cost of sales c.Increase the selling efforts d.Increase the sales volume 23)Select the correct statements. Ram's account: Dr. Rs.10,000 To Bank account: Rs.10,000 a.Ram is a creditor b.Rs.10,000/- has been paid to Ram c.The payment is made by cheque d.Ram is an employee 24)Error of commission refer to calculation errors, totaling errors, errors in carrying forward etc. a.True b.False 25)The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance. a.True b.False 26)A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. a.True b.False 27)Goods sent to the customers on approval basis should be treated as sales. a.True b.False 28)While preparing bank reconciliation statement for the month of September 2004, one should consider the balance as per bank book as on 1st September, 2004 and the balance as per pass book as on 30th September, 2004. a.True b.False 29)In marginal costing, under and over absorption of fixed overheads is bound to arise. a.True b.False 30)A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not debited to traveling A/c. The trial balance will NOT agree. a.True b.False 31)Collection charges of Rs.4/- on a cheque received from Calcutta should be dash in the bank book. a.credited b.debited c.adjusted d.added 32)The analysis which is also referred as 'what if' analysis is known as dash a.cost volume profit analysis b.cost variance analysis c.contribution marginal analysis d.profit variance analysis 33)An error of partial omission can be rectified by either debiting or crediting the dash account, as the case maybe. a.p&l b.suspense c.adjusted p&l d.credit 34)The cash flow format is used for preparing the cash budget by the dash method. a.balance sheet b.adjusted p&l c.receipts&payments d.cfo 35)Fixed overhead volume variance = Expenditure variance + Capacity variance + Calendar +dash variance. a.calender b.expenditure c.price d.produtivity 36)Warehousing cost is an item of a.distribution overhead b.office overhead c.prime cost d.material costs 37)In case of seasonal industry, the budget period may be taken as One season 5 years One month 10 years . a.one season b.one month c.5 years d.10 years 38)In order to rectify the totaling mistake, wherein the sales return ledger was undercast by Rs.2,000/-, the suspense account should be credited debited adjusted appended with __________ Rs.2,000/-. 39)Match the following: Selling and distribution budget :- Cost of demand creation Salary of CEO Carriage inwards Interest on loan Cost of spoilage and defective work Scrap generated during production Administration budget Cost of demand creation Salary of CEO Carriage inwards Interest on loan Cost of spoilage and defective work Scrap generated during production Materials budget Cost of demand creation Salary of CEO Carriage inwards Interest on loan Cost of spoilage and defective work Scrap generated during production Cash budget Cost of demand creation Salary of CEO Carriage inwards Interest on loan Cost of spoilage and defective work Scrap generated during production 40)Match the following: Power Horse power of machine Number of material requisitions Cubic feet of steam supplied Direct labour hours Number of light points Machine hours Stores department Horse power of machine Number of material requisitions Cubic feet of steam supplied Direct labour hours Number of light points Machine hours Boiler house Horse power of machine Number of material requisitions Cubic feet of steam supplied Direct labour hours Number of light points Machine hours Tool-room expenses Horse power of machine Number of material requisitions Cubic feet of steam supplied Direct labour hours Number of light points Machine hours -------------XXXXXX--------------- MANAGEMENT ACCOUNTING ASSIGNMENT QUESTIONS 1. The difference between sales and prime cost is known as ___________________. a) Gross Profit b)Contribution Margin c)Net Profit d)Operating Margin Ans. Gross Profit 2. Choose the correct answer. A textile mill has two production departments, spinning and weaving and two service departments, S and R. Variable cots of operating the two service departments, their output and quantum of service rendered to other department is as follows : Department S : Service rendered to spinning department - 30%, weaving department - 20% and department R - 50%; variable cost Rs.120,000/- and output -1,000 tons. Department R: Service rendered to spinning department - 25%, weaving department - 35% and department S - 40%; variable cost Rs.260,000/- and output - 2,000 tons. Calculate the total cost of service received by spinning and weaving departments. a) Spinning department -Rs.196,000/-; Weaving department -Rs.184,000/- b) Spinning department -Rs.148,000/-; Weaving department -Rs.169,000/- c) Spinning department -Rs.169,000/-; Weaving department -Rs.148,000/- d) Spinning department -Rs.184,000/-; Weaving department -Rs.196,000/- Ans. D 3. The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. a) true b) false Ans. A 4. Since the pass book and the bank book record the ____________transactions, the bank balance as per these books should be equal. Ans. Same 5. In India the gas industry and electricity industry, and _____________ industry are examples of industries using the uniform costing system. a) Automobile b) fertilizer c) construction d) FMCG Ans. 6. Choose the correct answer. XYZ Ltd. takes a periodic inventory of iron ingot at the end of each month. Physical stock on 30th September, 2004 was 600 tons valued @ Rs.3,000/- per ton. Purchases during October were :1 - 5,000 units @ Rs.3,200/- per ton; 8 - 4,000 units @ Rs.3,100/- per ton; 16 - 7,000 units @ Rs.3,400/- per ton; 24 - 3,500 units @ Rs.3,500/- per ton; 30 - 1,000 units @ Rs.3,700/- per ton. Physical stock at the end of October was verified as 10,500 tons. Determine the value of closing stock according to the weighted average method. a) Rs.3,48,09,240/- b) Rs.3,63,50,000/- c) Rs.3,32,60,000/- d) Rs.3,31,51,658/- 6Ans. A 7. The rates at which the depreciation is to be calculated are specified in the Income Tax Act 1961 and The Companies Act, 1956. a) true b) false Ans. A 8. Choose all that apply Select the steps to be followed while preparing bank reconciliation statement :- a)____ Compare the transactions in the bank book and the pass book b)____ Check the totals and the balancing of both the books c)____ Confirm that the opening balances of both the books are tallying d)____ Confirm that the closing balances of both the books are tallying Ans. A,b,c 9. If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material.. a) true b) false Ans. A 10. Yield variance equal to zero indicates that the standard yield and actual yield are the same. a) true b) false Ans. A 11. Choose the correct answer. The net book value of machinery as on 31st March, 2004, after providing depreciation @ 10% p.a. under the written down value method, is Rs.355,500/-. The company decided to continue with the same method of charging depreciation, but increased the rate by 5%. What would be the amount of depreciation for the year ended 31st March, as per revised rate? a) Rs.59,250/- b) Rs.53,325/- c) Rs.17,775/- d) Rs.19,750/- Ans. A 12. Choose all that apply Marginal costing technique is useful in taking decisions relating to which of the following courses of action? a)____ Decision to drop a product line b)____ Decision to accept a special offer at price lower than the normal selling price c)____ Decision to accept a special offer at price higher than the normal selling price d)____ Decision regarding temporary shut-downs Ans. A,b,d 13. Choose the correct answer. Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. a) Rs.29.98 b) Rs.30/- c) Rs.30.98 d) Rs.29/- Ans. A 14. Choose the correct answer. Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry? a) Uniform costing b) Standard costing c) Absorption costing d) Multiple costing Ans. A 15. Generally, all real accounts will have a ____________ balance. a)Debit b)Inflated c)Deflated d)Credit Ans. Debit 16. Choose the correct answer. If the annual labour turnover rate as per the flux method is 19.25%, what is equivalent monthly rate? a) 0.1925 b) 0.0963 c) 0.0321 d) 0.0161 Ans. 17. Balance sheet indicates the financial status of the business at given period. a) true b) false Ans. A 18. Choose all that apply A gang of 10 men, 20 women and 30 boys at the standard rate of Rs.15/-, Rs.10/- and Rs.8/- per hour, respectively, is expected to produce 5,000 units in a week of 40 working hours. In a particular week the gang which consisted of 12 men, 16 women and 40 boys was paid at the rate of Rs.13/-, Rs.11/- and Rs.5/- per hour, respectively. This gang actually produced 6,000 units. Due to a serious machine break-down three hours work was totally lost during the week. Calculate labour efficiency variance (exclusive of idle time) for each category of workers, viz. men, women and boys. a)____ Men -Rs.540/- (Favourable) b)____ Women -Rs.3,680/- (Favourable) c)____ Boys - Rs.320/- (Adverse) d)____ Women -Rs.368/- (Adverse) Ans. 19. Choose all that apply Select the various methods adopted for treatment of under or over absorbed overheads :- a)____ Use of supplementary rates b)____ Carrying over the amount to remaining period c)____ Writing off to the Costing Profit and Loss Account d)____ Writing off to the Financial Profit and Loss Account Ans. A,b,c 20. Accounting is an art of recording, classifying & summarizing in a significant manner. a) true b) false Ans. A 21. Re-order level for materials is determined considering maximum consumption and maximum delivery period. a) true b) false Ans. A 22. Revenue expenditure indicates the amount of funds spent during a certain period with the intention to receive the returns in future. a) true b) false Ans. B 23. If the ordering cost ________________s, then the economic order quantity will Increase. a)Become nil b)Increase c)decrease d)remain constant Ans. Increase 24. The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. a) true b) false Ans. B 25. Choose the correct answer. You are an accountant of India Structural Ltd. The contract department seeks your advice about the quotation to be submitted in a tender for 1,000 tones of structural material. Following figures are available to you for this purpose. (a) Output of structural material per year (tones) - 20,000 (b) Yearly consumption of raw material – Rs.2,00,00,000/- (c) Yearly wage bill - Rs.2,50,000/- (d) Yearly depreciation of plant -Rs.50,00,000/- (e) Annual dividend to shareholders - Rs.30,00,000/- (f) Income-tax (annual) - Rs.50,00,000/- (g) Salaries of supervisory staff for a year - Rs.50,00,000/- (h) Remuneration and perquisites of Director (j) The company adds 20% of its cost as its margin of profit. Calculate the selling price per tone. a) Rs.3,306/- b) Rs.3,603/- c) Rs.6,303/- d) Rs.6,603/- Ans. 26. Accounting is an art of recording, classifying & summarizing in a significant manner. a) true b) false Ans. A 27. According to the standard costing principles, only adverse variance must be further investigated. a) true b) false Ans. B 28. Marginal costing is also known as ________________________. a)Indirect costing b)Variable costing c)Fixed costing d)Absorption costing Ans. Variable costing 29. Match the following 1. Fixed cost / Contribution margin ratio (4) 1. Profit 2. Fixed cost - (Sales X Profit volume ratio) (1) 2. Margin of safety as a percentage of actual sales 3. (Sales X Profit volume ratio) -Fixed cost (5) 3. Angle of incidence 4. [( Actual sales - Break even sales) ]/ Actual sales (2) 4. Break even point 5. Loss 6. Contribution 30. Choose the correct answer. Selecting an appropriate method of valuation of inventory is important because :- a) It influences the figure of gross profit b) It influences the figure of scrap sales c) It determines the success of the company d) It determines the financial status of the company Ans. A 31. Graphically, fixed cost line will be _______________ the 'x-axis'. a)Perpendicular to b)Intersecting c)Tangential to d)Parallel to Ans. Parallel to 32. Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. a) true b) false Ans. A 33. A business is an activity carried out with the intention of earning the profit. a) true b) false Ans. A 34. Choose all that apply The disadvantages of time rate system are :- a)____ Recognizes the efficiency of workers b)____ Ignores the efficiency of workers c)____ Higher labour cost d)____ Lack of motivation to increase productivity Ans. B,c,d 35. Choose all that apply The causes of idle time can be analyzed as :- a)____ Administrative causes b)____ Productive causes c)____ Natural causes d)____ Economic causes 35Ans. A,b,d 36. Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour cost and ___________________________. a)Number of labour hours worked b)Direct material cost of the product c) Direct labour cost of the product d)Number of units produced Ans. C 37. Choose all that apply Direct Cost includes :- a)____ Direct material b)____ Direct labour c)____ Direct expenses d)____ Direct overheads Ans. A,b,c 38. A standard that is never altered, after being established, is known as _____ standard. a)Attainable b)Basic c)Ideal d)Projected Ans. 39. Choose the correct answer. Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre? a) Factory rates b) Salary of the production manager c) Salary of the finishing center's manager d) Power used by machines of finishing centre Ans. 40. Choose all that apply The suspense account has a debit balance of Rs.40,000/-. Select the transactions which are capable of nullifying this balance. a)____ Free samples worth Rs.40,000/- distributed during the year were credited to sales account b)____ Conveyance expenses of Rs.25,000/- were posted on the wrong side of the account. c)____ Purchased computer worth Rs.28,000/- was recorded in the ledger as d)____ The total of the purchase book was cast short by Rs.44,000/- Ans. B,c,d 41. Choose all that apply Items credited to Profit & Loss Account are :- a)____ Gross profit b)____ Commission received c)____ Interested received d)____ Closing stock 41Ans. A,b,c 42. Choose all that apply Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance. a)____ Material cost variance -Rs.400/- (Adverse) b)____ Material usage variance -Rs.750/- c)____ Material usage variance is favourable d)____ Material usage variance is adverse Ans. A,b,d 43. Match the following 1. Cost Centre (5) 1. Historical Cost 2. Cost Control (6) 2. Increase or Decrease in cost 3. Differential Cost (2) 3. Penalty paid 4. Sunk Cost (1) 4. Indirect cost 5. Facilitate the fixation of responsibility 6. Process of controlling costs of operations 44. Choose the correct answer. Alpha Bros. manufactures and sells four products-A, B, C and D. The sales mix in value comprises 33-1/3%, 41-2/3%, 16-2/3% and 8-1/3%, respectively, out of the total sales of Rs.60,000/-. Operating costs are 60%, 68%, 80% and 40%, respectively of the selling price. Fixed costs are Rs.14,700/- per month. You are required to find out the break even point for the products on an overall basis for Alpha Bros. a) Rs.42,000/- b) Rs.24,000/- c) Rs.60,000/- d) Rs.56,000/- Ans. 45. ____________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. a)Inflation b)Management c)Financial d)Cost Ans. Management 46. Balance sheet indicates the expenditure & income from the business. a) true b) false Ans. B 47. Choose the correct answer. From the given information, calculate the earnings of Lal, Mohan and Krishna. Rolland Ltd. operates in one of its departments, a group incentive scheme. A minimum hourly rate is guaranteed to each of the six employees in the group, if actual output for the week is less than the standard output. If actual output is greater than the standard output, the hourly rate of each employee is increased by 4% for every additional 600 units of output produced. The standard output for the group is 12,000 units for a 40-hour week. During the week ending 31st December, each employee in the group worked 40 hours; actual output and minimum hourly rates were as follows :Lal - 2,500 units and Rs.60/-; Hari - 2,700 units and Rs.100/-; Mohan - 2,400 units and Rs.60/-; Shyam - 2,500 units and Rs.80/-; Gopal - 2,460 units and Rs.60/-; Krishna - 2,440 units and Rs.40/-. a) Lal - Rs.3,500/-; Mohan - Rs.3,000/-; Krishna - Rs.2,000/- b) Lal - Rs.3,840/-; Mohan - Rs.3,500/-; Krishna - Rs.2,880/- c) Lal - Rs.4,800/-; Mohan - Rs.3,840/-; Krishna - Rs.1,020/- d) Lal - Rs.2,880/-; Mohan - Rs.2,880/-; Krishna - Rs.1,020/- Ans. 48. The process of accounting split into three steams i.e. financial, cost, management accounting. a) true b) false Ans. A 49. Choose the correct answer. In taking out a trial balance a book-keeper found that he was out by Rs.380/- excess credit. The difference was placed to suspense account. Subsequently, following errors were discovered. - (i) Rs.1,500/- paid for the purchases of Machinery had been debited to Purchases Account (ii) Rs.80/- from the discount column on the credit side of the Cash Book had not been posted to Party's account. (iii) The total of the Purchase Book was added Rs.300/- short. (iv) A credit purchase of Rs.4,200/- had been entered in the Sales Book as Rs.2,400/- (v) A cheque for Rs.500/- which was returned dishonoured was posted to the debit of allowances account. This cheque was received from Mr. Jose. Find the adjusted profit, if the net profit prior to rectification of errors was Rs.8,900/- a) Net adjusted profit - Rs.4,000/- b) Net adjusted profit - Rs.6,000/- c) Net adjusted profit - Rs.15,800/- d) Net adjusted profit - Rs.8,000/- Ans. A 50. The process of finding the reasons for the difference in the balance as per bank book and pass book is known as _____________. a)Reconsideration b)Reconciliation c)Rectification d)Revaluation Ans. Reconciliation 51 Choose all that apply Select the accounts to be disclosed on the assets side of the Balance sheet :- a)____ Furniture b)____ Loan to Bank of U.S.A. c)____ Loan from Bank of America d)____ Land & building Ans. A,b,d 52. Profitability statement indicates the amount of assets & liabilities. a) true b) false Ans. B 53. Accounts representing expenses will have ___________ balance. a)Negative b)Credit c)Nil d)Debit Ans. Debit 54. _______________ is an example of intangible asset. a)Closing stock b)Goodwill c)Investments d)Land Ans. Goodwill 55. Choose all that apply Contents of Uniform Cost Manual are :- Ans. Organization , Cost Accounting system , Presentation of information Select The Blank Question The costs incurred for recruitment and training of new workers and the resulting losses wastages and reduced productivity due to the inefficiency and inexperience of new workers is referred to as the _______. Correct Answer Replacement costs Question The ideal standards are generally ________ in nature and the variances always shows _______ trends Correct Answer theoretical Correct Answer unfavorable Question In process of establishing the standards, the following steps are involved Correct Answer Study of technical details , Study of existing costing system , Decision about types of standards to be used. Question The cost that tends to remain constant irrespective of the level of activity is called Correct Answer fixed cost Question A business is an activity carried out with the intention of earning the profit. Correct Answer True Question Cost Accounting restrict itself with historical transactions Correct Answer False Question These are the methods of measuring labour turnover. Correct Answer Replacement Method , Separation Method , Flux Method Question Valuation of returns indicates the material returned by store department to production department Correct Answer False Question In case of industries where capital investment is very high, budget should be prepared for a Correct Answer Longer period Question ________ and ________ are examples of semi- variable overheads. Correct Answer Maintenance cost Correct Answer electricity Question Balance sheet indicates the financial status of the business at given period. Correct Answer True Question __________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities like investors, suppliers, customers etc. Correct Answer Financial Question Purchased computers of Rs. 50,000 come under the heading of fixed asset Correct Answer True Question In Cash budget , Non operating cash inflow includes Correct Answer Receipt of loan/borrowings , Issue of shares , Sale of fixed assets Question Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 5000. The total amount transfer to advertisement account is Rs.____ Correct Answer 15,000 Question Convention of Materiality __________________ Correct Answer Only those transactions will be considered which have material impact on profitability , Insignificant transaction will be ignored , The cost of non-used should not be considered as the item of cost Question Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed cost is Rs. 18,02000. Find out the BEP in units, Correct Answer 53000 Question The opening balance of cash account is Rs. 25,000, cash received from debtors Rs. 30,000, sold goods amounted to Rs. 50,000, paid to creditors Rs. 20,000, purchase furniture Rs. 5000. What is the clos Correct Answer 80,000 Question It is the cost of opportunity foregone. Correct Answer Opportunity Cost Question Under Gannt Task bonus system where the output is ________ payment is made as per minimum time rate, output is ________ payment is made as per time wages plus some increase in wage rates Correct Answer below standard Correct Answer at standard Question Standard costing may not be useful for forecasting purposes Correct Answer True Question Factory overheads, administration overheads , selling and ________ overheads are the form of ________ classification of overheads Correct Answer distribution Correct Answer function wise Question Amit sold Goods to Atul for Rs. 50,000 on cash & Rs. 50,000 on credit basis & allowed 10% discount on on the spot transaction. Cash Account debited to Rs. _____________ Correct Answer 45,000 Question A key factor is defined as the factor which, at a particular point of time or over a period will ________ the volume of ________ Correct Answer limit Correct Answer output Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Question Fixed cost is the cost that tend to remain ________ irrespective of ________ Correct Answer constant Correct Answer level of activity Question The bank pass book or the bank statement is the extract of the account in the name of the business as it appears in the books the business. Correct Answer False Question Sales Budget is a forecast expressed in ________ and ________ terms. Correct Answer quantity Correct Answer Money Question Due to compensating errors the arithmetical accuracy of the trial balance get affected. Correct Answer False Question The process of ________ can followed to decide the ________ of overheads to each budget center Correct Answer Allocation & apportionment Correct Answer Loading Question LAST IN FIRST OUT (LIFO) Correct Answer The price of the latest available lot is considered first , If that lot is exhausted, the price of the 10% prior to that is considered , Physical issue of the material may not be made out of the said lot Question Standard Costs are used as tool for Correct Answer Cost Control Question Variable costs are the controllable costs at the ________ level of the management whereas fixed costs can be controlled only on the ________ level of the management Correct Answer Lower Correct Answer Top Question Along with financial accounting, ________ and ________ are the other streams of accounting Correct Answer Cost Accounting Correct Answer Management Accounting Question Bin Card Includes Correct Answer Entries in receipt column on basis of goods received note or material returned note , Entries in issue column on basis of material requisition note , The balance quantity is calculated and recorded Question classification of the overheads as fixed and variable ,facilitates the preparation of flexible budgets. Correct Answer True Question Under Merrick Differential Piece rate System of wage payment up to 83% of efficiency following rate is offered. Correct Answer Normal Question The following factors affects the budgeted advertisement cost Correct Answer Percentage of profits , Availability of funds , Competitors policy Question A bank reconciliation statement is prepared on a particular date. Correct Answer True Question Profit & Loss Account shows Gross Profit 13,000. Expenses incurred as Telephone charges 1500, Traveling expenses 3000, Salary paid 2000, discount allowed 500, depreciation 200. Calculate the net profi Correct Answer 5800 Question Balance sheet liability side includes Correct Answer Loan & advances , Outstanding expenses , Creditors Question ________ and ________ are non monetary incentives Correct Answer Safety services Correct Answer education facility Question Accounting period Concept________________ Correct Answer Longer life-span on business is divided into shorter segments , Each one being in the form of accounting period , Selection of accounting period may depend on various factors Question Bank reconciliation statement is the statement prepared to explain the reasons as to why the bank balance as per pass book and bank balance as per bank book does not match. Correct Answer True Question These are the replacement costs of labour turnover. Correct Answer cost of personnel administration , cost of selection and placement , increased spoilage and defectives Question These are the replacement costs of labour turnover. Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased spoilage and defectives Question Depreciation Correct Answer Amount charged on Fixed Assets. Question The sales day book of October 1991 was overcast by Rs. 10,000, which A/C to be debited. Correct Answer Sales A/C Question The cost accountancy is defined as “ the application of costing principles,methods and techniques to the ________, art and practice of ________ ascertainment of the profitability and the presenta Correct Answer science Correct Answer cost control Question A Co. having net sales Rs. 7,50,000, opening stock 1,14,375, purchases, 483,375 closing stock 1,47,750. Calculate the Gross Profit Correct Answer 3,00,000 Question Standard Costing system facilitates ________ and ________ for each individual or department Correct Answer Delegation of authority Correct Answer Fixation of responsibility Question Creditor Correct Answer Supplier Question The overhead is aggregate of Correct Answer Indirect labour cost , Indirect material cost , Indirect Expenses Question The wage payment system should take into consideration the external obligations such as the Minimum wages Act and the agreement entered into by the organization with the workers. Correct Answer True Question Bank Reconciliation statement is required in case of Correct Answer difference between the bank balance as per the bank book and as per pass book Question Trial balance is drawn on a particular date Correct Answer True Question Tallying of trial balance is conclusive evidence of the total accuracy of the books of account. Correct Answer False Question A very wide scope of Management Accounting is the limitation by itself. Correct Answer True Question Sundry creditors transfer to asset side. Correct Answer False Question ___________ Accounting is the process of classifying and recording of the expenditure in a systematic manner with the intention of ascertaining the cost of cost centre with the intention of controllin Correct Answer Cost Question This is one of the avoidable cause of labour turnover. Correct Answer Relationship with supervisors and workers Question Non-Operating / Financial Incomes are deducted from operating profit while calculating Net profit. Correct Answer False Question Semi ________ overheads are neither ________ nor variable in nature. Correct Answer fixed Correct Answer variable Question Standard Costing specifically relates to the function of Correct Answer Production Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Question Credit note is an intimation send to person dealing with the business that his account being debited for the purpose indicated therein. Correct Answer False Question Debtors Correct Answer Who owes money to the business Question Fixed assets do not give the returns during the same period during which they are paid for Correct Answer True Question These are the special type of cost Correct Answer Opportunity cost , Differential cost , Sunk cost Question Discount received from the Creditors has been entered in the Creditors A/C but discount amount has not been credited, for rectifying such error which account to be debited. Correct Answer Suspense A/C Question Under this method of time keeping , each worker is allotted an identification number and a disc or token bearing that number. Correct Answer Token or Disc Method Question Under marginal costing semi variable costs are also classified in their individual components of fixed cost and variable cost. Correct Answer True Question Labour Rate Variance occurs due to Correct Answer Change in wage structure , Use of different methods of payment , Wage difference Question Break even point is a situation of no ________ no ________ Correct Answer profit Correct Answer loss Question It is an appropriate basis of apportionment of depreciation expenditure Correct Answer value of assets Question Wage rate standards takes into consideration the following factors Correct Answer The system of wage payments , System for bonus payment , Grades of workers required Question Replacement costs refer to all costs incurred for recruitment and training of new workers. Correct Answer True Question While selecting source of supply ________ epartment may call for the ________ from the prospective suppliers Correct Answer purchase Correct Answer quotation Question P/L A/C debit side includes Correct Answer salary , discount allowed , postage & telegram Question Ifidle time payment is abnormal , it should be classified as overheads. Correct Answer False Question Bank reconciliation statement is the statement prepared to explain the ________ as to why the bank balance as per ________ and bank balance as per bank book does not match Correct Answer reasons Correct Answer pass book Question Accounting to the matching principles of accounting, the ________ incurred during an accounting period are required to be match with ________ during that period Correct Answer cost Correct Answer revenues Question Expenditure like general lighting are apportioned considering ________ as a base and expenditure like depreciation are apportioned considering ________ as a base. Correct Answer number of light points Correct Answer value of assets Question Planning lays down the course of action to be taken in future. In case budgetary control, it is in the form of the ________ and in case of ________ costing, it is in the form of the standard cost Correct Answer standard Correct Answer budgets Question Following are various forms of limiting factor Correct Answer market , labour , machine availability Question These are normal bases for primary apportionment of overheads. Correct Answer value of assets , HP/KWh , number of light points Question Due to errors of principle the arithmetical accuracy of the trial balance does not get affected. Correct Answer True Question The situation of over absorption arises if the overheads absorbed are less than the actual overheads. Correct Answer False Question Depreciation can be defined as a permanent , continuous and gradual reduction in the book value of a fixed assets. Correct Answer True Question Balance sheet asset side includes Correct Answer Furniture , Vehicle , Land & building Question In case of the under or over absorption of the overheads arising out of the normal circumstances , they are written off to costing profit and loss account. Correct Answer False Question Due to errors of principle the arithmetical accuracy of the trial balance get affected. Correct Answer False Question Trading a/c credit side includes Correct Answer sales , goods lost by fire , closing stock Question variable cost is the cost that tend to ________ in direct proportion with ________ Correct Answer vary Correct Answer level of activity Question Preliminaries for establishing Standard costing system includes Correct Answer Establishment of cost centers , Design of accounts , Establishment of standards Question Bank of Maharashtra A/C is a personal A/C Correct Answer True Question Adverse labour time variance may be due to Correct Answer Poor grade of labour , Defective plant & machinery , Poor quality of material Question This is the best example of element wise classification of cost. Correct Answer material Question Highest in first out Correct Answer This method assumes that the stock should always be shown at the minimum value Question Standard price creates complications in accounting system and increase clerical work. Correct Answer False Question Limitations of Management Accounting includes------------------- Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure Question Trade Discount Correct Answer Amount received on purchases Question In a Balance-Sheet right hand side is a Asset side & left hand side is liability side Correct Answer True Question The stages of cost control involves Correct Answer To plan the operation , Execute the plan & measuring the actual performance , Computing the variations between planned & actual performance Question __________ Accounting becomes a source of information for Management Accounting. Correct Answer Financial Question The levels indicated on the Bin card enables the ________ department to keep a watch on the balance and replace the material as soon as it reached at ________ level. Correct Answer Stores Correct Answer Re-order level Question Under Merrick Differential Piece rate System of wage payment above 100 % of efficiency following rate is offered. Correct Answer 130% of normal piece rate Question This is an example of semi variable overheads. Correct Answer electricity Question Following error affect the trial balance Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Question A Budget center may be in the form of Correct Answer A product , A department , A branch of the company Question Under absorption of overheads may take place due to the reasons like ________ overheads being more than the ________ overheads Correct Answer actual Correct Answer estimated Question If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount Correct Answer depreciation Correct Answer overstated Question Preventive costs of labour turnover refers to all the costs which may be incurred by the organisation to keep workers happy and ________ them from ________ the job Correct Answer discourage Correct Answer leaving Question Replacement costs of labour turnover are ________ and ________ Correct Answer training Correct Answer breakages of machine Question When the balance in the ledger account of the previous year are entered the current year’s books, the balances are said to be bought forward. Correct Answer True Question Sales at 1,00,000 units are Rs. 1,00,000 , variable costs Rs. 40,000 and fixed cots is Rs.50,000. What is Break even point ? Correct Answer Rs. 83,333 Question The material physically received is compared with material ordered as per the this order Correct Answer Purchase order Question Interest Received amounted to Rs. 10,000/- is to be transfer to ___ Correct Answer Profit & Loss A/C credit side Rs. 10,000 Question Under the daily ________ sheets method, each worker is provided with a daily time sheet on which time ________ by him on various jobs is expected to be mentioned Correct Answer Time Correct Answer Spent Question Material Price Variance may occur due to Correct Answer Change in price of material , Failure to take discounts , Weak purchase organization Question Selling and distribution overheads includes Correct Answer Indirect Material such as packing material, samples etc., , Indirect labour like salaries to sales personnel manager , Indirect expenses like warehouse charges, advertisement Question Idle time is the time required to complete particular job. Correct Answer False Question All items which do not involve cash flow will be considered for while preparing Cash Budget. Correct Answer False Question The quantitative record of receipts, issues and closing balance of an item of material is called Bin-Card. Correct Answer True Question The amount of money that is paid for is classified as ________ and ________ for the purpose of accounting Correct Answer Capital Expenditure Correct Answer Revenue Expenditure Question The material physically received compared with material order as per the purchase order may reveal the following forms of discrepancies Correct Answer Quantity received in excess , Quantity received in short , Quantity received of different quality Question Book keeping is clerical while accounting is managerial Correct Answer True Question ________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account Correct Answer Like office rent, Correct Answer Audit fees Question Cash received from credit sales, Cash account to be credited. Correct Answer False Question The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost? Correct Answer 37,86,000 Question Cost Accountancy is a science, art and practice of a cost Accountant. Correct Answer Science indicates the possession and the application of relevant systematic knowledge. , Art indicates the skill and ability. , Practice indicates continuous effects on the part of cost accountant. Question Under stocking may have following consequences Correct Answer Payment for idle time to workers , Production hold ups resulting into disturbed delivery schedule , Eleventh hour purchase Question Per unit cost of variable overheads may reduce as the volume of output increases but the total overheads remain constant. Correct Answer False Question A properly laid down system of Standard Costing helps in implementation of Correct Answer Budgetary Control Question Store ledger Correct Answer Record of all receipts and issue transactions , Financial expressions of all transactions , Maintenance of Store ledges provides a second check Question It is necessary to ignore key factors while taking decision by marginal costing technique. Correct Answer False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Question Financial statements are basically in two forms i.e. profitability statement and balance sheet. Correct Answer True Question Financial Accounting discloses the financial performance & financial statements of the business as a whole. Correct Answer True Question Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting Correct Answer True Question According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of cost of asset after deduction of the depreciation previously charged. Correct Answer True Question Discount received from the creditor has been entered in the creditor's account but discount has not been credited; what type of error is this ________ Correct Answer Omission of posting an amount in the ledger Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________ Correct Answer decrease in gross profit by Rs.2,020/- Question The variable costs are controllable at the lower lever. Correct Answer True Question A person in charge of a ________ may be held responsible for its proper functioning and cost control. Correct Answer Cost centre Question The cost that indicates historical cost, which is incurred in past, is known as Correct Answer Sunk cost Question The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from a ascertain the cost, is known as . . . Correct Answer Cost accounting Question Which of the following transactions should be excluded while preparing a cost sheet ? Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit Question Examples of indirect material are Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes Question The process of attributing proportions of items of costs amongst const centres is called ________. Correct Answer Cost apportionment Question Contents of Uniform Cost Manual are Correct Answer Organization , Cost Accounting system , Presentation of information Question It is said that adoption of uniform costing creates customer confidence because . . . Correct Answer Prices are reliable Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries. Correct Answer False Question The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions. Correct Answer Control Question Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be the amount of debtors that must be disclosed in the balance sheet? Correct Answer Rs.53,750/- Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed. The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the year ending 31st March, 2004. Correct Answer The net profit will decrease by Rs.18,000/- Question Annual sales were Rs.10,50,000/- and sales returned by customers amounted to Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount of incentive due to the salesmen. Correct Answer Rs.30,660/- Question Depreciation on assets is credited to the trading account. Correct Answer False Question Balance sheet is considered to be a part of the financial statements. Correct Answer True Question Long term loan borrowed from financial institution comes under the heading of long term liabilities. Correct Answer True Question The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank pass book balance as on the same date was Rs.8,015/-. Select the transactions representing the reasons for this difference. Correct Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/- , Bank interest not entered in the bank book Rs.90/- Question Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the bank book. Correct Answer Credited Question A materials requisition form normally contains the following aspects: Correct Answer Quantity requisitioned , Per unit material cost , Job number Question A complete list of all material required, with quantities, for a particular job is given in the ________. Correct Answer Bill of material Question A producer is using certain tool item in productive process. Annual requirement is 20,000 units of the tool. Cost of ordering a lot is Rs.160/-. Per unit price of the tool is Rs.360/-. Annual interest cost is 10%, insurance cost is 0.5% of the average inventory in stores, and other storage expenses are Rs.2.20 per unit. Calculate annual ordering cost. Correct Answer Rs.8,000/- Question A written request sent to a supplier for specified goods at an agreed upon price is often called as : Correct Answer Purchase order Question Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product. Correct Answer True Question The perpetual inventory system enables management to ascertain stock without physical verification. Correct Answer True Question The main advantages of profit sharing are : Correct Answer Employees try to increase productivity , Incentives are shared by all the employees , Augments emplyees' efficiency Question It is the ________ method of measuring labour turnover which is a combination of separation method and replacement method. Correct Answer Flux Question Measurement of ________ gives an idea of the degree of mobility of labour. Correct Answer Labour turnover Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Question Merits of break even point analysis are as follows: Correct Answer Useful diagnostic tool. , Used for analysing the risk implication of alternative actions. , Used to graphically represent complicated data. Question Annual fixed cost of a producer is Rs.500,000/-. The price of its product is Rs.60/- and per unit variable cost is Rs.40. In the next year his fixed cost commitments are expected to go up by 20%. By what percentage the break even point will go up in the next year. Correct Answer 0.2 Question A firm earns profit when contribution is equal to fixed costs under variable costing. Correct Answer False Question Labour efficiency variance arises due to: Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material Question Actual costs determined on the basis of costing records maintained have following limitations : Correct Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Question A standard that is never altered, after being established, is known as ________ standard. Correct Answer Ideal Question Standard costs are used for external reporting. Correct Answer False Match The Following Question Correct Answer Book-Keeping Books of Accounts Financial statement Profitability statement & Balance-sheet Accounting Process of analyzing & interpretation Profitability statement Indicates the amount of profit earned Balance-sheet Financial status Match The Following Question Correct Answer Quality control dept control the quality of the product Time booking dept jobwise booking of time Personnel department Selection & training to workers Time Keeping Department Recording of workers time Cost accounting dept Accumulation & classification of cost data Match The Following Question Correct Answer Lighting Number of light points Rent Area Power Hp/KW Depreciation Value of assets canteen expenses number of workers Match The Following Question Correct Answer Goodwill Real A/c Nominal Account Wages A/C Capital A/C Personal A/C Building A/C Real A/C Salary A/C Nominal A/C Match The Following Question Correct Answer Owner Businessman Banker Financial Institution Debtors Credit Transaction Creditors Receive the money Suppliers Sale the Goods Match The Following Question Correct Answer Spirit of mutual trust Requisite for uniform costing Avoids cut throat competition Advantage of uniform costing Treatment given to research and development costs Fields covered by uniform costing Advantageously applicable in similar industries Scope of uniform costing Match The Following Question Correct Answer Deferred revenue expenditure Real account Deferred revenue expenditure written off Nominal account Loan Personal account Drawings Proprietor's account Question Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an example of_______ Correct Answer Error of Commission Question Labour cost indicates that labour cost which cannot be identified with the individual cost centre and is incurred for those employees who are not engaged in the manufacturing process but only assist i Correct Answer Remuneration Question To take make or buy decision under the marginal costing , if purchase price of the product is less than its variable cost it is advisable to go for manufacturing proposition. Correct Answer False Question Income received in advance transfer to current liabilities Correct Answer True Question If wages for the month of January, February and March are Rs.4,000, Rs.4,400 and Rs.4,600 respectively and if delay in payment of wages is ½ month , payment of wages for the month of February is Correct Answer 4,200 Question Management Accounting has a very ________ scope and it requires ________ organizational structure Correct Answer wide Correct Answer elaborate Question For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is 5,000 units and consumption is 3,20,000 units, what will be the quantum of raw material to be purchased Correct Answer 3,15,000 Question Important advantages of Uniform Costing can be said to be Correct Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units can take advantage of settled systems of better managed units Question Actual costs may be affected due to inefficient functioning such as Correct Answer Abnormal expenses , In efficient use of labour , In efficient use of material Question Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500. Correct Answer Rs.4500/- ( Favorable ) Question Sales quantity may be forecasted after taking into consideration various factors such as Correct Answer Analysis of past trends , Market research , Reports by salesmen Question For taking make or buy decision marginal costing technique provide useful assistance. Correct Answer True Question The variable costs are controllable at the lower level. Correct Answer True Match The Following Question Correct Answer Journal Book of original entry Ledger Maintain all types of Accounts Assets All the properties owned by the business Liabilities All the amount owed by the business Drawing Withdrawn for personal use Question A budget manual is a document setting out the ________ of the persons and ________ required for the budget control. Correct Answer Responsibilities Correct Answer Forms and procedures Question Credit balances in all the Personal & Real accounts appear on asset side. Correct Answer False Question Omission of posting an amount in the ledger Correct Answer Error of Omission Question Non-operating / financial expenses are added while calculating net profit. Correct Answer False Question A Budget Manual may contain the following particulars Correct Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer , Scope of the Budget and area to be covered Question Direct Cost includes Correct Answer Direct material , Direct labour , Direct expenses Question Financial Accounting protects the interest of outsiders . it considers ________ transaction and it is a ________ requirement Correct Answer historical Correct Answer legal Question Bin Card is having all the information of item received and issued. Correct Answer False Question Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of management Correct Answer Cost control Correct Answer Maximization of profits Question The material Requisition note contains Correct Answer Number and date , Department demanding the material , Signature of the authority approving the demand Question Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________ level of the management Correct Answer uncontrollable Correct Answer lower Question Budget is prepared for a fixed period of time. Correct Answer True Question Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account ___________ Correct Answer 12750 Question This is not the non monetary incentive. Correct Answer Co-partnership Question P&L statement which is a period statement & relates to a certain period tells about results of operations. Correct Answer True Question Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Correct Answer False Question Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Correct Answer False Question Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Correct Answer True Question Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. Correct Answer True Match The Following Question Correct Answer Financial Accounting Systematic recording of business transactions Cost Accounting Ascertainment of cost Management Accounting Analyzing & interpretation of financial data Accounting Art of interpreting & classifying business transaction Book Keeping Recording of business transactions Match The Following Question Correct Answer Bills Payable Amount payable to supplier Bills Receivable Amount received from the customer Trade Discount Not accounted for in the books of Accounts Cash Discount Accounted for in the books of Accounts Bad debts Amount not received from customer Question Amount invested in purchasing Fixed Asset is a revenue expenditure. Correct Answer False Question Going Concern Concept __________________ Correct Answer Indefinite longer period , Not likely to close down in shorter period , This affects the values of asset and liabilities Question Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to depreciation 2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs as per the reducing balance m Correct Answer 20,000,18,000,16,200 Question Profit & Loss A/C credit side has Correct Answer Gross profit , Commission received , Interested received Question Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per year. What is the total amount of the capital Correct Answer 1,10,000 Question Cheques issued but not yet presented – the balance as per the bank pass book will be higher. Correct Answer True Question This cost indicates historical cost which is incurred in past. Correct Answer Sunk cost Question Labour cost is the cost of __________ paid to employees of the organization. Correct Answer Remuneration Question Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs, 35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost. Correct Answer 10,50,000 Question For the proper interpretation and presentation of cost the overhead further classified as Correct Answer Factory overheads , Office and administration overheads , Selling & distribution overhead Question A good wage payment system will punish the workers for the matters beyond the control of the workers. Correct Answer False Question These are the features of fixed overheads Correct Answer total cost remains the same , per unit cost may vary , not dependent on volume of output Question Under marginal costing technique only fixed costs are considered as relevant for decision making. Correct Answer False Question Product mix refers to the proportion in which various products of a company can be sold. Correct Answer True Question The cost that varies in direct proportion with the level of activity is called Correct Answer variable cost Question Basic assumptions made by marginal costing are Correct Answer per unit selling price remains constant at all the levels of activities. , whatever is produced by the organisation is sold off. , per unit variable cost remain constant. Question Calculate Volume Variance, If budgeted production is 20,000 units, actual production is 22,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer Rs.3,000/- ( Favorable ) Question Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/- per unit and actual sales volume is 500 units. Correct Answer Rs.200/- ( Favorable ) Question Uniform Costing disturbs the healthy competition in the industry Correct Answer False Question Uniform Costing Methods may be advantageously applied Correct Answer In single organization having number of branches. , Number of companies in same industry. , Similar Industries such as cotton, jute etc. Question In Cash budget , Operating cash outflow includes Correct Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries Question Characteristics of budget can be said to be Correct Answer It may be prepared in terms of quantity or money or both , It is prepared for a fixed period of time , It spells out objectives to be attained Question Like initial formation expenses, ________ and R & D are the examples of Deferred Revenue Expenditure Correct Answer Initial Advertisement Correct Answer R & D Question If ________ books are the books which record the transactions in the chronological order, ________ is the book where transactions of a similar nature are pooled together Correct Answer subsidiary Correct Answer ledger Question 4.Under the differential time rate method the wages are paid at Rs. 1.50 per hour between ________ efficiency and Rs.1.25 per hour between ________ efficiency Correct Answer 101% to 125 % Correct Answer 80% to90% Question ________ and ________ are examples of element wise classification ofoverhead costs Correct Answer Idirect material Correct Answer indirect labour Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value. Correct Answer 0.75 Question Under time rate system a worker is paid on the basis of production achieved by him in a given time. Correct Answer False Question Which of the following costs is most likely to have a cost behaviour pattern described as ..a fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10 paise to 8 paise per unit at 2,000 units? Correct Answer Wages payment which is fixed for a minimum output quantity after which a bonus per unit is paid which reduces when activity level exceeds 1,000 units Question The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Correct Answer False Question In case of defective material being returned by the stores department to the vendor, such material should be valued at the________. Correct Answer Purchase price Question Piece rate system is suitable when quality of goods produced is of extreme importance. Correct Answer False Question While preparing trial balance, the balance as per ________ book is considered as bank balance. Correct Answer Bank Question Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System. Correct Answer Rs.180/- Question Contribution represents pool of resources available for meeting all costs other than ________. Correct Answer Variable costs Question Locate the steps involved in rectifying the errors in the books of accounts Correct Answer Find the wrong entry passed , Find the correct entry to be passed , Find the entry that will resolve the mistake in the books Question Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc. Correct Answer The statement and the reason are both incorrect Question Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour cost and ________. Correct Answer Direct labour cost of the product Question Causes for adverse material price variance are: Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Question The objectives of Uniform costing system are as follows : Correct Answer To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of costs Question 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were purchased from Y @ Rs.6/- per unit. The organisation follows FIFO system of pricing of issues and the above purchases have been recorded in stores ledger. 120 units have already been issued. 60 units received from X are defective and are therefore returned. Find the value of the material returned to X. Correct Answer Rs.300/- Question If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can be stated as ________ sq.ft. tiles. Correct Answer 300000 Question Category C items, as per the ABC analysis, usually refers to indirect material. Correct Answer True Question According to the standard costing principles, only adverse variance must be further investigated. Correct Answer False Question Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives. Correct Answer Non-monetary Match The Following Question Correct Answer Closed the account with State Bank of India Henceforth, there shall be no difference in overdraft balances Debit side of bank book is overcast Overdraft as per bank book < Overdraft as per pass book Interest on debentures directly credited by bank Overdraft as per bank book > Overdraft as per pass book Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book = Overdraft as per pass book Question The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the year. Correct Answer Depreciation Question The purchase account should be debited when an order is placed with the supplier of material. Correct Answer False Question The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of 30 days, no rebate is offered. The company purchase Correct Answer October- NIL, November- Rs.26,750/- Question The variance which measures the profit consequences of selling different products in proportions other than the standard, is known as ________ variance. Correct Answer Sales margin mix Question Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all units belonging to that industry ? Correct Answer Uniform costing Question Select the non-monetary incentives Correct Answer Health and safety services , Canteen facility, Loans at reduced rate of interest Question Control on purchase of material is exercised by the storekeeper. Correct Answer False Question In practical circumstances, the ________ are referred to as application of funds. Correct Answer Assets Question The composition of selling costs is given below : 1 salaries 4% of sales, travelling expenses 1.5% of sales, and sales office 2% of sales. Find the amount of selling overheads if the sales are Rs.120,000/-. Correct Answer Rs.9,000/- Match The Following Question Correct Answer Ledger Maintain all types of accounts Audit Reviewing internal control system Accounting Process of analyzing & interpretation Journal Book of original entry Question The document which lays down the cost accounting plans and procedures to be followed by the constituent units is known as ________. Correct Answer uniform cost manual Question The characteristics of a good wage system are : Correct Answer Flexible , Economical to use , Easy to understand Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on 1st June, 2003, for a period of one year. The type of the fixed deposit is cumulative, i.e. interest shall be received only on maturity. What treatment should be given in the books of accounts on 31st March, 2004, the year ending date? Correct Answer An entry for Rs.458.34, debiting interest accrued but not due account should be passed Question If you are required to enforce uniform costing system in your industry, how would you proceed ? Correct Answer Collecting data from all units of your industry, Ensuring that the data collected is complete and correct, Maintaining secrecy of the data collected Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages. Correct Answer True Question Marginal costing is found to be unsuccessful in the following situations :- Correct Answer Impossible to distinguish costs into fixed and variable component. , With respect to capital intensive industries where fixed costs are very large and hence cannot be ignored , With respect to service industries where employee costs are very large and almost fixed in nature Question Master budget provides a basis for computing effect of changes in : Correct Answer product mix of the company , sales volume , production facilities Question Over absorption of overheads may take place due to the reasons like ________ overheads being less than the ________ overheads Correct Answer actual Correct Answer estimated Question ________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting. Correct Answer Talling Correct Answer arithmetical Question While calculating the minimum level, normal lead time is not necessary Correct Answer False Question To Increase the existing production capacity, additional capital expenditure is required. Correct Answer True Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer Rs. 83.60 Question Cost-sheet may be prepared separately for each Correct Answer Different Cost Centre Question The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs. Calculate the depreciation according to straight line method Correct Answer 10,000 Question To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________ Correct Answer Net effect Correct Answer Balanced Question In fixed overhead variance, the volume variance is further analyzed as Correct Answer Variance Efficiency Variance , Capacity Variance , Calendar Variance Question Accounts is a Correct Answer Record of all transaction Question Whatever is to be sold need not be produced. Correct Answer True Question Patents and Trade Marks Account is a Real Account. Correct Answer True Question Budget is prepared in terms of Correct Answer Quantity and/or Money Question Favorable variances need on investigation Correct Answer False Question Standard Costing may not be useful in Correct Answer Small concerns , Industries having non-standardized products , Contract jobs Question Standard costs are the targets to be attained by the actual performance. Correct Answer Minimum Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer Rs. 75 Question Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. Correct Answer True Question Double Entry Accounting System__________________ Correct Answer Every business transactions have two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Question Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______ Correct Answer 750 Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage Correct Answer 17% Question When bank balance as per bank book is considered then following to be added. Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank Question As soon as the suspense account balance is wiped out , it may be assumed that all mistakes have been corrected. Correct Answer False Question Credit sale of Rs. 5000 to Bobby should be entered in the purchase book. Correct Answer False Question Manufacturing process involves study of Correct Answer Designing the product , The quantity and quality , Material used Question The Bin card and stores ledges do not match due to the following reasons: Correct Answer Arithmetical errors in calculating , Non- posting a certain document , Posting a wrong Bin card Question Flux method is important method of wage payment. Correct Answer False Question The causes of idle time can be analysed as Correct Answer Administrative causes , Productive causes , economic causes Question If production overheads to be absorbed are Rs. 50000/- and labour hours worked are 100000 then the labour hour rate will be, Correct Answer Re. 0.50 per labour hour. Question Fixed cost tends to vary with time rather than with level of activity. Correct Answer True Question Limitations of marginal costing are Correct Answer difficult for classification as fixed cost and variable cost. , does not provide any standard for the evaluation of performance. , it is useful technique only in the short run. Question Flexible budget is an effective tool for evaluation of performance. Correct Answer True Question Material Mix Variance occurs where only one raw material is required Correct Answer False Question Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer Rs.1,500/-( Favorable ) Question Standard may not be necessarily useful for this purpose. Correct Answer Forecasting Question In Cash budget , Non-Operating cash outflow includesVarious kinds of over heads Correct Answer Loan instalments , Taxes , Purchase of fixed assets. Question During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg , what is the quantity of sales Correct Answer 20,000 kg Match The Following Question Correct Answer Ordering cost Associated with administrative efforts Carrying cost Cost of holding the inventory Total cost Ordering cost + carrying cost Inventory control Maintain the inventory of any kind E.O.Q Economic Ordering Quantity Question Generally accounts of the assets will have ________ balance and liabilities will have ________ balance Correct Answer debits Correct Answer credits Question Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book Correct Answer debited Correct Answer credited Question After material is received from the supplier, quantity actually received is compared with quantity ________-and ________-if any, are taken up with the supplier Correct Answer ordered Correct Answer variation Question Labour Turnover indicates ________ in labour force showing a highly increasing trend or highly ________ trend Correct Answer change Correct Answer decreasing Question Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management Correct Answer fixed Correct Answer top Question Bin card is maintained by ________ department whereas ________ is maintained by costing department. Correct Answer Stores Correct Answer Store ledger Question Profitability statement indicates the amount of assets & liabilities. Correct Answer False Question Advance received from customers is ________ for the organisation. Correct Answer A liability Question The features of multiplicity of key factors are as follows : Correct Answer More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique Question Maintenance Department is a service cost centre. Correct Answer True Question Identify the budgets for which the production manager sould be held responsible : Correct Answer Production budget , Production overheads budget , Plant utilisation budget Question The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the correct answers: Correct Answer Sales Rs.128,000/- , Return on capital employed , Working capital Rs.32,000/- Question Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations. Correct Answer Differential cost Question If the owner brings in personal calculator for office use, ________ account should be credited. Correct Answer Capital Question Variable cost + Profit = Sales Correct Answer False Question A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan. Correct Answer Rs.9,333.33 Question Features of material usage variance are : Correct Answer Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity Question Treating capital receipt as revenue income is an example of errors of commission. Correct Answer False Question Basic objective of Uniform Costing is . . . Correct Answer comparison Question Identify the causes due to which the cost of labour may be high: Correct Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Question Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit and loss accounts for the year ending December 2003 are as follows : Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-. You are Correct Answer Hero Ltd. Question Features of Sunk cost are . . . Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past Question For a manufacturing company, dividend received is a non-operating income. Correct Answer True Question Features of purchase requisition slip are : Correct Answer Raised when the stock of a raw material has fallen to the re-order level. , Indicates the type, quantity and quality of material required , The information about the price of material is excluded Question Judge the sentence in italics according to criteria given below : " It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used." Correct Answer The assertion and the reason are both correct Question Crane expenses should be apportioned on the basis of ________. Correct Answer Number of hours crane worked in the department Question Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by Management accounting. Correct Answer Management Question Features of convention of consistency are . . . Correct Answer The accounting policies and procedures should be followed consistently , Facilitates the comparison of financial statements , It facilitates comparison of financial statements on period-to-period basis Question Uniform costing is not a separate method of ________. Correct Answer cost accounting Question Suspense account is closed automatically after rectification of all the errors. Correct Answer True Question Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost. Correct Answer False Question Generally all the liabilities will have ________balance. Correct Answer Credit Question If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ________. Correct Answer Over-absorbed Question Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004. Correct Answer Rs.500/- Question The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to handle this level of sales. Correct Answer Production capacity Question Following are the examples of service cost centre Correct Answer Stores department , Transport department , Accounting department Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Correct Answer True Question Pre-requisites of Uniform Costing are . . . Correct Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry Question You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres drum was as follows : To job X 200 litres; job Y 400 litres and job Z 320 litres. After these issues the drum was empty. Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z. Correct Answer Loss due to spillage and evaporation - 30 litres. , Rate of charge per litre of petrol - Rs.30/- Question Error of commission refer to calculation errors, totaling errors, errors in carrying forward etc. Correct Answer True Question Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the pass book. Correct Answer False Question Copy of a firm's account in the bank's ledger is known as ________. Correct Answer Bank statement Question The column which refers to the page number of the ledger is known as ________. Correct Answer Ledger folio Question The direct material useage budget and direct material purchase budget differ because of which of the following: Correct Answer A planned change in the level of material stock Question Loss is equal to fixed cost minus ________ Correct Answer Contribution Question Profit = Contribution per unit X ________. Correct Answer Margin of safety (units) Question The different purposes served by standard costing technique are : Correct Answer Cost control , Cost awareness , Performance appraisal Question Error of commission refer to a situation where a transaction is not recorded in the books of account. Correct Answer False Question If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to : Correct Answer Decrease for fixed costs and remain unchanged for variable costs Question The variance which measures the difference between what is paid for a given quantity of materials and what should have been paid for, is known as ________ variance. Correct Answer Direct material cost Question Deferred revenue expenditure written off account is a real account. Correct Answer False Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation. Correct Answer 0.17 Question The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in the ________. Correct Answer short run Question The following figures relate to a company manufacturing a varied range of products : Year 2003 Total sales Rs.22,23,000/- and total cost Rs.19,83,600/-. Year 2004 : Total sales Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability in prices, calculate the profit volume ratio Correct Answer 0.3 Question Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. Correct Answer Rs.29.98 Question While preparing sales budget the following factors must be considered : Correct Answer The number and types of products sold by the organisation , Whether the organisation's market share is increasing or decreasing? , Details of seasonal fluctuations in sales Question Techniques of management accounting include: Correct Answer Marginal costing , Budgetary control , Standard costing Question Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system. Correct Answer Capital investment , Plant size , Location Question The expenses relating to maintenance and creation of demand for the product should be included in the ________budget Correct Answer Selling expenses Question Management Accounting is… Correct Answer Designed particularly for internal use , Helpful in estimating the future along with past period , Useful in furnishing the necessary information to the management Question Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. Correct Answer True Question The selection of the supplier may depend upon the following aspects: Correct Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier Question XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004? Correct Answer Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55 Question The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost. Correct Answer True Question If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________. Correct Answer Loss Question When bank balance as per bank book is considered for preparing bank reconciliation statement, then following items need to be added : Correct Answer Cheques issued but not presented , Direct deposit made by customer , Wrong credits given by bank Question The indirect material cost, indirect labour cost and indirect expenses cost, collectively are termed as ________. Correct Answer Overhead Question Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/- (adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour yield variance. Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- , Labour yield variance is favourable Question If the standard contribution is less than the actual contribution, then ________ variance arises. Correct Answer Favourable Question Correct Answer Purchase budget Forecast of quantity and value of materials Budget committee Analyses the performance of different budget centres Cash budget Assists in predicting shortage of cash Budget Objective is performance evaluation Question As a part of the data presented in support of a proposal to icnrease the production of clock radios, the sales manager of Wittman Electronics reproted the total additional cost required for the proposed increased production level. The increase in total cost is known as : Correct Answer Incremental cost Question Business Entity Concept ______________. Correct Answer Business is separated from the owner. , The accounting process carried out for the business , Separate legal entity Question The danger level fixed below maximum level Correct Answer False Question Following example comes under service cost centre Correct Answer Store department , Internal Transport department , Accounting/Costing department Match The Following Question Correct Answer Straight Piece rate system The rate of payment is fixed per piece Diemer system Halsey system & Gantt System Time rate System Worker is paid on the basis of time attended by him Payment by Result Workers are paid according to the production achieved by him Differential Time rate Different hourly rates are fixed for different levels of efficiency Question When bank balance as per pass book is considered then following to be added. Correct Answer cheques deposited but not cleared , Interest debited by bank , bank charges debited by bank Question (No. of unit * Rate of depreciation per unit ) this formula is used for written down value method. Correct Answer False Question Cash and---------------are the two systems of accounting. Correct Answer Mercantile Question This cost indicates increased or decreased cost due to the increased or decreased volume of operations. Correct Answer Differential cost Match The Following Question Correct Answer Fixed cost + variable cost Total cost Total cost – fixed cost variable cost sales- variable cost contribution contribution – fixed cost profit Total cost + profit Sales Question Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered. Correct Answer Rs. 1.40 per hour Question Margin of safety are the sales beyond Correct Answer break even point Question Indirect Labour Cost Correct Answer Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper Question The difference between sales and factory/ works cost is termed as ________ the difference between sales and ________ termed as net profit Correct Answer gross profit Correct Answer cost of sales Question For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.3.60/- per kg. Correct Answer Rs.375/-( Adverse ) Question Labour Efficiency Standards are decided by considering following factors Correct Answer Records of past performance, Time & Motion Study, Trial Runs Question Depreciation does not involve cash out flow Correct Answer True Question The difference between standard cost and actual cost is termed as Variance. Correct Answer True Question Wage payment system should be properly tied up with quality control procedures to ensure that the workers are paid only for good and quality production. Correct Answer True Question In Cash budget Operating cash inflow includes Correct Answer Cash Sales, Collection from Debtors, Interest/Dividend received Question If the product is labour intensive, more stress may be necessary on inventory control procedure. Correct Answer False Question A good wage payment system will not punish the workers for the matters beyond the control of the workers. Correct Answer True Question The material issued to production department may be returned back to the stores because material issued in excess requirement and Correct Answer Material issued is defective Question Following are called the element of Cost Correct Answer Material , Labour , Expenses Question Amount with drawn for personal purpose drawing A/C to be debited. Correct Answer True Question Under the repeated distribution method the overheads of ________ department are distributed to other departments on agreed ________ Correct Answer service Correct Answer percentage Question Under time rate system a worker is paid on the basis of production achieved by him. Correct Answer False Question Calculate Labour Rate Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and actual hours are 13, 500. Correct Answer Rs.6750/- ( Adverse ) Question Benefits available from revenue expenditure are received in the : Correct Answer Same year Match The Following Question Correct Answer Cost Centre Facilitate the fixation of responsibility Cost Control Process of controlling costs of operations Differential Cost Increase or Decrease in cost Sunk Cost Historical Cost Question Financial Accounting is … Correct Answer Designed to supply information to internal/ external users , Referred as 'Historical' form of accounting , Concerned with financial factors Question The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as ________ system. Correct Answer Uniform costing Question The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change. Correct Answer Accrued commission income of-Rs.32,960/- was not entered in the books , Rent for the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account Question If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________. Correct Answer Bad debts Question Creditors as on 31st March, 2004 amount to Rs.15,225/-. Provision for discount from creditors is to made @ 5%. Find the impact of this provision on the net profit. Correct Answer The net profit will increase by Rs.761.25 Question Under the Rowan plan bonus is a fixed percentage. Correct Answer False Question Margin of safety indicates ________ of operations. Correct Answer Profitability Question XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units (packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum price should it quote for this deal? Correct Answer Rs.190/- Question Period cost is the cost assigned to the products. Correct Answer False Question In calculation of total sales margin variance, the ________cost of sales is deducted from the actual sales revenue. Correct Answer Standard Question The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted. Correct Answer False Match The Following Question Correct Answer Personal A/C Debit the receiver, Credit the giver Real A/C Debit what comes in, Credit what goes out Nominal A/C Debit all the expenses, Credit all the incomes Tangible assets Building, Machinery In tangible assets Patents, Trade marks Question When bank balance as per pass book is considered then following to be deducted. Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank Question Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to general expenses account for rectifying the error, which A/C to be debited Correct Answer Drawing A/C Question Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0 Correct Answer True Question Office & Administration overhead includes Correct Answer Salary , Rent & Taxes , Stationary & postage Question There is reverse relationship between the ordering cost and carrying cost Correct Answer True Question Following points are taking into consideration for evaluation of receipts Correct Answer The Price , The trade discount is to be deducted , Other amounts such as sales tax, excise duty, octroi duty Question In EOQ, to express carrying cost as a percentage of the unit cost of purchases this is used in the formula----------- Correct Answer i Question Where overheads chargeable to the department are Rs. 5000/- , direct labour hours worked are 24000 then labour hour rate is Re. 0.2083 labour hour. Correct Answer True Question The selection of the base on which overheads should be apportioned depend on the following principles. Correct Answer service or use basis , survey basis , ability to pay basis Question The Budget key factor may be in the form of sales, raw material, labour etc. Correct Answer True Question For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.6/- per kg. Correct Answer Rs.600/-( favorable ) Question Find out Labour Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours are 12,600. Correct Answer Rs.900/- ( Adverse ) Question Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13, 500. Correct Answer Rs.9,000/- ( favourable ) Question Calendar Variance arises only if there is abnormal increase or decrease in Correct Answer Actual number of working days Match The Follow Question Correct Answer Token or Disc Method Token number & identification number allotted to worker Time Recording Clock Method Ticket number & clock card allotted to worker Daily Time sheets Time spent by worker on job is recorded Weekly Time sheets Record of time for all the jobs during the week is made Hand Written method Attendance register Question Rs.5000 paid as ________ to ________ should be debited to salary account Correct Answer Mahesh Correct Answer salary Question Uncontrollable variances are Correct Answer Strike , Change in customers demand , Devaluation of currency Question Indirect labour cost indicates that labour cost which cannot be identified with the individual cost centre. Correct Answer True Question There is no need to open a suspense account if the trial balance does not agree. Correct Answer False Question Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C credited to Rs Correct Answer 900 Question In financial statements P& L Accounts relates to a specific duration whereas ________ is for a given point of time Correct Answer P& L Accounts Correct Answer Balance sheet Question Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the same. Following account to be credited Correct Answer Suspense A/C Question Bin Card is not an ________ record but only a ________ record. Correct Answer Accounting Correct Answer Quantitative Question Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid . The outstanding salary is debited to Profit &Loss A/C. The second effect is -- Correct Answer Transfer to balance sheet liability side Question Debit the receiver & credit the giver is a rule of Real a/c. Correct Answer False Question If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what will the amount of total factory overheads at 60% capacity Correct Answer Rs.10,800/- Match The Following Question Correct Answer Advance Not related in current year Application Increase in Assets Outstanding Amount still payable in current year Prepaid Amount paid for next year Drawing Amount of personal use Question Head of the Department should sign the purchase requisition. Correct Answer True Question FIFO method Correct Answer The price of the earliest available lot is considered first , If the lot is exhausted, the price of the next available lot is considered , It is used for issue of material Question If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate will be, Correct Answer Re. 4 per machine hour. Question From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average inventory Correct Answer 300 Question Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable. Correct Answer Below 66.66% Match The Following Question Correct Answer Discount received Suppliers Outstanding expenses Liabilities Depreciation Assets Interest on capital Borrowed capital Discount allowed Debtors Question canteen facility to workers, health and safety services are examples of monetary incentives. Correct Answer False Question This is the process of recording attendance time of the workers. Correct Answer Time keeping Question If actual cost is more than the standard cost then it is called favorable variance. Correct Answer False Question The aggregate of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. Correct Answer False Question Interest on drawings of partners should be credited to which account? Correct Answer Profit and loss account Question The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and the amount of claim settled by the insurance company. Correct Answer True Question Penalty paid for delay in payment to creditors represents uncontrollable cost. Correct Answer False Question Subsidiary books include: Correct Answer Cash Book , Purchase Register , Sales Register Question Balance sheet is a part of the ledger accounts maintained by the company. Correct Answer False Question Average stock = ________ + (Order size / 2) Correct Answer Safety stock Question Based on the journal entry given, identify what transaction has taken place. Suresh Account………….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on behalf of creditor Suresh) Correct Answer Cash paid to Kailash should not be recovered from creditor Suresh Match The Follow Question Correct Answer Real A/C Debit what comes in, Credit what goes out Trade Discount Not accounted for in the books of Accounts Cash Discount Accounted for in the books of Accounts Rs.1 Personal A/C Debit the receiver, Credit the giver Question These are the preventive costs of labour turnover. Correct Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Question If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of Rs.75,000/-. You are required to calculate the margin of safety for the first month. Correct Answer Rs.300,000/- Question Loss on account of goods lost due to earthquake should be debited to which account? Correct Answer Profit and loss account Match The Following Question Correct Answer Operating income Cash Sales Non-Operating income Issue of shares Plan of investment in fixed assets Capital Expenditure Budget Plan for surplus/shortage of cash Cash Budget Question Under the average cost method of valuing material issues, new issue price is determined after ________ issue. Correct Answer Each Question Narration must be mentioned in the ledger. Correct Answer False Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. Correct Answer False Question The term ________ indicates expenditure incurred on or attributable to a given thing. Correct Answer Cost Question Items credited to Profit & Loss Account are… Correct Answer Gross profit , Commission received , Interested received Question Yield variance equal to zero indicates that the standard yield and actual yield are the same. Correct Answer True Question Balance sheet is statement of Correct Answer All Assets and Properties Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety will be Rs.________. Correct Answer 100,000/- Question Inventory holding cost comprises of : Correct Answer Cost of insurance , Rent of store house , Salary of store keeper Question Identify the steps involved in the process of decision making : Correct Answer Determination of the problem , Ascertainment of alternative courses of action , Screening each alternative so as to select the best one Question A low inventory turnover ratio should always be preferred. Correct Answer False Question The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as: Correct Answer Labour rate variance Question Following errors affect the trial balance Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Question ________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting Correct Answer Management Question Purchase day book for the month of April was under cast by Rs.1000/- which account should be credited ? ________ Correct Answer Suspense Account Question Linking overhead to a cost unit is known as overhead absorption. Correct Answer True Question A factory received a carton containing two materials X and Y. The invoice relating to the materials discloses the following details : Material X - 400 kg @ Rs.10/- per kg. =Rs.4,000/-; Material Y - 600 kg @ Rs.15/- per kg.= Rs.9,000/-; Sales @ 5% =Rs.650/-; Insurance @ 1% =Rs.130/-; Freight and handling charges = Rs.220/-. Correct Answer Material X -Rs.11.10; Material Y -Rs.16.68 Question An employee working under a bonus scheme saves 10 hours in a job for which the standard time is 60 hours. Calculate the wages payable to him, if incentive bonus of 10% on the hourly rate is payable when standard time (namely 100% efficiency) is achieved, and a further incentive bonus of 1% on hourly rate for each 1% in excess of that 100% efficiency is payable. Assume that the normal rate of payment is Rs.50/- per hour. Correct Answer Rs.3,250/- Question At 60% capacity utilisation the overhead recovery rate is Rs.35/- per unit. At 70% capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production attains 90% capacity utilisation? Correct Answer Rs.28/- per unit Question The production budget may be prepared in terms of : Correct Answer Units produced , Production cost , Material cost, labour cost and overheads Question Tom company has sales of Rs.200,000/- with variable expenses of Rs.150,000/-, fixed expenses of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much would Tom have to increase its sales in order to achieve an operating income of 10% of sales? Correct Answer Rs.200,000/- Question Angle formed by the intersection of total cost line and sales line is called angle of ________. Correct Answer Incidence Question All costs are controllable. Correct Answer False Question In the adjustment entry passed for closing stock, the ________ account should be credited. Correct Answer Trading Question Select the items which may be classified as selling and distribution overheads. Correct Answer Delivery van expenses , Rent of finished goods warehouse , Sales research expenses Question Warehousing cost is an item of ________ Correct Answer Distribution overheads Question From the following, select current assets: Correct Answer Sundry debtors , Stock , Pre paid expenses Question The objectives of cost accounting are : Correct Answer Cost control , Ascertain ment of cost of each product , Assist in managerial decision-making Question Which cost is defined as an estimated cost, prepared in advance of production or supply, estimated within a prescribed set of working conditions? Correct Answer Standard cost Question Carriage charges paid for a new machine purchased if debited to carriage account would affect the ________ Correct Answer Machinery A/c and carriage A/c Question Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction. Correct Answer The gross profit will increase by Rs.6,450/- Question Fundamentally, changes in price and changes in sales volume give rise to sales variances. Correct Answer True Question The ________ is responsible for material losses while in storage. Correct Answer Store-keeper Question A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not debited to traveling A/c. The trial balance will NOT agree. Correct Answer True Question Accounts representing expenses will have ________balance. Correct Answer Debit Question It is discovered that sales effected on 31st March, 2004 worth Rs.42,000/- has not been recorded in the books of accounts. Analyse the impact on the final statement of accounts. Correct Answer The sundry debtors will increase by Rs.42,000/- Question Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit. Correct Answer The net profit will not be affected Question New companies can adopt Uniform costing system as a ready-made system. Correct Answer True Question A journal entry is passed for trade discount, but no entry is passed for cash discount. Correct Answer False Question The assets which are suppoed to be used by the organisation to do business, are known as ________assets. Correct Answer Fixed Question The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is: Correct Answer Re.0.98 Question The disadvantages of time rate system are : Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase productivity Question Which of the following is the most efficient use of the clock card? Correct Answer To facilitate payment for time spend on the work premises Question One of the main objection to the contribution approach of costing is that it ignores fixed cost. Correct Answer True Question If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________ the overdraft as per pass book. Correct Answer Lesser than Question The cash flow format is used for preparing the cash budget by the ________ method. Correct Answer Adjusted Profits/Losses Question The ideal budget period for a company engaged in generation and distribution of electricity is one year. Correct Answer False Question In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative assessment to be made of the two sectors. Correct Answer uniform costing Question Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact. Correct Answer The asset side of the balance sheet will increase by Rs.5,000/- Question It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the product Correct Answer False Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : Correct Answer Difference in the balance as per bank book and as per pass book Question Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. Correct Answer False Question A business's telephone bill should nromally be classified into which one of the following categories? Correct Answer Semi-variable cost Question The objects of cost accountancy are . . Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information Question Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset. Correct Answer True Match The Following Question Correct Answer Error of Principle Trial Balance does not get affected Error of Omission Transaction is totally omitted Error of commission Wrong Posting Compensating Error Wrong classification Difference in trial balance Transferred to suspense account Question The difference between sales and cost of sales is termed as ________. Correct Answer Net Profit Question ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Correct Answer Management Question The capacity utilised to installed capacity ratio is 80% for the company. The capacity utilisation ratio in respect of a machine for a particular month is 90%. The available working hours in a month are 200 hours. The break of idle time is as follows : Waiting for job - 5hours, breakdown - 4 hours and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the machine is Rs.8/-. Correct Answer Rs.96/- Question Semi variable expenses fluctuate in direct proportion to volume. Correct Answer False Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. Correct Answer False Question From the following, select intangible assets: Correct Answer Goodwill , Patents , Trade Marks Question Select the accounts to be disclosed on the assets side of the Balance sheet. Correct Answer Furniture , Loan to Bank of U.S.A. , Land & building Question Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory. Correct Answer The statement is correct but the reason is incorrect Question The credit side of the sales book was overcast by Rs.2,000/-. As a result of this rectification, what of the given impacts is likely to happen? Correct Answer The liability side of the balance sheet will increase by Rs.2,000/- Question It is said that the income statement represents wealth increase /decrease for the organisation. Correct Answer True Question All personal expenses of the owner should be debited to the organisation's profit and loss account. Correct Answer False Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : Correct Answer Difference in the balance as per bank book and as per pass book Question If the ordering cost ________s, then the economic order quantity will Increase. Correct Answer Increase Question ________ authorises the production department to issue requistion for materials. Correct Answer Bill of material Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit of finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering cost is Rs.120/- per order and the holding cost is 10% per annum. If the company places each order for 2,000 units due to financial constraints, what is the extra annual cost? Correct Answer Rs.80/- Question An entry in the stores ledger is required for transfer of material from one job to another in the same department. Correct Answer False Question The method which deals with ownership rights being given to workers is known as ________ method of remuneration. Correct Answer Co-partnership Question A firm of boiler-house engineers provides engineering services to large number of factories having boiler houses. The firm charges on the basis of number of hours its engineers have worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An engineer's annual remuneration comprises (for the year Correct Answer Rs.182.29 Question Marginal costing is useful in the following areas : Correct Answer Plant shut down decisions , Make or buy decisions , Profit planning Question Cost volume profit analysis focuses attention on the ________ effect of a particular course of action. Correct Answer short run Question ABC Ltd. has a proposal of utilising a cheaper raw material which will increase the contribution from Rs.100/- per unit to Rs.125/- per unit. However, the use of cheaper raw material may result in decrease in sales by 10% (to 450 units only). Find the impact of using the cheaper raw material on the amount of contribution ( net increase or decrease in contribution). Correct Answer Increase in contribution Rs.6,250/- Question Which of the following budgets may be termed as a long term budget? Correct Answer Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company Question A ________ can be defined as a part of the orgainsation for which separate budget can be prepared and implemented. Correct Answer Budget centre Question The finance manager is responsible for which of the following budget? Correct Answer Cash budget Question The role of the budget committee may be taken as an advisory role to the Chief Executive. Correct Answer True Question While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored. Correct Answer False Question The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance. Correct Answer True Question From the following data, determine the net profit if sales are 20% above the break even point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed overheads Rs.20,000/- Correct Answer Rs.4,000/- Match The Following Question Correct Answer Decrease in selling price will lead to Decrease in contribution Increase in contribution will lead to Increase in profits Increase in fixed cost will lead to Increase in break even point Decrease in variable cost will lead to Increase in profit volume ratio Question As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its market price as on the same day was Rs.66,584/-. Which value of closing stock should be considered in the final statement of accounts for the year ended on 30th September, 2004? Correct Answer Rs.66,584/- Question Marginal costing technique is useful in taking decisions relating to which of the following courses of action? Correct Answer Decision to drop a product line , Decision to accept a special offer at price lower than the normal selling price , Decision regarding temporary shut-downs Question In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities. Correct Answer True Question Profit and loss account indicates the profit earned as on a particular date. Correct Answer False Question The balance of the suspense account will ________ after all the errors are Correct Answer become zero Question The best way to reduce labour cost is to recruit cheap labour. Correct Answer False Question A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is the total amount of capital? Correct Answer Rs. 12,000 Question Income Tax Act, recognise only one method of depreciation namely ________. Correct Answer Written down value method Question An adjustment relating to outstanding expenses will ________ the net profit. Correct Answer Decrease Question Generally, all real accounts will have a ________ balance Correct Answer Debit Question The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio? Correct Answer 0.333 Question The selective ________ controls are intended to control the ________ to particular sectors without affecting the total credit, and also to change the composition of credit from undesirable to de Correct Answer credit Correct Answer credit flows Question Journal is popularly known as 'Book of . . . Correct Answer Original Entry Question Presentation of information to enable managerial decision making' is one of the objects of which of the following Correct Answer Cost Accounting Question The principle of ________ is followed while preparing the financial statements. Correct Answer Going concern Match The Following Question Correct Answer Indirect Material Element wise classification Administration overheads Function wise classification Fixed overheads Variability wise classification Abnormal overheads Normality wise classification Question In India the gas industry and electricity industry, and ________ industry are examples of industries using the uniform costing system. Correct Answer fertilizer Multiple Choice Multiple Answer Question Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a., what will be the amount of capital of each of the partners as on 31st March, 2004, assuming there were no additions during this period? Also, state the treatment of this item in the Profit and loss account. Correct Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital should be debited to the Profit and loss account Question Non-trading income is disclosed on the credit side of ________ account. Correct Answer Profit and loss Question Goods returned to the suppliers from whom it was ________d is recorded in the Purchase return register. Correct Answer Purchase Question An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find the expenditure on account of advertisement. Correct Answer Rs.49,248/- Question Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The goods were not insured. Find the amont which should be debited to the profitability statement. Correct Answer Rs.18,950/- Question Generally speaking income represents wealth increase and business success; higher the income, lower will be the success of a business. Correct Answer False Question While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004? Correct Answer Balance as per pass book < Balance as per bank book Question Bank reconciliation statement is a systematic presentation of errors made by the accountant. Correct Answer False Question The stores department is a ________ department. Correct Answer Service Question The ________ is a perpetual inventory record. Correct Answer Bin card Question Selecting an appropriate method of valuation of inventory is important because : Correct Answer It influences the figure of gross profit Question Re-order level for materials is determined considering maximum consumption and maximum delivery period. Correct Answer True Question Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost. Correct Answer True Question Economical use of labour, materials and facilities can achieved with the help of ________. Correct Answer Budgetary control Question Select the advantages of standard cost system. Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency Question Which variance is used to analyse the effect of change in the quantity of output from a given mix of inputs? Correct Answer Materials yield variance Question Judge the statement according to the criteria given : ' The accounting period for XYZ Ltd. ends on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be recorded in the books of accounts in January, Correct Answer The statement and its reason are both incorrect Question From the following select the examples of errors of commission - Correct Answer Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- , Received cash from Sham, credited to Ram's account , Paid transport charges, credited to transport charges account Question Expenditure on income-tax is an example of ________. Correct Answer non-operating expenditure Question Identify the items which are correctly classified. Correct Answer Carriage inward - Factory overheads , Carriage outward - Selling and distribution overheads , Sales research expenses -Selling and distribution overheads Question Select the items which may be classified as administration overheads. Correct Answer Depreciation on office furniture , Director's remuneration , Telephone expenses Question Overhead absorption is an exercise by which overhead is properly spread over production for the period. Correct Answer True Question Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry ? Correct Answer Uniform costing Question A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on computers to be charged for the year. Correct Answer Rs.40,953.70 Question The amount of income for the current period which is not received during the current period, is called Accrued Income. Correct Answer True Question The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance as per pass book as on the same date is Rs.10,123.60. Select the transactions representing the reasons for this difference. Correct Answer Interest credited by bank, not entered in the bank book, Rs.125.60 , Cheques dishonoured not entered in the bank book Rs.200/- , Debit side of the cash book is overcast by Rs.100/- Question The principal functions of the cost accounting department are : Correct Answer Classifying labour cost according to jobs, processes, etc. , Preparation of different reports based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be reduced. Question Profit volume ratio is also known as ________. Correct Answer Contribution to sales ratio Question Margin of safety = Contribution / Profit volume ratio Correct Answer False Question Depreciation, interest and property tax continue even when the operations are discontinued. Correct Answer True Question The reasons and objectives of budgets may be stated as : Correct Answer To aid the planning of annual operations , To communicate the organisational plans to the different departments , To motivate the managers to strive for attainment of the organisational goals Question The key factor determines the : Correct Answer Level of activity , Capacity utilization , Level of sales Question Essentials for effective implementation of budgetary control system are Correct Answer Commitment of top management , Clearly defined objectives , Continous budget education Question Which of the following is a correct definition of the key factor? Correct Answer The factor which limits the activites of the undertaking Question The integrated form of all functional budgets is known as : Correct Answer Master budget Question For the month of November, a firm has budgeted sales of 20,000 units of X at a price of Rs.10/- and sale of 30,000 untis of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales quantity variance. Correct Answer Sales volume variance -Rs.120,000/- (Favourable) , Sales mix variance -Rs.44,000/- (Favourable) , Sales Quantity variance-Rs.76,000/- (Favourable) Question ________ variance represents the over or under utilisation of pland and machinery. Correct Answer Capacity Question The following data relates to the month of October : Actual variable overheads Rs.60,000/-; budgeted variable overheads Rs.80,000/-; actual output 900 units; budgeted output 1,000 units; standard time for one unit - 2 hours. Calculate variable overhead efficiency variance. Correct Answer Rs.4,000/- (Favourable) Question Which of the following operations would normally be carried out first when preparing a master budget? Correct Answer Determining the budget period Question Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________ . Correct Answer Income Tax Act, 1961 Question Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows : X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance. Correct Answer Rs.100/- (Favourable) Question Select the examples of functional budgets: Correct Answer Sales budget , Production budget , Research and development budget Question Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10% p.a., what should be the treatment of this interest in the profitability statement, assuming there were no additions to capital during this period? Correct Answer Profit and loss account should be debited with Rs.1,866.67 Question KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003, assuming there were no additions or disposals during the year? Correct Answer Rs.100,000/- Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer True Question An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________ Correct Answer P's A/c and Q's A/c Question Budgetary control system provides a basis for establishment of the incentive systems. Correct Answer True Question A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Correct Answer True Question A low margin of safety indicates ________ fixed overheads. Correct Answer higher Question Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory. Correct Answer less than 10 Question The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company. Correct Answer Rs.34,408.09 Question Price based on Uniform Costing may be taken to be reliable and representative of the whole industry. Correct Answer True Question The budget manual must contain statement regarding: Correct Answer Objectives of the orgainsation Question Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to: Correct Answer Balance as per bank book > Balance as per pass book Question Entry for dishonour of cheque appears only in the pass book, this entry should be ________ in the bank book. Correct Answer Passed Question Since the pass book and the bank book record the ________ transactions, the bank balance as per these books should be equal. Correct Answer Same Question A pre-determined factory overhead rate holds up product costing. Correct Answer False Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Correct Answer Rent received in advance account Question Bank reconciliation statement can be prepared on weekly basis. Correct Answer True Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account? Correct Answer Rs.45,000/- Question Financial Accounting ______________ Correct Answer Designed to supply information for internal/ external uses. , Deals with the transaction during specific period. , It is compulsory Question Cost Accounting ______________. Correct Answer Concerned with specific activities. , Classified according to their nature. , It deals with both i.e. past & present. Question Features of double entry accounting system are . . . Correct Answer Every business transaction has two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Question Features of a cost sheet are as follows Correct Answer Indicates the total cost of production during a given period , Indicates the unit cost of production during a given period , Helps the management in fixing the selling price to be quoted for the Question Depreciation charged on office furniture on straight line basis is an example of ________. Correct Answer Administration overheads Question If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business. Correct Answer Drawings Question Included in the trial balance is the sales promotion suspense account with a debit balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its impact on profit of the company. Correct Answer The net profit will decrease by Rs.6,300/- Question A lathe machine was purhcased on 31st March, 2004 for Rs.65,000/-, however it was installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of depreciation charge for the said lathe machine for the year ended 31st March, 2004. Correct Answer Nil Question While passing the journal entry, it is of utmost importance to ensure that the total of amount debited is equal to the total of the amount credited. Correct Answer True Question The bin card and stores ledger, being independent records, comparison of these two records should be avoided. Correct Answer False Question The cost of idle time incurred by employees that is considered normal for the production process should be charged to : Correct Answer Factory overheads Question The cost of abnormal time may be recovered by inflating the hourly labour rate. Correct Answer True Question ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/- and the variable costs are 60% of the selling price. In order to realize a profit of Rs.100,000/-, the selling price per unit would have to be : Correct Answer Rs.6.25 Question In which of the following situations, the flexible budget should be preferred? Correct Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of production activity Question The budget that represents the funds investment for expansion, diversification, etc. is known as ________. Correct Answer Capital expenditure budget True/False Question Amortization of goodwill should be considered while preparing cash budget. Correct Answer False Question As cost centers facilitate the control function, in many cases, they are termed as . . . Correct Answer Responsibility centers Question Lata and Tara are partners of Latara & Co. As on 31st March, 2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual drawings amounted to Rs.18,000/-. If interest on drawings is charged @ 15% p.a., what is the amount of income for Latara & Co.? Correct Answer Rs.6,450/- Question Labour turnover rate is best defined as : Correct Answer The number of leavers replaced divided by the average of employees on the payroll Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry ? Correct Answer Uniform costing Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year ended 31st March, 2004. Correct Answer The net profit will not be affected Question Interim dividend paid by the company should be debited to the profit and loss appropriation account. Correct Answer True Question The short run financial plan which acts as a guide to achieve the predefined targets is known as ________. Correct Answer Budget Question Indirect Cost is termed as ________. Correct Answer Overhead Question Interest on ________ is credited to Capital account. Correct Answer Capital Question The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. Correct Answer False Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost? Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Question Accounting is the art where transactions are … Correct Answer Summarized , Classified , Recorded Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees. Correct Answer False Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of Correct Answer Depreciation on plant and machinery , Interest on loans taken from other , Interest on loans granted to others Question Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors. Correct Answer False Question Management accounting is concerned with the following activities : Correct Answer Decision making , Safeguarding assets , Planning and controlling activities Question Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer Master budget Question A grinding machine is an example of impersonal cost centre Correct Answer True Question Piece rate systems are very useful in the following circumstances: Correct Answer Units of output are measurable , Job is standardised , The flow of work is regular Question The process of recording the business transactions in a defined set of records is referred to as ________. Correct Answer Balance sheet Question A ________ inventory turnover period indicates efficient utilisation of material. Correct Answer Low Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Correct Answer Investment account - Rs.170,000/- Question The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct. Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster moving material , Consumption of material Q is Rs.860,000/- Question Overhead absorption rate will be different at different capacity levels. Correct Answer True Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________. Correct Answer 90% to 100% Question The alternative courses of action for an integrated textile mill are: Correct Answer Sell cloth Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20 Correct Answer 153,000 units Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc. Correct Answer Accounting period Question Furniture account will always have a ________ balance. Correct Answer Debit Question Product costs under direct costing include: Correct Answer Prime cost and variable factory overheads Question Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer. Correct Answer True Question Items debited to Profit & Loss Account are… Correct Answer Salary , Discount allowed , Postage & telegram Question Select the entries which need to be rectified Correct Answer Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) , Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased) , Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for) Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book. Correct Answer Rs.128/- (overdraft) Question Identify the fixed expenses from the following. Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,etc. , Salary paid to factory supervisor Question Budgetary control is one of the techniques of management accounting. Correct Answer True Question Management Accounting is a developed stage of Cost Accounting Correct Answer True Question In the ledger account only credit entries relating to a particular account are posted. Correct Answer False Match The Following Question Correct Answer Global Tender Any supplier from the global market can fill the tender Single Tender Tender from only one supplier Limited Tender Tenders from reliable but few suppliers Open Tender Any supplier from the local market can fill the tender Question Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours. Correct Answer True Question Features of Taylor's differential piece rate system are as follows : Correct Answer Minima clerical work is involved in calculating the wages , Helps in building up an efficient labour force , Strong incentive to efficient and ambitious workers. Question Financial Accounting discloses the financial performance & Financial status of the business as a whole Correct Answer True Question Cost Accounting is a legal requirement. Correct Answer False Question Cash account can have a credit balance. Correct Answer False Question Labour turnover means : Correct Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force Question Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole. Correct Answer False Question The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half - 37,500 units. The production pattern of the company is based on 80% of the sales of the current six months and 20% of the budgeted sales of the next six months. Calcu Correct Answer 1st half -31,500 units; 2nd half - 30,000 units Question The variance which denotes the variation in overhead recovery due to the budgeted quantity of products being greater or less than actual production, is known as ________ variance. Correct Answer Volume Question As per the provisions of Section 209 of ________, all the company form of organisation is legally required to follow the mercantile or accrual system of accounting. Correct Answer The Companies Act, 1956 Question Cost Accounting and Management Accounting are similar to each other in many respects. Correct Answer True Question The reports generated by financial accounting are meant for the use by management for effective decisions. Correct Answer True Question Token or disc method is a related to the system of ________. Correct Answer Time-keeping Question Cost Accounting may be considered to be a part of management Accounting. Correct Answer True Question The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Correct Answer Total variable overhead Question It is said that marginal costs are used primarily in guiding decisions that are yet to be made. Correct Answer True Question Management Accounting is not at all a legal requirement Correct Answer True Question Identify the variable expenses. Correct Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by hired carriers , Wages paid to casual workers Question Which of the following cost is also termed as Prime Cost ? Correct Answer Direct cost Question The method of remuneration under which the workers are given in share in profits of the organization, at a specified percentage, along-with their wages, is known as ________ method. Correct Answer Profit-sharing Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Correct Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- Question Quantify the increase in profit on account of following errors : (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses. Correct Answer Rs.43,200/- Question The analysis which is also referred as 'what if' analysis is known as________. Correct Answer Cost volume profit analysis Question The balance sheet has three columns, viz. assets, liabilities and ledger folio. Correct Answer False Question The various areas in which uniform costing can be adopted are . . Correct Answer Valuation of inventories , Charging of depreciation , Apportionment of overheads Question The varinace that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer Sales margin volume Question Depreciation is caused by use factor, obsolescence and ________. Correct Answer Time factor Question Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit) Correct Answer False Question All cash sales are recorded in the sales register. Correct Answer False Match The Following Question Correct Answer Transport facilities to employees Preventive cost of labour turnover Relationship between supervisor and worker Avoidable cause of labour turnover Dismissal of employee Unavoidable cause of labour turnover Increased spoilage and defectives Replacement cost of labour turnover Question Indirect material cost is an integral part of finished goods. Correct Answer False Question Select the various methods adopted for treatment of under or over absorbed overheads Correct Answer Use of supplementary rates , Carrying over the amount to remaining period , Writing off to the Costing Profit and Loss Account Question It is difficult to apply Uniform costing system for an industry which has labour intensive companies as well as capital intensive companies, because : Correct Answer The cost structure is different Match The Following Question Correct Answer Normal Standards Anticipated to be achieved in future Basic Standards Established for a longer period of time Current Standards Established for a shorter period of time Expected Standards Anticipated to be achieved in the budget period True/False Question Trading account is an important account which will be used to analyze how successful and how efficiently the firm runs its business. Correct Answer True Question Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Correct Answer Long term liabilities Question The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004. Correct Answer Rs.75,981/- Question The components of the selling and distribution cost budget are : Correct Answer Distribution expenses , Publicity expenditure , Salary of sales-office workers Question Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000 Correct Answer Ram is a creditor , Rs.10,000/- has been paid to Ram , The payment is made by cheque Question A written order sent to inform the purchasing department of a need for materials is called a ________. Correct Answer Purchase requisition note Question The overheads apportioned to three production departments A, B and C and two service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of 4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2. Ascertain the total overheads of each production department. Correct Answer A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/- Question Re-order quantity may be measured as : Correct Answer Maximum stock level - re-order level + (minimum usage X minimum re-order period) Question If the total amount on the ________ side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance. Correct Answer Debit Question An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe. Correct Answer suspense Question The final result disclosed by trading account is the ________profit earned by the organization. Correct Answer Gross Question Number of days inventory is held can be calculated by dividing number of days in a year by ________. Correct Answer Inventory turnover ratio Match The Following Question Correct Answer Total cost Cost of finished goods Non operating income Profit on sale of investment Selling and distribution overheads Advertisement expenses Factory overheads Repair for factory building Question The amount of profit which is retained by the organisation is transferred to 'Reserves and Surplus' in the balance sheet. Correct Answer True Question Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Correct Answer Investments Question Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units. Correct Answer 66.9 days Question Material mix and material yield variance can be calculated even when only one raw material is used for production. Correct Answer False Question A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate System. Correct Answer P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80 Question A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total cost. What is the break even point for the company? Correct Answer 68,182 units Question The organization chart shows the following aspects : Correct Answer Functional responsibility of different functional managers , Delegation of authority to various managers , Inter-functional relationships of these managers Question Select the correct formulae for calculating break even point. Correct Answer Fixed cost / (Selling price per unit - Variable cost per unit) , [Fixed cost / Marginal contribution] X Sales , [Fixed cost / (Fixed cost + Net Profit)] X Sales Question Select the transactions which can be entered in the Journal proper. Correct Answer Opening entries , Closing entries , Rectification entries Question The lowest profit volume ratio can be ________%. Correct Answer 0 Question Trading account is used to analyse how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Correct Answer True Question Calculate the earnings of workers Monica and Sonica under Taylor's differential piece rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30 seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above standard. Monica produces 900 units per day and Sonica produces 1,100 units per day. Correct Answer Monica -Rs.72/-; Sonica - Rs.132/- Question The factors that influence determination of budget period are : Correct Answer Type of budget, viz. Sales or capital expenditure budget , General economic conditions , Trade cycle of business Question Uniform costing system can be successfully implemented in any industry only when : Correct Answer Information is freely supplied by all the units , Well organised sector is ready to share the technological improvements , Information furnished by the units is complete and correct Question In marginal costing, under and over absorption of fixed overheads is bound to arise. Correct Answer False Question Trade Discount refers to the discount . . . Correct Answer received on purchases Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual break even point. Correct Answer 80,000 units Question Cool-wind Ltd., manufactures fans, which at sold at Rs.400 pre piece. The cost of sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle by 39% of present gross profit. With the above information, you are required to determine the future selling price, if the present rate of gross profit is to be maintained. Correct Answer Rs.452/- Question Credit balance in interest account indicates income for the organisation. Correct Answer True Question Money Measurement Concept__________________ Correct Answer Only those transactions and facts expressed in terms of money , This Concept imposes severe restrictions on the kind of information available from financial statements , Due to several restrictions it becomes drawback of financial accounting Question A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10% on building. The total amount of capital comes to Rs. __________ Correct Answer 11500 Question The periodical total of sales book was cash short by Rs. 5000 for rectifying the same, which A/C to be debited Correct Answer Suspense A/C Question Following errors do not affect the trial balance Correct Answer Error of Principle , Error of Omission , Error of Commission Question A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account Correct Answer False Match The Following Question Correct Answer Opportunity Cost Cost can be controlled Differential Cost Historical Cost Sunk Cost Cannot be controlled Controllable Cost Increase or Decrease in cost Uncontrollable Cost Return or yield Question Indirect material cost assist the manufacturing process is an integral part of finish goods. Correct Answer False Question Dividend received is a Non-operating Income. Correct Answer True Question A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2 Correct Answer 14,59,200 Question Factory overheads are termed as Correct Answer Production overheads , Works overheads , Manufacturing overheads Question The aims of perpetual inventory system are as follows Correct Answer Maintaining Bin cards , Maintaining store ledger , Continuous verification of physical stock Question These are the features of variable overheads Correct Answer vary directly in proportion to volume of output. , per unit cost remains the same , total overheads may increase or decrease as per volume of output. Question The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet. Correct Answer True Question If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is 500 kg then what will be the quantity of production Correct Answer 4,500 kg Question The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time. Correct Answer Idle Question Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer Master budget Question Differential cost analysis is incorporated in the cost books. Correct Answer False Question The process of recording attendance time of the workers is known as time booking. Correct Answer False Question Factory light, telephone expenses are examples of ________ expenses. Correct Answer Indirect Question For successful implementation of uniform costing system, it is very essential to devise ________, containing recommended cost accounting plan and procedures. Correct Answer cost manual Question The combination in which different products are sold by a company is known as ________. Correct Answer Sales mix Question Which of the following is usually prepared daily by employees for each job worked on? Correct Answer Job card Question Profit = Profit volume ratio X Margin of safety Correct Answer True Question The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision. Correct Answer Loss of trained personnel , Loss of regular customers , Expenditure required to restart the factory Question Locate the error and its features in the following - Correct Answer Compensating errors , Trial balance will not be affected , Trial balance will be affected Question Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction? Correct Answer Maintenance of machine account Multiple Choice Multiple Answer Question Which of the formulae can be used to calculate profit volume ratio :- Correct Answer Change in contribution / Change in sales , 1 - (Change in variable cost / Change in sales) , (Fixed cost + Profit) / Sales Multiple Choice Multiple Answer Question International Motors manufactures crankshafts for jeeps and trucks. They have furnished the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct. Correct Answer Cost per crankshaft for jeep is Rs.445.45 , Cost per crankshaft for truck is Rs.805.66 , General expenses should be apportioned on direct labour ratio Multiple Choice Single Answer Question The direct material usage budget and direct material purchase budget differ because of which of the following? Correct Answer A planned change in the level of material stock Multiple Choice Multiple Answer Question Plant and equipment can become a key factor in the following circumstances :- Correct Answer Limited capacity due to lack of capital , Insufficient capacity due to shortage of space , Limited number of hours for which the plant can be used Multiple Choice Multiple Answer Question Select the accounts to be disclosed on the liability side of the Balance sheet :- Correct Answer Loan , Outstanding expenses , Creditors Select The Blank Question The ________ books are preferred when the volume of transactions is very large. Correct Answer Subsidiary Select The Blank Question ________ is any documentary evidence to justify that a particular transaction has taken place. Correct Answer Voucher Select The Blank Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization. Correct Answer Net True/False Question Receipts and payments method of cash budget is useful for preparing long term estimates. Correct Answer False Multiple Choice Single Answer Question The Asian Industries specialises in the manufacture of small capacity motors. The cost structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per annum. THe sale price of the motor is Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order to break-even. Correct Answer 6,000 motors True/False Question The purpose of profit and loss account is to brign together information which relates to gross profit and the expenses for running the business. Correct Answer True True/False Question If the storage cost of inventory increases, then the economic order quantity also increases. Correct Answer False Multiple Choice Single Answer Question The reporting method used in the costing system should be based on the principle of Correct Answer Management by exception Multiple Choice Single Answer Question XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased to offset 20% reduction in selling price, so that the existing profit remains intact. Correct Answer 0.6 Multiple Choice Single Answer Question A company manufactures and sells four products, viz. A, B, C and D. The details are as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%, Product D-18%; Incremental rupee sale for each Rupee spent on advertisement:-Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product D-Rs.10/-. Amount of advertisement available is only Rs.5,000/-. Correct Answer Product B True/False Question Match Correct Answer True Multiple Choice Single Answer Question An analysis of the time card of a worker on a machine shows that of the total 48 hours, he worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You are required to calculate the earnings of the worker. Correct Answer Rs.500/- Select The Blank Question In case of seasonal industry, the budget period may be taken as ________. Correct Answer One season Multiple Choice Single Answer Question The standard derpartmental overhead rate is Rs.15/- per hour. Based on the following details, work out the activity level at which the overhead rate has been pre-determined. Activity level : 600 hours; overhead allowance Rs.12,000/-. Activity level : 800 hours; overhead allowance Rs.14,400/-. Activity Correct Answer 1,600 hours True/False Question The total of the direct costs are termed as overheads. Correct Answer False Multiple Choice Single Answer Question Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as 6170 rectifying the transaction the creditor A/C is to be debited amount to Rs Correct Answer 540 True/False Question Market price may be treated as latest purchase price, realisable price or replacement price Correct Answer True True/False Question Office and administration overheads consists of all overhead costs incurred from procurement of material till the stage of selling the final product. Correct Answer False True/False Question Sold goods to Ajay on credit Rs 10,000/- Ajay account to be credited Correct Answer False True/False Question Goods lost by fire firstly transfers to Trading Account credit side & corresponding amount is debited to P&L account. Correct Answer True Multiple Choice Multiple Answer Question A manufacturer uses 200 units of component every month and he buys them entirely from outside supplier. The order placing and receiving cost is Rs. 100 and annual carrying cost is Rs. 12. Calculate Ec Correct Answer 200 units Select The Blank Question Due to compensating errors the ________ accuracy of the trial balance ________ affected Correct Answer arithmetical Correct Answer doesnot Select The Blank Question Preventive costs of labour turnover are ________ and ________ . Correct Answer welfare activities Correct Answer medical services Multiple Choice Multiple Answer Question Basic three steps in Standard Costing are Correct Answer Setting standards , Comparing actuals with standards , Measurement of variance True/False Question If the excess quantity is already billed in the invoice, it will be approved and paid. If not Debit note may be issued to the supplier for amending the amount. Correct Answer False Multiple Choice Single Answer Question A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 rectification of the suspense accounted debited to Rs Correct Answer 500 Multiple Choice Single Answer Question Depreciation charged on land & building, first debited to Profit & Loss A/C. and then to be --------------------- Correct Answer Deducted from land & building Select The Blank Question One of the limitations of the budgetory control is that it ________. Correct Answer is an expensive affair Multiple Choice Multiple Answer Question Features of real account are . . . Correct Answer Mainly deals with items which are having physical , Consists of some intangible assets , examples include - Lane, Building, Vehicles Select The Blank Question A trading concern will have only ________ overheads and selling overheads. Correct Answer administration Select The Blank Question ________ is an example of intangible asset. Correct Answer Goodwill Multiple Choice Single Answer Question Uniform costing system is useful in the following areas Correct Answer Classification of cost accounts Multiple Choice Single Answer Question Mr.X has Rs.200,000/- invested in his business firm. He wants a 15% return on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 60% of sales, his fixed costs are Rs.80,000/- per year. Mr.X estimates that even if he closed the doors of his business, he would incur Rs.25,000/- as expenses per year. At what sales would he be better off by locking his business up. Correct Answer Rs.62,500/- Multiple Choice Single Answer Question The budgeted level of activity of the production department of Style India Ltd. is 5,000 hours per period. From the given information find the cost for 3,500 hours per period. Indirect wages Re.0.40 per hour; Correct Answer Rs.2,480/- Select The Blank Question Normally, the planning for dividend payments and interest payments is based on the ________ budget. Correct Answer Cash Multiple Choice Single Answer Question The statement, mainly applicable to company form of organization, which discloses the manner in which the profit after tax is distributed is known as: Correct Answer Profit & Loss Account Appropriation Account Select The Blank Question Generally, all real accounts will have a ________ balance Correct Answer Debit Multiple Choice Single Answer Question The alternative courses of action for an integrated textile mill are: Correct Answer Sell cloth True/False Question The problem of multiple key factors can be solved with the help of techniques like linear programming, operations research, etc. Correct Answer True True/False Question Fixed expenses will move up by jumps if the output exceeds the capacity. Correct Answer True Multiple Choice Single Answer Question Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that the real worth of these loose tools is only Rs.30,000/-. What can be done to achieve the desired reduction in the net book value of loose tools? Correct Answer By providing depreciation to the extent of Rs.15,000/- Multiple Choice Multiple Answer Question Cost control procedure deals with : Correct Answer Establishment of plans , Comparison of actual and planed performance , Computation of variance Match The Following Question Correct Answer Tool-room expenses Direct labour hours Power Horse power of machine Stores department Number of material requisitions Boiler house Cubic feet of steam supplied Multiple Choice Single Answer Question The following data is extracted from the books of a manufacturing concern for the year 2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of 10% in the fixed expenses. Correct Answer Rs.275,000/- True/False Question Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. Correct Answer False Multiple Choice Single Answer Question A worker completes a job in a certain number of hours. The standard time allowed for the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate a bonus of Rs.20/- under Halsey plan. Find out his total earnings under the Rowan plan. Correct Answer Rs.84/- Match The Following Question Correct Answer Dividend paid Profit and loss appropriation account Freight inwards Manufacturing account Sales Trading account Freight outwards Profit and loss account Multiple Choice Single Answer Question The credit sales are as follows : February Rs.180,00,000/-, March Rs.192,00,000/- and April Rs.108,00,000/-. 50% of credit sales are realised in the month following the sale, 30% in the second month following the sale and the balance in the third month f Correct Answer Rs.15,000,000/- Multiple Choice Multiple Answer Question The disadvantages of supplementary overhead rates are: Correct Answer It can be determined only after the end of the accounting period , Defeats the basic concept of normal cost , Involves lot of clerical activity Select The Blank Question In the scheme of cost-________-profit analysis, an attempt is made to measure the variations of cost with volume. Correct Answer volume Select The Blank Question The ________ is of immense help in guiding the companies to operate their accounts on uniform basis. Correct Answer uniform cost manual Multiple Choice Multiple Answer Question The productive causes of idle time are : Correct Answer Instructions are not clearly given , Power failures , Machine breakdown Multiple Choice Multiple Answer Question The factors which influence the selection of the method for absorption of overheads are: Correct Answer Type of industry , Nature of products , Manufacturing process Match The Following Question Correct Answer Emerson's efficiency bonus system Actual hours X Hourly rate + Bonus percentage (Actual hours X Hourly rate) Piece rate system Output X Wage rate per unit Barth Premium system Hourly Rate X (square root of Standard Hours X Actual Hours) Time rate system Attendance time X Hourly wage rate Multiple Choice Single Answer Question If the overhead expenditure to be absorbed is the foreman's salary, the most appropriate basis for absorption would be : Correct Answer Direct labour hours True/False Question In case the standards are too difficult to achieve, they will provide additional incentive for improvement. Correct Answer False Multiple Choice Single Answer Question Standard cost specification per unit of product : 20 labour hours per unit @ Rs.22/- per labour hour.Actual production and labour cost : Actual production 300 units; time used in production -5,500 hours; Idle time -600 hours; time paid for-6,100 hours, total wages paid -Rs.146,400/- . Compute Idle time variance. Correct Answer Rs.13,200/- (Adverse) Multiple Choice Single Answer Question Details of budgeted and actual fixed overheads and output for the year 2004 are as follows : Budgeted fixed overheads -Rs.20,00,000/-; actual fixed overheads -Rs.21,50,000/-; budgeted output - 40,000 units and actual output- 45,000 units. Compute the per unit standard rate for fixed overheads. Correct Answer Rs.50/- Multiple Choice Single Answer Question In considering a special order situation that will enable a company to make use of presently idle capacity, which of the following costs would be irrelevant? Correct Answer Depreciation True/False Question Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of finished goods. Correct Answer True Multiple Choice Multiple Answer Question The management of Dick Ltd. is deciding whether to buy component Y from the supplier, since the purchase cost is less than the manufacturing cost. State the non-financial aspects that must be considered before arriving at a decision. Correct Answer Reliability regarding quality of the material supplied by the supplier , Alternative use of labour of engaged in manufacturing component Y , Regularity of material supplies from the supplier True/False Question In marginal costing, decisions are guided by profit rather than contribution margin. Correct Answer False Multiple Choice Single Answer Question Select the factor which can prove to be a very crucial key factor in case of an oil refinary. Correct Answer Supply of crude oil Multiple Choice Multiple Answer Question The factors to be considered while preparing the direct materials budget are : Correct Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved for specific purposes Select The Blank Question Excess direct labour wages will be disclosed by 'Direct labour________ variance'. Correct Answer Rate True/False Question The difference between sales and margin of safety is equal to budgeted sales. Correct Answer False Select The Blank Question A ________ note is prepared when excess material is returned to stores. Correct Answer Material returned Select The Blank Question The systematic process of identifying and reporting variance is known as ________. Correct Answer Variance analysis Match The Following Question Correct Answer [( Actual sales - Break even sales) ]/ Actual sales Margin of safety as a percentage of actual sales Fixed cost / Contribution margin ratio Break even point Fixed cost - (Sales X Profit volume ratio) Profit (Sales X Profit volume ratio) -Fixed cost Loss True/False Question Marginal costing rewards sales whereas absorption costing rewards production. Correct Answer True Select The Blank Question Dividend received on amount invested in shares is an example of ________. Correct Answer non-operating income Multiple Choice Single Answer Question The store-keeper should initiate action for the purchase of a material, when it reaches its : Correct Answer Re-order level Select The Blank Question Under-recovery of overheads implies that the profit will be________ to the extent of total under-recovered overheads. Correct Answer Increased Multiple Choice Single Answer Question Judge the statement in italics based on the criteria given. On 31st March, 2004 Sita Enterprises sent goods worth Rs.30,000/- on approval basis to Mr.Ram. These goods should be included in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz.Sita Enterprise. Correct Answer The statement and the reason both are correct Multiple Choice Single Answer Question Double entry system of accounting follows the principle of : Correct Answer Every debit has corresponding credit Multiple Choice Single Answer Question Where, in the final statements of accounts, should we disclosed the closing balance of income received in advance? Correct Answer Balance sheet - on the liability side True/False Question Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. Correct Answer True True/False Question In differential cost analysis, decisions are taken by comparing the incremental revenue with differential costs. Correct Answer True True/False Question Due to compensating errors the arithmetical accuracy of the trial balance is affected. Correct Answer False Select The Blank Question A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit completed, this type of labour cost may be classified as ________ cost. Correct Answer Semi-variable Multiple Choice Single Answer Question Following data has been extracted from the records of a manufacturing company whose level of operations varies during different months. Minimum activtity : 30,000 machine hours and manufacturing overeheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads. Correct Answer Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour Multiple Choice Single Answer Question You been informed that the carrying cost and ordering cost with best order size of 1,200 units is Rs.6,000/-. Unit cost of material is Rs.50/-. Annual storage cost per unit is 10% of the unit price of material. Ordering cost is Rs.240/- per order. Ascertain annual material requirement, assuming that at economic order quantity the total storage cost is equal to the total ordering cost. Correct Answer 15,000 units Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Select The Blank Question ________ variance arises when the mix of materials used in the production is different from the predetermined standard mix of operation. Correct Answer Materials mix True/False Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer True Multiple Choice Single Answer Question Over which of the following costs is the management likely to have least control? Correct Answer Buildings insurance cost Select The Blank Question Loss of uninsured goods by fire was debited incorrectly to United India Assurance Company's account instead of debiting it to ________ account. Correct Answer Goods lost by fire Multiple Choice Single Answer Question The given data pertains to the month of April : Budgeted : Fixed overheads Rs.10,000/-; output - 5,000 units; standard time for one unit - 4 hours. Actual : Fixed overheads -Rs.10,200/-; output - 5,200 units and actual hours worked - 20,100 hours. Calculate fixed overhead cost variance. Correct Answer Rs.200/- (Favourable) Multiple Choice Single Answer Question Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his annual salary is Rs.500,000/-, what amount should be charged as office overheads? Correct Answer Rs.300,000/- Multiple Choice Multiple Answer Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Correct Answer Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- , Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- Select The Blank Question Adjustment entries always have ________ effects. Correct Answer Two Multiple Choice Single Answer Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as :- Correct Answer Drawings Select The Blank Question The various contents of a uniform cost manual are organization, cost accounting system and ________. Correct Answer Presentation of information Multiple Choice Multiple Answer Question Which of the following information is included in the goods received note? Correct Answer Date of receipt of material , Quantity received , Description of goods Multiple Choice Single Answer Question In the trial balance prepared on 31st March, 2004, the insurance premium account had a debit balance of Rs.12,865/-. This amount is the premium of the policy which expired on 29th February, 2004. The policy has been renewed from 1st March, 2004 but the premium is not yet paid. Find the amount of insurance premium still payable as on 31st March, 2004. Correct Answer Rs.1,169.55 True/False Question All the properties owned by the business are collectively referred to as the assets of the business. Correct Answer True Multiple Choice Single Answer Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry? Correct Answer Uniform costing True/False Question Primary distribution is effected on the basis of service rendered to the service departments by the production departments. Correct Answer False Select The Blank Question Creche expenses may be appropriately apportioned on the basis of ________. Correct Answer Number of female workers True/False Question Debit Note is an intimation sent to person dealing with the business that his account is being credited for the purpose indicated therein. Correct Answer False Select The Blank Question Factory cost of a product is Rs.335,000/-, if the selling overheads are charged @ 25% of factory cost, then the amount of selling overheads should be Rs.________/- Correct Answer 83750 Multiple Choice Single Answer Question The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumption of X = 10 litres per unit of product. Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Correct Answer Rs.5,000/- (Favourable) Multiple Choice Multiple Answer Question The suspense account has a debit balance of Rs.40,000/-. Select the transactions which are capable of nullifying this balance. Correct Answer Conveyance expenses of Rs.25,000/- were posted on the wrong side of the account. , Purchased computer worth Rs.28,000/- was recorded in the ledger as , The total of the purchase book was cast short by Rs.44,000/- Multiple Choice Multiple Answer Question Items credited to Trading Account are :- Correct Answer Sales , Goods lost by fire , Closing stock Multiple Choice Single Answer Question As on 31st March, 2004, it was decided to write off Rs.800/- of debtors as bad debts. Also, provision for bad and doubtful debts is to be made @ 5% and for discount on debtors @ 4%. Find the net amount of debtors to be disclosed in the balance sheet, if the total debtors before the aforesaid adjustments is Rs.98,623/-. Correct Answer Rs.89,214.58 Select The Blank Question If the time booked as per the job cards is less than the attendance time it indicates ________ during which the worker has not done any work though he was present in the factory. Correct Answer Idle time Multiple Choice Multiple Answer Question The process of accounting has three streams of accounting ---------------,--------and ----------------------. Correct Answer Financial Accounting , Cost Accounting , Management Accounting Multiple Choice Single Answer Question Select the information to be considered before installing a costing system :- Correct Answer Labour intensity of the product Multiple Choice Single Answer Question The opening balance of cash account is Rs. 25,000/-, cash received from debtors Rs. 30,000/-, sold goods on cash basis amounting to Rs. 50,000/-, paid to creditors Rs. 20,000/-, purchase furniture Rs. 5000/-. What is the closing balance of the cash account? Correct Answer Rs. 80,000 Multiple Choice Single Answer Question The installation and operation of ___________ accounting requires a very elaborate organizational structure and large number of rules & regulations Correct Answer Management TO BE ANSWERED: (You can reply to me if you get the answers so that I can update the same) Where break even sales are Rs. 20000,fixed cost is Rs.10000and profit is Rs. 5000 then the margin of safety will be Rs. 10000 1500 15000 2000 Valuation of material uses the following methods FIFO and LIFO Average price method Market price Special price Goods distributed as free samples transfer to debit side of trading A/C . True / False In Citizen Ltd., Division X is a profit centre which produces three products, A, B and C. The details are as follows : External market price per unit:-Product A- Rs.48/-, Product B- Rs.46/-, Product C-Rs.40/-. Maximum external sales(units):-Product A- 800, Product B-500, Product C-300. Variable cost per unit:-Product A- Rs.33/-, Product B- Rs.24/-, Product C-Rs.28/-. A-800 units; B-500 units; C-300 units A-800 units; B-250 units; C-200 units A-400 units; B-500 units; C-300 units A-400 units; B-800 units; C-300 units XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Rs.20,000/- (Adverse) Rs.20,000/- (Favourable) Rs.60,000/- (Adverse) Rs.60,000/- (Favourable A firm is able to break even at 60% capacity with budgeted fixed cost of Rs.300,000/-, budgeted selling price Rs.20/- per unit and budgeted contribution Rs.6/- per unit. The firm can produce and sell at 90% capacity but it is estimated that in that case Rs.88,500/- Rs.75,000/- Rs.82,500/- Rs.72,500/- The annual variable production overheads of a factory are Rs.70,000/-. The production manager anticipates that in the next year, the production efficiency will decrease by 4%. Find out budgeted production overheads for the next year. Rs.72,800/- Rs.78,200/- Rs.72,916.67 Rs.79,216.67 XYZ & Co. is a partnership with X and Z as partners. The capital of X is Rs.58,000/- and that of Z is Rs.75,000/-. Interest on capital is charged @ 12% p.a. and interest on drawings is charged @ 5% p.a. The drawings of X totaled to Rs.15,000/- and that of Z totaled to Rs.12,000/-. The profit for the year after considering interest on capital and drawings is Rs.125,000/- and the profits are shared in the ratio of their capitals, i.e. 58 : 75. Find the balance of capital accounts after giving X - Rs.118,721.28 and Z -Rs.153,888.72 X - Rs.120,221.28 And Z - Rs.155,088.72 X - Rs.119,471.28 And Z - Rs.154,488.72 X - Rs.135,448.28 And Z - Rs.138,511.72 Factory rent is a direct cost to the factory as a whole but indirect to the production departments. True / False The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract should be defined as : Direct labour cost Indirect labour cost Fixed labour cost Non-controllable labour cost The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumptiion of X = 10 litres per unti of product.Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Rs.1,000/- (Favourable) Rs.4,000/- (Adverse) Rs.5,000/- (Favourable) Rs.3,000/- (Adverse) The following particulars are extracted from the books of a company relating to commodity "A" for the half year ending 30th June, 2004. (a) Purchase of raw materials - Rs.1,32,000/- (b) Direct wages - Rs.1,10,000/- (c) Rent, rates and insurance - Rs.44,000/- (d) Carriage inwards - Rs.1,584/- (e) Raw material as on 1st Jan, 2004 - Rs.22,000/- (f) Finished goods as on 1st Jan, 2004 - Rs.17,000/- (1600 tonnes) (g) Raw Material as on 30th June, 2004 - Rs.24,464/- (h) Finished goods as on 30th June, Rs.64,800/- Rs.46,800/- Rs.86,400/- Rs.68,400/- Annual maintenance of Rs.28,000/- was paid on 15th June, 2003 for a period of one year therefrom. Find the amount of prepaid maitenance expenditure for the year ended 31st March. Rs.28,000/- Rs.22,167/- Rs.7,000/- Rs.5,833/ The Balance Sheet method of cash budget ignores any excess or shortage of cash during the budget period. True / False Compound journal entry avoids duplication of effort. True / False Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of India. On 31st January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-; Current accountRs.2,250/- (overdraft). It is found that a deposit of Rs.1,500/- made into the savings account on 20th January, 2004 has been entered in the ledger in the of Current account. Find the correct ledger balances of savings and current accounts. Savings account-Rs.5,000/-, current account-Rs.3,750/- (overdraft Savings account-Rs.5,000/-, current account-Rs.2,250/- (overdraft) Savings account-Rs.6,500/-, current account-Rs.2,250/- (overdraft) Savings account-Rs.6,500/-, current account-Rs.3,750/- (overdraft) Which of the following source documetns in a cost accounting system is designed to exercise control voer the delivery of and accurate recording of the receipts of goods? Goods received note Order to the supplier Material requisition note Purchase requisition slip Select the cases where convention of conservation is applied : Closing stock is valued at cost or market price whichever is lower Providing for discount on debtors Amorisation of goodwill (goodwill being written off to Profit and Loss Account) Providing for discount on creditors M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-, Rs.80/- and Rs.50/-, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantitywise proportion in which these products are manufactured and sold are 20%, 30% and 50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to work out the overall break even point qunatity for 30,000 units 90,000 units 40,000 units 80,000 units A firm is earning a profit of Rs.60,000/- at the present sales level of Rs.500,000/-. It has a profit volume ration of 60%, which remains unchanged. Fixed cost increases by 25% as soon as sales become twice the break even point. Find the profit for sal Rs.240,000/- Rs.180,000/- Rs.120,000/- Rs.200,000/- At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What will the 401st unit sold contribute to profit? Re.0 Re.0.50 Re.1.00 Rs.1.50 1. Advantage of budgetary control system 1. Motivates the managers to exceed the budgeted targets 2. Fixed budget 2. Managerial tool which decreases effectiveness of managerial control 3. Disadvantage of budgetary control system 3. More elastic and practical 4. Flexible budget 4. Difficult to implement in fast changing industrial scenario 5. Restricts the efforts of the managers to the budgeted targets 6. Managerial tool which increases effectiveness of managerial control With the help of the given information, find actual fixed overheads for actual output. Fixed overheads volume variance -Rs.75,000/- (Favourable); fixed overheads efficiency variance -Rs.95,000/- (Favourable); fixed overheads calendar variance Rs.20,000/- (Adverse); fixed voerheads expenditure variance Rs.100,000/- (Adverse) and standard fixed overheads for actual output -Rs.575,000/-. Rs.600,000/- Rs.550,000/- Rs.525,000/- Rs.625,000/- Existing sales are Rs.100,000/- (500 units), variable costs are Rs.60,000/-, fixed costs are Rs.24,000/-. If selling price is reduced by 10% which of the following is the breakeven sales quantity? 450 units 500 units 400 units 334 units An operator engaged in machining certain components receives andordinary day rate of Rs.160/- per day of 8 hours. The standard output for machining the components has been fixed at 80 pieces per hour (time fixed for premium bonus). On a certain day, the output of the worker on this machine is 800 pieces. Find the labour cost per 100 pieces if a bonus of Rs.25/- is paid per 100 pieces of the extra output. Rs.25/- Rs.20/- Rs.15/- Rs.10/- Under the accelerating premium system incentive increases at a fast rate with the decrease in output. True /False A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of copper. Rs.200,000/- Rs.150,000/- Rs.350,000/- Rs.180,000/- Sold goods to Amitabh worth Rs. 15,000/- against 15% trade discount. In this case with what amount should the sales account be credited? Rs. 15,000 Rs. 12,750 Rs. 13,500 Rs. 13,750 Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance. Material cost variance -Rs.400/- (Adverse) Material usage variance -Rs.750/- Material usage variance is favourable Material usage variance is adverse Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the date of payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss account as expenditure on account of insurance premium? Rs.18,000/- Rs.14,250/- Rs.10,500/- Rs.3,750/- The standard cost of actual hours when any employee remains idle due to abnormal circumstances is known as Standard labour cost / Idle time variance / Labour cost variance / Standard cost. Keeping company's liquid position sufficiently sound to meet its daily obligation is the main object of preparing Cash Sales / Income / Expenditure / budget. One of the major drawback of the contribution approach to costing is that it ignores fixed cost. True / False Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account will be disclosed in the … Profit and Loss Account - credit side Balance Sheet - liability side Balance Sheet - asset side Trading Account - debit side A withdrawal of Rs.500/- from Mr.Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr.Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr.Johny, find out the balance as per his bank book. Rs.1,750/- (overdraft) Rs.1,750/- (debit) Rs.2,250/- (overdraft) Rs.2,250/- (debit) What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges on the lathe machine were debited to Carriage inward account, Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous expenses account, Rs.200/- Cost will increase by Rs.900/- Cost will increase by Rs.1,300/- Cost will decrease by Rs.1,300/- Cost will decrease by Rs.900/- From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments :X- Rs.48,000; Y-Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B-Rs.18,000. The expenses of the service departments are apportioned as follows : Service department A - Production department X-20%; Production department Y - 40%; Production department Z- 30%; Service department B - 10%.Service department B- Production department X-40%; Production department Y - 20%; production department Z- 20%; Service department A - 20%. Details of machine hours are as follows: Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-1,000 hours. X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 From the given information compute the total cost variance. Material cost variance -Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/- (adverse). Rs.32,850/- (Adverse) Rs.32,850/- (Favourable) Rs.24,050/- (Adverse) Rs.24,050/- (Favourable) Judge the given statement according to the given criteria :- 'Provision for doubtful debts account' and 'provision for discount on debtors account' mean same account can be maintained under two account-heads, since both are related to debtors and indicate a loss to the organization. The statement and the reason both are correct The statement and the reason both are incorrect The statement is correct but the reason is incorrect The statement is incorrect but the reason is correct 1. Ordering cost 1. Cost of holding the inventory 2. Carrying cost 2. Cost of issuing the inventory 3. Material cost 3. Cost of administrative efforts 4. Cost of material consumed 4. Can be obtained subtracting opening stock from the sum of material cost and closing stock 5. Can be obtained subtracting closing stock from the sum of material cost and opening stock 6. Sum of possession cost, ordering cost and purchase cost The pass book showed a credit balance of Rs.1,000/-. This balance was after considering the dividend of Rs.25/- collected by bank and Rs.5/- charged as collection expenses: these entries are not made in the bank book. Find the balance as per bank book. Rs.1,000/- Rs.1,030/- Rs.1,020/- Rs.980/- Compute fixed overheads calendar variance when fixed overhead volume variance is Rs.250/- (Favourable); fixed overheads efficiency variance is Rs.2,150/- (Adverse) and fixed overheads capacity variance is Rs.800/-(Favourable). Rs.1,100/- (Adverse) Rs.1,100/- (Favourable) Rs.1,600/- (Adverse) Rs.1,600/- (Favourable) Routing the purchase requisition through the purchase department entails unnecessary delay in receiving the required materials. True /False Large angle of incidence indicates Lower /Adjusted /Higher /Same amount of profits. The method of overhead apportionment which considers both the material cost as well as the labour cost, is known as Supplementary rate /Prime cost percentage rate /Direct labour hour rate /Machine hour rate method. Standard labour cost of producing 500 metre of cloth has been specified as 20 hours work by skilled workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per hour. For producing 500 metre cloth they worked for 30 hours each they were paid at the rate of Rs.17/- per hour and Rs.10/- per hour, respectively. Calculate labour mix variance. Rs.210/- (Adverse) Rs.60/- (Adverse) Rs.150/- (Adverse) Rs.30/- (Adverse) In a factory Ram and Shyam produce the same product using the same input of same material and at the same normal wage rate. Bonus is paid to both of them in the form of normal time wage rate adjusted by the proportion which time save bears to the standard time for the completion of the product. The time allotted to the product is fifty hours. Ram takes thirty hours and Shyam takes forty hours to produce the product. The factory cost of the product for Ram is Rs.3,100/- and for Shyam is Rs.3,280/-. The factory overhead rate is Rs.12/- per hour. Calculate the cost of material used for the product, for each worker, Ram and Shyam. Rs.3,000/- Rs.2,000/- Rs.3,320/- Rs.2,320/- Provision for discount on debtors account should be credited to the Profit and Loss Account. True /False Consideration to the fact that the repairs and maintenance cost is less in the initial years of life of the asset and hence needs to be counterbalanced by higher amount of depreciation in the :- Straight line method Written down value method Endowment policy method Sinking fund method The following data is available for a company for the month of April, 2004 : Territory I : selling expenses Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold -16,000; sales Rs.76,000/-. Territory II : selling expenses Rs.4,200/-; distribution cost Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory III : selling expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales Rs.52,000/-. The company adopts sales basis and quantity basis for application of selling and distribution costs respectively. Compute the amount of selling and distribution costs chargeable to a consignment of 4,000 units of a product sold in each territory at Rs.2.50 per unit. Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/- Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/- Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- SRR Ltd. producing a single product, sells it at Rs.50/- per unit. Unit variable cost is Rs.35/- and fixed costs amounts to Rs.12,00,000/- per annum. Calculate the increase in sales required if profits are to be increased by Rs.2.4 lakhs Rs.880,000/- Rs.800,000/- Rs.600,000/- Rs.660,000/- Re-order level should be higher than Monthly requirement /Average stock level /Annual requirement /Minimum level but lesser than maximum stock level. What is the balance of the cash account after considering the relevant transactions from the following set : 4th July, 2004-Sold goods to Deshmukh & Co. for Rs.2,500/-; 5th July, 2004-Received Rs.5,000/- for rent of June, 04; 7th July, 2004-Paid salaries by cheque for Rs.8,000/-; 15th July, 2004-Received commission, in cash, from XYZ Ltd., Rs.3,000/-; 21st July, 2004-Paid salaries by cash Rs.2,500/-; 22nd July, 2004-Deposited cash into Bank of India Rs.3,000/-; 25th July, 2004-Purchased furniture from Shantilal for Rs.10,000/-. Shantilal has given a credit period of 45 days; 26th July, 2004-Paid cash for purchase of machine from Elpro Ltd. For Rs.30,000/-; 28th July, 2004-Paid ready cash for advertisement inserted in newspaper, Rs.200/-; 28th July, 2004-Withdrawn cash from Bank of India Rs.50,000/-. Rs.22,300 (debit) Rs.22,300 (credit) Rs.33,200 (debit) Rs.33,200 (credit) Factory cost is Rs.13,10,800/-. The administrative overheads are salaries Rs.40,000/-, rent and rates Rs.6,400/-, traveling expenses Rs.12,400/-, Depreciation Rs,2,400/-, Directors fees Rs.24,000/-, General Charges Rs.24,800/-, Manager's salary Rs.38,400/-. What will be the office cost? Rs.14,59,200/- Rs.11,72,200/- Rs.13,10,800/- Rs.15,10,800/- XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Rs.20,000/- (Adverse) Rs.20,000/- (Favourable) Rs.60,000/- (Adverse) Rs.60,000/- (Favourable) The concept of marginal costing is based on the important distinction between product costs and Indirect /Direct /Variable /Period costs. Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is Rs.180/- per unit. Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company has a proposal that the sales staff may be paid a commission of 10% of sales instead of fixed salaries totaling Rs.80,000/-. This action is expected to increase the sales by 10%. Compute the amount of profit assuming the proposal is accepted? Rs.177,000/- Rs.200,000/- Rs.178,000/- Rs.277,000/- A company has a normal capacity of 120 machines, working 8 hours per day of 25 days in a month. The fixed overheads are budgeted at Rs.144,000/- per month. The standard time required to manufacture one unit of product is 4 hours. In April, 2004, the company worked 24 days of 840 machine hours per day and produced 5,305 units of output. The actual fixed overheads were Rs.142,000/-. Compute calendar variance. Rs.6,360/- (Favourable) Rs.17,280/- (Adverse) Rs.5,760/- (Adverse) Rs.16,680/- (Adverse) Industries which have high fixed cost burden but low variable cost have Narrow /Smaller /Larger /Flat angle of incidence. Special aspects of co-partnership include:- Workers are granted ownership rights Indirect monetary remuneration The morale of the workers is increased The workers are rewarded for individual efficiency The credit purchases are as follows : July Rs.80,000/- and August Rs.140,000/-. Creditors are paid either on a 'prompt basis' (on the spot) or 30 days basis. It is estimated that 10% of the creditors are in the prompt category. Find the amount paid :- Rs.161,000/- Rs.121,000/- Rs.177,000/- Rs.118,000/- The use of contribution per unit of limiting factor as the basis for ranking products to be produced and sold is aimed at which of the following? Maximization of turnover Minimization of turnover Maximization of short-term profit Maximization of long-term profit Obsolescence arises when a machine has to be discarded in favour of one better adopted to its purpose and giving better result. True /False A manufacturing unit produces electronic circuits at the rate of 6 pieces an hour. The unit works in single shift of 8 hours during a six-day week and remains close for 18 days a year on account of holidays. Average idle hours per month is 20 for cleaning and maintenance of equipments. Against an average annual output of 12,000 pieces during last ten years, the actual output achieved during the year was 10,800 pieces. The fixed overheads for the year amounted to Rs.540,000/-. You are required to calculate the idle capacity costs on the assumption that overhead recovery rate is based on maximum capacity. Rs.207,121.60 Rs.200,000/- Rs.193,121.60 Rs.187,000/- Select The Blank Question The costs incurred for recruitment and training of new workers and the resulting losses wastages and reduced productivity due to the inefficiency and inexperience of new workers is referred to as the _______. Correct Answer Replacement costs Question The ideal standards are generally ________ in nature and the variances always shows _______ trends Correct Answer theoretical Correct Answer unfavorable Question In process of establishing the standards, the following steps are involved Correct Answer Study of technical details , Study of existing costing system , Decision about types of standards to be used. Question The cost that tends to remain constant irrespective of the level of activity is called Correct Answer fixed cost Question A business is an activity carried out with the intention of earning the profit. Correct Answer True Question Cost Accounting restrict itself with historical transactions Correct Answer False Question These are the methods of measuring labour turnover. Correct Answer Replacement Method , Separation Method , Flux Method Question Valuation of returns indicates the material returned by store department to production department Correct Answer False Question In case of industries where capital investment is very high, budget should be prepared for a Correct Answer Longer period Question ________ and ________ are examples of semi- variable overheads. Correct Answer Maintenance cost Correct Answer electricity Question Balance sheet indicates the financial status of the business at given period. Correct Answer True Question __________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities like investors, suppliers, customers etc. Correct Answer Financial Question Purchased computers of Rs. 50,000 come under the heading of fixed asset Correct Answer True Question In Cash budget , Non operating cash inflow includes Correct Answer Receipt of loan/borrowings , Issue of shares , Sale of fixed assets Question Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 5000. The total amount transfer to advertisement account is Rs.____ Correct Answer 15,000 Question Convention of Materiality __________________ Correct Answer Only those transactions will be considered which have material impact on profitability , Insignificant transaction will be ignored , The cost of non-used should not be considered as the item of cost Question Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed cost is Rs. 18,02000. Find out the BEP in units, Correct Answer 53000 Question The opening balance of cash account is Rs. 25,000, cash received from debtors Rs. 30,000, sold goods amounted to Rs. 50,000, paid to creditors Rs. 20,000, purchase furniture Rs. 5000. What is the clos Correct Answer 80,000 Question It is the cost of opportunity foregone. Correct Answer Opportunity Cost Question Under Gannt Task bonus system where the output is ________ payment is made as per minimum time rate, output is ________ payment is made as per time wages plus some increase in wage rates Correct Answer below standard Correct Answer at standard Question Standard costing may not be useful for forecasting purposes Correct Answer True Question Factory overheads, administration overheads , selling and ________ overheads are the form of ________ classification of overheads Correct Answer distribution Correct Answer function wise Question Amit sold Goods to Atul for Rs. 50,000 on cash & Rs. 50,000 on credit basis & allowed 10% discount on on the spot transaction. Cash Account debited to Rs. _____________ Correct Answer 45,000 Question A key factor is defined as the factor which, at a particular point of time or over a period will ________ the volume of ________ Correct Answer limit Correct Answer output Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Question Fixed cost is the cost that tend to remain ________ irrespective of ________ Correct Answer constant Correct Answer level of activity Question The bank pass book or the bank statement is the extract of the account in the name of the business as it appears in the books the business. Correct Answer False Question Sales Budget is a forecast expressed in ________ and ________ terms. Correct Answer quantity Correct Answer Money Question Due to compensating errors the arithmetical accuracy of the trial balance get affected. Correct Answer False Question The process of ________ can followed to decide the ________ of overheads to each budget center Correct Answer Allocation & apportionment Correct Answer Loading Question LAST IN FIRST OUT (LIFO) Correct Answer The price of the latest available lot is considered first , If that lot is exhausted, the price of the 10% prior to that is considered , Physical issue of the material may not be made out of the said lot Question Standard Costs are used as tool for Correct Answer Cost Control Question Variable costs are the controllable costs at the ________ level of the management whereas fixed costs can be controlled only on the ________ level of the management Correct Answer Lower Correct Answer Top Question Along with financial accounting, ________ and ________ are the other streams of accounting Correct Answer Cost Accounting Correct Answer Management Accounting Question Bin Card Includes Correct Answer Entries in receipt column on basis of goods received note or material returned note , Entries in issue column on basis of material requisition note , The balance quantity is calculated and recorded Question classification of the overheads as fixed and variable ,facilitates the preparation of flexible budgets. Correct Answer True Question Under Merrick Differential Piece rate System of wage payment up to 83% of efficiency following rate is offered. Correct Answer Normal Question The following factors affects the budgeted advertisement cost Correct Answer Percentage of profits , Availability of funds , Competitors policy Question A bank reconciliation statement is prepared on a particular date. Correct Answer True Question Profit & Loss Account shows Gross Profit 13,000. Expenses incurred as Telephone charges 1500, Traveling expenses 3000, Salary paid 2000, discount allowed 500, depreciation 200. Calculate the net profi Correct Answer 5800 Question Balance sheet liability side includes Correct Answer Loan & advances , Outstanding expenses , Creditors Question ________ and ________ are non monetary incentives Correct Answer Safety services Correct Answer education facility Question Accounting period Concept________________ Correct Answer Longer life-span on business is divided into shorter segments , Each one being in the form of accounting period , Selection of accounting period may depend on various factors Question Bank reconciliation statement is the statement prepared to explain the reasons as to why the bank balance as per pass book and bank balance as per bank book does not match. Correct Answer True Question These are the replacement costs of labour turnover. Correct Answer cost of personnel administration , cost of selection and placement , increased spoilage and defectives Question These are the replacement costs of labour turnover. Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased spoilage and defectives Question Depreciation Correct Answer Amount charged on Fixed Assets. Question The sales day book of October 1991 was overcast by Rs. 10,000, which A/C to be debited. Correct Answer Sales A/C Question The cost accountancy is defined as “ the application of costing principles,methods and techniques to the ________, art and practice of ________ ascertainment of the profitability and the presenta Correct Answer science Correct Answer cost control Question A Co. having net sales Rs. 7,50,000, opening stock 1,14,375, purchases, 483,375 closing stock 1,47,750. Calculate the Gross Profit Correct Answer 3,00,000 Question Standard Costing system facilitates ________ and ________ for each individual or department Correct Answer Delegation of authority Correct Answer Fixation of responsibility Question Creditor Correct Answer Supplier Question The overhead is aggregate of Correct Answer Indirect labour cost , Indirect material cost , Indirect Expenses Question The wage payment system should take into consideration the external obligations such as the Minimum wages Act and the agreement entered into by the organization with the workers. Correct Answer True Question Bank Reconciliation statement is required in case of Correct Answer difference between the bank balance as per the bank book and as per pass book Question Trial balance is drawn on a particular date Correct Answer True Question Tallying of trial balance is conclusive evidence of the total accuracy of the books of account. Correct Answer False Question A very wide scope of Management Accounting is the limitation by itself. Correct Answer True Question Sundry creditors transfer to asset side. Correct Answer False Question ___________ Accounting is the process of classifying and recording of the expenditure in a systematic manner with the intention of ascertaining the cost of cost centre with the intention of controllin Correct Answer Cost Question This is one of the avoidable cause of labour turnover. Correct Answer Relationship with supervisors and workers Question Non-Operating / Financial Incomes are deducted from operating profit while calculating Net profit. Correct Answer False Question Semi ________ overheads are neither ________ nor variable in nature. Correct Answer fixed Correct Answer variable Question Standard Costing specifically relates to the function of Correct Answer Production Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Question Credit note is an intimation send to person dealing with the business that his account being debited for the purpose indicated therein. Correct Answer False Question Debtors Correct Answer Who owes money to the business Question Fixed assets do not give the returns during the same period during which they are paid for Correct Answer True Question These are the special type of cost Correct Answer Opportunity cost , Differential cost , Sunk cost Question Discount received from the Creditors has been entered in the Creditors A/C but discount amount has not been credited, for rectifying such error which account to be debited. Correct Answer Suspense A/C Question Under this method of time keeping , each worker is allotted an identification number and a disc or token bearing that number. Correct Answer Token or Disc Method Question Under marginal costing semi variable costs are also classified in their individual components of fixed cost and variable cost. Correct Answer True Question Labour Rate Variance occurs due to Correct Answer Change in wage structure , Use of different methods of payment , Wage difference Question Break even point is a situation of no ________ no ________ Correct Answer profit Correct Answer loss Question It is an appropriate basis of apportionment of depreciation expenditure Correct Answer value of assets Question Wage rate standards takes into consideration the following factors Correct Answer The system of wage payments , System for bonus payment , Grades of workers required Question Replacement costs refer to all costs incurred for recruitment and training of new workers. Correct Answer True Question While selecting source of supply ________ epartment may call for the ________ from the prospective suppliers Correct Answer purchase Correct Answer quotation Question P/L A/C debit side includes Correct Answer salary , discount allowed , postage & telegram Question Ifidle time payment is abnormal , it should be classified as overheads. Correct Answer False Question Bank reconciliation statement is the statement prepared to explain the ________ as to why the bank balance as per ________ and bank balance as per bank book does not match Correct Answer reasons Correct Answer pass book Question Accounting to the matching principles of accounting, the ________ incurred during an accounting period are required to be match with ________ during that period Correct Answer cost Correct Answer revenues Question Expenditure like general lighting are apportioned considering ________ as a base and expenditure like depreciation are apportioned considering ________ as a base. Correct Answer number of light points Correct Answer value of assets Question Planning lays down the course of action to be taken in future. In case budgetary control, it is in the form of the ________ and in case of ________ costing, it is in the form of the standard cost Correct Answer standard Correct Answer budgets Question Following are various forms of limiting factor Correct Answer market , labour , machine availability Question These are normal bases for primary apportionment of overheads. Correct Answer value of assets , HP/KWh , number of light points Question Due to errors of principle the arithmetical accuracy of the trial balance does not get affected. Correct Answer True Question The situation of over absorption arises if the overheads absorbed are less than the actual overheads. Correct Answer False Question Depreciation can be defined as a permanent , continuous and gradual reduction in the book value of a fixed assets. Correct Answer True Question Balance sheet asset side includes Correct Answer Furniture , Vehicle , Land & building Question In case of the under or over absorption of the overheads arising out of the normal circumstances , they are written off to costing profit and loss account. Correct Answer False Question Due to errors of principle the arithmetical accuracy of the trial balance get affected. Correct Answer False Question Trading a/c credit side includes Correct Answer sales , goods lost by fire , closing stock Question variable cost is the cost that tend to ________ in direct proportion with ________ Correct Answer vary Correct Answer level of activity Question Preliminaries for establishing Standard costing system includes Correct Answer Establishment of cost centers , Design of accounts , Establishment of standards Question Bank of Maharashtra A/C is a personal A/C Correct Answer True Question Adverse labour time variance may be due to Correct Answer Poor grade of labour , Defective plant & machinery , Poor quality of material Question This is the best example of element wise classification of cost. Correct Answer material Question Highest in first out Correct Answer This method assumes that the stock should always be shown at the minimum value Question Standard price creates complications in accounting system and increase clerical work. Correct Answer False Question Limitations of Management Accounting includes------------------- Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure Question Trade Discount Correct Answer Amount received on purchases Question In a Balance-Sheet right hand side is a Asset side & left hand side is liability side Correct Answer True Question The stages of cost control involves Correct Answer To plan the operation , Execute the plan & measuring the actual performance , Computing the variations between planned & actual performance Question __________ Accounting becomes a source of information for Management Accounting. Correct Answer Financial Question The levels indicated on the Bin card enables the ________ department to keep a watch on the balance and replace the material as soon as it reached at ________ level. Correct Answer Stores Correct Answer Re-order level Question Under Merrick Differential Piece rate System of wage payment above 100 % of efficiency following rate is offered. Correct Answer 130% of normal piece rate Question This is an example of semi variable overheads. Correct Answer electricity Question Following error affect the trial balance Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Question A Budget center may be in the form of Correct Answer A product , A department , A branch of the company Question Under absorption of overheads may take place due to the reasons like ________ overheads being more than the ________ overheads Correct Answer actual Correct Answer estimated Question If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount Correct Answer depreciation Correct Answer overstated Question Preventive costs of labour turnover refers to all the costs which may be incurred by the organisation to keep workers happy and ________ them from ________ the job Correct Answer discourage Correct Answer leaving Question Replacement costs of labour turnover are ________ and ________ Correct Answer training Correct Answer breakages of machine Question When the balance in the ledger account of the previous year are entered the current year’s books, the balances are said to be bought forward. Correct Answer True Question Sales at 1,00,000 units are Rs. 1,00,000 , variable costs Rs. 40,000 and fixed cots is Rs.50,000. What is Break even point ? Correct Answer Rs. 83,333 Question The material physically received is compared with material ordered as per the this order Correct Answer Purchase order Question Interest Received amounted to Rs. 10,000/- is to be transfer to ___ Correct Answer Profit & Loss A/C credit side Rs. 10,000 Question Under the daily ________ sheets method, each worker is provided with a daily time sheet on which time ________ by him on various jobs is expected to be mentioned Correct Answer Time Correct Answer Spent Question Material Price Variance may occur due to Correct Answer Change in price of material , Failure to take discounts , Weak purchase organization Question Selling and distribution overheads includes Correct Answer Indirect Material such as packing material, samples etc., , Indirect labour like salaries to sales personnel manager , Indirect expenses like warehouse charges, advertisement Question Idle time is the time required to complete particular job. Correct Answer False Question All items which do not involve cash flow will be considered for while preparing Cash Budget. Correct Answer False Question The quantitative record of receipts, issues and closing balance of an item of material is called Bin-Card. Correct Answer True Question The amount of money that is paid for is classified as ________ and ________ for the purpose of accounting Correct Answer Capital Expenditure Correct Answer Revenue Expenditure Question The material physically received compared with material order as per the purchase order may reveal the following forms of discrepancies Correct Answer Quantity received in excess , Quantity received in short , Quantity received of different quality Question Book keeping is clerical while accounting is managerial Correct Answer True Question ________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account Correct Answer Like office rent, Correct Answer Audit fees Question Cash received from credit sales, Cash account to be credited. Correct Answer False Question The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost? Correct Answer 37,86,000 Question Cost Accountancy is a science, art and practice of a cost Accountant. Correct Answer Science indicates the possession and the application of relevant systematic knowledge. , Art indicates the skill and ability. , Practice indicates continuous effects on the part of cost accountant. Question Under stocking may have following consequences Correct Answer Payment for idle time to workers , Production hold ups resulting into disturbed delivery schedule , Eleventh hour purchase Question Per unit cost of variable overheads may reduce as the volume of output increases but the total overheads remain constant. Correct Answer False Question A properly laid down system of Standard Costing helps in implementation of Correct Answer Budgetary Control Question Store ledger Correct Answer Record of all receipts and issue transactions , Financial expressions of all transactions , Maintenance of Store ledges provides a second check Question It is necessary to ignore key factors while taking decision by marginal costing technique. Correct Answer False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Question Financial statements are basically in two forms i.e. profitability statement and balance sheet. Correct Answer True Question Financial Accounting discloses the financial performance & financial statements of the business as a whole. Correct Answer True Question Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting Correct Answer True Question According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of cost of asset after deduction of the depreciation previously charged. Correct Answer True Question Discount received from the creditor has been entered in the creditor's account but discount has not been credited; what type of error is this ________ Correct Answer Omission of posting an amount in the ledger Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________ Correct Answer decrease in gross profit by Rs.2,020/- Question The variable costs are controllable at the lower lever. Correct Answer True Question A person in charge of a ________ may be held responsible for its proper functioning and cost control. Correct Answer Cost centre Question The cost that indicates historical cost, which is incurred in past, is known as Correct Answer Sunk cost Question The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from a ascertain the cost, is known as . . . Correct Answer Cost accounting Question Which of the following transactions should be excluded while preparing a cost sheet ? Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit Question Examples of indirect material are Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes Question The process of attributing proportions of items of costs amongst const centres is called ________. Correct Answer Cost apportionment Question Contents of Uniform Cost Manual are Correct Answer Organization , Cost Accounting system , Presentation of information Question It is said that adoption of uniform costing creates customer confidence because . . . Correct Answer Prices are reliable Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries. Correct Answer False Question The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions. Correct Answer Control Question Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be the amount of debtors that must be disclosed in the balance sheet? Correct Answer Rs.53,750/- Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed. The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the year ending 31st March, 2004. Correct Answer The net profit will decrease by Rs.18,000/- Question Annual sales were Rs.10,50,000/- and sales returned by customers amounted to Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount of incentive due to the salesmen. Correct Answer Rs.30,660/- Question Depreciation on assets is credited to the trading account. Correct Answer False Question Balance sheet is considered to be a part of the financial statements. Correct Answer True Question Long term loan borrowed from financial institution comes under the heading of long term liabilities. Correct Answer True Question The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank pass book balance as on the same date was Rs.8,015/-. Select the transactions representing the reasons for this difference. Correct Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/- , Bank interest not entered in the bank book Rs.90/- Question Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the bank book. Correct Answer Credited Question A materials requisition form normally contains the following aspects: Correct Answer Quantity requisitioned , Per unit material cost , Job number Question A complete list of all material required, with quantities, for a particular job is given in the ________. Correct Answer Bill of material Question A producer is using certain tool item in productive process. Annual requirement is 20,000 units of the tool. Cost of ordering a lot is Rs.160/-. Per unit price of the tool is Rs.360/-. Annual interest cost is 10%, insurance cost is 0.5% of the average inventory in stores, and other storage expenses are Rs.2.20 per unit. Calculate annual ordering cost. Correct Answer Rs.8,000/- Question A written request sent to a supplier for specified goods at an agreed upon price is often called as : Correct Answer Purchase order Question Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product. Correct Answer True Question The perpetual inventory system enables management to ascertain stock without physical verification. Correct Answer True Question The main advantages of profit sharing are : Correct Answer Employees try to increase productivity , Incentives are shared by all the employees , Augments emplyees' efficiency Question It is the ________ method of measuring labour turnover which is a combination of separation method and replacement method. Correct Answer Flux Question Measurement of ________ gives an idea of the degree of mobility of labour. Correct Answer Labour turnover Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Question Merits of break even point analysis are as follows: Correct Answer Useful diagnostic tool. , Used for analysing the risk implication of alternative actions. , Used to graphically represent complicated data. Question Annual fixed cost of a producer is Rs.500,000/-. The price of its product is Rs.60/- and per unit variable cost is Rs.40. In the next year his fixed cost commitments are expected to go up by 20%. By what percentage the break even point will go up in the next year. Correct Answer 0.2 Question A firm earns profit when contribution is equal to fixed costs under variable costing. Correct Answer False Question Labour efficiency variance arises due to: Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material Question Actual costs determined on the basis of costing records maintained have following limitations : Correct Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Question A standard that is never altered, after being established, is known as ________ standard. Correct Answer Ideal Question Standard costs are used for external reporting. Correct Answer False Match The Following Question Correct Answer Book-Keeping Books of Accounts Financial statement Profitability statement & Balance-sheet Accounting Process of analyzing & interpretation Profitability statement Indicates the amount of profit earned Balance-sheet Financial status Match The Following Question Correct Answer Quality control dept control the quality of the product Time booking dept jobwise booking of time Personnel department Selection & training to workers Time Keeping Department Recording of workers time Cost accounting dept Accumulation & classification of cost data Match The Following Question Correct Answer Lighting Number of light points Rent Area Power Hp/KW Depreciation Value of assets canteen expenses number of workers Match The Following Question Correct Answer Goodwill Real A/c Nominal Account Wages A/C Capital A/C Personal A/C Building A/C Real A/C Salary A/C Nominal A/C Match The Following Question Correct Answer Owner Businessman Banker Financial Institution Debtors Credit Transaction Creditors Receive the money Suppliers Sale the Goods Match The Following Question Correct Answer Spirit of mutual trust Requisite for uniform costing Avoids cut throat competition Advantage of uniform costing Treatment given to research and development costs Fields covered by uniform costing Advantageously applicable in similar industries Scope of uniform costing Match The Following Question Correct Answer Deferred revenue expenditure Real account Deferred revenue expenditure written off Nominal account Loan Personal account Drawings Proprietor's account Question Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an example of_______ Correct Answer Error of Commission Question Labour cost indicates that labour cost which cannot be identified with the individual cost centre and is incurred for those employees who are not engaged in the manufacturing process but only assist i Correct Answer Remuneration Question To take make or buy decision under the marginal costing , if purchase price of the product is less than its variable cost it is advisable to go for manufacturing proposition. Correct Answer False Question Income received in advance transfer to current liabilities Correct Answer True Question If wages for the month of January, February and March are Rs.4,000, Rs.4,400 and Rs.4,600 respectively and if delay in payment of wages is ½ month , payment of wages for the month of February is Correct Answer 4,200 Question Management Accounting has a very ________ scope and it requires ________ organizational structure Correct Answer wide Correct Answer elaborate Question For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is 5,000 units and consumption is 3,20,000 units, what will be the quantum of raw material to be purchased Correct Answer 3,15,000 Question Important advantages of Uniform Costing can be said to be Correct Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units can take advantage of settled systems of better managed units Question Actual costs may be affected due to inefficient functioning such as Correct Answer Abnormal expenses , In efficient use of labour , In efficient use of material Question Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500. Correct Answer Rs.4500/- ( Favorable ) Question Sales quantity may be forecasted after taking into consideration various factors such as Correct Answer Analysis of past trends , Market research , Reports by salesmen Question For taking make or buy decision marginal costing technique provide useful assistance. Correct Answer True Question The variable costs are controllable at the lower level. Correct Answer True Match The Following Question Correct Answer Journal Book of original entry Ledger Maintain all types of Accounts Assets All the properties owned by the business Liabilities All the amount owed by the business Drawing Withdrawn for personal use Question A budget manual is a document setting out the ________ of the persons and ________ required for the budget control. Correct Answer Responsibilities Correct Answer Forms and procedures Question Credit balances in all the Personal & Real accounts appear on asset side. Correct Answer False Question Omission of posting an amount in the ledger Correct Answer Error of Omission Question Non-operating / financial expenses are added while calculating net profit. Correct Answer False Question A Budget Manual may contain the following particulars Correct Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer , Scope of the Budget and area to be covered Question Direct Cost includes Correct Answer Direct material , Direct labour , Direct expenses Question Financial Accounting protects the interest of outsiders . it considers ________ transaction and it is a ________ requirement Correct Answer historical Correct Answer legal Question Bin Card is having all the information of item received and issued. Correct Answer False Question Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of management Correct Answer Cost control Correct Answer Maximization of profits Question The material Requisition note contains Correct Answer Number and date , Department demanding the material , Signature of the authority approving the demand Question Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________ level of the management Correct Answer uncontrollable Correct Answer lower Question Budget is prepared for a fixed period of time. Correct Answer True Question Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account ___________ Correct Answer 12750 Question This is not the non monetary incentive. Correct Answer Co-partnership Question P&L statement which is a period statement & relates to a certain period tells about results of operations. Correct Answer True Question Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Correct Answer False Question Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Correct Answer False Question Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Correct Answer True Question Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. Correct Answer True Match The Following Question Correct Answer Financial Accounting Systematic recording of business transactions Cost Accounting Ascertainment of cost Management Accounting Analyzing & interpretation of financial data Accounting Art of interpreting & classifying business transaction Book Keeping Recording of business transactions Match The Following Question Correct Answer Bills Payable Amount payable to supplier Bills Receivable Amount received from the customer Trade Discount Not accounted for in the books of Accounts Cash Discount Accounted for in the books of Accounts Bad debts Amount not received from customer Question Amount invested in purchasing Fixed Asset is a revenue expenditure. Correct Answer False Question Going Concern Concept __________________ Correct Answer Indefinite longer period , Not likely to close down in shorter period , This affects the values of asset and liabilities Question Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to depreciation 2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs as per the reducing balance m Correct Answer 20,000,18,000,16,200 Question Profit & Loss A/C credit side has Correct Answer Gross profit , Commission received , Interested received Question Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per year. What is the total amount of the capital Correct Answer 1,10,000 Question Cheques issued but not yet presented – the balance as per the bank pass book will be higher. Correct Answer True Question This cost indicates historical cost which is incurred in past. Correct Answer Sunk cost Question Labour cost is the cost of __________ paid to employees of the organization. Correct Answer Remuneration Question Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs, 35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost. Correct Answer 10,50,000 Question For the proper interpretation and presentation of cost the overhead further classified as Correct Answer Factory overheads , Office and administration overheads , Selling & distribution overhead Question A good wage payment system will punish the workers for the matters beyond the control of the workers. Correct Answer False Question These are the features of fixed overheads Correct Answer total cost remains the same , per unit cost may vary , not dependent on volume of output Question Under marginal costing technique only fixed costs are considered as relevant for decision making. Correct Answer False Question Product mix refers to the proportion in which various products of a company can be sold. Correct Answer True Question The cost that varies in direct proportion with the level of activity is called Correct Answer variable cost Question Basic assumptions made by marginal costing are Correct Answer per unit selling price remains constant at all the levels of activities. , whatever is produced by the organisation is sold off. , per unit variable cost remain constant. Question Calculate Volume Variance, If budgeted production is 20,000 units, actual production is 22,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer Rs.3,000/- ( Favorable ) Question Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/- per unit and actual sales volume is 500 units. Correct Answer Rs.200/- ( Favorable ) Question Uniform Costing disturbs the healthy competition in the industry Correct Answer False Question Uniform Costing Methods may be advantageously applied Correct Answer In single organization having number of branches. , Number of companies in same industry. , Similar Industries such as cotton, jute etc. Question In Cash budget , Operating cash outflow includes Correct Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries Question Characteristics of budget can be said to be Correct Answer It may be prepared in terms of quantity or money or both , It is prepared for a fixed period of time , It spells out objectives to be attained Question Like initial formation expenses, ________ and R & D are the examples of Deferred Revenue Expenditure Correct Answer Initial Advertisement Correct Answer R & D Question If ________ books are the books which record the transactions in the chronological order, ________ is the book where transactions of a similar nature are pooled together Correct Answer subsidiary Correct Answer ledger Question 4.Under the differential time rate method the wages are paid at Rs. 1.50 per hour between ________ efficiency and Rs.1.25 per hour between ________ efficiency Correct Answer 101% to 125 % Correct Answer 80% to90% Question ________ and ________ are examples of element wise classification ofoverhead costs Correct Answer Idirect material Correct Answer indirect labour Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value. Correct Answer 0.75 Question Under time rate system a worker is paid on the basis of production achieved by him in a given time. Correct Answer False Question Which of the following costs is most likely to have a cost behaviour pattern described as ..a fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10 paise to 8 paise per unit at 2,000 units? Correct Answer Wages payment which is fixed for a minimum output quantity after which a bonus per unit is paid which reduces when activity level exceeds 1,000 units Question The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Correct Answer False Question In case of defective material being returned by the stores department to the vendor, such material should be valued at the________. Correct Answer Purchase price Question Piece rate system is suitable when quality of goods produced is of extreme importance. Correct Answer False Question While preparing trial balance, the balance as per ________ book is considered as bank balance. Correct Answer Bank Question Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System. Correct Answer Rs.180/- Question Contribution represents pool of resources available for meeting all costs other than ________. Correct Answer Variable costs Question Locate the steps involved in rectifying the errors in the books of accounts Correct Answer Find the wrong entry passed , Find the correct entry to be passed , Find the entry that will resolve the mistake in the books Question Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc. Correct Answer The statement and the reason are both incorrect Question Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour cost and ________. Correct Answer Direct labour cost of the product Question Causes for adverse material price variance are: Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Question The objectives of Uniform costing system are as follows : Correct Answer To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of costs Question 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were purchased from Y @ Rs.6/- per unit. The organisation follows FIFO system of pricing of issues and the above purchases have been recorded in stores ledger. 120 units have already been issued. 60 units received from X are defective and are therefore returned. Find the value of the material returned to X. Correct Answer Rs.300/- Question If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can be stated as ________ sq.ft. tiles. Correct Answer 300000 Question Category C items, as per the ABC analysis, usually refers to indirect material. Correct Answer True Question According to the standard costing principles, only adverse variance must be further investigated. Correct Answer False Question Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives. Correct Answer Non-monetary Match The Following Question Correct Answer Closed the account with State Bank of India Henceforth, there shall be no difference in overdraft balances Debit side of bank book is overcast Overdraft as per bank book < Overdraft as per pass book Interest on debentures directly credited by bank Overdraft as per bank book > Overdraft as per pass book Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book = Overdraft as per pass book Question The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the year. Correct Answer Depreciation Question The purchase account should be debited when an order is placed with the supplier of material. Correct Answer False Question The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of 30 days, no rebate is offered. The company purchase Correct Answer October- NIL, November- Rs.26,750/- Question The variance which measures the profit consequences of selling different products in proportions other than the standard, is known as ________ variance. Correct Answer Sales margin mix Question Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all units belonging to that industry ? Correct Answer Uniform costing Question Select the non-monetary incentives Correct Answer Health and safety services , Canteen facility, Loans at reduced rate of interest Question Control on purchase of material is exercised by the storekeeper. Correct Answer False Question In practical circumstances, the ________ are referred to as application of funds. Correct Answer Assets Question The composition of selling costs is given below : 1 salaries 4% of sales, travelling expenses 1.5% of sales, and sales office 2% of sales. Find the amount of selling overheads if the sales are Rs.120,000/-. Correct Answer Rs.9,000/- Match The Following Question Correct Answer Ledger Maintain all types of accounts Audit Reviewing internal control system Accounting Process of analyzing & interpretation Journal Book of original entry Question The document which lays down the cost accounting plans and procedures to be followed by the constituent units is known as ________. Correct Answer uniform cost manual Question The characteristics of a good wage system are : Correct Answer Flexible , Economical to use , Easy to understand Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on 1st June, 2003, for a period of one year. The type of the fixed deposit is cumulative, i.e. interest shall be received only on maturity. What treatment should be given in the books of accounts on 31st March, 2004, the year ending date? Correct Answer An entry for Rs.458.34, debiting interest accrued but not due account should be passed Question If you are required to enforce uniform costing system in your industry, how would you proceed ? Correct Answer Collecting data from all units of your industry, Ensuring that the data collected is complete and correct, Maintaining secrecy of the data collected Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages. Correct Answer True Question Marginal costing is found to be unsuccessful in the following situations :- Correct Answer Impossible to distinguish costs into fixed and variable component. , With respect to capital intensive industries where fixed costs are very large and hence cannot be ignored , With respect to service industries where employee costs are very large and almost fixed in nature Question Master budget provides a basis for computing effect of changes in : Correct Answer product mix of the company , sales volume , production facilities Question Over absorption of overheads may take place due to the reasons like ________ overheads being less than the ________ overheads Correct Answer actual Correct Answer estimated Question ________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting. Correct Answer Talling Correct Answer arithmetical Question While calculating the minimum level, normal lead time is not necessary Correct Answer False Question To Increase the existing production capacity, additional capital expenditure is required. Correct Answer True Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer Rs. 83.60 Question Cost-sheet may be prepared separately for each Correct Answer Different Cost Centre Question The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs. Calculate the depreciation according to straight line method Correct Answer 10,000 Question To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________ Correct Answer Net effect Correct Answer Balanced Question In fixed overhead variance, the volume variance is further analyzed as Correct Answer Variance Efficiency Variance , Capacity Variance , Calendar Variance Question Accounts is a Correct Answer Record of all transaction Question Whatever is to be sold need not be produced. Correct Answer True Question Patents and Trade Marks Account is a Real Account. Correct Answer True Question Budget is prepared in terms of Correct Answer Quantity and/or Money Question Favorable variances need on investigation Correct Answer False Question Standard Costing may not be useful in Correct Answer Small concerns , Industries having non-standardized products , Contract jobs Question Standard costs are the targets to be attained by the actual performance. Correct Answer Minimum Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer Rs. 75 Question Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. Correct Answer True Question Double Entry Accounting System__________________ Correct Answer Every business transactions have two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Question Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______ Correct Answer 750 Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage Correct Answer 17% Question When bank balance as per bank book is considered then following to be added. Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank Question As soon as the suspense account balance is wiped out , it may be assumed that all mistakes have been corrected. Correct Answer False Question Credit sale of Rs. 5000 to Bobby should be entered in the purchase book. Correct Answer False Question Manufacturing process involves study of Correct Answer Designing the product , The quantity and quality , Material used Question The Bin card and stores ledges do not match due to the following reasons: Correct Answer Arithmetical errors in calculating , Non- posting a certain document , Posting a wrong Bin card Question Flux method is important method of wage payment. Correct Answer False Question The causes of idle time can be analysed as Correct Answer Administrative causes , Productive causes , economic causes Question If production overheads to be absorbed are Rs. 50000/- and labour hours worked are 100000 then the labour hour rate will be, Correct Answer Re. 0.50 per labour hour. Question Fixed cost tends to vary with time rather than with level of activity. Correct Answer True Question Limitations of marginal costing are Correct Answer difficult for classification as fixed cost and variable cost. , does not provide any standard for the evaluation of performance. , it is useful technique only in the short run. Question Flexible budget is an effective tool for evaluation of performance. Correct Answer True Question Material Mix Variance occurs where only one raw material is required Correct Answer False Question Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer Rs.1,500/-( Favorable ) Question Standard may not be necessarily useful for this purpose. Correct Answer Forecasting Question In Cash budget , Non-Operating cash outflow includesVarious kinds of over heads Correct Answer Loan instalments , Taxes , Purchase of fixed assets. Question During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg , what is the quantity of sales Correct Answer 20,000 kg Match The Following Question Correct Answer Ordering cost Associated with administrative efforts Carrying cost Cost of holding the inventory Total cost Ordering cost + carrying cost Inventory control Maintain the inventory of any kind E.O.Q Economic Ordering Quantity Question Generally accounts of the assets will have ________ balance and liabilities will have ________ balance Correct Answer debits Correct Answer credits Question Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book Correct Answer debited Correct Answer credited Question After material is received from the supplier, quantity actually received is compared with quantity ________-and ________-if any, are taken up with the supplier Correct Answer ordered Correct Answer variation Question Labour Turnover indicates ________ in labour force showing a highly increasing trend or highly ________ trend Correct Answer change Correct Answer decreasing Question Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management Correct Answer fixed Correct Answer top Question Bin card is maintained by ________ department whereas ________ is maintained by costing department. Correct Answer Stores Correct Answer Store ledger Question Profitability statement indicates the amount of assets & liabilities. Correct Answer False Question Advance received from customers is ________ for the organisation. Correct Answer A liability Question The features of multiplicity of key factors are as follows : Correct Answer More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique Question Maintenance Department is a service cost centre. Correct Answer True Question Identify the budgets for which the production manager sould be held responsible : Correct Answer Production budget , Production overheads budget , Plant utilisation budget Question The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the correct answers: Correct Answer Sales Rs.128,000/- , Return on capital employed , Working capital Rs.32,000/- Question Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations. Correct Answer Differential cost Question If the owner brings in personal calculator for office use, ________ account should be credited. Correct Answer Capital Question Variable cost + Profit = Sales Correct Answer False Question A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan. Correct Answer Rs.9,333.33 Question Features of material usage variance are : Correct Answer Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity Question Treating capital receipt as revenue income is an example of errors of commission. Correct Answer False Question Basic objective of Uniform Costing is . . . Correct Answer comparison Question Identify the causes due to which the cost of labour may be high: Correct Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Question Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit and loss accounts for the year ending December 2003 are as follows : Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-. You are Correct Answer Hero Ltd. Question Features of Sunk cost are . . . Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past Question For a manufacturing company, dividend received is a non-operating income. Correct Answer True Question Features of purchase requisition slip are : Correct Answer Raised when the stock of a raw material has fallen to the re-order level. , Indicates the type, quantity and quality of material required , The information about the price of material is excluded Question Judge the sentence in italics according to criteria given below : " It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used." Correct Answer The assertion and the reason are both correct Question Crane expenses should be apportioned on the basis of ________. Correct Answer Number of hours crane worked in the department Question Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by Management accounting. Correct Answer Management Question Features of convention of consistency are . . . Correct Answer The accounting policies and procedures should be followed consistently , Facilitates the comparison of financial statements , It facilitates comparison of financial statements on period-to-period basis Question Uniform costing is not a separate method of ________. Correct Answer cost accounting Question Suspense account is closed automatically after rectification of all the errors. Correct Answer True Question Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost. Correct Answer False Question Generally all the liabilities will have ________balance. Correct Answer Credit Question If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ________. Correct Answer Over-absorbed Question Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004. Correct Answer Rs.500/- Question The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to handle this level of sales. Correct Answer Production capacity Question Following are the examples of service cost centre Correct Answer Stores department , Transport department , Accounting department Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Correct Answer True Question Pre-requisites of Uniform Costing are . . . Correct Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry Question You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres drum was as follows : To job X 200 litres; job Y 400 litres and job Z 320 litres. After these issues the drum was empty. Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z. Correct Answer Loss due to spillage and evaporation - 30 litres. , Rate of charge per litre of petrol - Rs.30/- Question Error of commission refer to calculation errors, totaling errors, errors in carrying forward etc. Correct Answer True Question Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the pass book. Correct Answer False Question Copy of a firm's account in the bank's ledger is known as ________. Correct Answer Bank statement Question The column which refers to the page number of the ledger is known as ________. Correct Answer Ledger folio Question The direct material useage budget and direct material purchase budget differ because of which of the following: Correct Answer A planned change in the level of material stock Question Loss is equal to fixed cost minus ________ Correct Answer Contribution Question Profit = Contribution per unit X ________. Correct Answer Margin of safety (units) Question The different purposes served by standard costing technique are : Correct Answer Cost control , Cost awareness , Performance appraisal Question Error of commission refer to a situation where a transaction is not recorded in the books of account. Correct Answer False Question If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to : Correct Answer Decrease for fixed costs and remain unchanged for variable costs Question The variance which measures the difference between what is paid for a given quantity of materials and what should have been paid for, is known as ________ variance. Correct Answer Direct material cost Question Deferred revenue expenditure written off account is a real account. Correct Answer False Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation. Correct Answer 0.17 Question The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in the ________. Correct Answer short run Question The following figures relate to a company manufacturing a varied range of products : Year 2003 Total sales Rs.22,23,000/- and total cost Rs.19,83,600/-. Year 2004 : Total sales Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability in prices, calculate the profit volume ratio Correct Answer 0.3 Question Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. Correct Answer Rs.29.98 Question While preparing sales budget the following factors must be considered : Correct Answer The number and types of products sold by the organisation , Whether the organisation's market share is increasing or decreasing? , Details of seasonal fluctuations in sales Question Techniques of management accounting include: Correct Answer Marginal costing , Budgetary control , Standard costing Question Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system. Correct Answer Capital investment , Plant size , Location Question The expenses relating to maintenance and creation of demand for the product should be included in the ________budget Correct Answer Selling expenses Question Management Accounting is… Correct Answer Designed particularly for internal use , Helpful in estimating the future along with past period , Useful in furnishing the necessary information to the management Question Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. Correct Answer True Question The selection of the supplier may depend upon the following aspects: Correct Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier Question XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004? Correct Answer Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55 Question The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost. Correct Answer True Question If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________. Correct Answer Loss Question When bank balance as per bank book is considered for preparing bank reconciliation statement, then following items need to be added : Correct Answer Cheques issued but not presented , Direct deposit made by customer , Wrong credits given by bank Question The indirect material cost, indirect labour cost and indirect expenses cost, collectively are termed as ________. Correct Answer Overhead Question Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/- (adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour yield variance. Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- , Labour yield variance is favourable Question If the standard contribution is less than the actual contribution, then ________ variance arises. Correct Answer Favourable Question Correct Answer Purchase budget Forecast of quantity and value of materials Budget committee Analyses the performance of different budget centres Cash budget Assists in predicting shortage of cash Budget Objective is performance evaluation Question As a part of the data presented in support of a proposal to icnrease the production of clock radios, the sales manager of Wittman Electronics reproted the total additional cost required for the proposed increased production level. The increase in total cost is known as : Correct Answer Incremental cost Question Business Entity Concept ______________. Correct Answer Business is separated from the owner. , The accounting process carried out for the business , Separate legal entity Question The danger level fixed below maximum level Correct Answer False Question Following example comes under service cost centre Correct Answer Store department , Internal Transport department , Accounting/Costing department Match The Following Question Correct Answer Straight Piece rate system The rate of payment is fixed per piece Diemer system Halsey system & Gantt System Time rate System Worker is paid on the basis of time attended by him Payment by Result Workers are paid according to the production achieved by him Differential Time rate Different hourly rates are fixed for different levels of efficiency Question When bank balance as per pass book is considered then following to be added. Correct Answer cheques deposited but not cleared , Interest debited by bank , bank charges debited by bank Question (No. of unit * Rate of depreciation per unit ) this formula is used for written down value method. Correct Answer False Question Cash and---------------are the two systems of accounting. Correct Answer Mercantile Question This cost indicates increased or decreased cost due to the increased or decreased volume of operations. Correct Answer Differential cost Match The Following Question Correct Answer Fixed cost + variable cost Total cost Total cost – fixed cost variable cost sales- variable cost contribution contribution – fixed cost profit Total cost + profit Sales Question Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered. Correct Answer Rs. 1.40 per hour Question Margin of safety are the sales beyond Correct Answer break even point Question Indirect Labour Cost Correct Answer Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper Question The difference between sales and factory/ works cost is termed as ________ the difference between sales and ________ termed as net profit Correct Answer gross profit Correct Answer cost of sales Question For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.3.60/- per kg. Correct Answer Rs.375/-( Adverse ) Question Labour Efficiency Standards are decided by considering following factors Correct Answer Records of past performance, Time & Motion Study, Trial Runs Question Depreciation does not involve cash out flow Correct Answer True Question The difference between standard cost and actual cost is termed as Variance. Correct Answer True Question Wage payment system should be properly tied up with quality control procedures to ensure that the workers are paid only for good and quality production. Correct Answer True Question In Cash budget Operating cash inflow includes Correct Answer Cash Sales, Collection from Debtors, Interest/Dividend received Question If the product is labour intensive, more stress may be necessary on inventory control procedure. Correct Answer False Question A good wage payment system will not punish the workers for the matters beyond the control of the workers. Correct Answer True Question The material issued to production department may be returned back to the stores because material issued in excess requirement and Correct Answer Material issued is defective Question Following are called the element of Cost Correct Answer Material , Labour , Expenses Question Amount with drawn for personal purpose drawing A/C to be debited. Correct Answer True Question Under the repeated distribution method the overheads of ________ department are distributed to other departments on agreed ________ Correct Answer service Correct Answer percentage Question Under time rate system a worker is paid on the basis of production achieved by him. Correct Answer False Question Calculate Labour Rate Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and actual hours are 13, 500. Correct Answer Rs.6750/- ( Adverse ) Question Benefits available from revenue expenditure are received in the : Correct Answer Same year Match The Following Question Correct Answer Cost Centre Facilitate the fixation of responsibility Cost Control Process of controlling costs of operations Differential Cost Increase or Decrease in cost Sunk Cost Historical Cost Question Financial Accounting is … Correct Answer Designed to supply information to internal/ external users , Referred as 'Historical' form of accounting , Concerned with financial factors Question The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as ________ system. Correct Answer Uniform costing Question The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change. Correct Answer Accrued commission income of-Rs.32,960/- was not entered in the books , Rent for the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account Question If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________. Correct Answer Bad debts Question Creditors as on 31st March, 2004 amount to Rs.15,225/-. Provision for discount from creditors is to made @ 5%. Find the impact of this provision on the net profit. Correct Answer The net profit will increase by Rs.761.25 Question Under the Rowan plan bonus is a fixed percentage. Correct Answer False Question Margin of safety indicates ________ of operations. Correct Answer Profitability Question XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units (packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum price should it quote for this deal? Correct Answer Rs.190/- Question Period cost is the cost assigned to the products. Correct Answer False Question In calculation of total sales margin variance, the ________cost of sales is deducted from the actual sales revenue. Correct Answer Standard Question The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted. Correct Answer False Match The Following Question Correct Answer Personal A/C Debit the receiver, Credit the giver Real A/C Debit what comes in, Credit what goes out Nominal A/C Debit all the expenses, Credit all the incomes Tangible assets Building, Machinery In tangible assets Patents, Trade marks Question When bank balance as per pass book is considered then following to be deducted. Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank Question Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to general expenses account for rectifying the error, which A/C to be debited Correct Answer Drawing A/C Question Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0 Correct Answer True Question Office & Administration overhead includes Correct Answer Salary , Rent & Taxes , Stationary & postage Question There is reverse relationship between the ordering cost and carrying cost Correct Answer True Question Following points are taking into consideration for evaluation of receipts Correct Answer The Price , The trade discount is to be deducted , Other amounts such as sales tax, excise duty, octroi duty Question In EOQ, to express carrying cost as a percentage of the unit cost of purchases this is used in the formula----------- Correct Answer i Question Where overheads chargeable to the department are Rs. 5000/- , direct labour hours worked are 24000 then labour hour rate is Re. 0.2083 labour hour. Correct Answer True Question The selection of the base on which overheads should be apportioned depend on the following principles. Correct Answer service or use basis , survey basis , ability to pay basis Question The Budget key factor may be in the form of sales, raw material, labour etc. Correct Answer True Question For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.6/- per kg. Correct Answer Rs.600/-( favorable ) Question Find out Labour Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours are 12,600. Correct Answer Rs.900/- ( Adverse ) Question Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13, 500. Correct Answer Rs.9,000/- ( favourable ) Question Calendar Variance arises only if there is abnormal increase or decrease in Correct Answer Actual number of working days Match The Follow Question Correct Answer Token or Disc Method Token number & identification number allotted to worker Time Recording Clock Method Ticket number & clock card allotted to worker Daily Time sheets Time spent by worker on job is recorded Weekly Time sheets Record of time for all the jobs during the week is made Hand Written method Attendance register Question Rs.5000 paid as ________ to ________ should be debited to salary account Correct Answer Mahesh Correct Answer salary Question Uncontrollable variances are Correct Answer Strike , Change in customers demand , Devaluation of currency Question Indirect labour cost indicates that labour cost which cannot be identified with the individual cost centre. Correct Answer True Question There is no need to open a suspense account if the trial balance does not agree. Correct Answer False Question Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C credited to Rs Correct Answer 900 Question In financial statements P& L Accounts relates to a specific duration whereas ________ is for a given point of time Correct Answer P& L Accounts Correct Answer Balance sheet Question Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the same. Following account to be credited Correct Answer Suspense A/C Question Bin Card is not an ________ record but only a ________ record. Correct Answer Accounting Correct Answer Quantitative Question Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid . The outstanding salary is debited to Profit &Loss A/C. The second effect is -- Correct Answer Transfer to balance sheet liability side Question Debit the receiver & credit the giver is a rule of Real a/c. Correct Answer False Question If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what will the amount of total factory overheads at 60% capacity Correct Answer Rs.10,800/- Match The Following Question Correct Answer Advance Not related in current year Application Increase in Assets Outstanding Amount still payable in current year Prepaid Amount paid for next year Drawing Amount of personal use Question Head of the Department should sign the purchase requisition. Correct Answer True Question FIFO method Correct Answer The price of the earliest available lot is considered first , If the lot is exhausted, the price of the next available lot is considered , It is used for issue of material Question If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate will be, Correct Answer Re. 4 per machine hour. Question From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average inventory Correct Answer 300 Question Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable. Correct Answer Below 66.66% Match The Following Question Correct Answer Discount received Suppliers Outstanding expenses Liabilities Depreciation Assets Interest on capital Borrowed capital Discount allowed Debtors Question canteen facility to workers, health and safety services are examples of monetary incentives. Correct Answer False Question This is the process of recording attendance time of the workers. Correct Answer Time keeping Question If actual cost is more than the standard cost then it is called favorable variance. Correct Answer False Question The aggregate of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. Correct Answer False Question Interest on drawings of partners should be credited to which account? Correct Answer Profit and loss account Question The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and the amount of claim settled by the insurance company. Correct Answer True Question Penalty paid for delay in payment to creditors represents uncontrollable cost. Correct Answer False Question Subsidiary books include: Correct Answer Cash Book , Purchase Register , Sales Register Question Balance sheet is a part of the ledger accounts maintained by the company. Correct Answer False Question Average stock = ________ + (Order size / 2) Correct Answer Safety stock Question Based on the journal entry given, identify what transaction has taken place. Suresh Account………….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on behalf of creditor Suresh) Correct Answer Cash paid to Kailash should not be recovered from creditor Suresh Match The Follow Question Correct Answer Real A/C Debit what comes in, Credit what goes out Trade Discount Not accounted for in the books of Accounts Cash Discount Accounted for in the books of Accounts Rs.1 Personal A/C Debit the receiver, Credit the giver Question These are the preventive costs of labour turnover. Correct Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Question If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of Rs.75,000/-. You are required to calculate the margin of safety for the first month. Correct Answer Rs.300,000/- Question Loss on account of goods lost due to earthquake should be debited to which account? Correct Answer Profit and loss account Match The Following Question Correct Answer Operating income Cash Sales Non-Operating income Issue of shares Plan of investment in fixed assets Capital Expenditure Budget Plan for surplus/shortage of cash Cash Budget Question Under the average cost method of valuing material issues, new issue price is determined after ________ issue. Correct Answer Each Question Narration must be mentioned in the ledger. Correct Answer False Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. Correct Answer False Question The term ________ indicates expenditure incurred on or attributable to a given thing. Correct Answer Cost Question Items credited to Profit & Loss Account are… Correct Answer Gross profit , Commission received , Interested received Question Yield variance equal to zero indicates that the standard yield and actual yield are the same. Correct Answer True Question Balance sheet is statement of Correct Answer All Assets and Properties Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety will be Rs.________. Correct Answer 100,000/- Question Inventory holding cost comprises of : Correct Answer Cost of insurance , Rent of store house , Salary of store keeper Question Identify the steps involved in the process of decision making : Correct Answer Determination of the problem , Ascertainment of alternative courses of action , Screening each alternative so as to select the best one Question A low inventory turnover ratio should always be preferred. Correct Answer False Question The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as: Correct Answer Labour rate variance Question Following errors affect the trial balance Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Question ________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting Correct Answer Management Question Purchase day book for the month of April was under cast by Rs.1000/- which account should be credited ? ________ Correct Answer Suspense Account Question Linking overhead to a cost unit is known as overhead absorption. Correct Answer True Question A factory received a carton containing two materials X and Y. The invoice relating to the materials discloses the following details : Material X - 400 kg @ Rs.10/- per kg. =Rs.4,000/-; Material Y - 600 kg @ Rs.15/- per kg.= Rs.9,000/-; Sales @ 5% =Rs.650/-; Insurance @ 1% =Rs.130/-; Freight and handling charges = Rs.220/-. Correct Answer Material X -Rs.11.10; Material Y -Rs.16.68 Question An employee working under a bonus scheme saves 10 hours in a job for which the standard time is 60 hours. Calculate the wages payable to him, if incentive bonus of 10% on the hourly rate is payable when standard time (namely 100% efficiency) is achieved, and a further incentive bonus of 1% on hourly rate for each 1% in excess of that 100% efficiency is payable. Assume that the normal rate of payment is Rs.50/- per hour. Correct Answer Rs.3,250/- Question At 60% capacity utilisation the overhead recovery rate is Rs.35/- per unit. At 70% capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production attains 90% capacity utilisation? Correct Answer Rs.28/- per unit Question The production budget may be prepared in terms of : Correct Answer Units produced , Production cost , Material cost, labour cost and overheads Question Tom company has sales of Rs.200,000/- with variable expenses of Rs.150,000/-, fixed expenses of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much would Tom have to increase its sales in order to achieve an operating income of 10% of sales? Correct Answer Rs.200,000/- Question Angle formed by the intersection of total cost line and sales line is called angle of ________. Correct Answer Incidence Question All costs are controllable. Correct Answer False Question In the adjustment entry passed for closing stock, the ________ account should be credited. Correct Answer Trading Question Select the items which may be classified as selling and distribution overheads. Correct Answer Delivery van expenses , Rent of finished goods warehouse , Sales research expenses Question Warehousing cost is an item of ________ Correct Answer Distribution overheads Question From the following, select current assets: Correct Answer Sundry debtors , Stock , Pre paid expenses Question The objectives of cost accounting are : Correct Answer Cost control , Ascertain ment of cost of each product , Assist in managerial decision-making Question Which cost is defined as an estimated cost, prepared in advance of production or supply, estimated within a prescribed set of working conditions? Correct Answer Standard cost Question Carriage charges paid for a new machine purchased if debited to carriage account would affect the ________ Correct Answer Machinery A/c and carriage A/c Question Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction. Correct Answer The gross profit will increase by Rs.6,450/- Question Fundamentally, changes in price and changes in sales volume give rise to sales variances. Correct Answer True Question The ________ is responsible for material losses while in storage. Correct Answer Store-keeper Question A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not debited to traveling A/c. The trial balance will NOT agree. Correct Answer True Question Accounts representing expenses will have ________balance. Correct Answer Debit Question It is discovered that sales effected on 31st March, 2004 worth Rs.42,000/- has not been recorded in the books of accounts. Analyse the impact on the final statement of accounts. Correct Answer The sundry debtors will increase by Rs.42,000/- Question Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit. Correct Answer The net profit will not be affected Question New companies can adopt Uniform costing system as a ready-made system. Correct Answer True Question A journal entry is passed for trade discount, but no entry is passed for cash discount. Correct Answer False Question The assets which are suppoed to be used by the organisation to do business, are known as ________assets. Correct Answer Fixed Question The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is: Correct Answer Re.0.98 Question The disadvantages of time rate system are : Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase productivity Question Which of the following is the most efficient use of the clock card? Correct Answer To facilitate payment for time spend on the work premises Question One of the main objection to the contribution approach of costing is that it ignores fixed cost. Correct Answer True Question If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________ the overdraft as per pass book. Correct Answer Lesser than Question The cash flow format is used for preparing the cash budget by the ________ method. Correct Answer Adjusted Profits/Losses Question The ideal budget period for a company engaged in generation and distribution of electricity is one year. Correct Answer False Question In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative assessment to be made of the two sectors. Correct Answer uniform costing Question Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact. Correct Answer The asset side of the balance sheet will increase by Rs.5,000/- Question It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the product Correct Answer False Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : Correct Answer Difference in the balance as per bank book and as per pass book Question Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. Correct Answer False Question A business's telephone bill should nromally be classified into which one of the following categories? Correct Answer Semi-variable cost Question The objects of cost accountancy are . . Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information Question Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset. Correct Answer True Match The Following Question Correct Answer Error of Principle Trial Balance does not get affected Error of Omission Transaction is totally omitted Error of commission Wrong Posting Compensating Error Wrong classification Difference in trial balance Transferred to suspense account Question The difference between sales and cost of sales is termed as ________. Correct Answer Net Profit Question ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Correct Answer Management Question The capacity utilised to installed capacity ratio is 80% for the company. The capacity utilisation ratio in respect of a machine for a particular month is 90%. The available working hours in a month are 200 hours. The break of idle time is as follows : Waiting for job - 5hours, breakdown - 4 hours and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the machine is Rs.8/-. Correct Answer Rs.96/- Question Semi variable expenses fluctuate in direct proportion to volume. Correct Answer False Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. Correct Answer False Question From the following, select intangible assets: Correct Answer Goodwill , Patents , Trade Marks Question Select the accounts to be disclosed on the assets side of the Balance sheet. Correct Answer Furniture , Loan to Bank of U.S.A. , Land & building Question Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory. Correct Answer The statement is correct but the reason is incorrect Question The credit side of the sales book was overcast by Rs.2,000/-. As a result of this rectification, what of the given impacts is likely to happen? Correct Answer The liability side of the balance sheet will increase by Rs.2,000/- Question It is said that the income statement represents wealth increase /decrease for the organisation. Correct Answer True Question All personal expenses of the owner should be debited to the organisation's profit and loss account. Correct Answer False Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : Correct Answer Difference in the balance as per bank book and as per pass book Question If the ordering cost ________s, then the economic order quantity will Increase. Correct Answer Increase Question ________ authorises the production department to issue requistion for materials. Correct Answer Bill of material Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit of finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering cost is Rs.120/- per order and the holding cost is 10% per annum. If the company places each order for 2,000 units due to financial constraints, what is the extra annual cost? Correct Answer Rs.80/- Question An entry in the stores ledger is required for transfer of material from one job to another in the same department. Correct Answer False Question The method which deals with ownership rights being given to workers is known as ________ method of remuneration. Correct Answer Co-partnership Question A firm of boiler-house engineers provides engineering services to large number of factories having boiler houses. The firm charges on the basis of number of hours its engineers have worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An engineer's annual remuneration comprises (for the year Correct Answer Rs.182.29 Question Marginal costing is useful in the following areas : Correct Answer Plant shut down decisions , Make or buy decisions , Profit planning Question Cost volume profit analysis focuses attention on the ________ effect of a particular course of action. Correct Answer short run Question ABC Ltd. has a proposal of utilising a cheaper raw material which will increase the contribution from Rs.100/- per unit to Rs.125/- per unit. However, the use of cheaper raw material may result in decrease in sales by 10% (to 450 units only). Find the impact of using the cheaper raw material on the amount of contribution ( net increase or decrease in contribution). Correct Answer Increase in contribution Rs.6,250/- Question Which of the following budgets may be termed as a long term budget? Correct Answer Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company Question A ________ can be defined as a part of the orgainsation for which separate budget can be prepared and implemented. Correct Answer Budget centre Question The finance manager is responsible for which of the following budget? Correct Answer Cash budget Question The role of the budget committee may be taken as an advisory role to the Chief Executive. Correct Answer True Question While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored. Correct Answer False Question The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance. Correct Answer True Question From the following data, determine the net profit if sales are 20% above the break even point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed overheads Rs.20,000/- Correct Answer Rs.4,000/- Match The Following Question Correct Answer Decrease in selling price will lead to Decrease in contribution Increase in contribution will lead to Increase in profits Increase in fixed cost will lead to Increase in break even point Decrease in variable cost will lead to Increase in profit volume ratio Question As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its market price as on the same day was Rs.66,584/-. Which value of closing stock should be considered in the final statement of accounts for the year ended on 30th September, 2004? Correct Answer Rs.66,584/- Question Marginal costing technique is useful in taking decisions relating to which of the following courses of action? Correct Answer Decision to drop a product line , Decision to accept a special offer at price lower than the normal selling price , Decision regarding temporary shut-downs Question In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities. Correct Answer True Question Profit and loss account indicates the profit earned as on a particular date. Correct Answer False Question The balance of the suspense account will ________ after all the errors are Correct Answer become zero Question The best way to reduce labour cost is to recruit cheap labour. Correct Answer False Question A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is the total amount of capital? Correct Answer Rs. 12,000 Question Income Tax Act, recognise only one method of depreciation namely ________. Correct Answer Written down value method Question An adjustment relating to outstanding expenses will ________ the net profit. Correct Answer Decrease Question Generally, all real accounts will have a ________ balance Correct Answer Debit Question The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio? Correct Answer 0.333 Question The selective ________ controls are intended to control the ________ to particular sectors without affecting the total credit, and also to change the composition of credit from undesirable to de Correct Answer credit Correct Answer credit flows Question Journal is popularly known as 'Book of . . . Correct Answer Original Entry Question Presentation of information to enable managerial decision making' is one of the objects of which of the following Correct Answer Cost Accounting Question The principle of ________ is followed while preparing the financial statements. Correct Answer Going concern Match The Following Question Correct Answer Indirect Material Element wise classification Administration overheads Function wise classification Fixed overheads Variability wise classification Abnormal overheads Normality wise classification Question In India the gas industry and electricity industry, and ________ industry are examples of industries using the uniform costing system. Correct Answer fertilizer Multiple Choice Multiple Answer Question Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a., what will be the amount of capital of each of the partners as on 31st March, 2004, assuming there were no additions during this period? Also, state the treatment of this item in the Profit and loss account. Correct Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital should be debited to the Profit and loss account Question Non-trading income is disclosed on the credit side of ________ account. Correct Answer Profit and loss Question Goods returned to the suppliers from whom it was ________d is recorded in the Purchase return register. Correct Answer Purchase Question An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find the expenditure on account of advertisement. Correct Answer Rs.49,248/- Question Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The goods were not insured. Find the amont which should be debited to the profitability statement. Correct Answer Rs.18,950/- Question Generally speaking income represents wealth increase and business success; higher the income, lower will be the success of a business. Correct Answer False Question While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004? Correct Answer Balance as per pass book < Balance as per bank book Question Bank reconciliation statement is a systematic presentation of errors made by the accountant. Correct Answer False Question The stores department is a ________ department. Correct Answer Service Question The ________ is a perpetual inventory record. Correct Answer Bin card Question Selecting an appropriate method of valuation of inventory is important because : Correct Answer It influences the figure of gross profit Question Re-order level for materials is determined considering maximum consumption and maximum delivery period. Correct Answer True Question Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost. Correct Answer True Question Economical use of labour, materials and facilities can achieved with the help of ________. Correct Answer Budgetary control Question Select the advantages of standard cost system. Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency Question Which variance is used to analyse the effect of change in the quantity of output from a given mix of inputs? Correct Answer Materials yield variance Question Judge the statement according to the criteria given : ' The accounting period for XYZ Ltd. ends on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be recorded in the books of accounts in January, Correct Answer The statement and its reason are both incorrect Question From the following select the examples of errors of commission - Correct Answer Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- , Received cash from Sham, credited to Ram's account , Paid transport charges, credited to transport charges account Question Expenditure on income-tax is an example of ________. Correct Answer non-operating expenditure Question Identify the items which are correctly classified. Correct Answer Carriage inward - Factory overheads , Carriage outward - Selling and distribution overheads , Sales research expenses -Selling and distribution overheads Question Select the items which may be classified as administration overheads. Correct Answer Depreciation on office furniture , Director's remuneration , Telephone expenses Question Overhead absorption is an exercise by which overhead is properly spread over production for the period. Correct Answer True Question Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry ? Correct Answer Uniform costing Question A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on computers to be charged for the year. Correct Answer Rs.40,953.70 Question The amount of income for the current period which is not received during the current period, is called Accrued Income. Correct Answer True Question The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance as per pass book as on the same date is Rs.10,123.60. Select the transactions representing the reasons for this difference. Correct Answer Interest credited by bank, not entered in the bank book, Rs.125.60 , Cheques dishonoured not entered in the bank book Rs.200/- , Debit side of the cash book is overcast by Rs.100/- Question The principal functions of the cost accounting department are : Correct Answer Classifying labour cost according to jobs, processes, etc. , Preparation of different reports based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be reduced. Question Profit volume ratio is also known as ________. Correct Answer Contribution to sales ratio Question Margin of safety = Contribution / Profit volume ratio Correct Answer False Question Depreciation, interest and property tax continue even when the operations are discontinued. Correct Answer True Question The reasons and objectives of budgets may be stated as : Correct Answer To aid the planning of annual operations , To communicate the organisational plans to the different departments , To motivate the managers to strive for attainment of the organisational goals Question The key factor determines the : Correct Answer Level of activity , Capacity utilization , Level of sales Question Essentials for effective implementation of budgetary control system are Correct Answer Commitment of top management , Clearly defined objectives , Continous budget education Question Which of the following is a correct definition of the key factor? Correct Answer The factor which limits the activites of the undertaking Question The integrated form of all functional budgets is known as : Correct Answer Master budget Question For the month of November, a firm has budgeted sales of 20,000 units of X at a price of Rs.10/- and sale of 30,000 untis of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales quantity variance. Correct Answer Sales volume variance -Rs.120,000/- (Favourable) , Sales mix variance -Rs.44,000/- (Favourable) , Sales Quantity variance-Rs.76,000/- (Favourable) Question ________ variance represents the over or under utilisation of pland and machinery. Correct Answer Capacity Question The following data relates to the month of October : Actual variable overheads Rs.60,000/-; budgeted variable overheads Rs.80,000/-; actual output 900 units; budgeted output 1,000 units; standard time for one unit - 2 hours. Calculate variable overhead efficiency variance. Correct Answer Rs.4,000/- (Favourable) Question Which of the following operations would normally be carried out first when preparing a master budget? Correct Answer Determining the budget period Question Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________ . Correct Answer Income Tax Act, 1961 Question Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows : X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance. Correct Answer Rs.100/- (Favourable) Question Select the examples of functional budgets: Correct Answer Sales budget , Production budget , Research and development budget Question Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10% p.a., what should be the treatment of this interest in the profitability statement, assuming there were no additions to capital during this period? Correct Answer Profit and loss account should be debited with Rs.1,866.67 Question KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003, assuming there were no additions or disposals during the year? Correct Answer Rs.100,000/- Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer True Question An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________ Correct Answer P's A/c and Q's A/c Question Budgetary control system provides a basis for establishment of the incentive systems. Correct Answer True Question A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Correct Answer True Question A low margin of safety indicates ________ fixed overheads. Correct Answer higher Question Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory. Correct Answer less than 10 Question The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company. Correct Answer Rs.34,408.09 Question Price based on Uniform Costing may be taken to be reliable and representative of the whole industry. Correct Answer True Question The budget manual must contain statement regarding: Correct Answer Objectives of the orgainsation Question Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to: Correct Answer Balance as per bank book > Balance as per pass book Question Entry for dishonour of cheque appears only in the pass book, this entry should be ________ in the bank book. Correct Answer Passed Question Since the pass book and the bank book record the ________ transactions, the bank balance as per these books should be equal. Correct Answer Same Question A pre-determined factory overhead rate holds up product costing. Correct Answer False Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Correct Answer Rent received in advance account Question Bank reconciliation statement can be prepared on weekly basis. Correct Answer True Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account? Correct Answer Rs.45,000/- Question Financial Accounting ______________ Correct Answer Designed to supply information for internal/ external uses. , Deals with the transaction during specific period. , It is compulsory Question Cost Accounting ______________. Correct Answer Concerned with specific activities. , Classified according to their nature. , It deals with both i.e. past & present. Question Features of double entry accounting system are . . . Correct Answer Every business transaction has two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Question Features of a cost sheet are as follows Correct Answer Indicates the total cost of production during a given period , Indicates the unit cost of production during a given period , Helps the management in fixing the selling price to be quoted for the Question Depreciation charged on office furniture on straight line basis is an example of ________. Correct Answer Administration overheads Question If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business. Correct Answer Drawings Question Included in the trial balance is the sales promotion suspense account with a debit balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its impact on profit of the company. Correct Answer The net profit will decrease by Rs.6,300/- Question A lathe machine was purhcased on 31st March, 2004 for Rs.65,000/-, however it was installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of depreciation charge for the said lathe machine for the year ended 31st March, 2004. Correct Answer Nil Question While passing the journal entry, it is of utmost importance to ensure that the total of amount debited is equal to the total of the amount credited. Correct Answer True Question The bin card and stores ledger, being independent records, comparison of these two records should be avoided. Correct Answer False Question The cost of idle time incurred by employees that is considered normal for the production process should be charged to : Correct Answer Factory overheads Question The cost of abnormal time may be recovered by inflating the hourly labour rate. Correct Answer True Question ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/- and the variable costs are 60% of the selling price. In order to realize a profit of Rs.100,000/-, the selling price per unit would have to be : Correct Answer Rs.6.25 Question In which of the following situations, the flexible budget should be preferred? Correct Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of production activity Question The budget that represents the funds investment for expansion, diversification, etc. is known as ________. Correct Answer Capital expenditure budget True/False Question Amortization of goodwill should be considered while preparing cash budget. Correct Answer False Question As cost centers facilitate the control function, in many cases, they are termed as . . . Correct Answer Responsibility centers Question Lata and Tara are partners of Latara & Co. As on 31st March, 2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual drawings amounted to Rs.18,000/-. If interest on drawings is charged @ 15% p.a., what is the amount of income for Latara & Co.? Correct Answer Rs.6,450/- Question Labour turnover rate is best defined as : Correct Answer The number of leavers replaced divided by the average of employees on the payroll Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry ? Correct Answer Uniform costing Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year ended 31st March, 2004. Correct Answer The net profit will not be affected Question Interim dividend paid by the company should be debited to the profit and loss appropriation account. Correct Answer True Question The short run financial plan which acts as a guide to achieve the predefined targets is known as ________. Correct Answer Budget Question Indirect Cost is termed as ________. Correct Answer Overhead Question Interest on ________ is credited to Capital account. Correct Answer Capital Question The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. Correct Answer False Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost? Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Question Accounting is the art where transactions are … Correct Answer Summarized , Classified , Recorded Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees. Correct Answer False Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of Correct Answer Depreciation on plant and machinery , Interest on loans taken from other , Interest on loans granted to others Question Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors. Correct Answer False Question Management accounting is concerned with the following activities : Correct Answer Decision making , Safeguarding assets , Planning and controlling activities Question Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer Master budget Question A grinding machine is an example of impersonal cost centre Correct Answer True Question Piece rate systems are very useful in the following circumstances: Correct Answer Units of output are measurable , Job is standardised , The flow of work is regular Question The process of recording the business transactions in a defined set of records is referred to as ________. Correct Answer Balance sheet Question A ________ inventory turnover period indicates efficient utilisation of material. Correct Answer Low Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Correct Answer Investment account - Rs.170,000/- Question The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct. Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster moving material , Consumption of material Q is Rs.860,000/- Question Overhead absorption rate will be different at different capacity levels. Correct Answer True Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________. Correct Answer 90% to 100% Question The alternative courses of action for an integrated textile mill are: Correct Answer Sell cloth Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20 Correct Answer 153,000 units Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc. Correct Answer Accounting period Question Furniture account will always have a ________ balance. Correct Answer Debit Question Product costs under direct costing include: Correct Answer Prime cost and variable factory overheads Question Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer. Correct Answer True Question Items debited to Profit & Loss Account are… Correct Answer Salary , Discount allowed , Postage & telegram Question Select the entries which need to be rectified Correct Answer Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) , Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased) , Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for) Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book. Correct Answer Rs.128/- (overdraft) Question Identify the fixed expenses from the following. Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,etc. , Salary paid to factory supervisor Question Budgetary control is one of the techniques of management accounting. Correct Answer True Question Management Accounting is a developed stage of Cost Accounting Correct Answer True Question In the ledger account only credit entries relating to a particular account are posted. Correct Answer False Match The Following Question Correct Answer Global Tender Any supplier from the global market can fill the tender Single Tender Tender from only one supplier Limited Tender Tenders from reliable but few suppliers Open Tender Any supplier from the local market can fill the tender Question Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours. Correct Answer True Question Features of Taylor's differential piece rate system are as follows : Correct Answer Minima clerical work is involved in calculating the wages , Helps in building up an efficient labour force , Strong incentive to efficient and ambitious workers. Question Financial Accounting discloses the financial performance & Financial status of the business as a whole Correct Answer True Question Cost Accounting is a legal requirement. Correct Answer False Question Cash account can have a credit balance. Correct Answer False Question Labour turnover means : Correct Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force Question Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole. Correct Answer False Question The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half - 37,500 units. The production pattern of the company is based on 80% of the sales of the current six months and 20% of the budgeted sales of the next six months. Calcu Correct Answer 1st half -31,500 units; 2nd half - 30,000 units Question The variance which denotes the variation in overhead recovery due to the budgeted quantity of products being greater or less than actual production, is known as ________ variance. Correct Answer Volume Question As per the provisions of Section 209 of ________, all the company form of organisation is legally required to follow the mercantile or accrual system of accounting. Correct Answer The Companies Act, 1956 Question Cost Accounting and Management Accounting are similar to each other in many respects. Correct Answer True Question The reports generated by financial accounting are meant for the use by management for effective decisions. Correct Answer True Question Token or disc method is a related to the system of ________. Correct Answer Time-keeping Question Cost Accounting may be considered to be a part of management Accounting. Correct Answer True Question The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Correct Answer Total variable overhead Question It is said that marginal costs are used primarily in guiding decisions that are yet to be made. Correct Answer True Question Management Accounting is not at all a legal requirement Correct Answer True Question Identify the variable expenses. Correct Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by hired carriers , Wages paid to casual workers Question Which of the following cost is also termed as Prime Cost ? Correct Answer Direct cost Question The method of remuneration under which the workers are given in share in profits of the organization, at a specified percentage, along-with their wages, is known as ________ method. Correct Answer Profit-sharing Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Correct Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- Question Quantify the increase in profit on account of following errors : (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses. Correct Answer Rs.43,200/- Question The analysis which is also referred as 'what if' analysis is known as________. Correct Answer Cost volume profit analysis Question The balance sheet has three columns, viz. assets, liabilities and ledger folio. Correct Answer False Question The various areas in which uniform costing can be adopted are . . Correct Answer Valuation of inventories , Charging of depreciation , Apportionment of overheads Question The varinace that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer Sales margin volume Question Depreciation is caused by use factor, obsolescence and ________. Correct Answer Time factor Question Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit) Correct Answer False Question All cash sales are recorded in the sales register. Correct Answer False Match The Following Question Correct Answer Transport facilities to employees Preventive cost of labour turnover Relationship between supervisor and worker Avoidable cause of labour turnover Dismissal of employee Unavoidable cause of labour turnover Increased spoilage and defectives Replacement cost of labour turnover Question Indirect material cost is an integral part of finished goods. Correct Answer False Question Select the various methods adopted for treatment of under or over absorbed overheads Correct Answer Use of supplementary rates , Carrying over the amount to remaining period , Writing off to the Costing Profit and Loss Account Question It is difficult to apply Uniform costing system for an industry which has labour intensive companies as well as capital intensive companies, because : Correct Answer The cost structure is different Match The Following Question Correct Answer Normal Standards Anticipated to be achieved in future Basic Standards Established for a longer period of time Current Standards Established for a shorter period of time Expected Standards Anticipated to be achieved in the budget period True/False Question Trading account is an important account which will be used to analyze how successful and how efficiently the firm runs its business. Correct Answer True Question Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Correct Answer Long term liabilities Question The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004. Correct Answer Rs.75,981/- Question The components of the selling and distribution cost budget are : Correct Answer Distribution expenses , Publicity expenditure , Salary of sales-office workers Question Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000 Correct Answer Ram is a creditor , Rs.10,000/- has been paid to Ram , The payment is made by cheque Question A written order sent to inform the purchasing department of a need for materials is called a ________. Correct Answer Purchase requisition note Question The overheads apportioned to three production departments A, B and C and two service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of 4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2. Ascertain the total overheads of each production department. Correct Answer A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/- Question Re-order quantity may be measured as : Correct Answer Maximum stock level - re-order level + (minimum usage X minimum re-order period) Question If the total amount on the ________ side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance. Correct Answer Debit Question An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe. Correct Answer suspense Question The final result disclosed by trading account is the ________profit earned by the organization. Correct Answer Gross Question Number of days inventory is held can be calculated by dividing number of days in a year by ________. Correct Answer Inventory turnover ratio Match The Following Question Correct Answer Total cost Cost of finished goods Non operating income Profit on sale of investment Selling and distribution overheads Advertisement expenses Factory overheads Repair for factory building Question The amount of profit which is retained by the organisation is transferred to 'Reserves and Surplus' in the balance sheet. Correct Answer True Question Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Correct Answer Investments Question Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units. Correct Answer 66.9 days Question Material mix and material yield variance can be calculated even when only one raw material is used for production. Correct Answer False Question A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate System. Correct Answer P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80 Question A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total cost. What is the break even point for the company? Correct Answer 68,182 units Question The organization chart shows the following aspects : Correct Answer Functional responsibility of different functional managers , Delegation of authority to various managers , Inter-functional relationships of these managers Question Select the correct formulae for calculating break even point. Correct Answer Fixed cost / (Selling price per unit - Variable cost per unit) , [Fixed cost / Marginal contribution] X Sales , [Fixed cost / (Fixed cost + Net Profit)] X Sales Question Select the transactions which can be entered in the Journal proper. Correct Answer Opening entries , Closing entries , Rectification entries Question The lowest profit volume ratio can be ________%. Correct Answer 0 Question Trading account is used to analyse how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Correct Answer True Question Calculate the earnings of workers Monica and Sonica under Taylor's differential piece rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30 seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above standard. Monica produces 900 units per day and Sonica produces 1,100 units per day. Correct Answer Monica -Rs.72/-; Sonica - Rs.132/- Question The factors that influence determination of budget period are : Correct Answer Type of budget, viz. Sales or capital expenditure budget , General economic conditions , Trade cycle of business Question Uniform costing system can be successfully implemented in any industry only when : Correct Answer Information is freely supplied by all the units , Well organised sector is ready to share the technological improvements , Information furnished by the units is complete and correct Question In marginal costing, under and over absorption of fixed overheads is bound to arise. Correct Answer False Question Trade Discount refers to the discount . . . Correct Answer received on purchases Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual break even point. Correct Answer 80,000 units Question Cool-wind Ltd., manufactures fans, which at sold at Rs.400 pre piece. The cost of sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle by 39% of present gross profit. With the above information, you are required to determine the future selling price, if the present rate of gross profit is to be maintained. Correct Answer Rs.452/- Question Credit balance in interest account indicates income for the organisation. Correct Answer True Question Money Measurement Concept__________________ Correct Answer Only those transactions and facts expressed in terms of money , This Concept imposes severe restrictions on the kind of information available from financial statements , Due to several restrictions it becomes drawback of financial accounting Question A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10% on building. The total amount of capital comes to Rs. __________ Correct Answer 11500 Question The periodical total of sales book was cash short by Rs. 5000 for rectifying the same, which A/C to be debited Correct Answer Suspense A/C Question Following errors do not affect the trial balance Correct Answer Error of Principle , Error of Omission , Error of Commission Question A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account Correct Answer False Match The Following Question Correct Answer Opportunity Cost Cost can be controlled Differential Cost Historical Cost Sunk Cost Cannot be controlled Controllable Cost Increase or Decrease in cost Uncontrollable Cost Return or yield Question Indirect material cost assist the manufacturing process is an integral part of finish goods. Correct Answer False Question Dividend received is a Non-operating Income. Correct Answer True Question A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2 Correct Answer 14,59,200 Question Factory overheads are termed as Correct Answer Production overheads , Works overheads , Manufacturing overheads Question The aims of perpetual inventory system are as follows Correct Answer Maintaining Bin cards , Maintaining store ledger , Continuous verification of physical stock Question These are the features of variable overheads Correct Answer vary directly in proportion to volume of output. , per unit cost remains the same , total overheads may increase or decrease as per volume of output. Question The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet. Correct Answer True Question If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is 500 kg then what will be the quantity of production Correct Answer 4,500 kg Question The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time. Correct Answer Idle Question Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer Master budget Question Differential cost analysis is incorporated in the cost books. Correct Answer False Question The process of recording attendance time of the workers is known as time booking. Correct Answer False Question Factory light, telephone expenses are examples of ________ expenses. Correct Answer Indirect Question For successful implementation of uniform costing system, it is very essential to devise ________, containing recommended cost accounting plan and procedures. Correct Answer cost manual Question The combination in which different products are sold by a company is known as ________. Correct Answer Sales mix Question Which of the following is usually prepared daily by employees for each job worked on? Correct Answer Job card Question Profit = Profit volume ratio X Margin of safety Correct Answer True Question The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision. Correct Answer Loss of trained personnel , Loss of regular customers , Expenditure required to restart the factory Question Locate the error and its features in the following - Correct Answer Compensating errors , Trial balance will not be affected , Trial balance will be affected Question Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction? Correct Answer Maintenance of machine account Multiple Choice Multiple Answer Question Which of the formulae can be used to calculate profit volume ratio :- Correct Answer Change in contribution / Change in sales , 1 - (Change in variable cost / Change in sales) , (Fixed cost + Profit) / Sales Multiple Choice Multiple Answer Question International Motors manufactures crankshafts for jeeps and trucks. They have furnished the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct. Correct Answer Cost per crankshaft for jeep is Rs.445.45 , Cost per crankshaft for truck is Rs.805.66 , General expenses should be apportioned on direct labour ratio Multiple Choice Single Answer Question The direct material usage budget and direct material purchase budget differ because of which of the following? Correct Answer A planned change in the level of material stock Multiple Choice Multiple Answer Question Plant and equipment can become a key factor in the following circumstances :- Correct Answer Limited capacity due to lack of capital , Insufficient capacity due to shortage of space , Limited number of hours for which the plant can be used Multiple Choice Multiple Answer Question Select the accounts to be disclosed on the liability side of the Balance sheet :- Correct Answer Loan , Outstanding expenses , Creditors Select The Blank Question The ________ books are preferred when the volume of transactions is very large. Correct Answer Subsidiary Select The Blank Question ________ is any documentary evidence to justify that a particular transaction has taken place. Correct Answer Voucher Select The Blank Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization. Correct Answer Net True/False Question Receipts and payments method of cash budget is useful for preparing long term estimates. Correct Answer False Multiple Choice Single Answer Question The Asian Industries specialises in the manufacture of small capacity motors. The cost structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per annum. THe sale price of the motor is Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order to break-even. Correct Answer 6,000 motors True/False Question The purpose of profit and loss account is to brign together information which relates to gross profit and the expenses for running the business. Correct Answer True True/False Question If the storage cost of inventory increases, then the economic order quantity also increases. Correct Answer False Multiple Choice Single Answer Question The reporting method used in the costing system should be based on the principle of Correct Answer Management by exception Multiple Choice Single Answer Question XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased to offset 20% reduction in selling price, so that the existing profit remains intact. Correct Answer 0.6 Multiple Choice Single Answer Question A company manufactures and sells four products, viz. A, B, C and D. The details are as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%, Product D-18%; Incremental rupee sale for each Rupee spent on advertisement:-Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product D-Rs.10/-. Amount of advertisement available is only Rs.5,000/-. Correct Answer Product B True/False Question Match Correct Answer True Multiple Choice Single Answer Question An analysis of the time card of a worker on a machine shows that of the total 48 hours, he worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You are required to calculate the earnings of the worker. Correct Answer Rs.500/- Select The Blank Question In case of seasonal industry, the budget period may be taken as ________. Correct Answer One season Multiple Choice Single Answer Question The standard derpartmental overhead rate is Rs.15/- per hour. Based on the following details, work out the activity level at which the overhead rate has been pre-determined. Activity level : 600 hours; overhead allowance Rs.12,000/-. Activity level : 800 hours; overhead allowance Rs.14,400/-. Activity Correct Answer 1,600 hours True/False Question The total of the direct costs are termed as overheads. Correct Answer False Multiple Choice Single Answer Question Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as 6170 rectifying the transaction the creditor A/C is to be debited amount to Rs Correct Answer 540 True/False Question Market price may be treated as latest purchase price, realisable price or replacement price Correct Answer True True/False Question Office and administration overheads consists of all overhead costs incurred from procurement of material till the stage of selling the final product. Correct Answer False True/False Question Sold goods to Ajay on credit Rs 10,000/- Ajay account to be credited Correct Answer False True/False Question Goods lost by fire firstly transfers to Trading Account credit side & corresponding amount is debited to P&L account. Correct Answer True Multiple Choice Multiple Answer Question A manufacturer uses 200 units of component every month and he buys them entirely from outside supplier. The order placing and receiving cost is Rs. 100 and annual carrying cost is Rs. 12. Calculate Ec Correct Answer 200 units Select The Blank Question Due to compensating errors the ________ accuracy of the trial balance ________ affected Correct Answer arithmetical Correct Answer doesnot Select The Blank Question Preventive costs of labour turnover are ________ and ________ . Correct Answer welfare activities Correct Answer medical services Multiple Choice Multiple Answer Question Basic three steps in Standard Costing are Correct Answer Setting standards , Comparing actuals with standards , Measurement of variance True/False Question If the excess quantity is already billed in the invoice, it will be approved and paid. If not Debit note may be issued to the supplier for amending the amount. Correct Answer False Multiple Choice Single Answer Question A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 rectification of the suspense accounted debited to Rs Correct Answer 500 Multiple Choice Single Answer Question Depreciation charged on land & building, first debited to Profit & Loss A/C. and then to be --------------------- Correct Answer Deducted from land & building Select The Blank Question One of the limitations of the budgetory control is that it ________. Correct Answer is an expensive affair Multiple Choice Multiple Answer Question Features of real account are . . . Correct Answer Mainly deals with items which are having physical , Consists of some intangible assets , examples include - Lane, Building, Vehicles Select The Blank Question A trading concern will have only ________ overheads and selling overheads. Correct Answer administration Select The Blank Question ________ is an example of intangible asset. Correct Answer Goodwill Multiple Choice Single Answer Question Uniform costing system is useful in the following areas Correct Answer Classification of cost accounts Multiple Choice Single Answer Question Mr.X has Rs.200,000/- invested in his business firm. He wants a 15% return on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 60% of sales, his fixed costs are Rs.80,000/- per year. Mr.X estimates that even if he closed the doors of his business, he would incur Rs.25,000/- as expenses per year. At what sales would he be better off by locking his business up. Correct Answer Rs.62,500/- Multiple Choice Single Answer Question The budgeted level of activity of the production department of Style India Ltd. is 5,000 hours per period. From the given information find the cost for 3,500 hours per period. Indirect wages Re.0.40 per hour; Correct Answer Rs.2,480/- Select The Blank Question Normally, the planning for dividend payments and interest payments is based on the ________ budget. Correct Answer Cash Multiple Choice Single Answer Question The statement, mainly applicable to company form of organization, which discloses the manner in which the profit after tax is distributed is known as: Correct Answer Profit & Loss Account Appropriation Account Select The Blank Question Generally, all real accounts will have a ________ balance Correct Answer Debit Multiple Choice Single Answer Question The alternative courses of action for an integrated textile mill are: Correct Answer Sell cloth True/False Question The problem of multiple key factors can be solved with the help of techniques like linear programming, operations research, etc. Correct Answer True True/False Question Fixed expenses will move up by jumps if the output exceeds the capacity. Correct Answer True Multiple Choice Single Answer Question Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that the real worth of these loose tools is only Rs.30,000/-. What can be done to achieve the desired reduction in the net book value of loose tools? Correct Answer By providing depreciation to the extent of Rs.15,000/- Multiple Choice Multiple Answer Question Cost control procedure deals with : Correct Answer Establishment of plans , Comparison of actual and planed performance , Computation of variance Match The Following Question Correct Answer Tool-room expenses Direct labour hours Power Horse power of machine Stores department Number of material requisitions Boiler house Cubic feet of steam supplied Multiple Choice Single Answer Question The following data is extracted from the books of a manufacturing concern for the year 2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of 10% in the fixed expenses. Correct Answer Rs.275,000/- True/False Question Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. Correct Answer False Multiple Choice Single Answer Question A worker completes a job in a certain number of hours. The standard time allowed for the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate a bonus of Rs.20/- under Halsey plan. Find out his total earnings under the Rowan plan. Correct Answer Rs.84/- Match The Following Question Correct Answer Dividend paid Profit and loss appropriation account Freight inwards Manufacturing account Sales Trading account Freight outwards Profit and loss account Multiple Choice Single Answer Question The credit sales are as follows : February Rs.180,00,000/-, March Rs.192,00,000/- and April Rs.108,00,000/-. 50% of credit sales are realised in the month following the sale, 30% in the second month following the sale and the balance in the third month f Correct Answer Rs.15,000,000/- Multiple Choice Multiple Answer Question The disadvantages of supplementary overhead rates are: Correct Answer It can be determined only after the end of the accounting period , Defeats the basic concept of normal cost , Involves lot of clerical activity Select The Blank Question In the scheme of cost-________-profit analysis, an attempt is made to measure the variations of cost with volume. Correct Answer volume Select The Blank Question The ________ is of immense help in guiding the companies to operate their accounts on uniform basis. Correct Answer uniform cost manual Multiple Choice Multiple Answer Question The productive causes of idle time are : Correct Answer Instructions are not clearly given , Power failures , Machine breakdown Multiple Choice Multiple Answer Question The factors which influence the selection of the method for absorption of overheads are: Correct Answer Type of industry , Nature of products , Manufacturing process Match The Following Question Correct Answer Emerson's efficiency bonus system Actual hours X Hourly rate + Bonus percentage (Actual hours X Hourly rate) Piece rate system Output X Wage rate per unit Barth Premium system Hourly Rate X (square root of Standard Hours X Actual Hours) Time rate system Attendance time X Hourly wage rate Multiple Choice Single Answer Question If the overhead expenditure to be absorbed is the foreman's salary, the most appropriate basis for absorption would be : Correct Answer Direct labour hours True/False Question In case the standards are too difficult to achieve, they will provide additional incentive for improvement. Correct Answer False Multiple Choice Single Answer Question Standard cost specification per unit of product : 20 labour hours per unit @ Rs.22/- per labour hour.Actual production and labour cost : Actual production 300 units; time used in production -5,500 hours; Idle time -600 hours; time paid for-6,100 hours, total wages paid -Rs.146,400/- . Compute Idle time variance. Correct Answer Rs.13,200/- (Adverse) Multiple Choice Single Answer Question Details of budgeted and actual fixed overheads and output for the year 2004 are as follows : Budgeted fixed overheads -Rs.20,00,000/-; actual fixed overheads -Rs.21,50,000/-; budgeted output - 40,000 units and actual output- 45,000 units. Compute the per unit standard rate for fixed overheads. Correct Answer Rs.50/- Multiple Choice Single Answer Question In considering a special order situation that will enable a company to make use of presently idle capacity, which of the following costs would be irrelevant? Correct Answer Depreciation True/False Question Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of finished goods. Correct Answer True Multiple Choice Multiple Answer Question The management of Dick Ltd. is deciding whether to buy component Y from the supplier, since the purchase cost is less than the manufacturing cost. State the non-financial aspects that must be considered before arriving at a decision. Correct Answer Reliability regarding quality of the material supplied by the supplier , Alternative use of labour of engaged in manufacturing component Y , Regularity of material supplies from the supplier True/False Question In marginal costing, decisions are guided by profit rather than contribution margin. Correct Answer False Multiple Choice Single Answer Question Select the factor which can prove to be a very crucial key factor in case of an oil refinary. Correct Answer Supply of crude oil Multiple Choice Multiple Answer Question The factors to be considered while preparing the direct materials budget are : Correct Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved for specific purposes Select The Blank Question Excess direct labour wages will be disclosed by 'Direct labour________ variance'. Correct Answer Rate True/False Question The difference between sales and margin of safety is equal to budgeted sales. Correct Answer False Select The Blank Question A ________ note is prepared when excess material is returned to stores. Correct Answer Material returned Select The Blank Question The systematic process of identifying and reporting variance is known as ________. Correct Answer Variance analysis Match The Following Question Correct Answer [( Actual sales - Break even sales) ]/ Actual sales Margin of safety as a percentage of actual sales Fixed cost / Contribution margin ratio Break even point Fixed cost - (Sales X Profit volume ratio) Profit (Sales X Profit volume ratio) -Fixed cost Loss True/False Question Marginal costing rewards sales whereas absorption costing rewards production. Correct Answer True Select The Blank Question Dividend received on amount invested in shares is an example of ________. Correct Answer non-operating income Multiple Choice Single Answer Question The store-keeper should initiate action for the purchase of a material, when it reaches its : Correct Answer Re-order level Select The Blank Question Under-recovery of overheads implies that the profit will be________ to the extent of total under-recovered overheads. Correct Answer Increased Multiple Choice Single Answer Question Judge the statement in italics based on the criteria given. On 31st March, 2004 Sita Enterprises sent goods worth Rs.30,000/- on approval basis to Mr.Ram. These goods should be included in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz.Sita Enterprise. Correct Answer The statement and the reason both are correct Multiple Choice Single Answer Question Double entry system of accounting follows the principle of : Correct Answer Every debit has corresponding credit Multiple Choice Single Answer Question Where, in the final statements of accounts, should we disclosed the closing balance of income received in advance? Correct Answer Balance sheet - on the liability side True/False Question Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. Correct Answer True True/False Question In differential cost analysis, decisions are taken by comparing the incremental revenue with differential costs. Correct Answer True True/False Question Due to compensating errors the arithmetical accuracy of the trial balance is affected. Correct Answer False Select The Blank Question A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit completed, this type of labour cost may be classified as ________ cost. Correct Answer Semi-variable Multiple Choice Single Answer Question Following data has been extracted from the records of a manufacturing company whose level of operations varies during different months. Minimum activtity : 30,000 machine hours and manufacturing overeheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads. Correct Answer Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour Multiple Choice Single Answer Question You been informed that the carrying cost and ordering cost with best order size of 1,200 units is Rs.6,000/-. Unit cost of material is Rs.50/-. Annual storage cost per unit is 10% of the unit price of material. Ordering cost is Rs.240/- per order. Ascertain annual material requirement, assuming that at economic order quantity the total storage cost is equal to the total ordering cost. Correct Answer 15,000 units Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Select The Blank Question ________ variance arises when the mix of materials used in the production is different from the predetermined standard mix of operation. Correct Answer Materials mix True/False Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer True Multiple Choice Single Answer Question Over which of the following costs is the management likely to have least control? Correct Answer Buildings insurance cost Select The Blank Question Loss of uninsured goods by fire was debited incorrectly to United India Assurance Company's account instead of debiting it to ________ account. Correct Answer Goods lost by fire Multiple Choice Single Answer Question The given data pertains to the month of April : Budgeted : Fixed overheads Rs.10,000/-; output - 5,000 units; standard time for one unit - 4 hours. Actual : Fixed overheads -Rs.10,200/-; output - 5,200 units and actual hours worked - 20,100 hours. Calculate fixed overhead cost variance. Correct Answer Rs.200/- (Favourable) Multiple Choice Single Answer Question Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his annual salary is Rs.500,000/-, what amount should be charged as office overheads? Correct Answer Rs.300,000/- Multiple Choice Multiple Answer Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Correct Answer Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- , Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- Select The Blank Question Adjustment entries always have ________ effects. Correct Answer Two Multiple Choice Single Answer Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as :- Correct Answer Drawings Select The Blank Question The various contents of a uniform cost manual are organization, cost accounting system and ________. Correct Answer Presentation of information Multiple Choice Multiple Answer Question Which of the following information is included in the goods received note? Correct Answer Date of receipt of material , Quantity received , Description of goods Multiple Choice Single Answer Question In the trial balance prepared on 31st March, 2004, the insurance premium account had a debit balance of Rs.12,865/-. This amount is the premium of the policy which expired on 29th February, 2004. The policy has been renewed from 1st March, 2004 but the premium is not yet paid. Find the amount of insurance premium still payable as on 31st March, 2004. Correct Answer Rs.1,169.55 True/False Question All the properties owned by the business are collectively referred to as the assets of the business. Correct Answer True Multiple Choice Single Answer Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry? Correct Answer Uniform costing True/False Question Primary distribution is effected on the basis of service rendered to the service departments by the production departments. Correct Answer False Select The Blank Question Creche expenses may be appropriately apportioned on the basis of ________. Correct Answer Number of female workers True/False Question Debit Note is an intimation sent to person dealing with the business that his account is being credited for the purpose indicated therein. Correct Answer False Select The Blank Question Factory cost of a product is Rs.335,000/-, if the selling overheads are charged @ 25% of factory cost, then the amount of selling overheads should be Rs.________/- Correct Answer 83750 Multiple Choice Single Answer Question The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumption of X = 10 litres per unit of product. Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Correct Answer Rs.5,000/- (Favourable) Multiple Choice Multiple Answer Question The suspense account has a debit balance of Rs.40,000/-. Select the transactions which are capable of nullifying this balance. Correct Answer Conveyance expenses of Rs.25,000/- were posted on the wrong side of the account. , Purchased computer worth Rs.28,000/- was recorded in the ledger as , The total of the purchase book was cast short by Rs.44,000/- Multiple Choice Multiple Answer Question Items credited to Trading Account are :- Correct Answer Sales , Goods lost by fire , Closing stock Multiple Choice Single Answer Question As on 31st March, 2004, it was decided to write off Rs.800/- of debtors as bad debts. Also, provision for bad and doubtful debts is to be made @ 5% and for discount on debtors @ 4%. Find the net amount of debtors to be disclosed in the balance sheet, if the total debtors before the aforesaid adjustments is Rs.98,623/-. Correct Answer Rs.89,214.58 Select The Blank Question If the time booked as per the job cards is less than the attendance time it indicates ________ during which the worker has not done any work though he was present in the factory. Correct Answer Idle time Multiple Choice Multiple Answer Question The process of accounting has three streams of accounting ---------------,--------and ----------------------. Correct Answer Financial Accounting , Cost Accounting , Management Accounting Multiple Choice Single Answer Question Select the information to be considered before installing a costing system :- Correct Answer Labour intensity of the product Multiple Choice Single Answer Question The opening balance of cash account is Rs. 25,000/-, cash received from debtors Rs. 30,000/-, sold goods on cash basis amounting to Rs. 50,000/-, paid to creditors Rs. 20,000/-, purchase furniture Rs. 5000/-. What is the closing balance of the cash account? Correct Answer Rs. 80,000 Multiple Choice Single Answer Question The installation and operation of ___________ accounting requires a very elaborate organizational structure and large number of rules & regulations Correct Answer Management TO BE ANSWERED: (You can reply to me if you get the answers so that I can update the same) Where break even sales are Rs. 20000,fixed cost is Rs.10000and profit is Rs. 5000 then the margin of safety will be Rs. 10000 1500 15000 2000 Valuation of material uses the following methods FIFO and LIFO Average price method Market price Special price Goods distributed as free samples transfer to debit side of trading A/C . True / False In Citizen Ltd., Division X is a profit centre which produces three products, A, B and C. The details are as follows : External market price per unit:-Product A- Rs.48/-, Product B- Rs.46/-, Product C-Rs.40/-. Maximum external sales(units):-Product A- 800, Product B-500, Product C-300. Variable cost per unit:-Product A- Rs.33/-, Product B- Rs.24/-, Product C-Rs.28/-. A-800 units; B-500 units; C-300 units A-800 units; B-250 units; C-200 units A-400 units; B-500 units; C-300 units A-400 units; B-800 units; C-300 units XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Rs.20,000/- (Adverse) Rs.20,000/- (Favourable) Rs.60,000/- (Adverse) Rs.60,000/- (Favourable A firm is able to break even at 60% capacity with budgeted fixed cost of Rs.300,000/-, budgeted selling price Rs.20/- per unit and budgeted contribution Rs.6/- per unit. The firm can produce and sell at 90% capacity but it is estimated that in that case Rs.88,500/- Rs.75,000/- Rs.82,500/- Rs.72,500/- The annual variable production overheads of a factory are Rs.70,000/-. The production manager anticipates that in the next year, the production efficiency will decrease by 4%. Find out budgeted production overheads for the next year. Rs.72,800/- Rs.78,200/- Rs.72,916.67 Rs.79,216.67 XYZ & Co. is a partnership with X and Z as partners. The capital of X is Rs.58,000/- and that of Z is Rs.75,000/-. Interest on capital is charged @ 12% p.a. and interest on drawings is charged @ 5% p.a. The drawings of X totaled to Rs.15,000/- and that of Z totaled to Rs.12,000/-. The profit for the year after considering interest on capital and drawings is Rs.125,000/- and the profits are shared in the ratio of their capitals, i.e. 58 : 75. Find the balance of capital accounts after giving X - Rs.118,721.28 and Z -Rs.153,888.72 X - Rs.120,221.28 And Z - Rs.155,088.72 X - Rs.119,471.28 And Z - Rs.154,488.72 X - Rs.135,448.28 And Z - Rs.138,511.72 Factory rent is a direct cost to the factory as a whole but indirect to the production departments. True / False The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract should be defined as : Direct labour cost Indirect labour cost Fixed labour cost Non-controllable labour cost The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumptiion of X = 10 litres per unti of product.Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Rs.1,000/- (Favourable) Rs.4,000/- (Adverse) Rs.5,000/- (Favourable) Rs.3,000/- (Adverse) The following particulars are extracted from the books of a company relating to commodity "A" for the half year ending 30th June, 2004. (a) Purchase of raw materials - Rs.1,32,000/- (b) Direct wages - Rs.1,10,000/- (c) Rent, rates and insurance - Rs.44,000/- (d) Carriage inwards - Rs.1,584/- (e) Raw material as on 1st Jan, 2004 - Rs.22,000/- (f) Finished goods as on 1st Jan, 2004 - Rs.17,000/- (1600 tonnes) (g) Raw Material as on 30th June, 2004 - Rs.24,464/- (h) Finished goods as on 30th June, Rs.64,800/- Rs.46,800/- Rs.86,400/- Rs.68,400/- Annual maintenance of Rs.28,000/- was paid on 15th June, 2003 for a period of one year therefrom. Find the amount of prepaid maitenance expenditure for the year ended 31st March. Rs.28,000/- Rs.22,167/- Rs.7,000/- Rs.5,833/ The Balance Sheet method of cash budget ignores any excess or shortage of cash during the budget period. True / False Compound journal entry avoids duplication of effort. True / False Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of India. On 31st January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-; Current accountRs.2,250/- (overdraft). It is found that a deposit of Rs.1,500/- made into the savings account on 20th January, 2004 has been entered in the ledger in the of Current account. Find the correct ledger balances of savings and current accounts. Savings account-Rs.5,000/-, current account-Rs.3,750/- (overdraft Savings account-Rs.5,000/-, current account-Rs.2,250/- (overdraft) Savings account-Rs.6,500/-, current account-Rs.2,250/- (overdraft) Savings account-Rs.6,500/-, current account-Rs.3,750/- (overdraft) Which of the following source documetns in a cost accounting system is designed to exercise control voer the delivery of and accurate recording of the receipts of goods? Goods received note Order to the supplier Material requisition note Purchase requisition slip Select the cases where convention of conservation is applied : Closing stock is valued at cost or market price whichever is lower Providing for discount on debtors Amorisation of goodwill (goodwill being written off to Profit and Loss Account) Providing for discount on creditors M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-, Rs.80/- and Rs.50/-, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantitywise proportion in which these products are manufactured and sold are 20%, 30% and 50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to work out the overall break even point qunatity for 30,000 units 90,000 units 40,000 units 80,000 units A firm is earning a profit of Rs.60,000/- at the present sales level of Rs.500,000/-. It has a profit volume ration of 60%, which remains unchanged. Fixed cost increases by 25% as soon as sales become twice the break even point. Find the profit for sal Rs.240,000/- Rs.180,000/- Rs.120,000/- Rs.200,000/- At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What will the 401st unit sold contribute to profit? Re.0 Re.0.50 Re.1.00 Rs.1.50 1. Advantage of budgetary control system 1. Motivates the managers to exceed the budgeted targets 2. Fixed budget 2. Managerial tool which decreases effectiveness of managerial control 3. Disadvantage of budgetary control system 3. More elastic and practical 4. Flexible budget 4. Difficult to implement in fast changing industrial scenario 5. Restricts the efforts of the managers to the budgeted targets 6. Managerial tool which increases effectiveness of managerial control With the help of the given information, find actual fixed overheads for actual output. Fixed overheads volume variance -Rs.75,000/- (Favourable); fixed overheads efficiency variance -Rs.95,000/- (Favourable); fixed overheads calendar variance Rs.20,000/- (Adverse); fixed voerheads expenditure variance Rs.100,000/- (Adverse) and standard fixed overheads for actual output -Rs.575,000/-. Rs.600,000/- Rs.550,000/- Rs.525,000/- Rs.625,000/- Existing sales are Rs.100,000/- (500 units), variable costs are Rs.60,000/-, fixed costs are Rs.24,000/-. If selling price is reduced by 10% which of the following is the breakeven sales quantity? 450 units 500 units 400 units 334 units An operator engaged in machining certain components receives andordinary day rate of Rs.160/- per day of 8 hours. The standard output for machining the components has been fixed at 80 pieces per hour (time fixed for premium bonus). On a certain day, the output of the worker on this machine is 800 pieces. Find the labour cost per 100 pieces if a bonus of Rs.25/- is paid per 100 pieces of the extra output. Rs.25/- Rs.20/- Rs.15/- Rs.10/- Under the accelerating premium system incentive increases at a fast rate with the decrease in output. True /False A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of copper. Rs.200,000/- Rs.150,000/- Rs.350,000/- Rs.180,000/- Sold goods to Amitabh worth Rs. 15,000/- against 15% trade discount. In this case with what amount should the sales account be credited? Rs. 15,000 Rs. 12,750 Rs. 13,500 Rs. 13,750 Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance. Material cost variance -Rs.400/- (Adverse) Material usage variance -Rs.750/- Material usage variance is favourable Material usage variance is adverse Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the date of payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss account as expenditure on account of insurance premium? Rs.18,000/- Rs.14,250/- Rs.10,500/- Rs.3,750/- The standard cost of actual hours when any employee remains idle due to abnormal circumstances is known as Standard labour cost / Idle time variance / Labour cost variance / Standard cost. Keeping company's liquid position sufficiently sound to meet its daily obligation is the main object of preparing Cash Sales / Income / Expenditure / budget. One of the major drawback of the contribution approach to costing is that it ignores fixed cost. True / False Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account will be disclosed in the … Profit and Loss Account - credit side Balance Sheet - liability side Balance Sheet - asset side Trading Account - debit side A withdrawal of Rs.500/- from Mr.Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr.Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr.Johny, find out the balance as per his bank book. Rs.1,750/- (overdraft) Rs.1,750/- (debit) Rs.2,250/- (overdraft) Rs.2,250/- (debit) What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges on the lathe machine were debited to Carriage inward account, Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous expenses account, Rs.200/- Cost will increase by Rs.900/- Cost will increase by Rs.1,300/- Cost will decrease by Rs.1,300/- Cost will decrease by Rs.900/- From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments :X- Rs.48,000; Y-Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B-Rs.18,000. The expenses of the service departments are apportioned as follows : Service department A - Production department X-20%; Production department Y - 40%; Production department Z- 30%; Service department B - 10%.Service department B- Production department X-40%; Production department Y - 20%; production department Z- 20%; Service department A - 20%. Details of machine hours are as follows: Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-1,000 hours. X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 From the given information compute the total cost variance. Material cost variance -Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/- (adverse). Rs.32,850/- (Adverse) Rs.32,850/- (Favourable) Rs.24,050/- (Adverse) Rs.24,050/- (Favourable) Judge the given statement according to the given criteria :- 'Provision for doubtful debts account' and 'provision for discount on debtors account' mean same account can be maintained under two account-heads, since both are related to debtors and indicate a loss to the organization. The statement and the reason both are correct The statement and the reason both are incorrect The statement is correct but the reason is incorrect The statement is incorrect but the reason is correct 1. Ordering cost 1. Cost of holding the inventory 2. Carrying cost 2. Cost of issuing the inventory 3. Material cost 3. Cost of administrative efforts 4. Cost of material consumed 4. Can be obtained subtracting opening stock from the sum of material cost and closing stock 5. Can be obtained subtracting closing stock from the sum of material cost and opening stock 6. Sum of possession cost, ordering cost and purchase cost The pass book showed a credit balance of Rs.1,000/-. This balance was after considering the dividend of Rs.25/- collected by bank and Rs.5/- charged as collection expenses: these entries are not made in the bank book. Find the balance as per bank book. Rs.1,000/- Rs.1,030/- Rs.1,020/- Rs.980/- Compute fixed overheads calendar variance when fixed overhead volume variance is Rs.250/- (Favourable); fixed overheads efficiency variance is Rs.2,150/- (Adverse) and fixed overheads capacity variance is Rs.800/-(Favourable). Rs.1,100/- (Adverse) Rs.1,100/- (Favourable) Rs.1,600/- (Adverse) Rs.1,600/- (Favourable) Routing the purchase requisition through the purchase department entails unnecessary delay in receiving the required materials. True /False Large angle of incidence indicates Lower /Adjusted /Higher /Same amount of profits. The method of overhead apportionment which considers both the material cost as well as the labour cost, is known as Supplementary rate /Prime cost percentage rate /Direct labour hour rate /Machine hour rate method. Standard labour cost of producing 500 metre of cloth has been specified as 20 hours work by skilled workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per hour. For producing 500 metre cloth they worked for 30 hours each they were paid at the rate of Rs.17/- per hour and Rs.10/- per hour, respectively. Calculate labour mix variance. Rs.210/- (Adverse) Rs.60/- (Adverse) Rs.150/- (Adverse) Rs.30/- (Adverse) In a factory Ram and Shyam produce the same product using the same input of same material and at the same normal wage rate. Bonus is paid to both of them in the form of normal time wage rate adjusted by the proportion which time save bears to the standard time for the completion of the product. The time allotted to the product is fifty hours. Ram takes thirty hours and Shyam takes forty hours to produce the product. The factory cost of the product for Ram is Rs.3,100/- and for Shyam is Rs.3,280/-. The factory overhead rate is Rs.12/- per hour. Calculate the cost of material used for the product, for each worker, Ram and Shyam. Rs.3,000/- Rs.2,000/- Rs.3,320/- Rs.2,320/- Provision for discount on debtors account should be credited to the Profit and Loss Account. True /False Consideration to the fact that the repairs and maintenance cost is less in the initial years of life of the asset and hence needs to be counterbalanced by higher amount of depreciation in the :- Straight line method Written down value method Endowment policy method Sinking fund method The following data is available for a company for the month of April, 2004 : Territory I : selling expenses Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold -16,000; sales Rs.76,000/-. Territory II : selling expenses Rs.4,200/-; distribution cost Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory III : selling expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales Rs.52,000/-. The company adopts sales basis and quantity basis for application of selling and distribution costs respectively. Compute the amount of selling and distribution costs chargeable to a consignment of 4,000 units of a product sold in each territory at Rs.2.50 per unit. Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/- Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/- Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- SRR Ltd. producing a single product, sells it at Rs.50/- per unit. Unit variable cost is Rs.35/- and fixed costs amounts to Rs.12,00,000/- per annum. Calculate the increase in sales required if profits are to be increased by Rs.2.4 lakhs Rs.880,000/- Rs.800,000/- Rs.600,000/- Rs.660,000/- Re-order level should be higher than Monthly requirement /Average stock level /Annual requirement /Minimum level but lesser than maximum stock level. What is the balance of the cash account after considering the relevant transactions from the following set : 4th July, 2004-Sold goods to Deshmukh & Co. for Rs.2,500/-; 5th July, 2004-Received Rs.5,000/- for rent of June, 04; 7th July, 2004-Paid salaries by cheque for Rs.8,000/-; 15th July, 2004-Received commission, in cash, from XYZ Ltd., Rs.3,000/-; 21st July, 2004-Paid salaries by cash Rs.2,500/-; 22nd July, 2004-Deposited cash into Bank of India Rs.3,000/-; 25th July, 2004-Purchased furniture from Shantilal for Rs.10,000/-. Shantilal has given a credit period of 45 days; 26th July, 2004-Paid cash for purchase of machine from Elpro Ltd. For Rs.30,000/-; 28th July, 2004-Paid ready cash for advertisement inserted in newspaper, Rs.200/-; 28th July, 2004-Withdrawn cash from Bank of India Rs.50,000/-. Rs.22,300 (debit) Rs.22,300 (credit) Rs.33,200 (debit) Rs.33,200 (credit) Factory cost is Rs.13,10,800/-. The administrative overheads are salaries Rs.40,000/-, rent and rates Rs.6,400/-, traveling expenses Rs.12,400/-, Depreciation Rs,2,400/-, Directors fees Rs.24,000/-, General Charges Rs.24,800/-, Manager's salary Rs.38,400/-. What will be the office cost? Rs.14,59,200/- Rs.11,72,200/- Rs.13,10,800/- Rs.15,10,800/- XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Rs.20,000/- (Adverse) Rs.20,000/- (Favourable) Rs.60,000/- (Adverse) Rs.60,000/- (Favourable) The concept of marginal costing is based on the important distinction between product costs and Indirect /Direct /Variable /Period costs. Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is Rs.180/- per unit. Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company has a proposal that the sales staff may be paid a commission of 10% of sales instead of fixed salaries totaling Rs.80,000/-. This action is expected to increase the sales by 10%. Compute the amount of profit assuming the proposal is accepted? Rs.177,000/- Rs.200,000/- Rs.178,000/- Rs.277,000/- A company has a normal capacity of 120 machines, working 8 hours per day of 25 days in a month. The fixed overheads are budgeted at Rs.144,000/- per month. The standard time required to manufacture one unit of product is 4 hours. In April, 2004, the company worked 24 days of 840 machine hours per day and produced 5,305 units of output. The actual fixed overheads were Rs.142,000/-. Compute calendar variance. Rs.6,360/- (Favourable) Rs.17,280/- (Adverse) Rs.5,760/- (Adverse) Rs.16,680/- (Adverse) Industries which have high fixed cost burden but low variable cost have Narrow /Smaller /Larger /Flat angle of incidence. Special aspects of co-partnership include:- Workers are granted ownership rights Indirect monetary remuneration The morale of the workers is increased The workers are rewarded for individual efficiency The credit purchases are as follows : July Rs.80,000/- and August Rs.140,000/-. Creditors are paid either on a 'prompt basis' (on the spot) or 30 days basis. It is estimated that 10% of the creditors are in the prompt category. Find the amount paid :- Rs.161,000/- Rs.121,000/- Rs.177,000/- Rs.118,000/- The use of contribution per unit of limiting factor as the basis for ranking products to be produced and sold is aimed at which of the following? Maximization of turnover Minimization of turnover Maximization of short-term profit Maximization of long-term profit Obsolescence arises when a machine has to be discarded in favour of one better adopted to its purpose and giving better result. True /False A manufacturing unit produces electronic circuits at the rate of 6 pieces an hour. The unit works in single shift of 8 hours during a six-day week and remains close for 18 days a year on account of holidays. Average idle hours per month is 20 for cleaning and maintenance of equipments. Against an average annual output of 12,000 pieces during last ten years, the actual output achieved during the year was 10,800 pieces. The fixed overheads for the year amounted to Rs.540,000/-. You are required to calculate the idle capacity costs on the assumption that overhead recovery rate is based on maximum capacity. Rs.207,121.60 Rs.200,000/- Rs.193,121.60 Rs.187,000/- Select The Blank Question The costs incurred for recruitment and training of new workers and the resulting losses wastages and reduced productivity due to the inefficiency and inexperience of new workers is referred to as the _______. Correct Answer Replacement costs Question The ideal standards are generally ________ in nature and the variances always shows _______ trends Correct Answer theoretical Correct Answer unfavorable Question In process of establishing the standards, the following steps are involved Correct Answer Study of technical details , Study of existing costing system , Decision about types of standards to be used. Question The cost that tends to remain constant irrespective of the level of activity is called Correct Answer fixed cost Question A business is an activity carried out with the intention of earning the profit. Correct Answer True Question Cost Accounting restrict itself with historical transactions Correct Answer False Question These are the methods of measuring labour turnover. Correct Answer Replacement Method , Separation Method , Flux Method Question Valuation of returns indicates the material returned by store department to production department Correct Answer False Question In case of industries where capital investment is very high, budget should be prepared for a Correct Answer Longer period Question ________ and ________ are examples of semi- variable overheads. Correct Answer Maintenance cost Correct Answer electricity Question Balance sheet indicates the financial status of the business at given period. Correct Answer True Question __________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities like investors, suppliers, customers etc. Correct Answer Financial Question Purchased computers of Rs. 50,000 come under the heading of fixed asset Correct Answer True Question In Cash budget , Non operating cash inflow includes Correct Answer Receipt of loan/borrowings , Issue of shares , Sale of fixed assets Question Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 5000. The total amount transfer to advertisement account is Rs.____ Correct Answer 15,000 Question Convention of Materiality __________________ Correct Answer Only those transactions will be considered which have material impact on profitability , Insignificant transaction will be ignored , The cost of non-used should not be considered as the item of cost Question Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed cost is Rs. 18,02000. Find out the BEP in units, Correct Answer 53000 Question The opening balance of cash account is Rs. 25,000, cash received from debtors Rs. 30,000, sold goods amounted to Rs. 50,000, paid to creditors Rs. 20,000, purchase furniture Rs. 5000. What is the clos Correct Answer 80,000 Question It is the cost of opportunity foregone. Correct Answer Opportunity Cost Question Under Gannt Task bonus system where the output is ________ payment is made as per minimum time rate, output is ________ payment is made as per time wages plus some increase in wage rates Correct Answer below standard Correct Answer at standard Question Standard costing may not be useful for forecasting purposes Correct Answer True Question Factory overheads, administration overheads , selling and ________ overheads are the form of ________ classification of overheads Correct Answer distribution Correct Answer function wise Question Amit sold Goods to Atul for Rs. 50,000 on cash & Rs. 50,000 on credit basis & allowed 10% discount on on the spot transaction. Cash Account debited to Rs. _____________ Correct Answer 45,000 Question A key factor is defined as the factor which, at a particular point of time or over a period will ________ the volume of ________ Correct Answer limit Correct Answer output Question Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer True Question Fixed cost is the cost that tend to remain ________ irrespective of ________ Correct Answer constant Correct Answer level of activity Question The bank pass book or the bank statement is the extract of the account in the name of the business as it appears in the books the business. Correct Answer False Question Sales Budget is a forecast expressed in ________ and ________ terms. Correct Answer quantity Correct Answer Money Question Due to compensating errors the arithmetical accuracy of the trial balance get affected. Correct Answer False Question The process of ________ can followed to decide the ________ of overheads to each budget center Correct Answer Allocation & apportionment Correct Answer Loading Question LAST IN FIRST OUT (LIFO) Correct Answer The price of the latest available lot is considered first , If that lot is exhausted, the price of the 10% prior to that is considered , Physical issue of the material may not be made out of the said lot Question Standard Costs are used as tool for Correct Answer Cost Control Question Variable costs are the controllable costs at the ________ level of the management whereas fixed costs can be controlled only on the ________ level of the management Correct Answer Lower Correct Answer Top Question Along with financial accounting, ________ and ________ are the other streams of accounting Correct Answer Cost Accounting Correct Answer Management Accounting Question Bin Card Includes Correct Answer Entries in receipt column on basis of goods received note or material returned note , Entries in issue column on basis of material requisition note , The balance quantity is calculated and recorded Question classification of the overheads as fixed and variable ,facilitates the preparation of flexible budgets. Correct Answer True Question Under Merrick Differential Piece rate System of wage payment up to 83% of efficiency following rate is offered. Correct Answer Normal Question The following factors affects the budgeted advertisement cost Correct Answer Percentage of profits , Availability of funds , Competitors policy Question A bank reconciliation statement is prepared on a particular date. Correct Answer True Question Profit & Loss Account shows Gross Profit 13,000. Expenses incurred as Telephone charges 1500, Traveling expenses 3000, Salary paid 2000, discount allowed 500, depreciation 200. Calculate the net profi Correct Answer 5800 Question Balance sheet liability side includes Correct Answer Loan & advances , Outstanding expenses , Creditors Question ________ and ________ are non monetary incentives Correct Answer Safety services Correct Answer education facility Question Accounting period Concept________________ Correct Answer Longer life-span on business is divided into shorter segments , Each one being in the form of accounting period , Selection of accounting period may depend on various factors Question Bank reconciliation statement is the statement prepared to explain the reasons as to why the bank balance as per pass book and bank balance as per bank book does not match. Correct Answer True Question These are the replacement costs of labour turnover. Correct Answer cost of personnel administration , cost of selection and placement , increased spoilage and defectives Question These are the replacement costs of labour turnover. Correct Answer Inefficiency of new workers , Cost of selection and placement , Increased spoilage and defectives Question Depreciation Correct Answer Amount charged on Fixed Assets. Question The sales day book of October 1991 was overcast by Rs. 10,000, which A/C to be debited. Correct Answer Sales A/C Question The cost accountancy is defined as “ the application of costing principles,methods and techniques to the ________, art and practice of ________ ascertainment of the profitability and the presenta Correct Answer science Correct Answer cost control Question A Co. having net sales Rs. 7,50,000, opening stock 1,14,375, purchases, 483,375 closing stock 1,47,750. Calculate the Gross Profit Correct Answer 3,00,000 Question Standard Costing system facilitates ________ and ________ for each individual or department Correct Answer Delegation of authority Correct Answer Fixation of responsibility Question Creditor Correct Answer Supplier Question The overhead is aggregate of Correct Answer Indirect labour cost , Indirect material cost , Indirect Expenses Question The wage payment system should take into consideration the external obligations such as the Minimum wages Act and the agreement entered into by the organization with the workers. Correct Answer True Question Bank Reconciliation statement is required in case of Correct Answer difference between the bank balance as per the bank book and as per pass book Question Trial balance is drawn on a particular date Correct Answer True Question Tallying of trial balance is conclusive evidence of the total accuracy of the books of account. Correct Answer False Question A very wide scope of Management Accounting is the limitation by itself. Correct Answer True Question Sundry creditors transfer to asset side. Correct Answer False Question ___________ Accounting is the process of classifying and recording of the expenditure in a systematic manner with the intention of ascertaining the cost of cost centre with the intention of controllin Correct Answer Cost Question This is one of the avoidable cause of labour turnover. Correct Answer Relationship with supervisors and workers Question Non-Operating / Financial Incomes are deducted from operating profit while calculating Net profit. Correct Answer False Question Semi ________ overheads are neither ________ nor variable in nature. Correct Answer fixed Correct Answer variable Question Standard Costing specifically relates to the function of Correct Answer Production Question Balance sheet indicates the expenditure & income from the business. Correct Answer False Question Credit note is an intimation send to person dealing with the business that his account being debited for the purpose indicated therein. Correct Answer False Question Debtors Correct Answer Who owes money to the business Question Fixed assets do not give the returns during the same period during which they are paid for Correct Answer True Question These are the special type of cost Correct Answer Opportunity cost , Differential cost , Sunk cost Question Discount received from the Creditors has been entered in the Creditors A/C but discount amount has not been credited, for rectifying such error which account to be debited. Correct Answer Suspense A/C Question Under this method of time keeping , each worker is allotted an identification number and a disc or token bearing that number. Correct Answer Token or Disc Method Question Under marginal costing semi variable costs are also classified in their individual components of fixed cost and variable cost. Correct Answer True Question Labour Rate Variance occurs due to Correct Answer Change in wage structure , Use of different methods of payment , Wage difference Question Break even point is a situation of no ________ no ________ Correct Answer profit Correct Answer loss Question It is an appropriate basis of apportionment of depreciation expenditure Correct Answer value of assets Question Wage rate standards takes into consideration the following factors Correct Answer The system of wage payments , System for bonus payment , Grades of workers required Question Replacement costs refer to all costs incurred for recruitment and training of new workers. Correct Answer True Question While selecting source of supply ________ epartment may call for the ________ from the prospective suppliers Correct Answer purchase Correct Answer quotation Question P/L A/C debit side includes Correct Answer salary , discount allowed , postage & telegram Question Ifidle time payment is abnormal , it should be classified as overheads. Correct Answer False Question Bank reconciliation statement is the statement prepared to explain the ________ as to why the bank balance as per ________ and bank balance as per bank book does not match Correct Answer reasons Correct Answer pass book Question Accounting to the matching principles of accounting, the ________ incurred during an accounting period are required to be match with ________ during that period Correct Answer cost Correct Answer revenues Question Expenditure like general lighting are apportioned considering ________ as a base and expenditure like depreciation are apportioned considering ________ as a base. Correct Answer number of light points Correct Answer value of assets Question Planning lays down the course of action to be taken in future. In case budgetary control, it is in the form of the ________ and in case of ________ costing, it is in the form of the standard cost Correct Answer standard Correct Answer budgets Question Following are various forms of limiting factor Correct Answer market , labour , machine availability Question These are normal bases for primary apportionment of overheads. Correct Answer value of assets , HP/KWh , number of light points Question Due to errors of principle the arithmetical accuracy of the trial balance does not get affected. Correct Answer True Question The situation of over absorption arises if the overheads absorbed are less than the actual overheads. Correct Answer False Question Depreciation can be defined as a permanent , continuous and gradual reduction in the book value of a fixed assets. Correct Answer True Question Balance sheet asset side includes Correct Answer Furniture , Vehicle , Land & building Question In case of the under or over absorption of the overheads arising out of the normal circumstances , they are written off to costing profit and loss account. Correct Answer False Question Due to errors of principle the arithmetical accuracy of the trial balance get affected. Correct Answer False Question Trading a/c credit side includes Correct Answer sales , goods lost by fire , closing stock Question variable cost is the cost that tend to ________ in direct proportion with ________ Correct Answer vary Correct Answer level of activity Question Preliminaries for establishing Standard costing system includes Correct Answer Establishment of cost centers , Design of accounts , Establishment of standards Question Bank of Maharashtra A/C is a personal A/C Correct Answer True Question Adverse labour time variance may be due to Correct Answer Poor grade of labour , Defective plant & machinery , Poor quality of material Question This is the best example of element wise classification of cost. Correct Answer material Question Highest in first out Correct Answer This method assumes that the stock should always be shown at the minimum value Question Standard price creates complications in accounting system and increase clerical work. Correct Answer False Question Limitations of Management Accounting includes------------------- Correct Answer Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure Question Trade Discount Correct Answer Amount received on purchases Question In a Balance-Sheet right hand side is a Asset side & left hand side is liability side Correct Answer True Question The stages of cost control involves Correct Answer To plan the operation , Execute the plan & measuring the actual performance , Computing the variations between planned & actual performance Question __________ Accounting becomes a source of information for Management Accounting. Correct Answer Financial Question The levels indicated on the Bin card enables the ________ department to keep a watch on the balance and replace the material as soon as it reached at ________ level. Correct Answer Stores Correct Answer Re-order level Question Under Merrick Differential Piece rate System of wage payment above 100 % of efficiency following rate is offered. Correct Answer 130% of normal piece rate Question This is an example of semi variable overheads. Correct Answer electricity Question Following error affect the trial balance Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Question A Budget center may be in the form of Correct Answer A product , A department , A branch of the company Question Under absorption of overheads may take place due to the reasons like ________ overheads being more than the ________ overheads Correct Answer actual Correct Answer estimated Question If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount Correct Answer depreciation Correct Answer overstated Question Preventive costs of labour turnover refers to all the costs which may be incurred by the organisation to keep workers happy and ________ them from ________ the job Correct Answer discourage Correct Answer leaving Question Replacement costs of labour turnover are ________ and ________ Correct Answer training Correct Answer breakages of machine Question When the balance in the ledger account of the previous year are entered the current year’s books, the balances are said to be bought forward. Correct Answer True Question Sales at 1,00,000 units are Rs. 1,00,000 , variable costs Rs. 40,000 and fixed cots is Rs.50,000. What is Break even point ? Correct Answer Rs. 83,333 Question The material physically received is compared with material ordered as per the this order Correct Answer Purchase order Question Interest Received amounted to Rs. 10,000/- is to be transfer to ___ Correct Answer Profit & Loss A/C credit side Rs. 10,000 Question Under the daily ________ sheets method, each worker is provided with a daily time sheet on which time ________ by him on various jobs is expected to be mentioned Correct Answer Time Correct Answer Spent Question Material Price Variance may occur due to Correct Answer Change in price of material , Failure to take discounts , Weak purchase organization Question Selling and distribution overheads includes Correct Answer Indirect Material such as packing material, samples etc., , Indirect labour like salaries to sales personnel manager , Indirect expenses like warehouse charges, advertisement Question Idle time is the time required to complete particular job. Correct Answer False Question All items which do not involve cash flow will be considered for while preparing Cash Budget. Correct Answer False Question The quantitative record of receipts, issues and closing balance of an item of material is called Bin-Card. Correct Answer True Question The amount of money that is paid for is classified as ________ and ________ for the purpose of accounting Correct Answer Capital Expenditure Correct Answer Revenue Expenditure Question The material physically received compared with material order as per the purchase order may reveal the following forms of discrepancies Correct Answer Quantity received in excess , Quantity received in short , Quantity received of different quality Question Book keeping is clerical while accounting is managerial Correct Answer True Question ________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account Correct Answer Like office rent, Correct Answer Audit fees Question Cash received from credit sales, Cash account to be credited. Correct Answer False Question The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost? Correct Answer 37,86,000 Question Cost Accountancy is a science, art and practice of a cost Accountant. Correct Answer Science indicates the possession and the application of relevant systematic knowledge. , Art indicates the skill and ability. , Practice indicates continuous effects on the part of cost accountant. Question Under stocking may have following consequences Correct Answer Payment for idle time to workers , Production hold ups resulting into disturbed delivery schedule , Eleventh hour purchase Question Per unit cost of variable overheads may reduce as the volume of output increases but the total overheads remain constant. Correct Answer False Question A properly laid down system of Standard Costing helps in implementation of Correct Answer Budgetary Control Question Store ledger Correct Answer Record of all receipts and issue transactions , Financial expressions of all transactions , Maintenance of Store ledges provides a second check Question It is necessary to ignore key factors while taking decision by marginal costing technique. Correct Answer False Question The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer True Question Financial statements are basically in two forms i.e. profitability statement and balance sheet. Correct Answer True Question Financial Accounting discloses the financial performance & financial statements of the business as a whole. Correct Answer True Question Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting Correct Answer True Question According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of cost of asset after deduction of the depreciation previously charged. Correct Answer True Question Discount received from the creditor has been entered in the creditor's account but discount has not been credited; what type of error is this ________ Correct Answer Omission of posting an amount in the ledger Question Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________ Correct Answer decrease in gross profit by Rs.2,020/- Question The variable costs are controllable at the lower lever. Correct Answer True Question A person in charge of a ________ may be held responsible for its proper functioning and cost control. Correct Answer Cost centre Question The cost that indicates historical cost, which is incurred in past, is known as Correct Answer Sunk cost Question The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from a ascertain the cost, is known as . . . Correct Answer Cost accounting Question Which of the following transactions should be excluded while preparing a cost sheet ? Correct Answer Interest on loan , Bad debts , Expenses on criminal law suit Question Examples of indirect material are Correct Answer Consumable stores , Glue used in book binding , Nails used in packing boxes Question The process of attributing proportions of items of costs amongst const centres is called ________. Correct Answer Cost apportionment Question Contents of Uniform Cost Manual are Correct Answer Organization , Cost Accounting system , Presentation of information Question It is said that adoption of uniform costing creates customer confidence because . . . Correct Answer Prices are reliable Question Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries. Correct Answer False Question The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions. Correct Answer Control Question Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be the amount of debtors that must be disclosed in the balance sheet? Correct Answer Rs.53,750/- Question Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed. The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the year ending 31st March, 2004. Correct Answer The net profit will decrease by Rs.18,000/- Question Annual sales were Rs.10,50,000/- and sales returned by customers amounted to Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount of incentive due to the salesmen. Correct Answer Rs.30,660/- Question Depreciation on assets is credited to the trading account. Correct Answer False Question Balance sheet is considered to be a part of the financial statements. Correct Answer True Question Long term loan borrowed from financial institution comes under the heading of long term liabilities. Correct Answer True Question The balance as per bank book as on 30th November, 2004 was Rs.6,500/- and the bank pass book balance as on the same date was Rs.8,015/-. Select the transactions representing the reasons for this difference. Correct Answer Cheques deposited but not cleared Rs.1,200/- , Unpresented cheques Rs.2,625/- , Bank interest not entered in the bank book Rs.90/- Question Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the bank book. Correct Answer Credited Question A materials requisition form normally contains the following aspects: Correct Answer Quantity requisitioned , Per unit material cost , Job number Question A complete list of all material required, with quantities, for a particular job is given in the ________. Correct Answer Bill of material Question A producer is using certain tool item in productive process. Annual requirement is 20,000 units of the tool. Cost of ordering a lot is Rs.160/-. Per unit price of the tool is Rs.360/-. Annual interest cost is 10%, insurance cost is 0.5% of the average inventory in stores, and other storage expenses are Rs.2.20 per unit. Calculate annual ordering cost. Correct Answer Rs.8,000/- Question A written request sent to a supplier for specified goods at an agreed upon price is often called as : Correct Answer Purchase order Question Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product. Correct Answer True Question The perpetual inventory system enables management to ascertain stock without physical verification. Correct Answer True Question The main advantages of profit sharing are : Correct Answer Employees try to increase productivity , Incentives are shared by all the employees , Augments emplyees' efficiency Question It is the ________ method of measuring labour turnover which is a combination of separation method and replacement method. Correct Answer Flux Question Measurement of ________ gives an idea of the degree of mobility of labour. Correct Answer Labour turnover Question Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer Personnel Question Merits of break even point analysis are as follows: Correct Answer Useful diagnostic tool. , Used for analysing the risk implication of alternative actions. , Used to graphically represent complicated data. Question Annual fixed cost of a producer is Rs.500,000/-. The price of its product is Rs.60/- and per unit variable cost is Rs.40. In the next year his fixed cost commitments are expected to go up by 20%. By what percentage the break even point will go up in the next year. Correct Answer 0.2 Question A firm earns profit when contribution is equal to fixed costs under variable costing. Correct Answer False Question Labour efficiency variance arises due to: Correct Answer Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material Question Actual costs determined on the basis of costing records maintained have following limitations : Correct Answer No practical utility from control point of view , No practical utility for price fixation , Expensive Question A standard that is never altered, after being established, is known as ________ standard. Correct Answer Ideal Question Standard costs are used for external reporting. Correct Answer False Match The Following Question Correct Answer Book-Keeping Books of Accounts Financial statement Profitability statement & Balance-sheet Accounting Process of analyzing & interpretation Profitability statement Indicates the amount of profit earned Balance-sheet Financial status Match The Following Question Correct Answer Quality control dept control the quality of the product Time booking dept jobwise booking of time Personnel department Selection & training to workers Time Keeping Department Recording of workers time Cost accounting dept Accumulation & classification of cost data Match The Following Question Correct Answer Lighting Number of light points Rent Area Power Hp/KW Depreciation Value of assets canteen expenses number of workers Match The Following Question Correct Answer Goodwill Real A/c Nominal Account Wages A/C Capital A/C Personal A/C Building A/C Real A/C Salary A/C Nominal A/C Match The Following Question Correct Answer Owner Businessman Banker Financial Institution Debtors Credit Transaction Creditors Receive the money Suppliers Sale the Goods Match The Following Question Correct Answer Spirit of mutual trust Requisite for uniform costing Avoids cut throat competition Advantage of uniform costing Treatment given to research and development costs Fields covered by uniform costing Advantageously applicable in similar industries Scope of uniform costing Match The Following Question Correct Answer Deferred revenue expenditure Real account Deferred revenue expenditure written off Nominal account Loan Personal account Drawings Proprietor's account Question Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an example of_______ Correct Answer Error of Commission Question Labour cost indicates that labour cost which cannot be identified with the individual cost centre and is incurred for those employees who are not engaged in the manufacturing process but only assist i Correct Answer Remuneration Question To take make or buy decision under the marginal costing , if purchase price of the product is less than its variable cost it is advisable to go for manufacturing proposition. Correct Answer False Question Income received in advance transfer to current liabilities Correct Answer True Question If wages for the month of January, February and March are Rs.4,000, Rs.4,400 and Rs.4,600 respectively and if delay in payment of wages is ½ month , payment of wages for the month of February is Correct Answer 4,200 Question Management Accounting has a very ________ scope and it requires ________ organizational structure Correct Answer wide Correct Answer elaborate Question For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is 5,000 units and consumption is 3,20,000 units, what will be the quantum of raw material to be purchased Correct Answer 3,15,000 Question Important advantages of Uniform Costing can be said to be Correct Answer It is a useful tool for management control , It avoids cut throat competition , Weaker units can take advantage of settled systems of better managed units Question Actual costs may be affected due to inefficient functioning such as Correct Answer Abnormal expenses , In efficient use of labour , In efficient use of material Question Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500. Correct Answer Rs.4500/- ( Favorable ) Question Sales quantity may be forecasted after taking into consideration various factors such as Correct Answer Analysis of past trends , Market research , Reports by salesmen Question For taking make or buy decision marginal costing technique provide useful assistance. Correct Answer True Question The variable costs are controllable at the lower level. Correct Answer True Match The Following Question Correct Answer Journal Book of original entry Ledger Maintain all types of Accounts Assets All the properties owned by the business Liabilities All the amount owed by the business Drawing Withdrawn for personal use Question A budget manual is a document setting out the ________ of the persons and ________ required for the budget control. Correct Answer Responsibilities Correct Answer Forms and procedures Question Credit balances in all the Personal & Real accounts appear on asset side. Correct Answer False Question Omission of posting an amount in the ledger Correct Answer Error of Omission Question Non-operating / financial expenses are added while calculating net profit. Correct Answer False Question A Budget Manual may contain the following particulars Correct Answer Duties and responsibilities of various executives , Functions and duties of Budget Officer , Scope of the Budget and area to be covered Question Direct Cost includes Correct Answer Direct material , Direct labour , Direct expenses Question Financial Accounting protects the interest of outsiders . it considers ________ transaction and it is a ________ requirement Correct Answer historical Correct Answer legal Question Bin Card is having all the information of item received and issued. Correct Answer False Question Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of management Correct Answer Cost control Correct Answer Maximization of profits Question The material Requisition note contains Correct Answer Number and date , Department demanding the material , Signature of the authority approving the demand Question Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________ level of the management Correct Answer uncontrollable Correct Answer lower Question Budget is prepared for a fixed period of time. Correct Answer True Question Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account ___________ Correct Answer 12750 Question This is not the non monetary incentive. Correct Answer Co-partnership Question P&L statement which is a period statement & relates to a certain period tells about results of operations. Correct Answer True Question Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Correct Answer False Question Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Correct Answer False Question Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Correct Answer True Question Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. Correct Answer True Match The Following Question Correct Answer Financial Accounting Systematic recording of business transactions Cost Accounting Ascertainment of cost Management Accounting Analyzing & interpretation of financial data Accounting Art of interpreting & classifying business transaction Book Keeping Recording of business transactions Match The Following Question Correct Answer Bills Payable Amount payable to supplier Bills Receivable Amount received from the customer Trade Discount Not accounted for in the books of Accounts Cash Discount Accounted for in the books of Accounts Bad debts Amount not received from customer Question Amount invested in purchasing Fixed Asset is a revenue expenditure. Correct Answer False Question Going Concern Concept __________________ Correct Answer Indefinite longer period , Not likely to close down in shorter period , This affects the values of asset and liabilities Question Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to depreciation 2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs as per the reducing balance m Correct Answer 20,000,18,000,16,200 Question Profit & Loss A/C credit side has Correct Answer Gross profit , Commission received , Interested received Question Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per year. What is the total amount of the capital Correct Answer 1,10,000 Question Cheques issued but not yet presented – the balance as per the bank pass book will be higher. Correct Answer True Question This cost indicates historical cost which is incurred in past. Correct Answer Sunk cost Question Labour cost is the cost of __________ paid to employees of the organization. Correct Answer Remuneration Question Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs, 35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost. Correct Answer 10,50,000 Question For the proper interpretation and presentation of cost the overhead further classified as Correct Answer Factory overheads , Office and administration overheads , Selling & distribution overhead Question A good wage payment system will punish the workers for the matters beyond the control of the workers. Correct Answer False Question These are the features of fixed overheads Correct Answer total cost remains the same , per unit cost may vary , not dependent on volume of output Question Under marginal costing technique only fixed costs are considered as relevant for decision making. Correct Answer False Question Product mix refers to the proportion in which various products of a company can be sold. Correct Answer True Question The cost that varies in direct proportion with the level of activity is called Correct Answer variable cost Question Basic assumptions made by marginal costing are Correct Answer per unit selling price remains constant at all the levels of activities. , whatever is produced by the organisation is sold off. , per unit variable cost remain constant. Question Calculate Volume Variance, If budgeted production is 20,000 units, actual production is 22,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer Rs.3,000/- ( Favorable ) Question Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/- per unit and actual sales volume is 500 units. Correct Answer Rs.200/- ( Favorable ) Question Uniform Costing disturbs the healthy competition in the industry Correct Answer False Question Uniform Costing Methods may be advantageously applied Correct Answer In single organization having number of branches. , Number of companies in same industry. , Similar Industries such as cotton, jute etc. Question In Cash budget , Operating cash outflow includes Correct Answer Payment to Creditors , Cash purchases of raw material , Wages/salaries Question Characteristics of budget can be said to be Correct Answer It may be prepared in terms of quantity or money or both , It is prepared for a fixed period of time , It spells out objectives to be attained Question Like initial formation expenses, ________ and R & D are the examples of Deferred Revenue Expenditure Correct Answer Initial Advertisement Correct Answer R & D Question If ________ books are the books which record the transactions in the chronological order, ________ is the book where transactions of a similar nature are pooled together Correct Answer subsidiary Correct Answer ledger Question 4.Under the differential time rate method the wages are paid at Rs. 1.50 per hour between ________ efficiency and Rs.1.25 per hour between ________ efficiency Correct Answer 101% to 125 % Correct Answer 80% to90% Question ________ and ________ are examples of element wise classification ofoverhead costs Correct Answer Idirect material Correct Answer indirect labour Question If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value. Correct Answer 0.75 Question Under time rate system a worker is paid on the basis of production achieved by him in a given time. Correct Answer False Question Which of the following costs is most likely to have a cost behaviour pattern described as ..a fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10 paise to 8 paise per unit at 2,000 units? Correct Answer Wages payment which is fixed for a minimum output quantity after which a bonus per unit is paid which reduces when activity level exceeds 1,000 units Question The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Correct Answer False Question In case of defective material being returned by the stores department to the vendor, such material should be valued at the________. Correct Answer Purchase price Question Piece rate system is suitable when quality of goods produced is of extreme importance. Correct Answer False Question While preparing trial balance, the balance as per ________ book is considered as bank balance. Correct Answer Bank Question Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System. Correct Answer Rs.180/- Question Contribution represents pool of resources available for meeting all costs other than ________. Correct Answer Variable costs Question Locate the steps involved in rectifying the errors in the books of accounts Correct Answer Find the wrong entry passed , Find the correct entry to be passed , Find the entry that will resolve the mistake in the books Question Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc. Correct Answer The statement and the reason are both incorrect Question Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour cost and ________. Correct Answer Direct labour cost of the product Question Causes for adverse material price variance are: Correct Answer Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges Question The objectives of Uniform costing system are as follows : Correct Answer To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of costs Question 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were purchased from Y @ Rs.6/- per unit. The organisation follows FIFO system of pricing of issues and the above purchases have been recorded in stores ledger. 120 units have already been issued. 60 units received from X are defective and are therefore returned. Find the value of the material returned to X. Correct Answer Rs.300/- Question If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can be stated as ________ sq.ft. tiles. Correct Answer 300000 Question Category C items, as per the ABC analysis, usually refers to indirect material. Correct Answer True Question According to the standard costing principles, only adverse variance must be further investigated. Correct Answer False Question Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives. Correct Answer Non-monetary Match The Following Question Correct Answer Closed the account with State Bank of India Henceforth, there shall be no difference in overdraft balances Debit side of bank book is overcast Overdraft as per bank book < Overdraft as per pass book Interest on debentures directly credited by bank Overdraft as per bank book > Overdraft as per pass book Received sanction for a loan of Rs.10 lakhs Overdraft as per bank book = Overdraft as per pass book Question The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the year. Correct Answer Depreciation Question The purchase account should be debited when an order is placed with the supplier of material. Correct Answer False Question The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of 30 days, no rebate is offered. The company purchase Correct Answer October- NIL, November- Rs.26,750/- Question The variance which measures the profit consequences of selling different products in proportions other than the standard, is known as ________ variance. Correct Answer Sales margin mix Question Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all units belonging to that industry ? Correct Answer Uniform costing Question Select the non-monetary incentives Correct Answer Health and safety services , Canteen facility, Loans at reduced rate of interest Question Control on purchase of material is exercised by the storekeeper. Correct Answer False Question In practical circumstances, the ________ are referred to as application of funds. Correct Answer Assets Question The composition of selling costs is given below : 1 salaries 4% of sales, travelling expenses 1.5% of sales, and sales office 2% of sales. Find the amount of selling overheads if the sales are Rs.120,000/-. Correct Answer Rs.9,000/- Match The Following Question Correct Answer Ledger Maintain all types of accounts Audit Reviewing internal control system Accounting Process of analyzing & interpretation Journal Book of original entry Question The document which lays down the cost accounting plans and procedures to be followed by the constituent units is known as ________. Correct Answer uniform cost manual Question The characteristics of a good wage system are : Correct Answer Flexible , Economical to use , Easy to understand Question Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on 1st June, 2003, for a period of one year. The type of the fixed deposit is cumulative, i.e. interest shall be received only on maturity. What treatment should be given in the books of accounts on 31st March, 2004, the year ending date? Correct Answer An entry for Rs.458.34, debiting interest accrued but not due account should be passed Question If you are required to enforce uniform costing system in your industry, how would you proceed ? Correct Answer Collecting data from all units of your industry, Ensuring that the data collected is complete and correct, Maintaining secrecy of the data collected Question Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages. Correct Answer True Question Marginal costing is found to be unsuccessful in the following situations :- Correct Answer Impossible to distinguish costs into fixed and variable component. , With respect to capital intensive industries where fixed costs are very large and hence cannot be ignored , With respect to service industries where employee costs are very large and almost fixed in nature Question Master budget provides a basis for computing effect of changes in : Correct Answer product mix of the company , sales volume , production facilities Question Over absorption of overheads may take place due to the reasons like ________ overheads being less than the ________ overheads Correct Answer actual Correct Answer estimated Question ________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting. Correct Answer Talling Correct Answer arithmetical Question While calculating the minimum level, normal lead time is not necessary Correct Answer False Question To Increase the existing production capacity, additional capital expenditure is required. Correct Answer True Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer Rs. 83.60 Question Cost-sheet may be prepared separately for each Correct Answer Different Cost Centre Question The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs. Calculate the depreciation according to straight line method Correct Answer 10,000 Question To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________ Correct Answer Net effect Correct Answer Balanced Question In fixed overhead variance, the volume variance is further analyzed as Correct Answer Variance Efficiency Variance , Capacity Variance , Calendar Variance Question Accounts is a Correct Answer Record of all transaction Question Whatever is to be sold need not be produced. Correct Answer True Question Patents and Trade Marks Account is a Real Account. Correct Answer True Question Budget is prepared in terms of Correct Answer Quantity and/or Money Question Favorable variances need on investigation Correct Answer False Question Standard Costing may not be useful in Correct Answer Small concerns , Industries having non-standardized products , Contract jobs Question Standard costs are the targets to be attained by the actual performance. Correct Answer Minimum Question During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer Rs. 75 Question Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. Correct Answer True Question Double Entry Accounting System__________________ Correct Answer Every business transactions have two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Question Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______ Correct Answer 750 Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage Correct Answer 17% Question When bank balance as per bank book is considered then following to be added. Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank Question As soon as the suspense account balance is wiped out , it may be assumed that all mistakes have been corrected. Correct Answer False Question Credit sale of Rs. 5000 to Bobby should be entered in the purchase book. Correct Answer False Question Manufacturing process involves study of Correct Answer Designing the product , The quantity and quality , Material used Question The Bin card and stores ledges do not match due to the following reasons: Correct Answer Arithmetical errors in calculating , Non- posting a certain document , Posting a wrong Bin card Question Flux method is important method of wage payment. Correct Answer False Question The causes of idle time can be analysed as Correct Answer Administrative causes , Productive causes , economic causes Question If production overheads to be absorbed are Rs. 50000/- and labour hours worked are 100000 then the labour hour rate will be, Correct Answer Re. 0.50 per labour hour. Question Fixed cost tends to vary with time rather than with level of activity. Correct Answer True Question Limitations of marginal costing are Correct Answer difficult for classification as fixed cost and variable cost. , does not provide any standard for the evaluation of performance. , it is useful technique only in the short run. Question Flexible budget is an effective tool for evaluation of performance. Correct Answer True Question Material Mix Variance occurs where only one raw material is required Correct Answer False Question Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer Rs.1,500/-( Favorable ) Question Standard may not be necessarily useful for this purpose. Correct Answer Forecasting Question In Cash budget , Non-Operating cash outflow includesVarious kinds of over heads Correct Answer Loan instalments , Taxes , Purchase of fixed assets. Question During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg , what is the quantity of sales Correct Answer 20,000 kg Match The Following Question Correct Answer Ordering cost Associated with administrative efforts Carrying cost Cost of holding the inventory Total cost Ordering cost + carrying cost Inventory control Maintain the inventory of any kind E.O.Q Economic Ordering Quantity Question Generally accounts of the assets will have ________ balance and liabilities will have ________ balance Correct Answer debits Correct Answer credits Question Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book Correct Answer debited Correct Answer credited Question After material is received from the supplier, quantity actually received is compared with quantity ________-and ________-if any, are taken up with the supplier Correct Answer ordered Correct Answer variation Question Labour Turnover indicates ________ in labour force showing a highly increasing trend or highly ________ trend Correct Answer change Correct Answer decreasing Question Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management Correct Answer fixed Correct Answer top Question Bin card is maintained by ________ department whereas ________ is maintained by costing department. Correct Answer Stores Correct Answer Store ledger Question Profitability statement indicates the amount of assets & liabilities. Correct Answer False Question Advance received from customers is ________ for the organisation. Correct Answer A liability Question The features of multiplicity of key factors are as follows : Correct Answer More than one key factors , Refers to a complex situation , Can be resolved by using linear programming technique Question Maintenance Department is a service cost centre. Correct Answer True Question Identify the budgets for which the production manager sould be held responsible : Correct Answer Production budget , Production overheads budget , Plant utilisation budget Question The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the correct answers: Correct Answer Sales Rs.128,000/- , Return on capital employed , Working capital Rs.32,000/- Question Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations. Correct Answer Differential cost Question If the owner brings in personal calculator for office use, ________ account should be credited. Correct Answer Capital Question Variable cost + Profit = Sales Correct Answer False Question A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan. Correct Answer Rs.9,333.33 Question Features of material usage variance are : Correct Answer Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity Question Treating capital receipt as revenue income is an example of errors of commission. Correct Answer False Question Basic objective of Uniform Costing is . . . Correct Answer comparison Question Identify the causes due to which the cost of labour may be high: Correct Answer Excess staffing , Lack of experienced and efficient personnel , High labour turnover Question Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit and loss accounts for the year ending December 2003 are as follows : Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-. You are Correct Answer Hero Ltd. Question Features of Sunk cost are . . . Correct Answer Indicates historical cost , Not relevant in decision making process , Incurred in past Question For a manufacturing company, dividend received is a non-operating income. Correct Answer True Question Features of purchase requisition slip are : Correct Answer Raised when the stock of a raw material has fallen to the re-order level. , Indicates the type, quantity and quality of material required , The information about the price of material is excluded Question Judge the sentence in italics according to criteria given below : " It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used." Correct Answer The assertion and the reason are both correct Question Crane expenses should be apportioned on the basis of ________. Correct Answer Number of hours crane worked in the department Question Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by Management accounting. Correct Answer Management Question Features of convention of consistency are . . . Correct Answer The accounting policies and procedures should be followed consistently , Facilitates the comparison of financial statements , It facilitates comparison of financial statements on period-to-period basis Question Uniform costing is not a separate method of ________. Correct Answer cost accounting Question Suspense account is closed automatically after rectification of all the errors. Correct Answer True Question Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost. Correct Answer False Question Generally all the liabilities will have ________balance. Correct Answer Credit Question If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ________. Correct Answer Over-absorbed Question Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004. Correct Answer Rs.500/- Question The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to handle this level of sales. Correct Answer Production capacity Question Following are the examples of service cost centre Correct Answer Stores department , Transport department , Accounting department Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Correct Answer True Question Pre-requisites of Uniform Costing are . . . Correct Answer Spirit of mutual trust , Free Exchange of ideas , No rivalry Question You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres drum was as follows : To job X 200 litres; job Y 400 litres and job Z 320 litres. After these issues the drum was empty. Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z. Correct Answer Loss due to spillage and evaporation - 30 litres. , Rate of charge per litre of petrol - Rs.30/- Question Error of commission refer to calculation errors, totaling errors, errors in carrying forward etc. Correct Answer True Question Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the pass book. Correct Answer False Question Copy of a firm's account in the bank's ledger is known as ________. Correct Answer Bank statement Question The column which refers to the page number of the ledger is known as ________. Correct Answer Ledger folio Question The direct material useage budget and direct material purchase budget differ because of which of the following: Correct Answer A planned change in the level of material stock Question Loss is equal to fixed cost minus ________ Correct Answer Contribution Question Profit = Contribution per unit X ________. Correct Answer Margin of safety (units) Question The different purposes served by standard costing technique are : Correct Answer Cost control , Cost awareness , Performance appraisal Question Error of commission refer to a situation where a transaction is not recorded in the books of account. Correct Answer False Question If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to : Correct Answer Decrease for fixed costs and remain unchanged for variable costs Question The variance which measures the difference between what is paid for a given quantity of materials and what should have been paid for, is known as ________ variance. Correct Answer Direct material cost Question Deferred revenue expenditure written off account is a real account. Correct Answer False Question The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation. Correct Answer 0.17 Question The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in the ________. Correct Answer short run Question The following figures relate to a company manufacturing a varied range of products : Year 2003 Total sales Rs.22,23,000/- and total cost Rs.19,83,600/-. Year 2004 : Total sales Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability in prices, calculate the profit volume ratio Correct Answer 0.3 Question Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for 5,670 hours. Correct Answer Rs.29.98 Question While preparing sales budget the following factors must be considered : Correct Answer The number and types of products sold by the organisation , Whether the organisation's market share is increasing or decreasing? , Details of seasonal fluctuations in sales Question Techniques of management accounting include: Correct Answer Marginal costing , Budgetary control , Standard costing Question Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system. Correct Answer Capital investment , Plant size , Location Question The expenses relating to maintenance and creation of demand for the product should be included in the ________budget Correct Answer Selling expenses Question Management Accounting is… Correct Answer Designed particularly for internal use , Helpful in estimating the future along with past period , Useful in furnishing the necessary information to the management Question Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. Correct Answer True Question The selection of the supplier may depend upon the following aspects: Correct Answer Geographical location of the supplier , Price quoted by the supplier , Goodwill of the supplier Question XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004? Correct Answer Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55 Question The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost. Correct Answer True Question If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________. Correct Answer Loss Question When bank balance as per bank book is considered for preparing bank reconciliation statement, then following items need to be added : Correct Answer Cheques issued but not presented , Direct deposit made by customer , Wrong credits given by bank Question The indirect material cost, indirect labour cost and indirect expenses cost, collectively are termed as ________. Correct Answer Overhead Question Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/- (adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour yield variance. Correct Answer Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- , Labour yield variance is favourable Question If the standard contribution is less than the actual contribution, then ________ variance arises. Correct Answer Favourable Question Correct Answer Purchase budget Forecast of quantity and value of materials Budget committee Analyses the performance of different budget centres Cash budget Assists in predicting shortage of cash Budget Objective is performance evaluation Question As a part of the data presented in support of a proposal to icnrease the production of clock radios, the sales manager of Wittman Electronics reproted the total additional cost required for the proposed increased production level. The increase in total cost is known as : Correct Answer Incremental cost Question Business Entity Concept ______________. Correct Answer Business is separated from the owner. , The accounting process carried out for the business , Separate legal entity Question The danger level fixed below maximum level Correct Answer False Question Following example comes under service cost centre Correct Answer Store department , Internal Transport department , Accounting/Costing department Match The Following Question Correct Answer Straight Piece rate system The rate of payment is fixed per piece Diemer system Halsey system & Gantt System Time rate System Worker is paid on the basis of time attended by him Payment by Result Workers are paid according to the production achieved by him Differential Time rate Different hourly rates are fixed for different levels of efficiency Question When bank balance as per pass book is considered then following to be added. Correct Answer cheques deposited but not cleared , Interest debited by bank , bank charges debited by bank Question (No. of unit * Rate of depreciation per unit ) this formula is used for written down value method. Correct Answer False Question Cash and---------------are the two systems of accounting. Correct Answer Mercantile Question This cost indicates increased or decreased cost due to the increased or decreased volume of operations. Correct Answer Differential cost Match The Following Question Correct Answer Fixed cost + variable cost Total cost Total cost – fixed cost variable cost sales- variable cost contribution contribution – fixed cost profit Total cost + profit Sales Question Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered. Correct Answer Rs. 1.40 per hour Question Margin of safety are the sales beyond Correct Answer break even point Question Indirect Labour Cost Correct Answer Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper Question The difference between sales and factory/ works cost is termed as ________ the difference between sales and ________ termed as net profit Correct Answer gross profit Correct Answer cost of sales Question For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.3.60/- per kg. Correct Answer Rs.375/-( Adverse ) Question Labour Efficiency Standards are decided by considering following factors Correct Answer Records of past performance, Time & Motion Study, Trial Runs Question Depreciation does not involve cash out flow Correct Answer True Question The difference between standard cost and actual cost is termed as Variance. Correct Answer True Question Wage payment system should be properly tied up with quality control procedures to ensure that the workers are paid only for good and quality production. Correct Answer True Question In Cash budget Operating cash inflow includes Correct Answer Cash Sales, Collection from Debtors, Interest/Dividend received Question If the product is labour intensive, more stress may be necessary on inventory control procedure. Correct Answer False Question A good wage payment system will not punish the workers for the matters beyond the control of the workers. Correct Answer True Question The material issued to production department may be returned back to the stores because material issued in excess requirement and Correct Answer Material issued is defective Question Following are called the element of Cost Correct Answer Material , Labour , Expenses Question Amount with drawn for personal purpose drawing A/C to be debited. Correct Answer True Question Under the repeated distribution method the overheads of ________ department are distributed to other departments on agreed ________ Correct Answer service Correct Answer percentage Question Under time rate system a worker is paid on the basis of production achieved by him. Correct Answer False Question Calculate Labour Rate Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and actual hours are 13, 500. Correct Answer Rs.6750/- ( Adverse ) Question Benefits available from revenue expenditure are received in the : Correct Answer Same year Match The Following Question Correct Answer Cost Centre Facilitate the fixation of responsibility Cost Control Process of controlling costs of operations Differential Cost Increase or Decrease in cost Sunk Cost Historical Cost Question Financial Accounting is … Correct Answer Designed to supply information to internal/ external users , Referred as 'Historical' form of accounting , Concerned with financial factors Question The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as ________ system. Correct Answer Uniform costing Question The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change. Correct Answer Accrued commission income of-Rs.32,960/- was not entered in the books , Rent for the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account Question If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________. Correct Answer Bad debts Question Creditors as on 31st March, 2004 amount to Rs.15,225/-. Provision for discount from creditors is to made @ 5%. Find the impact of this provision on the net profit. Correct Answer The net profit will increase by Rs.761.25 Question Under the Rowan plan bonus is a fixed percentage. Correct Answer False Question Margin of safety indicates ________ of operations. Correct Answer Profitability Question XYZ Ltd. has sufficient idle capacity. It has received an enquiry for the supply of 300 units (packed in better box at an additional cost of Rs.20/- per box). The variable cost of manufacturing the product is Rs.150/-. The company expects a profit of Rs.6,000/- from this wholesale offer. What minimum price should it quote for this deal? Correct Answer Rs.190/- Question Period cost is the cost assigned to the products. Correct Answer False Question In calculation of total sales margin variance, the ________cost of sales is deducted from the actual sales revenue. Correct Answer Standard Question The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted. Correct Answer False Match The Following Question Correct Answer Personal A/C Debit the receiver, Credit the giver Real A/C Debit what comes in, Credit what goes out Nominal A/C Debit all the expenses, Credit all the incomes Tangible assets Building, Machinery In tangible assets Patents, Trade marks Question When bank balance as per pass book is considered then following to be deducted. Correct Answer cheques issued but not presented , direct deposit by customer , wrong credits given by bank Question Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to general expenses account for rectifying the error, which A/C to be debited Correct Answer Drawing A/C Question Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0 Correct Answer True Question Office & Administration overhead includes Correct Answer Salary , Rent & Taxes , Stationary & postage Question There is reverse relationship between the ordering cost and carrying cost Correct Answer True Question Following points are taking into consideration for evaluation of receipts Correct Answer The Price , The trade discount is to be deducted , Other amounts such as sales tax, excise duty, octroi duty Question In EOQ, to express carrying cost as a percentage of the unit cost of purchases this is used in the formula----------- Correct Answer i Question Where overheads chargeable to the department are Rs. 5000/- , direct labour hours worked are 24000 then labour hour rate is Re. 0.2083 labour hour. Correct Answer True Question The selection of the base on which overheads should be apportioned depend on the following principles. Correct Answer service or use basis , survey basis , ability to pay basis Question The Budget key factor may be in the form of sales, raw material, labour etc. Correct Answer True Question For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.6/- per kg. Correct Answer Rs.600/-( favorable ) Question Find out Labour Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours are 12,600. Correct Answer Rs.900/- ( Adverse ) Question Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13, 500. Correct Answer Rs.9,000/- ( favourable ) Question Calendar Variance arises only if there is abnormal increase or decrease in Correct Answer Actual number of working days Match The Follow Question Correct Answer Token or Disc Method Token number & identification number allotted to worker Time Recording Clock Method Ticket number & clock card allotted to worker Daily Time sheets Time spent by worker on job is recorded Weekly Time sheets Record of time for all the jobs during the week is made Hand Written method Attendance register Question Rs.5000 paid as ________ to ________ should be debited to salary account Correct Answer Mahesh Correct Answer salary Question Uncontrollable variances are Correct Answer Strike , Change in customers demand , Devaluation of currency Question Indirect labour cost indicates that labour cost which cannot be identified with the individual cost centre. Correct Answer True Question There is no need to open a suspense account if the trial balance does not agree. Correct Answer False Question Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C credited to Rs Correct Answer 900 Question In financial statements P& L Accounts relates to a specific duration whereas ________ is for a given point of time Correct Answer P& L Accounts Correct Answer Balance sheet Question Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the same. Following account to be credited Correct Answer Suspense A/C Question Bin Card is not an ________ record but only a ________ record. Correct Answer Accounting Correct Answer Quantitative Question Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid . The outstanding salary is debited to Profit &Loss A/C. The second effect is -- Correct Answer Transfer to balance sheet liability side Question Debit the receiver & credit the giver is a rule of Real a/c. Correct Answer False Question If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what will the amount of total factory overheads at 60% capacity Correct Answer Rs.10,800/- Match The Following Question Correct Answer Advance Not related in current year Application Increase in Assets Outstanding Amount still payable in current year Prepaid Amount paid for next year Drawing Amount of personal use Question Head of the Department should sign the purchase requisition. Correct Answer True Question FIFO method Correct Answer The price of the earliest available lot is considered first , If the lot is exhausted, the price of the next available lot is considered , It is used for issue of material Question If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate will be, Correct Answer Re. 4 per machine hour. Question From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average inventory Correct Answer 300 Question Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable. Correct Answer Below 66.66% Match The Following Question Correct Answer Discount received Suppliers Outstanding expenses Liabilities Depreciation Assets Interest on capital Borrowed capital Discount allowed Debtors Question canteen facility to workers, health and safety services are examples of monetary incentives. Correct Answer False Question This is the process of recording attendance time of the workers. Correct Answer Time keeping Question If actual cost is more than the standard cost then it is called favorable variance. Correct Answer False Question The aggregate of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. Correct Answer False Question Interest on drawings of partners should be credited to which account? Correct Answer Profit and loss account Question The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and the amount of claim settled by the insurance company. Correct Answer True Question Penalty paid for delay in payment to creditors represents uncontrollable cost. Correct Answer False Question Subsidiary books include: Correct Answer Cash Book , Purchase Register , Sales Register Question Balance sheet is a part of the ledger accounts maintained by the company. Correct Answer False Question Average stock = ________ + (Order size / 2) Correct Answer Safety stock Question Based on the journal entry given, identify what transaction has taken place. Suresh Account………….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on behalf of creditor Suresh) Correct Answer Cash paid to Kailash should not be recovered from creditor Suresh Match The Follow Question Correct Answer Real A/C Debit what comes in, Credit what goes out Trade Discount Not accounted for in the books of Accounts Cash Discount Accounted for in the books of Accounts Rs.1 Personal A/C Debit the receiver, Credit the giver Question These are the preventive costs of labour turnover. Correct Answer Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Question If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit Correct Answer Increase the selling price , Reduce cost of sales , Increase the selling efforts Question A company had incurred fixed expenses of Rs.225,000/- with sales of Rs.750,000/- and earned a profit of Rs.150,000/- during the first month. In the second month, it suffered a loss of Rs.75,000/-. You are required to calculate the margin of safety for the first month. Correct Answer Rs.300,000/- Question Loss on account of goods lost due to earthquake should be debited to which account? Correct Answer Profit and loss account Match The Following Question Correct Answer Operating income Cash Sales Non-Operating income Issue of shares Plan of investment in fixed assets Capital Expenditure Budget Plan for surplus/shortage of cash Cash Budget Question Under the average cost method of valuing material issues, new issue price is determined after ________ issue. Correct Answer Each Question Narration must be mentioned in the ledger. Correct Answer False Question The sum of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost. Correct Answer False Question The term ________ indicates expenditure incurred on or attributable to a given thing. Correct Answer Cost Question Items credited to Profit & Loss Account are… Correct Answer Gross profit , Commission received , Interested received Question Yield variance equal to zero indicates that the standard yield and actual yield are the same. Correct Answer True Question Balance sheet is statement of Correct Answer All Assets and Properties Question If the profit of Y Ltd. is Rs.10,000/- and its profit volume ratio is 10%, then its margin of safety will be Rs.________. Correct Answer 100,000/- Question Inventory holding cost comprises of : Correct Answer Cost of insurance , Rent of store house , Salary of store keeper Question Identify the steps involved in the process of decision making : Correct Answer Determination of the problem , Ascertainment of alternative courses of action , Screening each alternative so as to select the best one Question A low inventory turnover ratio should always be preferred. Correct Answer False Question The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as: Correct Answer Labour rate variance Question Following errors affect the trial balance Correct Answer Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Question ________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting Correct Answer Management Question Purchase day book for the month of April was under cast by Rs.1000/- which account should be credited ? ________ Correct Answer Suspense Account Question Linking overhead to a cost unit is known as overhead absorption. Correct Answer True Question A factory received a carton containing two materials X and Y. The invoice relating to the materials discloses the following details : Material X - 400 kg @ Rs.10/- per kg. =Rs.4,000/-; Material Y - 600 kg @ Rs.15/- per kg.= Rs.9,000/-; Sales @ 5% =Rs.650/-; Insurance @ 1% =Rs.130/-; Freight and handling charges = Rs.220/-. Correct Answer Material X -Rs.11.10; Material Y -Rs.16.68 Question An employee working under a bonus scheme saves 10 hours in a job for which the standard time is 60 hours. Calculate the wages payable to him, if incentive bonus of 10% on the hourly rate is payable when standard time (namely 100% efficiency) is achieved, and a further incentive bonus of 1% on hourly rate for each 1% in excess of that 100% efficiency is payable. Assume that the normal rate of payment is Rs.50/- per hour. Correct Answer Rs.3,250/- Question At 60% capacity utilisation the overhead recovery rate is Rs.35/- per unit. At 70% capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production attains 90% capacity utilisation? Correct Answer Rs.28/- per unit Question The production budget may be prepared in terms of : Correct Answer Units produced , Production cost , Material cost, labour cost and overheads Question Tom company has sales of Rs.200,000/- with variable expenses of Rs.150,000/-, fixed expenses of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much would Tom have to increase its sales in order to achieve an operating income of 10% of sales? Correct Answer Rs.200,000/- Question Angle formed by the intersection of total cost line and sales line is called angle of ________. Correct Answer Incidence Question All costs are controllable. Correct Answer False Question In the adjustment entry passed for closing stock, the ________ account should be credited. Correct Answer Trading Question Select the items which may be classified as selling and distribution overheads. Correct Answer Delivery van expenses , Rent of finished goods warehouse , Sales research expenses Question Warehousing cost is an item of ________ Correct Answer Distribution overheads Question From the following, select current assets: Correct Answer Sundry debtors , Stock , Pre paid expenses Question The objectives of cost accounting are : Correct Answer Cost control , Ascertain ment of cost of each product , Assist in managerial decision-making Question Which cost is defined as an estimated cost, prepared in advance of production or supply, estimated within a prescribed set of working conditions? Correct Answer Standard cost Question Carriage charges paid for a new machine purchased if debited to carriage account would affect the ________ Correct Answer Machinery A/c and carriage A/c Question Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction. Correct Answer The gross profit will increase by Rs.6,450/- Question Fundamentally, changes in price and changes in sales volume give rise to sales variances. Correct Answer True Question The ________ is responsible for material losses while in storage. Correct Answer Store-keeper Question A cash payment of Rs.1,000/- for traveling expenses has been entered in the books but not debited to traveling A/c. The trial balance will NOT agree. Correct Answer True Question Accounts representing expenses will have ________balance. Correct Answer Debit Question It is discovered that sales effected on 31st March, 2004 worth Rs.42,000/- has not been recorded in the books of accounts. Analyse the impact on the final statement of accounts. Correct Answer The sundry debtors will increase by Rs.42,000/- Question Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit. Correct Answer The net profit will not be affected Question New companies can adopt Uniform costing system as a ready-made system. Correct Answer True Question A journal entry is passed for trade discount, but no entry is passed for cash discount. Correct Answer False Question The assets which are suppoed to be used by the organisation to do business, are known as ________assets. Correct Answer Fixed Question The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is: Correct Answer Re.0.98 Question The disadvantages of time rate system are : Correct Answer Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase productivity Question Which of the following is the most efficient use of the clock card? Correct Answer To facilitate payment for time spend on the work premises Question One of the main objection to the contribution approach of costing is that it ignores fixed cost. Correct Answer True Question If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________ the overdraft as per pass book. Correct Answer Lesser than Question The cash flow format is used for preparing the cash budget by the ________ method. Correct Answer Adjusted Profits/Losses Question The ideal budget period for a company engaged in generation and distribution of electricity is one year. Correct Answer False Question In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative assessment to be made of the two sectors. Correct Answer uniform costing Question Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact. Correct Answer The asset side of the balance sheet will increase by Rs.5,000/- Question It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the product Correct Answer False Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : Correct Answer Difference in the balance as per bank book and as per pass book Question Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. Correct Answer False Question A business's telephone bill should nromally be classified into which one of the following categories? Correct Answer Semi-variable cost Question The objects of cost accountancy are . . Correct Answer To ascertain cost and profitability , Cost Control , Presentation of Information Question Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset. Correct Answer True Match The Following Question Correct Answer Error of Principle Trial Balance does not get affected Error of Omission Transaction is totally omitted Error of commission Wrong Posting Compensating Error Wrong classification Difference in trial balance Transferred to suspense account Question The difference between sales and cost of sales is termed as ________. Correct Answer Net Profit Question ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Correct Answer Management Question The capacity utilised to installed capacity ratio is 80% for the company. The capacity utilisation ratio in respect of a machine for a particular month is 90%. The available working hours in a month are 200 hours. The break of idle time is as follows : Waiting for job - 5hours, breakdown - 4 hours and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the machine is Rs.8/-. Correct Answer Rs.96/- Question Semi variable expenses fluctuate in direct proportion to volume. Correct Answer False Question GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. Correct Answer False Question From the following, select intangible assets: Correct Answer Goodwill , Patents , Trade Marks Question Select the accounts to be disclosed on the assets side of the Balance sheet. Correct Answer Furniture , Loan to Bank of U.S.A. , Land & building Question Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory. Correct Answer The statement is correct but the reason is incorrect Question The credit side of the sales book was overcast by Rs.2,000/-. As a result of this rectification, what of the given impacts is likely to happen? Correct Answer The liability side of the balance sheet will increase by Rs.2,000/- Question It is said that the income statement represents wealth increase /decrease for the organisation. Correct Answer True Question All personal expenses of the owner should be debited to the organisation's profit and loss account. Correct Answer False Question A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : Correct Answer Difference in the balance as per bank book and as per pass book Question If the ordering cost ________s, then the economic order quantity will Increase. Correct Answer Increase Question ________ authorises the production department to issue requistion for materials. Correct Answer Bill of material Question P Ltd. produces a product having a monthly demand of 4,000 units. For every one unit of finished product one unit of a component X is required at purchase price of Rs.20/-. The ordering cost is Rs.120/- per order and the holding cost is 10% per annum. If the company places each order for 2,000 units due to financial constraints, what is the extra annual cost? Correct Answer Rs.80/- Question An entry in the stores ledger is required for transfer of material from one job to another in the same department. Correct Answer False Question The method which deals with ownership rights being given to workers is known as ________ method of remuneration. Correct Answer Co-partnership Question A firm of boiler-house engineers provides engineering services to large number of factories having boiler houses. The firm charges on the basis of number of hours its engineers have worked for the client. Each engineer works for eight hours on each working day. Each engineer enjoys Saturday and Sunday as holiday. In addition he is granted a total of 21 more paid holidays in a year. An engineer's annual remuneration comprises (for the year Correct Answer Rs.182.29 Question Marginal costing is useful in the following areas : Correct Answer Plant shut down decisions , Make or buy decisions , Profit planning Question Cost volume profit analysis focuses attention on the ________ effect of a particular course of action. Correct Answer short run Question ABC Ltd. has a proposal of utilising a cheaper raw material which will increase the contribution from Rs.100/- per unit to Rs.125/- per unit. However, the use of cheaper raw material may result in decrease in sales by 10% (to 450 units only). Find the impact of using the cheaper raw material on the amount of contribution ( net increase or decrease in contribution). Correct Answer Increase in contribution Rs.6,250/- Question Which of the following budgets may be termed as a long term budget? Correct Answer Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company Question A ________ can be defined as a part of the orgainsation for which separate budget can be prepared and implemented. Correct Answer Budget centre Question The finance manager is responsible for which of the following budget? Correct Answer Cash budget Question The role of the budget committee may be taken as an advisory role to the Chief Executive. Correct Answer True Question While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored. Correct Answer False Question The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance. Correct Answer True Question From the following data, determine the net profit if sales are 20% above the break even point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed overheads Rs.20,000/- Correct Answer Rs.4,000/- Match The Following Question Correct Answer Decrease in selling price will lead to Decrease in contribution Increase in contribution will lead to Increase in profits Increase in fixed cost will lead to Increase in break even point Decrease in variable cost will lead to Increase in profit volume ratio Question As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its market price as on the same day was Rs.66,584/-. Which value of closing stock should be considered in the final statement of accounts for the year ended on 30th September, 2004? Correct Answer Rs.66,584/- Question Marginal costing technique is useful in taking decisions relating to which of the following courses of action? Correct Answer Decision to drop a product line , Decision to accept a special offer at price lower than the normal selling price , Decision regarding temporary shut-downs Question In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities. Correct Answer True Question Profit and loss account indicates the profit earned as on a particular date. Correct Answer False Question The balance of the suspense account will ________ after all the errors are Correct Answer become zero Question The best way to reduce labour cost is to recruit cheap labour. Correct Answer False Question A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is the total amount of capital? Correct Answer Rs. 12,000 Question Income Tax Act, recognise only one method of depreciation namely ________. Correct Answer Written down value method Question An adjustment relating to outstanding expenses will ________ the net profit. Correct Answer Decrease Question Generally, all real accounts will have a ________ balance Correct Answer Debit Question The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio? Correct Answer 0.333 Question The selective ________ controls are intended to control the ________ to particular sectors without affecting the total credit, and also to change the composition of credit from undesirable to de Correct Answer credit Correct Answer credit flows Question Journal is popularly known as 'Book of . . . Correct Answer Original Entry Question Presentation of information to enable managerial decision making' is one of the objects of which of the following Correct Answer Cost Accounting Question The principle of ________ is followed while preparing the financial statements. Correct Answer Going concern Match The Following Question Correct Answer Indirect Material Element wise classification Administration overheads Function wise classification Fixed overheads Variability wise classification Abnormal overheads Normality wise classification Question In India the gas industry and electricity industry, and ________ industry are examples of industries using the uniform costing system. Correct Answer fertilizer Multiple Choice Multiple Answer Question Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a., what will be the amount of capital of each of the partners as on 31st March, 2004, assuming there were no additions during this period? Also, state the treatment of this item in the Profit and loss account. Correct Answer Ram's capital Rs.55,000/- , Laxman's capital Rs.88,000/- , Interest on capital should be debited to the Profit and loss account Question Non-trading income is disclosed on the credit side of ________ account. Correct Answer Profit and loss Question Goods returned to the suppliers from whom it was ________d is recorded in the Purchase return register. Correct Answer Purchase Question An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find the expenditure on account of advertisement. Correct Answer Rs.49,248/- Question Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The goods were not insured. Find the amont which should be debited to the profitability statement. Correct Answer Rs.18,950/- Question Generally speaking income represents wealth increase and business success; higher the income, lower will be the success of a business. Correct Answer False Question While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004? Correct Answer Balance as per pass book < Balance as per bank book Question Bank reconciliation statement is a systematic presentation of errors made by the accountant. Correct Answer False Question The stores department is a ________ department. Correct Answer Service Question The ________ is a perpetual inventory record. Correct Answer Bin card Question Selecting an appropriate method of valuation of inventory is important because : Correct Answer It influences the figure of gross profit Question Re-order level for materials is determined considering maximum consumption and maximum delivery period. Correct Answer True Question Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost. Correct Answer True Question Economical use of labour, materials and facilities can achieved with the help of ________. Correct Answer Budgetary control Question Select the advantages of standard cost system. Correct Answer Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency Question Which variance is used to analyse the effect of change in the quantity of output from a given mix of inputs? Correct Answer Materials yield variance Question Judge the statement according to the criteria given : ' The accounting period for XYZ Ltd. ends on 31st December, 2003. It is noted that office rent for the month of December, 2003 is paid on 15th January, 2004. "According to concept of matching expenses with the revenues, this expenditure should be recorded in the books of accounts in January, Correct Answer The statement and its reason are both incorrect Question From the following select the examples of errors of commission - Correct Answer Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/- , Received cash from Sham, credited to Ram's account , Paid transport charges, credited to transport charges account Question Expenditure on income-tax is an example of ________. Correct Answer non-operating expenditure Question Identify the items which are correctly classified. Correct Answer Carriage inward - Factory overheads , Carriage outward - Selling and distribution overheads , Sales research expenses -Selling and distribution overheads Question Select the items which may be classified as administration overheads. Correct Answer Depreciation on office furniture , Director's remuneration , Telephone expenses Question Overhead absorption is an exercise by which overhead is properly spread over production for the period. Correct Answer True Question Which system involves adoption of same costing principles, practices and procedures by the individual firms of an industry ? Correct Answer Uniform costing Question A new computer worth Rs.35,000 was purchased on 18th June, 2003. The company has 10 such computers costing Rs.20,000/- each. The depreciation is charged @ 18% p.a. Find the depreciation on computers to be charged for the year. Correct Answer Rs.40,953.70 Question The amount of income for the current period which is not received during the current period, is called Accrued Income. Correct Answer True Question The balance as per bank book as on 30th June, 2004 is Rs.10,298/- while the balance as per pass book as on the same date is Rs.10,123.60. Select the transactions representing the reasons for this difference. Correct Answer Interest credited by bank, not entered in the bank book, Rs.125.60 , Cheques dishonoured not entered in the bank book Rs.200/- , Debit side of the cash book is overcast by Rs.100/- Question The principal functions of the cost accounting department are : Correct Answer Classifying labour cost according to jobs, processes, etc. , Preparation of different reports based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be reduced. Question Profit volume ratio is also known as ________. Correct Answer Contribution to sales ratio Question Margin of safety = Contribution / Profit volume ratio Correct Answer False Question Depreciation, interest and property tax continue even when the operations are discontinued. Correct Answer True Question The reasons and objectives of budgets may be stated as : Correct Answer To aid the planning of annual operations , To communicate the organisational plans to the different departments , To motivate the managers to strive for attainment of the organisational goals Question The key factor determines the : Correct Answer Level of activity , Capacity utilization , Level of sales Question Essentials for effective implementation of budgetary control system are Correct Answer Commitment of top management , Clearly defined objectives , Continous budget education Question Which of the following is a correct definition of the key factor? Correct Answer The factor which limits the activites of the undertaking Question The integrated form of all functional budgets is known as : Correct Answer Master budget Question For the month of November, a firm has budgeted sales of 20,000 units of X at a price of Rs.10/- and sale of 30,000 untis of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales quantity variance. Correct Answer Sales volume variance -Rs.120,000/- (Favourable) , Sales mix variance -Rs.44,000/- (Favourable) , Sales Quantity variance-Rs.76,000/- (Favourable) Question ________ variance represents the over or under utilisation of pland and machinery. Correct Answer Capacity Question The following data relates to the month of October : Actual variable overheads Rs.60,000/-; budgeted variable overheads Rs.80,000/-; actual output 900 units; budgeted output 1,000 units; standard time for one unit - 2 hours. Calculate variable overhead efficiency variance. Correct Answer Rs.4,000/- (Favourable) Question Which of the following operations would normally be carried out first when preparing a master budget? Correct Answer Determining the budget period Question Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________ . Correct Answer Income Tax Act, 1961 Question Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows : X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance. Correct Answer Rs.100/- (Favourable) Question Select the examples of functional budgets: Correct Answer Sales budget , Production budget , Research and development budget Question Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10% p.a., what should be the treatment of this interest in the profitability statement, assuming there were no additions to capital during this period? Correct Answer Profit and loss account should be debited with Rs.1,866.67 Question KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003, assuming there were no additions or disposals during the year? Correct Answer Rs.100,000/- Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer True Question An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________ Correct Answer P's A/c and Q's A/c Question Budgetary control system provides a basis for establishment of the incentive systems. Correct Answer True Question A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Correct Answer True Question A low margin of safety indicates ________ fixed overheads. Correct Answer higher Question Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory. Correct Answer less than 10 Question The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company. Correct Answer Rs.34,408.09 Question Price based on Uniform Costing may be taken to be reliable and representative of the whole industry. Correct Answer True Question The budget manual must contain statement regarding: Correct Answer Objectives of the orgainsation Question Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to: Correct Answer Balance as per bank book > Balance as per pass book Question Entry for dishonour of cheque appears only in the pass book, this entry should be ________ in the bank book. Correct Answer Passed Question Since the pass book and the bank book record the ________ transactions, the bank balance as per these books should be equal. Correct Answer Same Question A pre-determined factory overhead rate holds up product costing. Correct Answer False Question Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Correct Answer Rent received in advance account Question Bank reconciliation statement can be prepared on weekly basis. Correct Answer True Question Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account? Correct Answer Rs.45,000/- Question Financial Accounting ______________ Correct Answer Designed to supply information for internal/ external uses. , Deals with the transaction during specific period. , It is compulsory Question Cost Accounting ______________. Correct Answer Concerned with specific activities. , Classified according to their nature. , It deals with both i.e. past & present. Question Features of double entry accounting system are . . . Correct Answer Every business transaction has two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Question Features of a cost sheet are as follows Correct Answer Indicates the total cost of production during a given period , Indicates the unit cost of production during a given period , Helps the management in fixing the selling price to be quoted for the Question Depreciation charged on office furniture on straight line basis is an example of ________. Correct Answer Administration overheads Question If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business. Correct Answer Drawings Question Included in the trial balance is the sales promotion suspense account with a debit balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its impact on profit of the company. Correct Answer The net profit will decrease by Rs.6,300/- Question A lathe machine was purhcased on 31st March, 2004 for Rs.65,000/-, however it was installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of depreciation charge for the said lathe machine for the year ended 31st March, 2004. Correct Answer Nil Question While passing the journal entry, it is of utmost importance to ensure that the total of amount debited is equal to the total of the amount credited. Correct Answer True Question The bin card and stores ledger, being independent records, comparison of these two records should be avoided. Correct Answer False Question The cost of idle time incurred by employees that is considered normal for the production process should be charged to : Correct Answer Factory overheads Question The cost of abnormal time may be recovered by inflating the hourly labour rate. Correct Answer True Question ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/- and the variable costs are 60% of the selling price. In order to realize a profit of Rs.100,000/-, the selling price per unit would have to be : Correct Answer Rs.6.25 Question In which of the following situations, the flexible budget should be preferred? Correct Answer Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of production activity Question The budget that represents the funds investment for expansion, diversification, etc. is known as ________. Correct Answer Capital expenditure budget True/False Question Amortization of goodwill should be considered while preparing cash budget. Correct Answer False Question As cost centers facilitate the control function, in many cases, they are termed as . . . Correct Answer Responsibility centers Question Lata and Tara are partners of Latara & Co. As on 31st March, 2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual drawings amounted to Rs.18,000/-. If interest on drawings is charged @ 15% p.a., what is the amount of income for Latara & Co.? Correct Answer Rs.6,450/- Question Labour turnover rate is best defined as : Correct Answer The number of leavers replaced divided by the average of employees on the payroll Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry ? Correct Answer Uniform costing Question An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year ended 31st March, 2004. Correct Answer The net profit will not be affected Question Interim dividend paid by the company should be debited to the profit and loss appropriation account. Correct Answer True Question The short run financial plan which acts as a guide to achieve the predefined targets is known as ________. Correct Answer Budget Question Indirect Cost is termed as ________. Correct Answer Overhead Question Interest on ________ is credited to Capital account. Correct Answer Capital Question The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. Correct Answer False Question Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost? Correct Answer The level of control of the used of material in the production cycle , The incorrect choice of purchase order quantity , Failure to control the issue of materials from stores Question Accounting is the art where transactions are … Correct Answer Summarized , Classified , Recorded Question If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees. Correct Answer False Question The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of Correct Answer Depreciation on plant and machinery , Interest on loans taken from other , Interest on loans granted to others Question Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors. Correct Answer False Question Management accounting is concerned with the following activities : Correct Answer Decision making , Safeguarding assets , Planning and controlling activities Question Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer Master budget Question A grinding machine is an example of impersonal cost centre Correct Answer True Question Piece rate systems are very useful in the following circumstances: Correct Answer Units of output are measurable , Job is standardised , The flow of work is regular Question The process of recording the business transactions in a defined set of records is referred to as ________. Correct Answer Balance sheet Question A ________ inventory turnover period indicates efficient utilisation of material. Correct Answer Low Question Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Correct Answer Investment account - Rs.170,000/- Question The data for two materials P and Q is given below : Material P : opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct. Correct Answer Inventory turnover period for material P is 40.5 days , Material P is faster moving material , Consumption of material Q is Rs.860,000/- Question Overhead absorption rate will be different at different capacity levels. Correct Answer True Question Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is between________. Correct Answer 90% to 100% Question The alternative courses of action for an integrated textile mill are: Correct Answer Sell cloth Question The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20 Correct Answer 153,000 units Question The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc. Correct Answer Accounting period Question Furniture account will always have a ________ balance. Correct Answer Debit Question Product costs under direct costing include: Correct Answer Prime cost and variable factory overheads Question Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer. Correct Answer True Question Items debited to Profit & Loss Account are… Correct Answer Salary , Discount allowed , Postage & telegram Question Select the entries which need to be rectified Correct Answer Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) , Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased) , Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for) Question The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book. Correct Answer Rs.128/- (overdraft) Question Identify the fixed expenses from the following. Correct Answer Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,etc. , Salary paid to factory supervisor Question Budgetary control is one of the techniques of management accounting. Correct Answer True Question Management Accounting is a developed stage of Cost Accounting Correct Answer True Question In the ledger account only credit entries relating to a particular account are posted. Correct Answer False Match The Following Question Correct Answer Global Tender Any supplier from the global market can fill the tender Single Tender Tender from only one supplier Limited Tender Tenders from reliable but few suppliers Open Tender Any supplier from the local market can fill the tender Question Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours. Correct Answer True Question Features of Taylor's differential piece rate system are as follows : Correct Answer Minima clerical work is involved in calculating the wages , Helps in building up an efficient labour force , Strong incentive to efficient and ambitious workers. Question Financial Accounting discloses the financial performance & Financial status of the business as a whole Correct Answer True Question Cost Accounting is a legal requirement. Correct Answer False Question Cash account can have a credit balance. Correct Answer False Question Labour turnover means : Correct Answer Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force Question Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole. Correct Answer False Question The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half - 37,500 units. The production pattern of the company is based on 80% of the sales of the current six months and 20% of the budgeted sales of the next six months. Calcu Correct Answer 1st half -31,500 units; 2nd half - 30,000 units Question The variance which denotes the variation in overhead recovery due to the budgeted quantity of products being greater or less than actual production, is known as ________ variance. Correct Answer Volume Question As per the provisions of Section 209 of ________, all the company form of organisation is legally required to follow the mercantile or accrual system of accounting. Correct Answer The Companies Act, 1956 Question Cost Accounting and Management Accounting are similar to each other in many respects. Correct Answer True Question The reports generated by financial accounting are meant for the use by management for effective decisions. Correct Answer True Question Token or disc method is a related to the system of ________. Correct Answer Time-keeping Question Cost Accounting may be considered to be a part of management Accounting. Correct Answer True Question The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Correct Answer Total variable overhead Question It is said that marginal costs are used primarily in guiding decisions that are yet to be made. Correct Answer True Question Management Accounting is not at all a legal requirement Correct Answer True Question Identify the variable expenses. Correct Answer Repairs of plant when it is undertaken by an outside agency , Carriage inward by hired carriers , Wages paid to casual workers Question Which of the following cost is also termed as Prime Cost ? Correct Answer Direct cost Question The method of remuneration under which the workers are given in share in profits of the organization, at a specified percentage, along-with their wages, is known as ________ method. Correct Answer Profit-sharing Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Correct Answer Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- Question Quantify the increase in profit on account of following errors : (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses. Correct Answer Rs.43,200/- Question The analysis which is also referred as 'what if' analysis is known as________. Correct Answer Cost volume profit analysis Question The balance sheet has three columns, viz. assets, liabilities and ledger folio. Correct Answer False Question The various areas in which uniform costing can be adopted are . . Correct Answer Valuation of inventories , Charging of depreciation , Apportionment of overheads Question The varinace that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer Sales margin volume Question Depreciation is caused by use factor, obsolescence and ________. Correct Answer Time factor Question Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit) Correct Answer False Question All cash sales are recorded in the sales register. Correct Answer False Match The Following Question Correct Answer Transport facilities to employees Preventive cost of labour turnover Relationship between supervisor and worker Avoidable cause of labour turnover Dismissal of employee Unavoidable cause of labour turnover Increased spoilage and defectives Replacement cost of labour turnover Question Indirect material cost is an integral part of finished goods. Correct Answer False Question Select the various methods adopted for treatment of under or over absorbed overheads Correct Answer Use of supplementary rates , Carrying over the amount to remaining period , Writing off to the Costing Profit and Loss Account Question It is difficult to apply Uniform costing system for an industry which has labour intensive companies as well as capital intensive companies, because : Correct Answer The cost structure is different Match The Following Question Correct Answer Normal Standards Anticipated to be achieved in future Basic Standards Established for a longer period of time Current Standards Established for a shorter period of time Expected Standards Anticipated to be achieved in the budget period True/False Question Trading account is an important account which will be used to analyze how successful and how efficiently the firm runs its business. Correct Answer True Question Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Correct Answer Long term liabilities Question The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004. Correct Answer Rs.75,981/- Question The components of the selling and distribution cost budget are : Correct Answer Distribution expenses , Publicity expenditure , Salary of sales-office workers Question Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000 Correct Answer Ram is a creditor , Rs.10,000/- has been paid to Ram , The payment is made by cheque Question A written order sent to inform the purchasing department of a need for materials is called a ________. Correct Answer Purchase requisition note Question The overheads apportioned to three production departments A, B and C and two service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of 4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2. Ascertain the total overheads of each production department. Correct Answer A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/- Question Re-order quantity may be measured as : Correct Answer Maximum stock level - re-order level + (minimum usage X minimum re-order period) Question If the total amount on the ________ side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance. Correct Answer Debit Question An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe. Correct Answer suspense Question The final result disclosed by trading account is the ________profit earned by the organization. Correct Answer Gross Question Number of days inventory is held can be calculated by dividing number of days in a year by ________. Correct Answer Inventory turnover ratio Match The Following Question Correct Answer Total cost Cost of finished goods Non operating income Profit on sale of investment Selling and distribution overheads Advertisement expenses Factory overheads Repair for factory building Question The amount of profit which is retained by the organisation is transferred to 'Reserves and Surplus' in the balance sheet. Correct Answer True Question Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Correct Answer Investments Question Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units. Correct Answer 66.9 days Question Material mix and material yield variance can be calculated even when only one raw material is used for production. Correct Answer False Question A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate System. Correct Answer P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80 Question A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total cost. What is the break even point for the company? Correct Answer 68,182 units Question The organization chart shows the following aspects : Correct Answer Functional responsibility of different functional managers , Delegation of authority to various managers , Inter-functional relationships of these managers Question Select the correct formulae for calculating break even point. Correct Answer Fixed cost / (Selling price per unit - Variable cost per unit) , [Fixed cost / Marginal contribution] X Sales , [Fixed cost / (Fixed cost + Net Profit)] X Sales Question Select the transactions which can be entered in the Journal proper. Correct Answer Opening entries , Closing entries , Rectification entries Question The lowest profit volume ratio can be ________%. Correct Answer 0 Question Trading account is used to analyse how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Correct Answer True Question Calculate the earnings of workers Monica and Sonica under Taylor's differential piece rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30 seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above standard. Monica produces 900 units per day and Sonica produces 1,100 units per day. Correct Answer Monica -Rs.72/-; Sonica - Rs.132/- Question The factors that influence determination of budget period are : Correct Answer Type of budget, viz. Sales or capital expenditure budget , General economic conditions , Trade cycle of business Question Uniform costing system can be successfully implemented in any industry only when : Correct Answer Information is freely supplied by all the units , Well organised sector is ready to share the technological improvements , Information furnished by the units is complete and correct Question In marginal costing, under and over absorption of fixed overheads is bound to arise. Correct Answer False Question Trade Discount refers to the discount . . . Correct Answer received on purchases Question A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual break even point. Correct Answer 80,000 units Question Cool-wind Ltd., manufactures fans, which at sold at Rs.400 pre piece. The cost of sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle by 39% of present gross profit. With the above information, you are required to determine the future selling price, if the present rate of gross profit is to be maintained. Correct Answer Rs.452/- Question Credit balance in interest account indicates income for the organisation. Correct Answer True Question Money Measurement Concept__________________ Correct Answer Only those transactions and facts expressed in terms of money , This Concept imposes severe restrictions on the kind of information available from financial statements , Due to several restrictions it becomes drawback of financial accounting Question A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10% on building. The total amount of capital comes to Rs. __________ Correct Answer 11500 Question The periodical total of sales book was cash short by Rs. 5000 for rectifying the same, which A/C to be debited Correct Answer Suspense A/C Question Following errors do not affect the trial balance Correct Answer Error of Principle , Error of Omission , Error of Commission Question A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account Correct Answer False Match The Following Question Correct Answer Opportunity Cost Cost can be controlled Differential Cost Historical Cost Sunk Cost Cannot be controlled Controllable Cost Increase or Decrease in cost Uncontrollable Cost Return or yield Question Indirect material cost assist the manufacturing process is an integral part of finish goods. Correct Answer False Question Dividend received is a Non-operating Income. Correct Answer True Question A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2 Correct Answer 14,59,200 Question Factory overheads are termed as Correct Answer Production overheads , Works overheads , Manufacturing overheads Question The aims of perpetual inventory system are as follows Correct Answer Maintaining Bin cards , Maintaining store ledger , Continuous verification of physical stock Question These are the features of variable overheads Correct Answer vary directly in proportion to volume of output. , per unit cost remains the same , total overheads may increase or decrease as per volume of output. Question The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet. Correct Answer True Question If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is 500 kg then what will be the quantity of production Correct Answer 4,500 kg Question The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time. Correct Answer Idle Question Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer Master budget Question Differential cost analysis is incorporated in the cost books. Correct Answer False Question The process of recording attendance time of the workers is known as time booking. Correct Answer False Question Factory light, telephone expenses are examples of ________ expenses. Correct Answer Indirect Question For successful implementation of uniform costing system, it is very essential to devise ________, containing recommended cost accounting plan and procedures. Correct Answer cost manual Question The combination in which different products are sold by a company is known as ________. Correct Answer Sales mix Question Which of the following is usually prepared daily by employees for each job worked on? Correct Answer Job card Question Profit = Profit volume ratio X Margin of safety Correct Answer True Question The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision. Correct Answer Loss of trained personnel , Loss of regular customers , Expenditure required to restart the factory Question Locate the error and its features in the following - Correct Answer Compensating errors , Trial balance will not be affected , Trial balance will be affected Question Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction? Correct Answer Maintenance of machine account Multiple Choice Multiple Answer Question Which of the formulae can be used to calculate profit volume ratio :- Correct Answer Change in contribution / Change in sales , 1 - (Change in variable cost / Change in sales) , (Fixed cost + Profit) / Sales Multiple Choice Multiple Answer Question International Motors manufactures crankshafts for jeeps and trucks. They have furnished the following particulars for the quarter ended 31st March : Materials Rs.298,000/-; direct wages Rs.42,000/-; store expenses Rs.20,000/-; machinery maintenance Rs.4,600/-; depreciation Rs.22,300/-; staff welfare Rs.12,000/-; general expenses Rs.30,000/-; administration and selling expenses Rs.27,000/-. Additional information provided by them : Production 300 numbers of jeep and 400 trucks; material cost ratio per vehicle between jeep and truck is 1 : 2. Direct labour ratio per vehicle for jeep and truck is 2 : 3. Machine hour ratio per vehicle for jeep and truck is 1 : 2. Select the statements which are true and correct. Correct Answer Cost per crankshaft for jeep is Rs.445.45 , Cost per crankshaft for truck is Rs.805.66 , General expenses should be apportioned on direct labour ratio Multiple Choice Single Answer Question The direct material usage budget and direct material purchase budget differ because of which of the following? Correct Answer A planned change in the level of material stock Multiple Choice Multiple Answer Question Plant and equipment can become a key factor in the following circumstances :- Correct Answer Limited capacity due to lack of capital , Insufficient capacity due to shortage of space , Limited number of hours for which the plant can be used Multiple Choice Multiple Answer Question Select the accounts to be disclosed on the liability side of the Balance sheet :- Correct Answer Loan , Outstanding expenses , Creditors Select The Blank Question The ________ books are preferred when the volume of transactions is very large. Correct Answer Subsidiary Select The Blank Question ________ is any documentary evidence to justify that a particular transaction has taken place. Correct Answer Voucher Select The Blank Question The final result disclosed by Profit & Loss Account is the ________ profit after taxes earned by the organization. Correct Answer Net True/False Question Receipts and payments method of cash budget is useful for preparing long term estimates. Correct Answer False Multiple Choice Single Answer Question The Asian Industries specialises in the manufacture of small capacity motors. The cost structure of a motor is as under : Material Rs.50/-; labour Rs.80/-; variable overheads 75% of labour cost. The fixed overheads of the company amount to Rs.240,000/- per annum. THe sale price of the motor is Rs.230/- each. Determine the number of motors that have to be manufactured and sold in a year in order to break-even. Correct Answer 6,000 motors True/False Question The purpose of profit and loss account is to brign together information which relates to gross profit and the expenses for running the business. Correct Answer True True/False Question If the storage cost of inventory increases, then the economic order quantity also increases. Correct Answer False Multiple Choice Single Answer Question The reporting method used in the costing system should be based on the principle of Correct Answer Management by exception Multiple Choice Single Answer Question XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased to offset 20% reduction in selling price, so that the existing profit remains intact. Correct Answer 0.6 Multiple Choice Single Answer Question A company manufactures and sells four products, viz. A, B, C and D. The details are as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C-25%, Product D-18%; Incremental rupee sale for each Rupee spent on advertisement:-Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product D-Rs.10/-. Amount of advertisement available is only Rs.5,000/-. Correct Answer Product B True/False Question Match Correct Answer True Multiple Choice Single Answer Question An analysis of the time card of a worker on a machine shows that of the total 48 hours, he worked 45 hours (including 4 hours overtime) on production and that 3 hours was idle due to machine break-down. The rate of the worker is rupees ten per hour : but overtime is paid at 50 per cent extra. You are required to calculate the earnings of the worker. Correct Answer Rs.500/- Select The Blank Question In case of seasonal industry, the budget period may be taken as ________. Correct Answer One season Multiple Choice Single Answer Question The standard derpartmental overhead rate is Rs.15/- per hour. Based on the following details, work out the activity level at which the overhead rate has been pre-determined. Activity level : 600 hours; overhead allowance Rs.12,000/-. Activity level : 800 hours; overhead allowance Rs.14,400/-. Activity Correct Answer 1,600 hours True/False Question The total of the direct costs are termed as overheads. Correct Answer False Multiple Choice Single Answer Question Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as 6170 rectifying the transaction the creditor A/C is to be debited amount to Rs Correct Answer 540 True/False Question Market price may be treated as latest purchase price, realisable price or replacement price Correct Answer True True/False Question Office and administration overheads consists of all overhead costs incurred from procurement of material till the stage of selling the final product. Correct Answer False True/False Question Sold goods to Ajay on credit Rs 10,000/- Ajay account to be credited Correct Answer False True/False Question Goods lost by fire firstly transfers to Trading Account credit side & corresponding amount is debited to P&L account. Correct Answer True Multiple Choice Multiple Answer Question A manufacturer uses 200 units of component every month and he buys them entirely from outside supplier. The order placing and receiving cost is Rs. 100 and annual carrying cost is Rs. 12. Calculate Ec Correct Answer 200 units Select The Blank Question Due to compensating errors the ________ accuracy of the trial balance ________ affected Correct Answer arithmetical Correct Answer doesnot Select The Blank Question Preventive costs of labour turnover are ________ and ________ . Correct Answer welfare activities Correct Answer medical services Multiple Choice Multiple Answer Question Basic three steps in Standard Costing are Correct Answer Setting standards , Comparing actuals with standards , Measurement of variance True/False Question If the excess quantity is already billed in the invoice, it will be approved and paid. If not Debit note may be issued to the supplier for amending the amount. Correct Answer False Multiple Choice Single Answer Question A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 rectification of the suspense accounted debited to Rs Correct Answer 500 Multiple Choice Single Answer Question Depreciation charged on land & building, first debited to Profit & Loss A/C. and then to be --------------------- Correct Answer Deducted from land & building Select The Blank Question One of the limitations of the budgetory control is that it ________. Correct Answer is an expensive affair Multiple Choice Multiple Answer Question Features of real account are . . . Correct Answer Mainly deals with items which are having physical , Consists of some intangible assets , examples include - Lane, Building, Vehicles Select The Blank Question A trading concern will have only ________ overheads and selling overheads. Correct Answer administration Select The Blank Question ________ is an example of intangible asset. Correct Answer Goodwill Multiple Choice Single Answer Question Uniform costing system is useful in the following areas Correct Answer Classification of cost accounts Multiple Choice Single Answer Question Mr.X has Rs.200,000/- invested in his business firm. He wants a 15% return on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 60% of sales, his fixed costs are Rs.80,000/- per year. Mr.X estimates that even if he closed the doors of his business, he would incur Rs.25,000/- as expenses per year. At what sales would he be better off by locking his business up. Correct Answer Rs.62,500/- Multiple Choice Single Answer Question The budgeted level of activity of the production department of Style India Ltd. is 5,000 hours per period. From the given information find the cost for 3,500 hours per period. Indirect wages Re.0.40 per hour; Correct Answer Rs.2,480/- Select The Blank Question Normally, the planning for dividend payments and interest payments is based on the ________ budget. Correct Answer Cash Multiple Choice Single Answer Question The statement, mainly applicable to company form of organization, which discloses the manner in which the profit after tax is distributed is known as: Correct Answer Profit & Loss Account Appropriation Account Select The Blank Question Generally, all real accounts will have a ________ balance Correct Answer Debit Multiple Choice Single Answer Question The alternative courses of action for an integrated textile mill are: Correct Answer Sell cloth True/False Question The problem of multiple key factors can be solved with the help of techniques like linear programming, operations research, etc. Correct Answer True True/False Question Fixed expenses will move up by jumps if the output exceeds the capacity. Correct Answer True Multiple Choice Single Answer Question Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that the real worth of these loose tools is only Rs.30,000/-. What can be done to achieve the desired reduction in the net book value of loose tools? Correct Answer By providing depreciation to the extent of Rs.15,000/- Multiple Choice Multiple Answer Question Cost control procedure deals with : Correct Answer Establishment of plans , Comparison of actual and planed performance , Computation of variance Match The Following Question Correct Answer Tool-room expenses Direct labour hours Power Horse power of machine Stores department Number of material requisitions Boiler house Cubic feet of steam supplied Multiple Choice Single Answer Question The following data is extracted from the books of a manufacturing concern for the year 2003-04: Direct materials Rs.205,000/-; direct labour Rs.75,000/-; fixed overheads Rs.60,000/-; variable overheads Rs.100,000/- and sales Rs.500,000/-. Calculate the break even point if there is an increase of 10% in the fixed expenses. Correct Answer Rs.275,000/- True/False Question Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. Correct Answer False Multiple Choice Single Answer Question A worker completes a job in a certain number of hours. The standard time allowed for the job is 10 hours, and the hourly rate of wages is Rs.10/-. The worker earns at 50% rate a bonus of Rs.20/- under Halsey plan. Find out his total earnings under the Rowan plan. Correct Answer Rs.84/- Match The Following Question Correct Answer Dividend paid Profit and loss appropriation account Freight inwards Manufacturing account Sales Trading account Freight outwards Profit and loss account Multiple Choice Single Answer Question The credit sales are as follows : February Rs.180,00,000/-, March Rs.192,00,000/- and April Rs.108,00,000/-. 50% of credit sales are realised in the month following the sale, 30% in the second month following the sale and the balance in the third month f Correct Answer Rs.15,000,000/- Multiple Choice Multiple Answer Question The disadvantages of supplementary overhead rates are: Correct Answer It can be determined only after the end of the accounting period , Defeats the basic concept of normal cost , Involves lot of clerical activity Select The Blank Question In the scheme of cost-________-profit analysis, an attempt is made to measure the variations of cost with volume. Correct Answer volume Select The Blank Question The ________ is of immense help in guiding the companies to operate their accounts on uniform basis. Correct Answer uniform cost manual Multiple Choice Multiple Answer Question The productive causes of idle time are : Correct Answer Instructions are not clearly given , Power failures , Machine breakdown Multiple Choice Multiple Answer Question The factors which influence the selection of the method for absorption of overheads are: Correct Answer Type of industry , Nature of products , Manufacturing process Match The Following Question Correct Answer Emerson's efficiency bonus system Actual hours X Hourly rate + Bonus percentage (Actual hours X Hourly rate) Piece rate system Output X Wage rate per unit Barth Premium system Hourly Rate X (square root of Standard Hours X Actual Hours) Time rate system Attendance time X Hourly wage rate Multiple Choice Single Answer Question If the overhead expenditure to be absorbed is the foreman's salary, the most appropriate basis for absorption would be : Correct Answer Direct labour hours True/False Question In case the standards are too difficult to achieve, they will provide additional incentive for improvement. Correct Answer False Multiple Choice Single Answer Question Standard cost specification per unit of product : 20 labour hours per unit @ Rs.22/- per labour hour.Actual production and labour cost : Actual production 300 units; time used in production -5,500 hours; Idle time -600 hours; time paid for-6,100 hours, total wages paid -Rs.146,400/- . Compute Idle time variance. Correct Answer Rs.13,200/- (Adverse) Multiple Choice Single Answer Question Details of budgeted and actual fixed overheads and output for the year 2004 are as follows : Budgeted fixed overheads -Rs.20,00,000/-; actual fixed overheads -Rs.21,50,000/-; budgeted output - 40,000 units and actual output- 45,000 units. Compute the per unit standard rate for fixed overheads. Correct Answer Rs.50/- Multiple Choice Single Answer Question In considering a special order situation that will enable a company to make use of presently idle capacity, which of the following costs would be irrelevant? Correct Answer Depreciation True/False Question Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of finished goods. Correct Answer True Multiple Choice Multiple Answer Question The management of Dick Ltd. is deciding whether to buy component Y from the supplier, since the purchase cost is less than the manufacturing cost. State the non-financial aspects that must be considered before arriving at a decision. Correct Answer Reliability regarding quality of the material supplied by the supplier , Alternative use of labour of engaged in manufacturing component Y , Regularity of material supplies from the supplier True/False Question In marginal costing, decisions are guided by profit rather than contribution margin. Correct Answer False Multiple Choice Single Answer Question Select the factor which can prove to be a very crucial key factor in case of an oil refinary. Correct Answer Supply of crude oil Multiple Choice Multiple Answer Question The factors to be considered while preparing the direct materials budget are : Correct Answer Adequacy of material storing space , Availability of funds , Material in stores but reserved for specific purposes Select The Blank Question Excess direct labour wages will be disclosed by 'Direct labour________ variance'. Correct Answer Rate True/False Question The difference between sales and margin of safety is equal to budgeted sales. Correct Answer False Select The Blank Question A ________ note is prepared when excess material is returned to stores. Correct Answer Material returned Select The Blank Question The systematic process of identifying and reporting variance is known as ________. Correct Answer Variance analysis Match The Following Question Correct Answer [( Actual sales - Break even sales) ]/ Actual sales Margin of safety as a percentage of actual sales Fixed cost / Contribution margin ratio Break even point Fixed cost - (Sales X Profit volume ratio) Profit (Sales X Profit volume ratio) -Fixed cost Loss True/False Question Marginal costing rewards sales whereas absorption costing rewards production. Correct Answer True Select The Blank Question Dividend received on amount invested in shares is an example of ________. Correct Answer non-operating income Multiple Choice Single Answer Question The store-keeper should initiate action for the purchase of a material, when it reaches its : Correct Answer Re-order level Select The Blank Question Under-recovery of overheads implies that the profit will be________ to the extent of total under-recovered overheads. Correct Answer Increased Multiple Choice Single Answer Question Judge the statement in italics based on the criteria given. On 31st March, 2004 Sita Enterprises sent goods worth Rs.30,000/- on approval basis to Mr.Ram. These goods should be included in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz.Sita Enterprise. Correct Answer The statement and the reason both are correct Multiple Choice Single Answer Question Double entry system of accounting follows the principle of : Correct Answer Every debit has corresponding credit Multiple Choice Single Answer Question Where, in the final statements of accounts, should we disclosed the closing balance of income received in advance? Correct Answer Balance sheet - on the liability side True/False Question Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. Correct Answer True True/False Question In differential cost analysis, decisions are taken by comparing the incremental revenue with differential costs. Correct Answer True True/False Question Due to compensating errors the arithmetical accuracy of the trial balance is affected. Correct Answer False Select The Blank Question A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit completed, this type of labour cost may be classified as ________ cost. Correct Answer Semi-variable Multiple Choice Single Answer Question Following data has been extracted from the records of a manufacturing company whose level of operations varies during different months. Minimum activtity : 30,000 machine hours and manufacturing overeheads Rs.400,000/-. Maximum activity : 80,000 machine hours and manufacturing overheads Rs.600,000/-. Determine the fixed and variable components of manufacturing overheads. Correct Answer Fixed overheads Rs.280,000/- and variable overheads Rs.4/- per machine hour Multiple Choice Single Answer Question You been informed that the carrying cost and ordering cost with best order size of 1,200 units is Rs.6,000/-. Unit cost of material is Rs.50/-. Annual storage cost per unit is 10% of the unit price of material. Ordering cost is Rs.240/- per order. Ascertain annual material requirement, assuming that at economic order quantity the total storage cost is equal to the total ordering cost. Correct Answer 15,000 units Select The Blank Question Graphically, fixed cost line will be ________ the 'x-axis'. Correct Answer Parallel to Select The Blank Question ________ variance arises when the mix of materials used in the production is different from the predetermined standard mix of operation. Correct Answer Materials mix True/False Question Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer True Multiple Choice Single Answer Question Over which of the following costs is the management likely to have least control? Correct Answer Buildings insurance cost Select The Blank Question Loss of uninsured goods by fire was debited incorrectly to United India Assurance Company's account instead of debiting it to ________ account. Correct Answer Goods lost by fire Multiple Choice Single Answer Question The given data pertains to the month of April : Budgeted : Fixed overheads Rs.10,000/-; output - 5,000 units; standard time for one unit - 4 hours. Actual : Fixed overheads -Rs.10,200/-; output - 5,200 units and actual hours worked - 20,100 hours. Calculate fixed overhead cost variance. Correct Answer Rs.200/- (Favourable) Multiple Choice Single Answer Question Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his annual salary is Rs.500,000/-, what amount should be charged as office overheads? Correct Answer Rs.300,000/- Multiple Choice Multiple Answer Question Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general expenses account. Correct Answer Rs.6,000/- to Rao's A/c Rs.6,000/- , Rs.250/- to General Expenses A/c Rs.250/- , Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- Select The Blank Question Adjustment entries always have ________ effects. Correct Answer Two Multiple Choice Single Answer Question M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor of Vivek Enterprises. This payment should be treated as :- Correct Answer Drawings Select The Blank Question The various contents of a uniform cost manual are organization, cost accounting system and ________. Correct Answer Presentation of information Multiple Choice Multiple Answer Question Which of the following information is included in the goods received note? Correct Answer Date of receipt of material , Quantity received , Description of goods Multiple Choice Single Answer Question In the trial balance prepared on 31st March, 2004, the insurance premium account had a debit balance of Rs.12,865/-. This amount is the premium of the policy which expired on 29th February, 2004. The policy has been renewed from 1st March, 2004 but the premium is not yet paid. Find the amount of insurance premium still payable as on 31st March, 2004. Correct Answer Rs.1,169.55 True/False Question All the properties owned by the business are collectively referred to as the assets of the business. Correct Answer True Multiple Choice Single Answer Question Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry? Correct Answer Uniform costing True/False Question Primary distribution is effected on the basis of service rendered to the service departments by the production departments. Correct Answer False Select The Blank Question Creche expenses may be appropriately apportioned on the basis of ________. Correct Answer Number of female workers True/False Question Debit Note is an intimation sent to person dealing with the business that his account is being credited for the purpose indicated therein. Correct Answer False Select The Blank Question Factory cost of a product is Rs.335,000/-, if the selling overheads are charged @ 25% of factory cost, then the amount of selling overheads should be Rs.________/- Correct Answer 83750 Multiple Choice Single Answer Question The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumption of X = 10 litres per unit of product. Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Correct Answer Rs.5,000/- (Favourable) Multiple Choice Multiple Answer Question The suspense account has a debit balance of Rs.40,000/-. Select the transactions which are capable of nullifying this balance. Correct Answer Conveyance expenses of Rs.25,000/- were posted on the wrong side of the account. , Purchased computer worth Rs.28,000/- was recorded in the ledger as , The total of the purchase book was cast short by Rs.44,000/- Multiple Choice Multiple Answer Question Items credited to Trading Account are :- Correct Answer Sales , Goods lost by fire , Closing stock Multiple Choice Single Answer Question As on 31st March, 2004, it was decided to write off Rs.800/- of debtors as bad debts. Also, provision for bad and doubtful debts is to be made @ 5% and for discount on debtors @ 4%. Find the net amount of debtors to be disclosed in the balance sheet, if the total debtors before the aforesaid adjustments is Rs.98,623/-. Correct Answer Rs.89,214.58 Select The Blank Question If the time booked as per the job cards is less than the attendance time it indicates ________ during which the worker has not done any work though he was present in the factory. Correct Answer Idle time Multiple Choice Multiple Answer Question The process of accounting has three streams of accounting ---------------,--------and ----------------------. Correct Answer Financial Accounting , Cost Accounting , Management Accounting Multiple Choice Single Answer Question Select the information to be considered before installing a costing system :- Correct Answer Labour intensity of the product Multiple Choice Single Answer Question The opening balance of cash account is Rs. 25,000/-, cash received from debtors Rs. 30,000/-, sold goods on cash basis amounting to Rs. 50,000/-, paid to creditors Rs. 20,000/-, purchase furniture Rs. 5000/-. What is the closing balance of the cash account? Correct Answer Rs. 80,000 Multiple Choice Single Answer Question The installation and operation of ___________ accounting requires a very elaborate organizational structure and large number of rules & regulations Correct Answer Management TO BE ANSWERED: (You can reply to me if you get the answers so that I can update the same) Where break even sales are Rs. 20000,fixed cost is Rs.10000and profit is Rs. 5000 then the margin of safety will be Rs. 10000 1500 15000 2000 Valuation of material uses the following methods FIFO and LIFO Average price method Market price Special price Goods distributed as free samples transfer to debit side of trading A/C . True / False In Citizen Ltd., Division X is a profit centre which produces three products, A, B and C. The details are as follows : External market price per unit:-Product A- Rs.48/-, Product B- Rs.46/-, Product C-Rs.40/-. Maximum external sales(units):-Product A- 800, Product B-500, Product C-300. Variable cost per unit:-Product A- Rs.33/-, Product B- Rs.24/-, Product C-Rs.28/-. A-800 units; B-500 units; C-300 units A-800 units; B-250 units; C-200 units A-400 units; B-500 units; C-300 units A-400 units; B-800 units; C-300 units XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Rs.20,000/- (Adverse) Rs.20,000/- (Favourable) Rs.60,000/- (Adverse) Rs.60,000/- (Favourable A firm is able to break even at 60% capacity with budgeted fixed cost of Rs.300,000/-, budgeted selling price Rs.20/- per unit and budgeted contribution Rs.6/- per unit. The firm can produce and sell at 90% capacity but it is estimated that in that case Rs.88,500/- Rs.75,000/- Rs.82,500/- Rs.72,500/- The annual variable production overheads of a factory are Rs.70,000/-. The production manager anticipates that in the next year, the production efficiency will decrease by 4%. Find out budgeted production overheads for the next year. Rs.72,800/- Rs.78,200/- Rs.72,916.67 Rs.79,216.67 XYZ & Co. is a partnership with X and Z as partners. The capital of X is Rs.58,000/- and that of Z is Rs.75,000/-. Interest on capital is charged @ 12% p.a. and interest on drawings is charged @ 5% p.a. The drawings of X totaled to Rs.15,000/- and that of Z totaled to Rs.12,000/-. The profit for the year after considering interest on capital and drawings is Rs.125,000/- and the profits are shared in the ratio of their capitals, i.e. 58 : 75. Find the balance of capital accounts after giving X - Rs.118,721.28 and Z -Rs.153,888.72 X - Rs.120,221.28 And Z - Rs.155,088.72 X - Rs.119,471.28 And Z - Rs.154,488.72 X - Rs.135,448.28 And Z - Rs.138,511.72 Factory rent is a direct cost to the factory as a whole but indirect to the production departments. True / False The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract should be defined as : Direct labour cost Indirect labour cost Fixed labour cost Non-controllable labour cost The following information relating to material X and its standard use for production has been extracted from the standard cost card: Price of material X = Rs.5/- per litre; consumptiion of X = 10 litres per unti of product.Data relating to actual material purchases and production during the period: Purchases of X = 4,000 litres; price paid for X =Rs.6/- per unit; actual production = 500units. Calculate material usage variance. Rs.1,000/- (Favourable) Rs.4,000/- (Adverse) Rs.5,000/- (Favourable) Rs.3,000/- (Adverse) The following particulars are extracted from the books of a company relating to commodity "A" for the half year ending 30th June, 2004. (a) Purchase of raw materials - Rs.1,32,000/- (b) Direct wages - Rs.1,10,000/- (c) Rent, rates and insurance - Rs.44,000/- (d) Carriage inwards - Rs.1,584/- (e) Raw material as on 1st Jan, 2004 - Rs.22,000/- (f) Finished goods as on 1st Jan, 2004 - Rs.17,000/- (1600 tonnes) (g) Raw Material as on 30th June, 2004 - Rs.24,464/- (h) Finished goods as on 30th June, Rs.64,800/- Rs.46,800/- Rs.86,400/- Rs.68,400/- Annual maintenance of Rs.28,000/- was paid on 15th June, 2003 for a period of one year therefrom. Find the amount of prepaid maitenance expenditure for the year ended 31st March. Rs.28,000/- Rs.22,167/- Rs.7,000/- Rs.5,833/ The Balance Sheet method of cash budget ignores any excess or shortage of cash during the budget period. True / False Compound journal entry avoids duplication of effort. True / False Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of India. On 31st January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-; Current accountRs.2,250/- (overdraft). It is found that a deposit of Rs.1,500/- made into the savings account on 20th January, 2004 has been entered in the ledger in the of Current account. Find the correct ledger balances of savings and current accounts. Savings account-Rs.5,000/-, current account-Rs.3,750/- (overdraft Savings account-Rs.5,000/-, current account-Rs.2,250/- (overdraft) Savings account-Rs.6,500/-, current account-Rs.2,250/- (overdraft) Savings account-Rs.6,500/-, current account-Rs.3,750/- (overdraft) Which of the following source documetns in a cost accounting system is designed to exercise control voer the delivery of and accurate recording of the receipts of goods? Goods received note Order to the supplier Material requisition note Purchase requisition slip Select the cases where convention of conservation is applied : Closing stock is valued at cost or market price whichever is lower Providing for discount on debtors Amorisation of goodwill (goodwill being written off to Profit and Loss Account) Providing for discount on creditors M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-, Rs.80/- and Rs.50/-, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantitywise proportion in which these products are manufactured and sold are 20%, 30% and 50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to work out the overall break even point qunatity for 30,000 units 90,000 units 40,000 units 80,000 units A firm is earning a profit of Rs.60,000/- at the present sales level of Rs.500,000/-. It has a profit volume ration of 60%, which remains unchanged. Fixed cost increases by 25% as soon as sales become twice the break even point. Find the profit for sal Rs.240,000/- Rs.180,000/- Rs.120,000/- Rs.200,000/- At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What will the 401st unit sold contribute to profit? Re.0 Re.0.50 Re.1.00 Rs.1.50 1. Advantage of budgetary control system 1. Motivates the managers to exceed the budgeted targets 2. Fixed budget 2. Managerial tool which decreases effectiveness of managerial control 3. Disadvantage of budgetary control system 3. More elastic and practical 4. Flexible budget 4. Difficult to implement in fast changing industrial scenario 5. Restricts the efforts of the managers to the budgeted targets 6. Managerial tool which increases effectiveness of managerial control With the help of the given information, find actual fixed overheads for actual output. Fixed overheads volume variance -Rs.75,000/- (Favourable); fixed overheads efficiency variance -Rs.95,000/- (Favourable); fixed overheads calendar variance Rs.20,000/- (Adverse); fixed voerheads expenditure variance Rs.100,000/- (Adverse) and standard fixed overheads for actual output -Rs.575,000/-. Rs.600,000/- Rs.550,000/- Rs.525,000/- Rs.625,000/- Existing sales are Rs.100,000/- (500 units), variable costs are Rs.60,000/-, fixed costs are Rs.24,000/-. If selling price is reduced by 10% which of the following is the breakeven sales quantity? 450 units 500 units 400 units 334 units An operator engaged in machining certain components receives andordinary day rate of Rs.160/- per day of 8 hours. The standard output for machining the components has been fixed at 80 pieces per hour (time fixed for premium bonus). On a certain day, the output of the worker on this machine is 800 pieces. Find the labour cost per 100 pieces if a bonus of Rs.25/- is paid per 100 pieces of the extra output. Rs.25/- Rs.20/- Rs.15/- Rs.10/- Under the accelerating premium system incentive increases at a fast rate with the decrease in output. True /False A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of copper. Rs.200,000/- Rs.150,000/- Rs.350,000/- Rs.180,000/- Sold goods to Amitabh worth Rs. 15,000/- against 15% trade discount. In this case with what amount should the sales account be credited? Rs. 15,000 Rs. 12,750 Rs. 13,500 Rs. 13,750 Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/- (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost variance and material usage variance. Material cost variance -Rs.400/- (Adverse) Material usage variance -Rs.750/- Material usage variance is favourable Material usage variance is adverse Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the date of payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss account as expenditure on account of insurance premium? Rs.18,000/- Rs.14,250/- Rs.10,500/- Rs.3,750/- The standard cost of actual hours when any employee remains idle due to abnormal circumstances is known as Standard labour cost / Idle time variance / Labour cost variance / Standard cost. Keeping company's liquid position sufficiently sound to meet its daily obligation is the main object of preparing Cash Sales / Income / Expenditure / budget. One of the major drawback of the contribution approach to costing is that it ignores fixed cost. True / False Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account will be disclosed in the … Profit and Loss Account - credit side Balance Sheet - liability side Balance Sheet - asset side Trading Account - debit side A withdrawal of Rs.500/- from Mr.Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr.Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr.Johny, find out the balance as per his bank book. Rs.1,750/- (overdraft) Rs.1,750/- (debit) Rs.2,250/- (overdraft) Rs.2,250/- (debit) What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges on the lathe machine were debited to Carriage inward account, Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous expenses account, Rs.200/- Cost will increase by Rs.900/- Cost will increase by Rs.1,300/- Cost will decrease by Rs.1,300/- Cost will decrease by Rs.900/- From the following particulars, calculate the machine hour rate of overhead absorption. A company has three production departments and two service departments. The overhead analysis sheet provides the following totals of the overheads analysed to production and service departments. Production Departments :X- Rs.48,000; Y-Rs.42,000; Z-Rs.30,000.Service Departments : A-Rs.14,040; B-Rs.18,000. The expenses of the service departments are apportioned as follows : Service department A - Production department X-20%; Production department Y - 40%; Production department Z- 30%; Service department B - 10%.Service department B- Production department X-40%; Production department Y - 20%; production department Z- 20%; Service department A - 20%. Details of machine hours are as follows: Production department X -1,000 hours; Production department Y-1,000 hours; Production department Z-1,000 hours. X - Rs.5.316, Y - Rs.5.952 and Z - Rs.3.936 X - Rs.5.952, Y - Rs.3.936 and Z - Rs.5.316 X - Rs.5.952, Y - Rs.5.316 and Z - Rs.3.936 X - Rs.5.316, Y - Rs.3.936 and Z - Rs.5.952 From the given information compute the total cost variance. Material cost variance -Rs.4,400/- (Favourable); labour cost variance -Rs.450/- (Adverse); fixed overhead cost variance -Rs.22,000/- (Adverse); variable overhead cost variance -Rs.6,000/- (adverse). Rs.32,850/- (Adverse) Rs.32,850/- (Favourable) Rs.24,050/- (Adverse) Rs.24,050/- (Favourable) Judge the given statement according to the given criteria :- 'Provision for doubtful debts account' and 'provision for discount on debtors account' mean same account can be maintained under two account-heads, since both are related to debtors and indicate a loss to the organization. The statement and the reason both are correct The statement and the reason both are incorrect The statement is correct but the reason is incorrect The statement is incorrect but the reason is correct 1. Ordering cost 1. Cost of holding the inventory 2. Carrying cost 2. Cost of issuing the inventory 3. Material cost 3. Cost of administrative efforts 4. Cost of material consumed 4. Can be obtained subtracting opening stock from the sum of material cost and closing stock 5. Can be obtained subtracting closing stock from the sum of material cost and opening stock 6. Sum of possession cost, ordering cost and purchase cost The pass book showed a credit balance of Rs.1,000/-. This balance was after considering the dividend of Rs.25/- collected by bank and Rs.5/- charged as collection expenses: these entries are not made in the bank book. Find the balance as per bank book. Rs.1,000/- Rs.1,030/- Rs.1,020/- Rs.980/- Compute fixed overheads calendar variance when fixed overhead volume variance is Rs.250/- (Favourable); fixed overheads efficiency variance is Rs.2,150/- (Adverse) and fixed overheads capacity variance is Rs.800/-(Favourable). Rs.1,100/- (Adverse) Rs.1,100/- (Favourable) Rs.1,600/- (Adverse) Rs.1,600/- (Favourable) Routing the purchase requisition through the purchase department entails unnecessary delay in receiving the required materials. True /False Large angle of incidence indicates Lower /Adjusted /Higher /Same amount of profits. The method of overhead apportionment which considers both the material cost as well as the labour cost, is known as Supplementary rate /Prime cost percentage rate /Direct labour hour rate /Machine hour rate method. Standard labour cost of producing 500 metre of cloth has been specified as 20 hours work by skilled workers @ Rs.15/- per hour and 30 hours work by unskilled workers @ Rs.10/- per hour. For producing 500 metre cloth they worked for 30 hours each they were paid at the rate of Rs.17/- per hour and Rs.10/- per hour, respectively. Calculate labour mix variance. Rs.210/- (Adverse) Rs.60/- (Adverse) Rs.150/- (Adverse) Rs.30/- (Adverse) In a factory Ram and Shyam produce the same product using the same input of same material and at the same normal wage rate. Bonus is paid to both of them in the form of normal time wage rate adjusted by the proportion which time save bears to the standard time for the completion of the product. The time allotted to the product is fifty hours. Ram takes thirty hours and Shyam takes forty hours to produce the product. The factory cost of the product for Ram is Rs.3,100/- and for Shyam is Rs.3,280/-. The factory overhead rate is Rs.12/- per hour. Calculate the cost of material used for the product, for each worker, Ram and Shyam. Rs.3,000/- Rs.2,000/- Rs.3,320/- Rs.2,320/- Provision for discount on debtors account should be credited to the Profit and Loss Account. True /False Consideration to the fact that the repairs and maintenance cost is less in the initial years of life of the asset and hence needs to be counterbalanced by higher amount of depreciation in the :- Straight line method Written down value method Endowment policy method Sinking fund method The following data is available for a company for the month of April, 2004 : Territory I : selling expenses Rs.7,600/-; distribution cost Rs.4,000/-; number of units sold -16,000; sales Rs.76,000/-. Territory II : selling expenses Rs.4,200/-; distribution cost Rs.1,800/-; number of units sold -6,000; sales Rs.28,000/-. Territory III : selling expenses Rs.6,240/-; distribution cost Rs.2,000/-; number of units sold -10,000; sales Rs.52,000/-. The company adopts sales basis and quantity basis for application of selling and distribution costs respectively. Compute the amount of selling and distribution costs chargeable to a consignment of 4,000 units of a product sold in each territory at Rs.2.50 per unit. Territory I -Rs.2,000/-; Territory II -Rs.2,000/- and Territory III -Rs.2,000/- Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,700/- Territory I -Rs.2,700/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- Territory I -Rs.2,000/-; Territory II -Rs.2,700/- and Territory III -Rs.2,000/- SRR Ltd. producing a single product, sells it at Rs.50/- per unit. Unit variable cost is Rs.35/- and fixed costs amounts to Rs.12,00,000/- per annum. Calculate the increase in sales required if profits are to be increased by Rs.2.4 lakhs Rs.880,000/- Rs.800,000/- Rs.600,000/- Rs.660,000/- Re-order level should be higher than Monthly requirement /Average stock level /Annual requirement /Minimum level but lesser than maximum stock level. What is the balance of the cash account after considering the relevant transactions from the following set : 4th July, 2004-Sold goods to Deshmukh & Co. for Rs.2,500/-; 5th July, 2004-Received Rs.5,000/- for rent of June, 04; 7th July, 2004-Paid salaries by cheque for Rs.8,000/-; 15th July, 2004-Received commission, in cash, from XYZ Ltd., Rs.3,000/-; 21st July, 2004-Paid salaries by cash Rs.2,500/-; 22nd July, 2004-Deposited cash into Bank of India Rs.3,000/-; 25th July, 2004-Purchased furniture from Shantilal for Rs.10,000/-. Shantilal has given a credit period of 45 days; 26th July, 2004-Paid cash for purchase of machine from Elpro Ltd. For Rs.30,000/-; 28th July, 2004-Paid ready cash for advertisement inserted in newspaper, Rs.200/-; 28th July, 2004-Withdrawn cash from Bank of India Rs.50,000/-. Rs.22,300 (debit) Rs.22,300 (credit) Rs.33,200 (debit) Rs.33,200 (credit) Factory cost is Rs.13,10,800/-. The administrative overheads are salaries Rs.40,000/-, rent and rates Rs.6,400/-, traveling expenses Rs.12,400/-, Depreciation Rs,2,400/-, Directors fees Rs.24,000/-, General Charges Rs.24,800/-, Manager's salary Rs.38,400/-. What will be the office cost? Rs.14,59,200/- Rs.11,72,200/- Rs.13,10,800/- Rs.15,10,800/- XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Rs.20,000/- (Adverse) Rs.20,000/- (Favourable) Rs.60,000/- (Adverse) Rs.60,000/- (Favourable) The concept of marginal costing is based on the important distinction between product costs and Indirect /Direct /Variable /Period costs. Currently Beta Ltd. is earning a contribution of Rs.80/- per unit and the variable cost is Rs.180/- per unit. Its fixed costs are Rs.200,000/-. Its existing sales are 5,000 units. The company has a proposal that the sales staff may be paid a commission of 10% of sales instead of fixed salaries totaling Rs.80,000/-. This action is expected to increase the sales by 10%. Compute the amount of profit assuming the proposal is accepted? Rs.177,000/- Rs.200,000/- Rs.178,000/- Rs.277,000/- A company has a normal capacity of 120 machines, working 8 hours per day of 25 days in a month. The fixed overheads are budgeted at Rs.144,000/- per month. The standard time required to manufacture one unit of product is 4 hours. In April, 2004, the company worked 24 days of 840 machine hours per day and produced 5,305 units of output. The actual fixed overheads were Rs.142,000/-. Compute calendar variance. Rs.6,360/- (Favourable) Rs.17,280/- (Adverse) Rs.5,760/- (Adverse) Rs.16,680/- (Adverse) Industries which have high fixed cost burden but low variable cost have Narrow /Smaller /Larger /Flat angle of incidence. Special aspects of co-partnership include:- Workers are granted ownership rights Indirect monetary remuneration The morale of the workers is increased The workers are rewarded for individual efficiency The credit purchases are as follows : July Rs.80,000/- and August Rs.140,000/-. Creditors are paid either on a 'prompt basis' (on the spot) or 30 days basis. It is estimated that 10% of the creditors are in the prompt category. Find the amount paid :- Rs.161,000/- Rs.121,000/- Rs.177,000/- Rs.118,000/- The use of contribution per unit of limiting factor as the basis for ranking products to be produced and sold is aimed at which of the following? Maximization of turnover Minimization of turnover Maximization of short-term profit Maximization of long-term profit Obsolescence arises when a machine has to be discarded in favour of one better adopted to its purpose and giving better result. True /False A manufacturing unit produces electronic circuits at the rate of 6 pieces an hour. The unit works in single shift of 8 hours during a six-day week and remains close for 18 days a year on account of holidays. Average idle hours per month is 20 for cleaning and maintenance of equipments. Against an average annual output of 12,000 pieces during last ten years, the actual output achieved during the year was 10,800 pieces. The fixed overheads for the year amounted to Rs.540,000/-. You are required to calculate the idle capacity costs on the assumption that overhead recovery rate is based on maximum capacity. Rs.207,121.60 Rs.200,000/- Rs.193,121.60 Rs.187,000/- Return to question paper search

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