LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
The objects of cost accountancy are :-
To ascertain cost and profitability , Cost Control , Presentation of Information
Management accounting is concerned with the following activities :-
Decision making , Safeguarding assets , Planning and controlling activities
Decision making , Planning and controlling activities
Features of material usage variance are :-
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
Under the accelerating premium system incentive increases at a fast rate with the decrease in output.
If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material.
Multiple Choice Single 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.
Predetermined rate of absorption of overheads helps in quick preparation of cost estimates and quoting prices.
Select The Blank
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 ________.
A worker is paid a monthly salary of Rs.500/- along with a bonus of 50 paise per unit completed, this type of labour cost may be classified as ________ cost.
Goods purchased from A for Rs.2,020/- were passed through the sales book. The rectification of this error will result in ________.
Decrease in gross profit by Rs.2,020/-
Increase in gross profit by Rs.2,020/-
High time wages means necessarily high cost of production.
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 :-
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
Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet.
Long term liabilities
Interest receivable is a________ for the organization.
Period cost is the cost assigned to the products.
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.
The direct material usage budget and direct material purchase budget differ because of which of the following?
A planned change in the level of material stock
The level of efficiency of men or machines
New companies can adopt Uniform costing system as a ready-made system.
Pre-requisites of Uniform Costing are :-
Spirit of mutual trust , Free Exchange of ideas , No rivalry
Free Exchange of ideas , No rivalry , Spirit of mutual trust
The principal functions of the cost accounting department are :-
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.
In which of the following situations, the flexible budget should be preferred?
Sales are too difficult to predict , Supply level of input cannot be predicted , Varying levels of production activity
Select the information to be considered before installing a costing system :-
Labour intensity of the product
Number of workers required
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?
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/-.
Payment by ________ method lowers the cost of production through their impact on fixed costs.
Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system?
Capital investment , Plant size , Location
The most appropriate method for apportionment of overheads of the purchasing and stores department is percentage on ________.
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 is incorrect but the reason is correct
The statement and the reason both are incorrect
Following errors affect the trial balance :-
Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger
If the owner brings in personal calculator for office use, ________ account should be credited.
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
A ________ can be defined as a part of the organization for which separate budget can be prepared and implemented.
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.
Profitability statement is a period statement & provides information about the results of operations.
The method of overhead apportionment which considers both the material cost as well as the labour cost, is known as ________ method.
Prime cost percentage rate
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.
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.
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.
The various areas in which uniform costing can be adopted are :-
Valuation of inventories , Charging of depreciation , Apportionment of overheads
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.
The purpose of the profit and loss account is to bring together information which relates to gross profit and the expenses for running the business.
Match The Following
Maintain all types of accounts
Reviewing internal control system
Process of analyzing & interpretation
Book of original entry
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
Items credited to Profit & Loss Account are :-
Gross profit , Commission received , Interested received
For a manufacturing company, dividend received is a non-operating income.
A standard that is never altered, after being established, is known as ________ standard.
Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction?
Maintenance of machine account
ABC Ltd.'s Account