Management Accounting Test Questions - Set 7

1)   Which of the following are tools of management accounting?

A) Decision accounting
B) Standard costing
C) Budgetary control
D) Human Resources Accounting


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 C

Explanation:
No explanation is available for this question!


2)   State which of them are true?

A) When ratios of previous years are compared with current years, they are called trend ratios.
B) Trend percentages and trend ratios are used in static analysis.
C) Reliability of financial analysis depends upon the reliability of financial data.


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

ANSWER: A, B, C

Explanation:
No explanation is available for this question!


3)   Comparison of financial statements highlights the trend of the _________ of the business.

a. Financial position
b. Performance
c. Profitability
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


4)   Capital market line is:

a. Capital allocation line of a market portfolio
b. Capital allocation line of a risk free asset
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!


5)   CAPM accounts for:

a. Unsystematic risk
b. Systematic risk
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Systematic risk

Explanation:
No explanation is available for this question!


6)   Net Profit ratio is calculated by

a. (Gross Profit / Gross sales) * 100
b. (Gross Profit / Net sales) * 100
c. (Net Profit / Net sales) * 100
d. None of the above
Answer  Explanation  Related Ques

ANSWER: (Net Profit / Net sales) * 100

Explanation:
No explanation is available for this question!


7)   If sales is Rs 5,00,000 and net profit is Rs 1,20,000 Net Profit ratio is

a. 24%
b. 416%
c. 60%
d. None of the above
Answer  Explanation  Related Ques

ANSWER: 24%

Explanation:
No explanation is available for this question!


8)   If sales is Rs 10,00,000, sales returns is Rs 50,000, Profit Before Tax is Rs 2,00,000, Income tax is 40%, Net profit ratio is

a. 12.63%
b. 20%
c. 10%
d. 50%
Answer  Explanation  Related Ques

ANSWER: 12.63%

Explanation:
No explanation is available for this question!


9)   Funds Flow Statement is prepared on the basis of data of P&L statement and two consecutive balance sheets.

a. True
b. False
c. Value delivery
d. None of the above
Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


10)   Which of the following rules stands true while preparation of Schedule of changes in working capital?

A) An increase in current assets increases working capital.
B) An increase in current assets decreases working capital.
C) An increase in current liabilities decreases working capital.
D) An increase in current liabilities increases working capital.


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

ANSWER: A and C

Explanation:
No explanation is available for this question!


11)   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 by eliminating

a. Non-cash revenue from the revenue earned
b. Non-cash expenses from expenses incurred
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!


12)   While preparing Cash Flow Statement, non-cash items and non-operating items are not required to be adjusted under________

a. Indirect method
b. Direct method
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Direct method

Explanation:
No explanation is available for this question!


13)   Cash flow from sales is calculated by

a. Cash sales + Cash Collections
b. Sales + Opening debtors + Opening B/R – Closing Debtors – Closing B/R
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)   Under High and Low Point method, the output at two different levels is compared with the amount of __________ incurred at these two points.

a. Total fixed costs
b. Total costs
c. Total fixed costs
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Total costs

Explanation:
No explanation is available for this question!


15)   Given Maximum value of production and minimum value of production is 10,000 and 5000 units respectively. Maximum total cost is Rs 25,000 and minimum total cost is Rs 15,000. Determine total fixed cost and per unit marginal cost.

a. Rs 2 per unit, Rs 5,000
b. Rs 5 per unit, Rs 2000
c. Rs 10 per unit, Rs 10,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 2 per unit, Rs 5,000

Explanation:
No explanation is available for this question!


16)   Under method of least squares, a linear equation is developed in the form of ______ wherein Y is total cost, a = fixed cost, b = marginal cost and X is output.

a. Y = a + bX
b. Y = a - bX
c. Y = a * bX
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Y = a + bX

Explanation:
No explanation is available for this question!


17)   Product X is manufactured By ABC company, The sales is Rs 50,000 Direct Materials is Rs 20,000, Direct Labour is Rs 10,000, Variable overheads is Rs 5,000 and Fixed overheads is Rs 10,000. ABC Company now intends to introduce a new product Y so that sales may be increased by Rs 10,000. There will be no rise in fixed costs and the estimated variable costs of Product Y are Labour Rs 2,200 Materials Rs 4,800 Overheads Rs 1,400. If the company introduces Product Y, what will be the impact?

a. Total profit will decrease by Rs 1,600
b. Total profit will increase by Rs 1,600
c. No impact
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Total profit will increase by Rs 1,600

Explanation:
No explanation is available for this question!


18)   In a competitive market, the price is determined by the

a. Individual concern
b. Market forces
c. Both a and b
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Market forces

Explanation:
No explanation is available for this question!


19)   The alternative which shows ____ difference between the incremental revenue and the differential cost is the one considered to be the best choice for selection.

a. Maximum
b. Minimum
c. No
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Maximum

Explanation:
No explanation is available for this question!


20)   Breakeven point can be calculated in terms of units as well as in terms of amount.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


21)   Which of the following statements are true about Break-even analysis?

a. If per unit information is given in question and no specific direction available, B.E.P should e calculated in terms of amount as well as in units
b. If technique of P/V ratio is to be used, B.E.P should be obtained in terms of amount
c. B.E.P is measured as Sales-Margin of safety
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


22)   What will be amount of profit if Margin of safety is Rs 50,000 and P/V ratio is 25%?

a. Rs 12,500
b. Rs 1,25,000
c. Rs 1,250
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 12,500

Explanation:
No explanation is available for this question!


23)   Determine B.E.P if Sales is Rs 1,00,000, Variable cost is Rs 50,000 and Profit is Rs 20,000.

a. Rs 60,000
b. Rs 40,000
c. Rs 80,000
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Rs 60,000

Explanation:
No explanation is available for this question!


24)   What will be the B.E.P if P/V ratio is 20% and Fixed cost is Rs 40,000.

a. Rs 2,00,000
b. Rs 4,00,000
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!


25)   A cost centre which relates to equipment or to location is known as

a. Impersonal cost centre
b. Personal cost centre
c. Local cost centre
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Impersonal cost centre

Explanation:
No explanation is available for this question!


26)   There are ______ types of standard used in the process of establishment of standard costing system.

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

ANSWER: Two

Explanation:
No explanation is available for this question!


27)   _________reflects a level of attainment depending on the maximum possible efficiency which may never be achieved.

a. Attainable Standard
b. Perfection Standard
c. Expected Standard
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Perfection Standard

Explanation:
No explanation is available for this question!


28)   _________ is stated as a budget which is made to change as per the levels of activity attained.

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

ANSWER: Flexible budget

Explanation:
No explanation is available for this question!


29)    __________ contains the picture of total plans during the budget period and it comprises information relating to sales, profit, cost, production etc.

a. Master budget
b. Functional budget
c. Cost budget
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Master budget

Explanation:
No explanation is available for this question!


30)   _______also known as subsidiary budgets.

a. Master budget
b. Functional budget
c. Cost budget
d. None of the above
Answer  Explanation  Related Ques

ANSWER: Functional budget

Explanation:
No explanation is available for this question!


31)   In a month, payment for salary was Rs. 5,750 when the lag in payment of salary is 1/8 month. If total salaries of current month are Rs 6,000, determine the salaries of previous month.

a. Rs 4,800
b. Rs 4,250
c. Rs 4,000
d. Rs 4,750
Answer  Explanation  Related Ques

ANSWER: Rs 4,800

Explanation:
No explanation is available for this question!


32)   Cash budget is a __________ budget.

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

ANSWER: Short-term

Explanation:
No explanation is available for this question!


33)   Semi-variable expenses increases with the increase in the level of activity,

a. In the same proportion as the activity increases
b. Not in the same proportion as the activity increases
c. In inverse proportion of activity increase
d. None of the above
Answer  Explanation  Related Ques

ANSWER: In the same proportion as the activity increases

Explanation:
No explanation is available for this question!


34)   Semi-variable cost will not be zero, even if production is nil.

a. True
b. False


Answer  Explanation  Related Ques

ANSWER: True

Explanation:
No explanation is available for this question!


35)   Material sub usage variance is calculated when

A) When quantity of wastage is not given
B) When quality of output is not given
C) When price of wastage is not given
D) When total cost of output is not given


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

ANSWER: A and B

Explanation:
No explanation is available for this question!


36)   Material sub-usage variance is also known as

a. Material revised usage
b. Revised quantity variance
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!


37)   Material sub usage variance is measured by using the 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. (Standard quantity - Revised standard quantity) * Standard price
Answer  Explanation  Related Ques

ANSWER: (Standard quantity - Revised standard quantity) * Standard price

Explanation:
No explanation is available for this question!


38)   Management auditor should be well versed with

a. Management by exception
b. Management by objectives
c. Principles of delegation of authority
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


39)   Which of the following is responsibility center?

a. Expense center
b. Profit center
c. Investment center
d. All of the above
Answer  Explanation  Related Ques

ANSWER: All of the above

Explanation:
No explanation is available for this question!


40)   On the basis of information contained in the reports, the managerial reporting can be divided into

a. Operating reports and financial reports
b. Trend reports and analytical reports
c. Individual activity reports and joint activity reports
d. Internal reports and external reports
Answer  Explanation  Related Ques

ANSWER: Operating reports and financial reports

Explanation:
No explanation is available for this question!