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