1. Current assets-(stock +prepaid expenses)= -------------------.
A. Current assets.
B. Fixed assets
C. Liquid assets
D. Fictitious assets
Ans :- C
2. The ratio establishes the relationship between fixed assets and long term fund is----------.
A. current ratio
B. fixed assets ratio
C. fixed assets turnover ratio
D. debt equity ratio
Ans:-b
3. Contribution is –
a) Sales – total cost,
b) Sales – variable cost,
c) Sales – fixed cost,
d) None of these.
Ans:b
4. Share holders funds+Long-term loans= -----------.
A. current assets
B. current liabilities
C. fixed assets
D. capital employed
ANSWER: D
5. Earnings per share (EPS) is a __________
A. Profitability ratio
B. Turnover ratio
C. Liquidity ratio
D. None of these
ANSWER: A
6. Which one of the following statement is incorrect?
a) P/V ratio indicates profitability,
b) Sales below break-even point means profit,
c) Margin of safety indicate profit,
d) Contribution margin = sales x P/V Ratio. Ans:b
7. Fund flow statement is based on the -------------.
A. cash concept of funds
B. working capital concept
C. long term funds
D. fixed assets concept of funds
AnS:-b
8. Which one of the ratio is not included under the budgetary control
ratio?
a) activity ratio,
b) capacity ratio,
c) productivity ratio,
d) cash ratio.
Ans:d
9. Marginal cost is __________
A. Prime cost
B. Variable cost
C. Works cost
D. cost of production
ANSWER: B
10. Return on equity is also called--------.
A. return on on investment
B. Gross profit ratio
C. return on shareholders fund
D. return on net worth.
ANSWER: D
11. Which of the cost is related with decision making?
a) fixed cost,
b) marginal cost,
c) full cost,
d) none of these.
Ans:b
12. Debtors turnover ratio is an-----------.
A. Short term solvency ratio
B. long term solvency ratio
C. profitability ratio
D. efficiency ratio
ANSWER: D
13. The net profits will be maximized when contribution is –
a) maximized,
b) minimized,
c) equal,
d) none of these.
Ans:a
14. _______ is the primary objective of cost accounting.
A. cost ascertainment
B. financial audit
C. profit analysis.
D. tax compliance
ANSWER: A
15. Responsibility accounting is a system of .................... where responsibility is assigned for the control cost.
a) control,
b) management,
c) reduce,
d) all of these.
Ans:a
16.Which one of the centre is not a part of responsibility centre?
a) expense centre,
b) revenue centre,
c) profit centre,
d) stock centre.
Ans:d
17. Each responsibility centre is put under the charge of a responsibility –
a) manager,
b) accountant,
c) employee,
d) all of these.
Ans:a
18. Which one of the following is not essential for a sound system of budgetary control?
a) chart,
b) budget centre,
c) budget,
d) flexibility.
Ans:d
19. Contribution margin is equal to------------------.
A. fixed cost - loss
B. profit+variable cost
C. sales-fixed cost-profit
D. sales-profit
ANSWER: A
20. Which of the following statement is correct?
a) BEP is the point at which total revenue is equal to total cost,
b) Contribution margin = Sales x P/V ratio,
c) BEP is the point at which total revenue is equal to total cost,
d) all of these.
Ans:d
21. Reorder level=------------------------.
A. Maximum level-Minimum level
B. Maximum consumption * Maximum reorder period
C. Minimum consumption * Minimum Reorder period.
D. Normal consumption * Normal reorder period.
ANSWER: B
22. Which of the following statement is true?
a) in marginal costing, managerial decisions are guided by contribution rather than by profit,
b) MOS indicates profit,
c) profit volume ratio indicates profitability,
d) all of these.
Ans:d
23. Which of the following statement is false?
a) marginal costing is a method of ascertaining cost,
b) a firm incurs a loss when contribution is equal to fixed cost,
c) Contribution is always equal to fixed cost,
d) all of these.
Ans:d
24. Which of the following statement is false?
a) a firm earn profit when contribution is equal to fixed cost under variable cost,
b) MOS implies BEP,
c) if the margin of safety is high, actual sales are very near to the breakeven sales,
d) all of these.
Ans:d
25. Given, fixed cost = Rs.200000, variable cost = Rs.5, sales price = Rs.10 per unit. Find out BEP (in units) –
a) 40000,
b) 60000,
c) 30000,
d) 45000.
Ans:a
26. Given, fixed cost = Rs.200000, variable cost = Rs.5, sales price = Rs.10 per unit. If selling price is reduced by 10%, the new BEP will be –
a) 50000,
b) 40000,
c) 75000,
d) 49000.
Ans:a
27. The P/V ratio on X Co. Ltd. is 40% and its MOS is 50%. Find out the net profit, if sales volume is Rs.800000 –
a) Rs. 160000,
b) Rs.140000,
c) Rs.180000,
d) Rs. 170000
Ans:a
28. The P/V Ratio of X Ltd. is 40% and its MOS is 50%. Find out BEP, if sales volume is Rs.800000
a) Rs.400000,
b) Rs. 30000,
c) Rs.450000,
d) Rs.120000
Ans:a
29. A company earned a profit of Rs.30000 during the year 2010- 11. If the marginal cost and selling price of a product are Rs.8 and Rs.10 per unit respectively, the MOS will be –
a) Rs.150000,
b) Rs.130000,
c) Rs.140000,
d) Rs.120000
Ans:a
30. In the context of standard costing, basic standards is established for –
a) short period,
b) current period,
c) indefinite period,
d) pre-defined period
. Ans:d
31. The three main categories of manufacturing costs are:--------------
A. direct material, direct labour and factory overhead
B. direct labour,indirect labour and overtime premiums
C. raw materials, work in progress and finished goods
D. raw materials, direct labour and finished goods.
ANSWER: A
32. Management accounting and cost accounting functions are----------.
A. neutral in effect
B. complementary in nature.
C. contradictory in nature.
D. does not relate to each other.
ANSWER: B
33. The term 'Management Accountancy' was first used in----------------.
A. 1950
B. 1939
C. 1910
D. 1947
ANSWER: B
34. In a division that is treated as a profit centre, which of the following should be used as the basis for assessing divisional performance?
a) Divisional profit before head office cost allocation,
b) Contribution,
c) Contribution less controllable fixed costs,
d) Divisional profit before tax.
Ans:c
35. Financial accounting records only---------------.
A. standard figures
B. estimated figures
C. actual figures
D. approximate figures
ANSWER: C
36. A Ltd. has earned contribution of Rs. 200000 and net profit of Rs. 150000 on sales Rs. 800000. Calculate MOS.
a) Rs.600000,
b) Rs. 550000,
c) Rs. 400000,
d) Rs. 420000
Ans:a
37. Net profit ratio is a ---------.
A. turnover ratio
B. long term solvency ratio
C. short term solvency ratio
D. profitability ratio.
ANSWER: D
38. The ratios which reflect managerial efficiency in handling the asset is------.
A. turnover ratios.
B. profitability ratios.
C. short term solvency ratios.
D. long term ratios
ANSWER: A
39. According to which method of pricing issues is close to current economic values?
A. Last In First Out
B. First In First Out
C. Highest In First Out
D. Weighted average price.
ANSWER: A
40. Which of the following is the correct description of the break-even- point?
a) where total revenue equals total variable costs,
b) where total revenue equals total contribution,
c) where total revenue equals total fixed costs,
d) where total revenue equals total fixed and variable costs.
Ans:d
41. In a profit-volume chart, what does the point at which the contribution line touches the vertical axis represent?
a) the break-even point,
b) total contribution,
c) total variable cost,
d) total fixed costs.
Ans:d
42. Toy manufacturing industry should use----------.
A. unit costing
B. process costing
C. batch costing
D. multiple costing.
ANSWER: C
43. Which one of the following best describes the margin of safety?
a) the extent to which the total sales exceeds the total fixed costs,
b) the extent to which the total sales exceeds the total fixed and variable costs,
c) the extent to which the total sales exceeds the total variable costs,
d) fixed costs / (sales revenue per unit – variable costs per unit)
Ans:b
44. Office and administration expenses can be charged on the basis of- ------.
A. material cost
B. labour cost
C. prime cost
D. factory cost
ANSWER: D
45.A static budget is useful in controlling costs when cost behaviour is –
a) mixed,
b) fixed,
c) variable,
d) linear.
Ans:b
46. Responsibility centers include –
a) cost centers,
b) profit centers,
c) investment centers,
d) all of the above.
Ans:d
47. Which one of the following is not considered for preparation of cost sheet?
A. Factory cost
B. goodwill written off
C. labour cost.
D. Selling cost.
ANSWER: B
48.In a responsibility report for a profit center, fixed costs are deducted from contribution margin to show –
a) profit center margin,
b) controllable margin,
c) net income,
d) income from operations.
Ans:b
49. Economic Order Quantity is also known as _____________
A. Reorder quantity
B. Optimal order quantity
C. Both A & B
D. None of the above
ANSWER: C
50. Which cost is taken into consideration for ‘make or buy’ decisions?
a) prime cost,
b) total cost,
c) cost of production,
d) relevant cost.
Ans:b
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