Management Accounting Test Questions - Set 10

1)   Who coined the concept of management accounting?

a. R.N Anthony
b. James H. Bliss
c. J. Batty
d. American Accounting Association
Answer  Explanation  Related Ques

ANSWER: James H. Bliss

Explanation:
No explanation is available for this question!


2)   Interpretation of accounts is the

a. Art and science of translating the figures
b. To know financial strengths and weaknesses of a business
c. To know the causes for the prevailing performance of business
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


3)   The term ‘Financial Statement’ covers

a. Profit & Loss Statement
b. Balance sheet and Profit & Loss Statement appropriation account
c. Profit & Loss Statement and Balance sheet
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Profit & Loss Statement and Balance sheet

Explanation:
No explanation is available for this question!


4)   There is no difference between the capital market line and security market line as both the terms are same.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


5)   The value of a bond and debenture is

a. Present value of interest payments it gets
b. Present value of contractual payments it gets till maturity
c. Present value of redemption amount
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Present value of contractual payments it gets till maturity

Explanation:
No explanation is available for this question!


6)   Return on equity capital is calculated on basis of:

a. Funds of equity shareholders
b. Equity capital only
c. Either a or b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Either a or b

Explanation:
No explanation is available for this question!


7)   While calculating Earnings per share, if both equity and preference share capitals are there, then

a. Preference share is deducted from the net profit
b. Equity share capital is deducted from the net profit
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Preference share is deducted from the net profit

Explanation:
No explanation is available for this question!


8)   Turnover ratios are also known as

a. Activity ratios
b. Performance ratios
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!


9)   The share capital of A Ltd. stood at Rs 20,00,000 in 2013 and at Rs 26 lac in 2014. As per records, the company bought asset of another company for Rs 6 lac payable in fully paid shares. These assets included Goodwill Rs 2,00,000 Machinery Rs 1,83,600 and Stock Rs 2,16,400. What is the fund from issue of shares?

a. Rs 2,15,600
b. Rs 2,16,400
c. Rs 2,00,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 2,16,400

Explanation:
No explanation is available for this question!


10)   Debentures are Rs 2,50,000 and Rs 3,50,000 in the balance sheet of 2013 and 2014. 1000 of the debentures of Rs 100 each were issued at per in 2014 of which 400 debentures were issued to a supplier for the purchase of a machine. Determine amount of issue for debentures for the purpose of funds flow statement.

a. Rs 60,000
b. Rs 40,000
c. Rs 10,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 60,000

Explanation:
No explanation is available for this question!


11)   Which of the following are cash flow from financing activities?

A) Interest received
B) Dividend received
C) Interest paid
D) Dividend paid


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

ANSWER: Both C and D

Explanation:
No explanation is available for this question!


12)   Acquisition and disposal of long term assets is included in

a. Cash flow from investing activities
b. Cash flow from financing activities
c. Cash flow from operating activities
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Cash flow from investing activities

Explanation:
No explanation is available for this question!


13)   Which of the following statements represent example of cash flow from investing activities?

a. Cash advances and loans made by financial enterprises
b. Cash advances and loans made to third parties
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Cash advances and loans made to third parties

Explanation:
No explanation is available for this question!


14)   Absorption costing is also known as

a. Historical costing
b. Total costing
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!


15)   Given production is 1,00,000 units, fixed costs is Rs 2,00,000 Selling price is Rs 10 per unit and variable cost is Rs 6 per unit. Determine profit using technique of marginal costing.

a. Rs 2,00,000
b. Rs 8,00,000
c. Rs 6,00,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 2,00,000

Explanation:
No explanation is available for this question!


16)   Which of the following statements are true about absorption & marginal costing?

a. In absorption costing, cost is divided into three major parts while in marginal costing, cost is divided into two main parts
b. In absorption costing period is important and in marginal costing product is important
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!


17)   4000 mobiles need to be made and sold in a monopoly market. The desired profit is Rs 2,00,000. The variable cost per mobile is Rs 100 and the total fixed costs are Rs 40,000. Find out unit selling price.

a. Rs 160 per mobile
b. Rs 1,600 per mobile
c. Rs 1.60 per mobile
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 1,600 per mobile

Explanation:
No explanation is available for this question!


18)   When there is tough competition and price-cut is on war, the focus should be on

a. Normal price
b. Depression price
c. Minimum price
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Minimum price

Explanation:
No explanation is available for this question!


19)   Differential costs are obtained on the basis of

a. Absorption costing
b. Marginal costing
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!


20)   Calculate sales in rupees for desired profit if fixed cost is Rs 10,000, selling price is Rs 20 per unit, Variable cost is Rs 15 per unit and desired profit is Rs 1 per unit.

a. Rs 20,000
b. Rs 50,000
c. Rs 70,000
d. Rs 10,000
Answer  Explanation  Related Ques

ANSWER: Rs 50,000

Explanation:
No explanation is available for this question!


21)   Determine sales in units for desired profit if Fixed cost is Rs 15,000, desired profit is Rs 5,000 Selling price per unit is Rs 20 and Variable cost per unit is Rs 16.

a. 5,000 units
b. Rs 5,000
c. Rs 10,000
d. 10,000 units
Answer  Explanation  Related Ques

ANSWER: 5,000 units

Explanation:
No explanation is available for this question!


22)   What will be sales in units if fixed cost is Rs 50,000, Contribution per unit is Rs 60 and desired profit per unit is Rs 10.

a. 6,000 units
b. Rs 1,000
c. 1,000 units
d. Rs 6,000
Answer  Explanation  Related Ques

ANSWER: 1,000 units

Explanation:
No explanation is available for this question!


23)   Given Break even sales is 40,000 Profit earned is Rs 2,000 and fixed cost is Rs 8,000. Determine actual sales.

a. Rs 50,000
b. Rs 20,000
c. Rs 32,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 50,000

Explanation:
No explanation is available for this question!


24)   What will be the sales amount required to earn a profit of Rs 4,00,000, if fixed cost is Rs 80,000, direct material is Rs 5 per unit, direct labor Rs 2 per unit, direct overhead 100% of direct labor and selling price is Rs 12 per unit.

a. Rs 19,20,000
b. Rs 3,20,000
c. Rs 12,90,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 19,20,000

Explanation:
No explanation is available for this question!


25)   Which of the following standards cannot be used for cost control?

a. Basic Standard
b. Normal Standard
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!


26)   Which of the following statements are not true about normal standards?

a. Normal Standards are meant to smooth out fluctuations caused by cyclical and seasonal changes
b. Normal Standards can be applied for absorption of overheads for a long period of time
c. In establishing normal standards, allowance is given to normal fatigue and breaks, and normal waste and scrap
d. None of the above
Answer  Explanation  Related Ques

ANSWER: None of the above

Explanation:
No explanation is available for this question!


27)   Standard costing committee is responsible for

a. Computation of variances
b. Linking the deviations with responsibilities
c. Setting all types of standards
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


28)   ABC Company plans a sale of 96,000 units of TV product line in the first fiscal quarter, 1,20,000 TV units in second quarter, and 1,32,000 units and 1,50,000 units in third and fourth quarter, and 1,56,000 units in the first quarter of next year. Given that at the beginning of first fiscal quarter, the company has 16,000 units in stock. Also, at the end of each quarter, ABC Company wants to maintain an inventory equal to one-sixth of the sales for the next fiscal quarter. Determine units to be manufactured in first and second quarter of the year.

a. 10,00,000 and 1,35,000
b. 10,00,000 and 1,22,000
c. Insufficient data
d. None of the above
Answer  Explanation  Related Ques

ANSWER: 10,00,000 and 1,22,000

Explanation:
No explanation is available for this question!


29)   Given the budgeted output in second quarter is 8,000 units. In the first quarter, Fixed overheads were Rs 40,000 Variable overheads were Rs 5 per unit ( Rs 40,000) and semi variable were 20,000 ( 60% varying @ Rs 3 per unit). Determine the total manufacturing overhead budget for the second quarter.

a. Rs 1,12,000
b. 1,12,000 units
c. Insufficient data
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 1,12,000

Explanation:
No explanation is available for this question!


30)   In fixed budgets costs are classified according to their nature.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


31)   While preparing cash budget from Cash Accounting method, if there is no specific direction in respect of a particular item, it is assumed that payments or receipts will take place in

a. Current month
b. Month of occurrence
c. Insufficient data to decide
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Month of occurrence

Explanation:
No explanation is available for this question!


32)   If in any month, the amount of payment exceeds, it will be carried forward as opening balance in the next month.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


33)   The total costs at 60% and 70% of activity are Rs 28,290 and Rs 30,348 respectively. Production at 60% level is 720 units and selling price is Rs 38 per unit. Determine Profit and Loss at 80% activity level.

a. Rs 6,576
b. Rs 4,074
c. Rs 9,078
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 4,074

Explanation:
No explanation is available for this question!


34)   If variable and fixed costs at 60% capacity are Rs 12,000 and Rs 9,000 respectively, total cost at 80% capacity will be

a. Rs 25,000
b. Rs 28,000
c. Rs 24,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 25,000

Explanation:
No explanation is available for this question!


35)   Idle time variance arises when

a. Only one grade of labour is used
b. Time is lost due to abnormal reasons
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!


36)   The formula used for calculation of labour rate variance is

a. Total standard labour cost of actual output - Total actual cost of actual output
b. (Standard rate per hour - Actual rate per hour) * Actual Hours
c. (Standard time - Actual time) * Standard rate per hour
d. Abnormal idle hours * Standard hourly rate
Answer  Explanation  Related Ques

ANSWER: (Standard rate per hour - Actual rate per hour) * Actual Hours

Explanation:
No explanation is available for this question!


37)   Labour efficiency variance is also known as

a. Labour time variance
b. Labour quantity variance
c. Labour usage variance
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


38)   Management auditor should have a thorough knowledge of

a. Financial Accounting
b. Production techniques
c. Costing systems
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


39)   In profit center revenue represents a monetary measure of output emanating from a profit center in a given period irrespective whether

a. The revenue is realized or not
b. The output is sold or not
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!


40)   Control reports and information reports are a part of

a. Financial reports
b. Operating reports
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Operating reports

Explanation:
No explanation is available for this question!