LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
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 amount which should be debited to the profitability statement.
The cost behaviour patterns for a company is as follows : Activity level: 500 units, the total cost is Rs.2,500/-; Activity level : 700 units, the total cost is Rs.3,100/-; Activity level: 900 units, the total cost is Rs.4,600/- If fixed cost remains unchanged throughout all activity levels, which of the following statements is true in relation to the cost behaviour?
Variable cost per unit is increases above 700 units.
Total average cost per unit is constant for all activity levels.
Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet.
Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product.
Multiple Choice Multiple Answer
Items credited to Trading Account are :-
Sales , Goods lost by fire , Closing stock
Select The Blank
If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________.
Purchase day book for the month of April was under cast by Rs.1000/- ________ account should be credited.
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/-
The process of attributing proportions of items of costs amongst cost centres is called ________.
Absorption of indirect costs
Purchases included an amount of Rs. 25,450/- representing purchase of computer. The rate of depreciation is 10% for computers. Calculate the net effect of this transaction on the profitability statement.
Net profit will increase by Rs.22,905/-
Net profit will decrease by Rs.22,905/-
Management accounting is concerned with the following activities :-
Decision making , Safeguarding assets , Planning and controlling activities
Decision making , Planning and controlling activities
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.
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/-.
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.
The gross profit will increase by Rs.6,450/-
The gross profit will not be affected
Inventory holding cost comprises of :-
Cost of insurance , Rent of store house , Salary of store keeper
Cost of insurance , Cost of material
The handloom industry will have ________ fixed cost and high variable cost.
Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the bank book.
A producer of tin boxes purchased 5,000 kg of tin sheet for Rs.50,000/- for producing large size tin boxes. 1,600 large boxes, each weighing 2 kg were manufactured. In addition to the above 400 large boxes were damaged in the course of manufacture. Rectification of these boxes amounted to Rs.1,000/-. 700 kg of off cuts were used for producing small tin boxes. Market value of these off cuts is Rs.5/- per kg. 250 kgs of off cuts were sold @ Rs.3/- per kg. Other costs Rs.9,400/- were apportioned in the ratio of weight of output. Calculate cost of each large sized tin box assuming that there are no opening and closing stocks.
Match The Following
Maintain all types of accounts
Reviewing internal control system
Process of analyzing & interpretation
Process of estimating profits
Book of original entry
Piece rate systems are very useful in the following circumstances:-
Units of output are measurable , Job is standardized , The flow of work is regular
Work delays are frequent , Job is standardized , The flow of work is regular
Time-keeping facilitates the preparation of payroll.
From the following select the examples of errors of commission :-
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
Overhead absorption is an exercise by which overhead is properly spread over production for the period.
The final result disclosed by trading account is the ________ profit earned by the organization.
The bin card and stores ledger, being independent records, comparison of these two records should be avoided.
Goods returned by Pawan worth Rs.1,000/- is debited to Pawan's Account. In order to rectify the mistake, ________ account should be debited.
Financial Accounting considers those transactions which can be expressed in terms of ________.
A producer has the option to procure a particular material from two sources: Source A assures that the defectives will not exceed 2% of the supplied quantity. Source B does not give any assurance, but on the basis of past experience of supplies from this source, it is observed that defective percentage is 2.8%. The material is supplied in lots of 1,000 units by both sources. Source B supplies the lot at a price, which is lower by Rs.100/- as compared to Source A. The defective material units can be rectified at a cost of Rs.5/- per unit. Which of the two sources is more economical?
Source B is more economical
Under Bedaux Point system the standard time is divided into standard minutes and each standard minute identified as ________.
Bedaux point or B
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.
An important feature of cost accounting is :
Focuses attention on the profitability of each product and service.
Generally all the liabilities will have ________ balance.
Balance sheet is statement of :-
All Assets and Properties
Daily Time sheets
Time spent by worker on job is recorded
Time Keeping Department
Recording of workers time
Time booking department
Jobwise booking of time.
Time Recording Clock Method
Ticket number & clock card allotted to worker
High time wages means necessarily high cost of production.
The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point.
Product costs under direct costing include:-
Prime cost and variable factory overheads
Prime cost, variable and fixed factory overheads
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.
Which document is a part of the perpetual inventory system?
Material requisition note
Which of the formulae can be used to calculate profit volume ratio :-
Change in contribution / Change in sales , 1 - (Change in variable cost / Change in sales) , (Fixed cost + Profit) / Sales
Change in contribution / Change in sales
Features of Sunk cost are :-
Indicates historical cost , Not relevant in decision making process , Incurred in past
The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account.
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.
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/-
Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.250/- to General Expenses A/c Rs.250/-
A materials requisition form normally contains the following aspects:-
Quantity requisitioned , Per unit material cost , Job number
Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices.
Select the steps to be followed while preparing bank reconciliation statement :-
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
Compare the transactions in the bank book and the pass book , Confirm that the opening balances of both the books are tallying , Confirm that the closing balances of both the books are tallying
Select the advantages of standard cost system :-
Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency