Management Accounting Test Questions - Set 1

1)   The term management accounting was first coined in

a. 1960
b. 1950
c. 1945
d. 1955
Answer  Explanation  Related Ques

ANSWER: 1950

Explanation:
No explanation is available for this question!


2)   The second term for Horizontal Analysis is

a. Dynamic Analysis
b. Inter-firm Analysis
c. Time-series Analysis
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


3)   Vertical analysis is also known as

a. Static analysis
b. Structural analysis
c. Cross-sectional analysis
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


4)   Time value of money indicates that

a. A unit of money obtained today is worth more than a unit of money obtained in future
b. A unit of money obtained today is worth less than a unit of money obtained in future
c. There is no difference in the value of money obtained today and tomorrow
d. None of the above
Answer  Explanation  Related Ques

ANSWER: A unit of money obtained today is worth more than a unit of money obtained in future

Explanation:
No explanation is available for this question!


5)   Time value of money supports the comparison of cash flows recorded at different time period by

a. Discounting all cash flows to a common point of time
b. Compounding all cash flows to a common point of time
c. Using either a or b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Using either a or b

Explanation:
No explanation is available for this question!


6)   When the concept of ratio is defined in respect to the items shown in the financial statements, it is termed as

a. Accounting ratio
b. Financial ratio
c. Costing ratio
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Accounting ratio

Explanation:
No explanation is available for this question!


7)   The definition, “The term accounting ratio is used to describe significant relationship which exist between figures shown in a balance sheet, in a profit and loss account, in a budgetary control system or in a any part of the accounting organization” is given by

a. Biramn and Dribin
b. Lord Keynes
c. J. Betty
d. None of the above
Answer  Explanation  Related Ques

ANSWER: J. Betty

Explanation:
No explanation is available for this question!


8)   The relationship between two financial variables can be expressed in:

a. Pure ratio
b. Percentage
c. Rate or time
d. Either of the above
Answer  Explanation  Related Ques

ANSWER: Either of the above

Explanation:
No explanation is available for this question!


9)   Which of the following statement is true about Funds Flow Statement?

A) It highlights change in funds of a firm at different point
B) It highlights change in funds of different firms at a single point
C) It highlights change in funds of different firms at different point
D) It doesn’t highlights change in funds


a. Only A
b. Only B
c. Only D
d. A, B, C, D
Answer  Explanation  Related Ques

ANSWER: A, B, C, D

Explanation:
No explanation is available for this question!


10)   In the context of Funds Flow Analysis, the word “funds” is used to define

a. Net Working capital
b. Total current assets-Total current liabilities
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a and b

Explanation:
No explanation is available for this question!


11)   As per Accounting Standard-3, Cash Flow is classified into

a. Operating activities and investing activities
b. Investing activities and financing activities
c. Operating activities and financing activities
d. Operating activities, financing activities and investing activities
Answer  Explanation  Related Ques

ANSWER: Operating activities, financing activities and investing activities

Explanation:
No explanation is available for this question!


12)   Cash Flow Statement is also known as

a. Statement of Changes in Financial Position on Cash basis
b. Statement accounting for variation in cash
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a and b

Explanation:
No explanation is available for this question!


13)   The objectives of Cash Flow Statement are

A) Analysis of cash position
B) Short-term cash planning
C) Evaluation of liquidity
D) Comparison of operating Performance


a. Both A and B
b. Both A and C
c. Both B and D
d. A, B, C, D
Answer  Explanation  Related Ques

ANSWER: A, B, C, D

Explanation:
No explanation is available for this question!


14)   Which of the following is a conventional method of ascertaining cost?

a. Absorption costing
b. Full Costing
c. Both a & b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a & b

Explanation:
No explanation is available for this question!


15)   Under absorption costing, profit is ascertained

a. On the basis of difference between sales and total cost
b. By computation as per desired rate of profit on sales or cost
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a and b

Explanation:
No explanation is available for this question!


16)   All costs are classified under ______ segments under absorption costing.

a. Five
b. Six
c. Four
d. Three
Answer  Explanation  Related Ques

ANSWER: Three

Explanation:
No explanation is available for this question!


17)   In make or buy decision, marginal costs as well as additional fixed costs are the factors to be considered.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


18)   If the marginal cost is _________ buying price, additional requirement of the component should be met by making rather than buying.

a. Equal to
b. More than
c. Less than
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Less than

Explanation:
No explanation is available for this question!


19)   __________ refers to changes in total costs that occur due to changes in volume of production or sales, product system, product mix or from the adoption of an alternative course of action.

a. Differential costs
b. Marginal costs
c. Absorption costs
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Differential costs

Explanation:
No explanation is available for this question!


20)   The Break-even Point of a company is that level of sales income which will equal the sum of its fixed cost.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


21)   Which of the following are characteristics of B.E.P?

a. There is no loss and no profit to the firm
b. Total revenue is equal to total cost
c. Contribution is equal to fixed cost
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


22)   Which of the following are assumptions for break-even analysis?

A) Elements of cost cannot be divided in different groups.
B) Fixed cost remains certain from zero production to full capacity.
C) Behavior of different costs is linear.
D) Selling per price unit remains constant.


a. A, B, C
b. B, C, D
c. A, C, D
d. A, B, D
Answer  Explanation  Related Ques

ANSWER: B, C, D

Explanation:
No explanation is available for this question!


23)   While measuring break-even analysis, it is considered that during a specific period there will be no change in general price level, i.e., labor, cost of material and other overheads.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


24)   Which of the following are limitations of break-even analysis?

a. Static concept
b. Capital employed is taken into account
c. Limitation of non-linear behavior of costs
d. Limitation of presence of perfect competition
Answer  Explanation  Related Ques

ANSWER: Static concept

Explanation:
No explanation is available for this question!


25)   ___________ can be defined as a system which intends to control the cost of each unit through prior determination of what should be the cost and then its comparison with actual cost.

a. Standard costing
b. Absorption costing
c. Marginal costing
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Standard costing

Explanation:
No explanation is available for this question!


26)   Standard costing is the preparation of standard costs and their comparison with _______ and the analysis of ________.

a. Marginal costs, Variances
b. Variances, Marginal costs
c. Actual costs, Variances
d. Variances, Actual costs
Answer  Explanation  Related Ques

ANSWER: Actual costs, Variances

Explanation:
No explanation is available for this question!


27)   For the application of standard costing, it is necessary to meet which of following conditions?

A) A sufficient volume of standard components or products should be manufactured
B) Methods and procedures cannot be controlled
C) A sufficient number of costs should be able to be controlled


a. A and B
b. B and C
c. A and C
d. None of the above
Answer  Explanation  Related Ques

ANSWER: A and B

Explanation:
No explanation is available for this question!


28)   Which of the following statements are true?

a. Budget is prepared for an indefinite period
b. Budget can be expressed in form of physical units
c. It is no way related with the management plans and policies to be pursued in future
d. It provides a base for measuring the success of expected results
Answer  Explanation  Related Ques

ANSWER: Budget can be expressed in form of physical units

Explanation:
No explanation is available for this question!


29)   The process of budgeting includes

a. Preparation of budget
b. Budget Control
c. Budget co-ordination
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


30)   Which of the following statements are true for forcast and budget?

a. Forecast and budget are one and same thing
b. Budget is prepared after the forecast
c. Forecast and budget both can be expressed in financial form
d. All of the above
Answer  Explanation  Related Ques

ANSWER: Budget is prepared after the forecast

Explanation:
No explanation is available for this question!


31)   As per S.C Kuchhal, Cash budget is a schedule to record ________ over a period with a view to locating the timing and magnitude of cash surplus and shortage.

a. Cash inflows
b. Cash outflows
c. Both a & b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a & b

Explanation:
No explanation is available for this question!


32)   Cash budget helps in the formulation of suitable dividend policy.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


33)   ___________ is based on assumption that the firm will carry out its activity only at a specific level and the targets of production determined in budget will be achieved.

a. Fixed budget
b. Flexible budget
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Fixed budget

Explanation:
No explanation is available for this question!


34)   Fixed budget is of much help in the fixation of selling price or calculation of tender price.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


35)   The sum of actual cost and the standard cost is known as variance analysis.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


36)   Which of the following are included in variance analysis?

a. General variances
b. Cost element variances
c. Turnover variances
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


37)   General variances are applicable with

a. Turnover variances
b. Cost element variances
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a and b

Explanation:
No explanation is available for this question!


38)   As per Leslie R. Howard, Management audit is an investigation of a business from the __________ in order to ascertain whether sound management prevails throughout.

a. Highest level downwards
b. Lowest level upwards
c. Either a or b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Highest level downwards

Explanation:
No explanation is available for this question!


39)   As per R.M. Bhandari, __________ is a system under which costs are accumulated and reported at each level of responsibility so that the accounting and cost data may be used by the management at each level in controlling the operations and their costs.

a. Responsibility Accounting
b. Cost accounting
c. Cost data accounting
d. Financial accounting
Answer  Explanation  Related Ques

ANSWER: Responsibility Accounting

Explanation:
No explanation is available for this question!


40)   Management reporting can be performed as

a. Internal reporting
b. External reporting
c. Both a & b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Both a & b

Explanation:
No explanation is available for this question!