Management Accounting Test Questions - Set 6

1)   Management accounting assists the management

a. Only in control
b. Only in direction
c. Only in planning
d. In planning, direction and control
Answer  Explanation  Related Ques

ANSWER: In planning, direction and control

Explanation:
No explanation is available for this question!


2)   The 3 Ps, i.e. the three objectives of analysis and interpretation of financial statements are : Progress, Position and Prospects.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


3)   Which of the following statements are false?

A) When all the figures in a balance sheet are stated as percentage of the total, it is termed as horizontal analysis.
B) When financial statements of several years are analyzed, it is termed as vertical analysis.
C) Vertical Analysis is also termed as dynamic analysis.


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

ANSWER: Both A and C

Explanation:
No explanation is available for this question!


4)   Efficient frontier comprises of

a. Portfolios that have negatively correlated securities
b. Portfolios that have positively correlated securities
c. Inefficient portfolios
d. Efficient portfolios
Answer  Explanation  Related Ques

ANSWER: Efficient portfolios

Explanation:
No explanation is available for this question!


5)   Efficient portfolios can be defined as those portfolios which for a given level of risk provides

a. Maximum return
b. Average return
c. Minimum return
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Maximum return

Explanation:
No explanation is available for this question!


6)   What will be the Gross Profit if, total sales is Rs 2,60,000, cost of net goods sold is Rs 2,00,000 and sales return is Rs 10,000?

a. 13%
b. 28%
c. 26%
d. 20%
Answer  Explanation  Related Ques

ANSWER: 20%

Explanation:
No explanation is available for this question!


7)   If selling price is fixed 25% above the cost, the Gross Profit ratio is

a. 13%
b. 28%
c. 26%
d. 20%
Answer  Explanation  Related Ques

ANSWER: 20%

Explanation:
No explanation is available for this question!


8)   Gross Profit ratio should be adequate to cover

a. Selling expenses
b. Administrative expenses
c. Dividends
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


9)   Funds Flow Statement holds significance for

a. Shareholders
b. Financiers
c. Government
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


10)   Which statement is prepared in the process of funds flow analysis?

a. Schedule of changes in working capital
b. Funds Flow Statement
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Schedule of changes in working capital

Explanation:
No explanation is available for this question!


11)   Match the columns

A) Taxes Paid --------------------------------- i) Cash flow from investing activities
B) Repayment of loans ------------------- ii) Cash flow from operating activities
C) Sale of fixed assets -------------------- iii) Cash Flow from financing activities


a. A-ii, B-iii, C-i
b. A-i, B-ii, C-iii
c. A-iii, B-i, C-ii
d. A-i, B-iii, C-ii
Answer  Explanation  Related Ques

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

Explanation:
No explanation is available for this question!


12)   Cash payment to suppliers for services and goods is example of cash outflow.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: False

Explanation:
No explanation is available for this question!


13)   For the calculation of cash flow from operating activities, payments and receipts shown in Profit & Loss account are converted into payments and receipts actually in cash.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


14)   While computing profit in marginal costing

a. Total marginal cost is deducted from total sales revenues
b. Total marginal cost is added to total sales revenues
c. Fixed cost is added to contribution
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Total marginal cost is deducted from total sales revenues

Explanation:
No explanation is available for this question!


15)   Which of the following are the assumptions of marginal costing?

A) All the elements of cost can be divided into fixed and variable components.
B) Total fixed cost remains constant at all levels of output.
C) Total variable costs varies in proportion to the volume of output.
D) Per unit selling price remain unchanged at all levels of operating activity.


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

ANSWER: A, B, C and D

Explanation:
No explanation is available for this question!


16)   In two periods total costs amounts to Rs 50000 and Rs 40000 against production of 20000 and 15000 units respectively. Determine marginal cost per unit and fixed cost.

a. Rs 2 and Rs 10,000
b. Rs 4 and Rs 5000
c. Rs 10 and Rs 8000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 2 and Rs 10,000

Explanation:
No explanation is available for this question!


17)   While selecting optimum product mix ___________ is the real index of profitability.

a. Contribution per unit
b. Contribution per unit of key factor
c. Profit and sales
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Contribution per unit of key factor

Explanation:
No explanation is available for this question!


18)   While selecting optimum product mix,

a. Ranks are assigned on the basis of highest contribution per unit of key factor
b. Ranks are assigned on the basis of lowest contribution per unit of key factor
c. No ranks are assigned
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Ranks are assigned on the basis of highest contribution per unit of key factor

Explanation:
No explanation is available for this question!


19)   The basic data used for differential cost analysis are

a. Cost
b. Revenue
c. Investment data
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


20)   Given sales is Rs 2,00,000 and Rs 4,00,000 in year 2013 and 2014 respectively. Profit is Rs (-10,000) and Rs 20,000 in 2013 and 2014 respectively. Compute P/V ratio.

a. 40%
b. 30%
c. 25%
d. 50%
Answer  Explanation  Related Ques

ANSWER: 30%

Explanation:
No explanation is available for this question!


21)   Given sales is Rs 2,00,000 and Rs 4,00,000 in year 2013 and 2014 respectively. Cost is Rs 1,40,000 and Rs 2,40,000 in 2013 and 2014 respectively. Compute P/V ratio.

a. 40%
b. 30%
c. 25%
d. 50%
Answer  Explanation  Related Ques

ANSWER: 50%

Explanation:
No explanation is available for this question!


22)   A company produces and sells three types of products namely X, Y and Z. Total sales per month is Rs 60,000 in which the share of these three goods are 40%, 40% and 20% respectively. Variable costs of these three goods are 40%, 50% and 60% respectively. Compute combined P/V ratio.

a. 40%
b. 52%
c. 25%
d. 50%
Answer  Explanation  Related Ques

ANSWER: 52%

Explanation:
No explanation is available for this question!


23)   Profit on sales is measured as

a. Sales * P/V Ratio – Fixed cost
b. Sales * P/V Ratio + Fixed cost
c. Sales + P/V Ratio + Fixed cost
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Sales * P/V Ratio – Fixed cost

Explanation:
No explanation is available for this question!


24)   Sales for desired profit is measured as

a. (Fixed cost + profit) / (P/V Ratio)
b. (Fixed cost + profit) * (P/V Ratio)
c. (Fixed cost - profit) / (P/V Ratio)
d. None of the above
Answer  Explanation  Related Ques

ANSWER: (Fixed cost + profit) / (P/V Ratio)

Explanation:
No explanation is available for this question!


25)   Budgetary control deals with just total variances whereas in standard costing variances are measured for different departments and are disclosed in total for the entity as a whole.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


26)   Which of the following statements are true about standard costing & budgetary control?

a. The budgetary control at finances, production and sales is almost a necessity for best use of Standard Costing
b. Standard costing can be applied to each concern whereas budgetary control is limited to manufacturing concerns
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: The budgetary control at finances, production and sales is almost a necessity for best use of Standard Costing

Explanation:
No explanation is available for this question!


27)   To establish an effective system of standard costing it is essential that

A) The technical process of operation should be prone to planning
B) The cost of the products should be given
C) The process or operating costs of products should be provided
D) The standard costing should be consistent with the technical procedure of the production of the specific entity


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

ANSWER: A, C and D

Explanation:
No explanation is available for this question!


28)   On the basis of period, budgets may be classified into _________ groups.

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

ANSWER: Three

Explanation:
No explanation is available for this question!


29)   R&D budget and Capital expenditure budget are examples of

a. Short-term budget
b. Current budget
c. Long-term budget
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Long-term budget

Explanation:
No explanation is available for this question!


30)    _______ is prepared for single level of activity and single set of business conditions.

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!


31)   The payment made in lieu of purchase of fixed asset is

a. Cash payment for capital transaction
b. Cash payment for non-operating expenses
c. Cash payment for business operations
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Cash payment for capital transaction

Explanation:
No explanation is available for this question!


32)   Project forecast method is also known as

a. Projected Balance Sheet Method
b. Cash Flow method
c. Budgeted Method
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Cash Flow method

Explanation:
No explanation is available for this question!


33)   While preparing a flexible budget, direct material, direct labour and direct expenses all are placed under the head of variable cost.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


34)   The cost of material at 50% capacity is Rs 8,000 and budget is to be prepared at 60%, 90% and 100% of normal capacity. The cost of material at 60% and 90% capacity will be

a. Rs 9600 and Rs 14,400
b. Rs 14,400 and Rs 16,000
c. Rs 9600 and Rs 16,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 9600 and Rs 14,400

Explanation:
No explanation is available for this question!


35)   Material yield variance arises when

a. Actual output > Standard output
b. Actual output < Standard output
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)   Material yield variance is measured using formula

a. (Actual yield + Standard yield) * Standard cost per unit
b. Standard cost of revised standard mix - Standard cost of actual mix
c. (Standard unit price - Actual unit price) * Actual quantity used
d. (Actual yield - Standard yield) * Standard cost per unit
Answer  Explanation  Related Ques

ANSWER: (Actual yield - Standard yield) * Standard cost per unit

Explanation:
No explanation is available for this question!


37)   While calculating material yield variance if Standard loss on actual mix is more than actual loss on actual mix then the variance is

a. Unfavorable
b. Favorable
c. Neither favorable nor unfavorable
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Favorable

Explanation:
No explanation is available for this question!


38)   Which of the following statements are true about management audit?

a. The management audit is made compulsory and statutory
b. Management audit is a programme of one year
c. Management audit cannot be conducted by an independent person
d. No time limit can be fixed for submission of the report under management audit
Answer  Explanation  Related Ques

ANSWER: No time limit can be fixed for submission of the report under management audit

Explanation:
No explanation is available for this question!


39)   The responsibility centers, for control purposes, may be classified into _____ types.

a. Five
b. Three
c. Four
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Three

Explanation:
No explanation is available for this question!


40)   When it comes to accounting ratios in reporting, they should be

a. A part of the formal financial statement
b. In the form of a separate statement
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!