Management Accounting Test Questions - Set 11

1)   Which of the following statements are false about management accounting?

A) Management accounting is concerned with historical events.
B) Management accounting is related only with such instances which can be expressed in monetary terms.
C) Management accounting is a part of Financial Management.
D) Management accounting information can be disclosed to outsiders.


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

ANSWER: A, B and D

Explanation:
No explanation is available for this question!


2)   The form of balance sheet is

a. Vertical
b. Horizontal
c. Horizontal and vertical
d. Horizontal or vertical
Answer  Explanation  Related Ques

ANSWER: Horizontal or vertical

Explanation:
No explanation is available for this question!


3)   The term current asset doesn’t cover

a. Car
b. Debtors
c. Stock
d. Prepaid expenses
Answer  Explanation  Related Ques

ANSWER: Car

Explanation:
No explanation is available for this question!


4)   P&L statement is also known as

a. Statement of operations
b. Statement of income
c. Statement of earnings
d. All of the above
Answer  Explanation  Related Ques

ANSWER: Statement of income

Explanation:
No explanation is available for this question!


5)   Required rate of return > Coupon rate, the bond will be valued at

a. Premium
b. Par value
c. Discount
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Discount

Explanation:
No explanation is available for this question!


6)   If the coupon rate is constant, the value of bond when close to maturity will be

a. Issued value
b. Par value
c. Redemption value
d. All of the above
Answer  Explanation  Related Ques

ANSWER: Redemption value

Explanation:
No explanation is available for this question!


7)   The lower turnover ratio highlights the under utilizations of the resources accessible at the disposal of the firm.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


8)   Stock velocity establishes a relationship between

a. Cost of goods sold in a given period and the average amount of inventory held during that period
b. Cost of goods sold in a given period and the average amount of stock held during that period
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)   Determine stock turnover ratio if, Opening stock is Rs 31,000, Closing stock is Rs 29,000, Sales is Rs 3,20,000 and Gross profit ratio is 25% on sales.

a. 31 times
b. 11 times
c. 8 times
d. 32 times
Answer  Explanation  Related Ques

ANSWER: 8 times

Explanation:
No explanation is available for this question!


10)   In the balance sheet of Praveen for 2013 and 2014, 4% debentures are Rs 5,00,000 and Rs 4,00,000, respectively. Profit on redemption of debentures in 2013 is nil while in 2014 is Rs 4,000. What is the amount of redemption for the purpose of funds flow statement?

a. Rs 96,000
b. Rs 1,04,000
c. Rs 9,00,000
d. Rs 9,04,000
Answer  Explanation  Related Ques

ANSWER: Rs 96,000

Explanation:
No explanation is available for this question!


11)   The balance of property at cost has been Rs 20,000 and Rs 17,000 in 2013 and 2014 respectively. The profit on sale of property of Rs 2000 is credited to Capital Reserves Account. New property costing Rs 5000 bought in 2014. Determine sale of proceeds from land.

a. Rs 3000
b. Rs 10,000
c. Rs 7000
d. Rs 15,000
Answer  Explanation  Related Ques

ANSWER: Rs 10,000

Explanation:
No explanation is available for this question!


12)   ABC Ltd had investment of Rs 68,000 as on 31.3.2013 and investment of Rs 56,000 as on 31.3.2014. During the year ABC Ltd sold 40% of its investments being held in the beginning of period at a profit of Rs 16,800. Determine cash flow from investing activities.

a. Rs 59,200
b. Rs 28,800
c. Rs 72,800
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 28,800

Explanation:
No explanation is available for this question!


13)   Financing activities bring changes in

a. Size and composition of owner’s equities
b. Borrowing of the enterprise
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!


14)   For year 2013 Equity Share Capital is Rs 3,00,000 Preference Share Capital is 1,00,000 10% debentures is 2,00,000 and Share premium is 30,000. For year 2014 Equity Share Capital is Rs 4,00,000 Preference Share Capital is 60,000 10% debentures is 1,00,000 and Share premium is 40,000. Also given, Dividend paid on shares Rs 15,000 and Interest paid on debentures Rs 20,000. Determine net cash flow from financing activities.

a. Cash inflow of Rs 65,000
b. Cash outflow of Rs 65,000
c. Cash inflow of Rs 56,000
d. Cash outflow of Rs 56,000
Answer  Explanation  Related Ques

ANSWER: Cash outflow of Rs 65,000

Explanation:
No explanation is available for this question!


15)   Under absorption costing, managerial decisions are based on

a. Profit
b. Contribution
c. Profit volume ratio
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Profit

Explanation:
No explanation is available for this question!


16)   If sales is less than production and there is no opening stock, it suggests there is closing stock. In such a scenario, profit under marginal costing will be less than the one shown by absorption costing.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


17)   Minimum price is calculated as

a. Variable cost + Fixed costs
b. Marginal cost + Contribution
c. Marginal cost - Contribution
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Variable cost + Fixed costs

Explanation:
No explanation is available for this question!


18)   ABC Company manufactures and sells trucks at Rs 75,000 each made up of Direct Materials Rs 30,000, Direct Labour Rs 8,000 Variable Overheads is Rs 12,000, Fixed overheads is Rs 6,000, Variable selling expenses is Rs 3,000 Royalty is Rs 4,000 Profit is Rs 7,000. There is enough idle capacity. If the company decides to sell 4 trucks to ABC Company under the same management, what should be the minimum price to be charged?

a. Rs 86,000
b. Rs 54,000
c. Rs 45,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 54,000

Explanation:
No explanation is available for this question!


19)   In the case of differential costing, ________ is the main criteria for decision making.

a. Contribution
b. Ratios
c. Incremental/decremental revenue
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Incremental/decremental revenue

Explanation:
No explanation is available for this question!


20)   Given fixed costs is Rs 1,00,000 selling price per unit is Rs 10 and variable cost per unit is Rs 6. If fixed cost increase by 10% , B.E.P will

a. Decrease by 2,500 units
b. No change
c. Increase by 2,500 units
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Increase by 2,500 units

Explanation:
No explanation is available for this question!


21)   Given fixed costs is Rs 1,00,000 selling price per unit is Rs 10 and variable cost per unit is Rs 6. If variable cost increase by 10% , B.E.P will

a. Decrease by 4,214 units
b. Increase by 4,214 units
c. Decrease by 4,412 units
d. Increase by 4,412 units
Answer  Explanation  Related Ques

ANSWER: Increase by 4,412 units

Explanation:
No explanation is available for this question!


22)   Given fixed costs is Rs 1,00,000 selling price per unit is Rs 10 and variable cost per unit is Rs 6. If variable cost increase by 10% and fixed cost decrease by 10%s , B.E.P will

a. Increase by 1,471 units
b. Decline by 1,471 units
c. Increase by 4,171 units
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Increase by 1,471 units

Explanation:
No explanation is available for this question!


23)   What will be the impact on B.E.P if fixed cost is increased?

a. Decrease
b. No change
c. Increase
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Increase

Explanation:
No explanation is available for this question!


24)   What will be the impact on B.E.P if variable costs are reduced?

a. Decrease
b. No change
c. Increase
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Decrease

Explanation:
No explanation is available for this question!


25)   Setting of standards are classified on the basis of only price.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


26)   While determining material quantity standards, a proper consideration should be assigned to

a. Normal material wastage
b. Abnormal material wastage
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Normal material wastage

Explanation:
No explanation is available for this question!


27)    ______ is responsible for setting up of materials price standard.

a. Production department
b. Engineering department
c. Purchase department
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Purchase department

Explanation:
No explanation is available for this question!


28)   Given Production at 60% activity, 600 units, Material Rs 50 per unit, Labour Rs 20 per unit, Direct expenses Rs 5 per unit, Factory overheads Rs 20,000 ( 60% variable) and Administration expenses Rs 15,000 ( 60% fixed). What will be the total cost per unit for production at 80% capacity?

a. Rs 1,01,000
b. Rs 126.25
c. Rs 122
d. Rs 1,22,000
Answer  Explanation  Related Ques

ANSWER: Rs 126.25

Explanation:
No explanation is available for this question!


29)   Match the columns

A) Activity Ratio -------------------- i) (Actual hours worked / Budgeted hours) * 100
B) Capacity Ratio ------------------ ii) (Standard hours of actual production / Actual hours worked) * 100
C) Efficiency Ratio ----------------- iii) (Standard hours for actual output / Budgeted hours) * 100


a. A-ii, B-iii, C-i
b. A-i, B-ii, C-iii
c. A-iii, B-i, C-ii
d. None of the above
Answer  Explanation  Related Ques

ANSWER: A-iii, B-i, C-ii

Explanation:
No explanation is available for this question!


30)   A factory produces two types of articles Y and Z. Article Y takes 8 hours to make and Z takes 16 hours. In a month ( 25 days * 8 hours) 600 units of X and 400 units of Z are produced. Given budgeted hours 8000 per month and men employed are 50. Determine Activity ratio, Capacity ratio and efficiency ratio.

a. 112%, 140%, 140%
b. 140%, 112%, 140%
c. 140%, 140%, 112%
d. None of the above
Answer  Explanation  Related Ques

ANSWER: 140%, 140%, 112%

Explanation:
No explanation is available for this question!


31)   Given estimated sales in February, March, April, May and June are Rs 90,000, Rs 96,000, Rs 54,000, Rs 87,000 and Rs 63,000. In case 50% of sales are realized in the next month and balance in the next of next month, determine cash collection from sales in April and May.

a. Rs 93,000 and Rs 75,000
b. Rs 93,000 and Rs 70,500
c. Rs 75,000 and Rs 70,500
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 93,000 and Rs 75,000

Explanation:
No explanation is available for this question!


32)   In a firm, the forecast of wages for month of December, January, February and March are Rs 4,800, Rs 6,000, Rs 6,400 and Rs 6,800. The time-lag in payment of wages is 1/8 month. Determine the amount of wages payable in each month January to March.

a. Rs 6,750, Rs 6,350 and Rs 5,850
b. Rs 5,850, Rs 6,350 and Rs 6,750
c. Rs 5,850, Rs 6,750 and Rs 6,350
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 5,850, Rs 6,350 and Rs 6,750

Explanation:
No explanation is available for this question!


33)   To get to labour efficiency variance, the formula to be applied 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 time - Actual time) * Standard rate per hour

Explanation:
No explanation is available for this question!


34)   Which of the following statements are true about labour idle time?

a. Labour idle time variance is not caused by non-availability of raw material
b. Labour idle time variance is measured as : Abnormal idle hours * Actual hourly rate
c. Labour idle time variance is always unfavorable or adverse
d. All of the above
Answer  Explanation  Related Ques

ANSWER: Labour idle time variance is always unfavorable or adverse

Explanation:
No explanation is available for this question!


35)   Given standard time per unit is 80 hours, standard time per hour @ Rs 1 per hour, actual time per unit is 90 hours and actual rate per hour @ Rs 1.10 per hour. Determine labour cost variance, labour rate variance and labour efficiency variance.

a. Rs 11, Rs 22 and Rs 10 all unfavorable
b. Rs 19, Rs 9 and Rs 10 all favorable
c. Rs 19, Rs 9 and Rs 10 all unfavorable
d. Rs 11, Rs 22 and Rs 10 all favorable
Answer  Explanation  Related Ques

ANSWER: Rs 19, Rs 9 and Rs 10 all unfavorable

Explanation:
No explanation is available for this question!


36)   Responsibility accounting is not useful in following the principle of management by exception.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


37)   _________ indicates the variances and the reasons behind such variances.

a. Control reports
b. Information reports
c. Static reports
d. All of the above
Answer  Explanation  Related Ques

ANSWER: Control reports

Explanation:
No explanation is available for this question!