Wednesday, April 28, 2010

Management Accounting - 11

 

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

 

 

 

 Multiple Choice Single Answer

  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 amount which should be debited to the profitability statement.

  Correct Answer  

Rs.18,950/-

  Your Answer  

Rs.18,950/-

 

 Multiple Choice Single Answer

  Question  

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?

  Correct Answer  

Variable cost per unit is increases above 700 units.

  Your Answer  

Total average cost per unit is constant for all activity levels.

 

 True/False

  Question  

Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet.

  Correct Answer  

True

  Your Answer  

False

 

 True/False

  Question  

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

  Correct Answer  

True

  Your Answer  

False

 

 Multiple Choice Multiple Answer

  Question  

Items credited to Trading Account are :-

  Correct Answer  

Sales , Goods lost by fire , Closing stock

  Your Answer  

Sales , Goods lost by fire , Closing stock

 

 Select The Blank

  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

  Your Answer  

Net profit

 

 Select The Blank

  Question  

Purchase day book for the month of April was under cast by Rs.1000/- ________ account should be credited.

  Correct Answer  

Suspense

  Your Answer  

Purchase

 

 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.10,000/-

 

 Select The Blank

  Question  

The process of attributing proportions of items of costs amongst cost centres is called ________.

  Correct Answer  

Cost apportionment

  Your Answer  

Absorption of indirect costs

 

 Multiple Choice Single Answer

  Question  

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.

  Correct Answer  

Net profit will increase by Rs.22,905/-

  Your Answer  

Net profit will decrease by Rs.22,905/-

 

 Multiple Choice Multiple Answer

  Question  

Management accounting is concerned with the following activities :-

  Correct Answer  

Decision making , Safeguarding assets , Planning and controlling activities

  Your Answer  

Decision making , Planning and controlling activities

 

 Select The Blank

  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

  Your Answer  

Equal to

 

 Multiple Choice Single Answer

  Question  

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/-.

  Correct Answer  

Rs.22,300 (debit)

  Your Answer  

Rs.33,200 (debit)

 

 Multiple Choice Multiple Answer

  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/-

  Your Answer  

The gross profit will not be affected

 

 Multiple Choice Multiple Answer

  Question  

Inventory holding cost comprises of :-

  Correct Answer  

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

  Your Answer  

Cost of insurance , Cost of material

 

 Select The Blank

  Question  

The handloom industry will have ________ fixed cost and high variable cost.

  Correct Answer  

Low

  Your Answer  

Low

 

 Select The Blank

  Question  

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

  Correct Answer  

Credited

  Your Answer  

Added

 

 Multiple Choice Single Answer

  Question  

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.

  Correct Answer  

Rs.27.38

  Your Answer  

Rs.27.38

 

 Match The Following

Question

Correct Answer

Your Answer

Ledger

Maintain all types of accounts

Maintain all types of accounts

Audit

Reviewing internal control system

Process of analyzing & interpretation

Accounting

Process of analyzing & interpretation

Process of estimating profits

Journal

Book of original entry

Book of original entry

 

 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  

Work delays are frequent , Job is standardized , The flow of work is regular

 

 True/False

  Question  

Time-keeping facilitates the preparation of payroll.

  Correct Answer  

True

  Your Answer  

True

 

 Multiple Choice Multiple Answer

  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

  Your 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

 

 True/False

  Question  

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

  Correct Answer  

True

  Your Answer  

False

 

 Select The Blank

  Question  

The final result disclosed by trading account is the ________ profit earned by the organization.

  Correct Answer  

Gross

  Your Answer  

Gross

 

 True/False

  Question  

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

  Correct Answer  

False

  Your Answer  

True

 

 Select The Blank

  Question  

Goods returned by Pawan worth Rs.1,000/- is debited to Pawan's Account. In order to rectify the mistake, ________ account should be debited.

  Correct Answer  

Suspense

  Your Answer  

Suspense

 

 Select The Blank

  Question  

Financial Accounting considers those transactions which can be expressed in terms of ________.

  Correct Answer  

Money

  Your Answer  

Money

 

 Multiple Choice Single Answer

  Question  

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?

  Correct Answer  

Source B is more economical

  Your Answer  

Source B is more economical

 

 Select The Blank

  Question  

Under Bedaux Point system the standard time is divided into standard minutes and each standard minute identified as ________.

  Correct Answer  

Bedaux point or B

  Your Answer  

Bedaux point or B

 

 Multiple Choice Single Answer

  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/-

  Your Answer  

Rs.300,000/-

 

 Multiple Choice Single Answer

  Question  

An important feature of cost accounting is :

  Correct Answer  

Focuses attention on the profitability of each product and service.

  Your Answer  

Focuses attention on the profitability of each product and service.

 

 Select The Blank

  Question  

Generally all the liabilities will have ________ balance.

  Correct Answer  

Credit

  Your Answer  

Credit

 

 Multiple Choice Single Answer

  Question  

Balance sheet is statement of :-

  Correct Answer  

All Assets and Properties

  Your Answer  

All Assets and Properties

 

 Match The Following

Question

Correct Answer

Your Answer

Daily Time sheets

Time spent by worker on job is recorded

Time spent by worker on job is recorded

Time Keeping Department

Recording of workers time

Recording of workers time

Time booking department

Jobwise booking of time.

Jobwise booking of time.

Time Recording Clock Method

Ticket number & clock card allotted to worker

Ticket number & clock card allotted to worker

 

 True/False

  Question  

High time wages means necessarily high cost of production.

  Correct Answer  

False

  Your Answer  

False

 

 True/False

  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

  Your Answer  

False

 

 Multiple Choice Single Answer

  Question  

Product costs under direct costing include:-

  Correct Answer  

Prime cost and variable factory overheads

  Your Answer  

Prime cost, variable and fixed factory overheads

 

 True/False

  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

  Your Answer  

True

 

 Multiple Choice Single Answer

  Question  

Which document is a part of the perpetual inventory system?

  Correct Answer  

Bin card

  Your Answer  

Material requisition note

 

 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

  Your Answer  

Change in contribution / Change in sales

 

 Multiple Choice Multiple Answer

  Question  

Features of Sunk cost are :-

  Correct Answer  

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

  Your Answer  

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

 

 True/False

  Question  

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

  Correct Answer  

False

  Your Answer  

True

 

 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  

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/-

  Your Answer  

Debtors A/c ..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/- , Rs.250/- to General Expenses A/c Rs.250/-

 

 Multiple Choice Multiple Answer

  Question  

A materials requisition form normally contains the following aspects:-

  Correct Answer  

Quantity requisitioned , Per unit material cost , Job number

  Your Answer  

Quantity requisitioned , Per unit material cost , Job number

 

 True/False

  Question  

Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices.

  Correct Answer  

True

  Your Answer  

False

 

 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 , Confirm that the opening balances of both the books are tallying , Confirm that the closing balances of both the books are tallying

 

 Multiple Choice Multiple Answer

  Question  

Select the advantages of standard cost system :-

  Correct Answer  

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

  Your Answer  

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

 

 

 

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