COST ACCOUNTING.3.pdf

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III B.COM (AM) [2012-2015]Semester V

Core: COST AND MANAGEMENT ACCOUNTING 513BMultiple Choice Questions.

1. Basic objectives of cost accounting is__________. A. tax compliance. B. financial audit. C. cost ascertainment. D. profit analysis. ANSWER: C

2. Direct cost incurred can be identified with ________. A. each department. B. each unit of output. C. each month. D. each executive. ANSWER: B

3. Overhead cost is the total of ____________. A. all indirect costs. B. all direct costs. C. indirect and direct costs. D. all specific costs. ANSWER: A

4. Imputed cost is a__________. A. notional cost. B. real cost. C. normal cost. D. variable cost. ANSWER: A

5. Operating costing is suitable for ___________. A. job order business. B. contractors. C. sugar industries. D. service industries. ANSWER: D

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6. Process costing is suitable for _________. A. hospitals. B. oil reefing firms. C. transport firms. D. brick laying firms. ANSWER: B

7. Cost classification can be done in __________. A. two ways. B. three ways. C. four ways. D. several ways. ANSWER: D

8. Costing refers to the techniques and processes of __________ . A. ascertainment of costs. B. allocation of costs. C. apportion of costs. D. distribution of costs. ANSWER: A

9. Cost accounting was developed because of the ________. A. limitations of the financial accounting. B. limitations of the management accounting. C. limitations of the human resource accounting. D. limitations of the double entry accounting. ANSWER: A

10. Multiple costing is a technique of using two or more costing methods for ascertainment of cost by. A. the same firm. B. the several firms. C. the same industry. D. the several industries. ANSWER: A

11. Wages paid to a labour who was engaged in production activities can be termed as. A. direct cost. B. indirect cost. C. sunk cost. D. imputed cost. ANSWER: A

12. The cost which is to be incurred even when a business unit is closed is a. A. imputed cost. B. historical cost. C. sunk cost. D. shutdown cost.


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ANSWER: D

13. Classification of cost is useful . A. to find gross profit. B. to find net profit. C. to identify costs. D. to identify efficiency. ANSWER: C

14. Elements of costs are. A. three types. B. four types. C. five types. D. seven types. ANSWER: A

15. Direct expenses are also called ________ . A. major expenses. B. chargeable expenses. C. overhead expenses. D. sundry expenses. ANSWER: B

16. Indirect material used in production is classified as. A. office overhead. B. selling overhead. C. distribution overhead. D. production overhead. ANSWER: D

17. Warehouse rent is a part of _________. A. prime cost. B. factory cost. C. distribution cost. D. production cost. ANSWER: C

18. Indirect material scrap is adjusted along with ________. A. prime cost. B. factory cost. C. labour cost. D. cost of goods sold. ANSWER: B

19. Which one of the following is not considered for preparation of cost sheet_______. A. Factory cost. B. Goodwill written off. C. Labour cost.


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D. Selling cost. ANSWER: B

20. Sale of defectives is reduced from _________. a. prime cost. A. prime cost. B. works cost. C. cost of production. D. cost of sales. ANSWER: C

21. Tender is an. A. estimation of profit. B. estimation of cost. C. estimation of selling price. D. estimation of units. ANSWER: C

22. Cost of sales plus profit is __________. A. selling price. B. value of finished product. C. value of goods produced. D. value of stocks. ANSWER: A

23. Prime cost includes. A. direct materials, direct wages and indirect expenses . B. indirect materials and indirect labour and indirect expenses. C. direct materials, direct wages and direct expenses. D. direct materials, indirect wages and indirect expenses. ANSWER: C

24. Total of all direct costs is termed as _______. A. prime cost. B. works cost. C. cost of sales. D. cost of production. ANSWER: A

25. Depreciation of plant and machinery is a part of ___________. A. factory overhead. B. selling overhead. C. distribution overhead. D. administration overhead. ANSWER: A

26. Audit fess is a part of. A. works on cost. B. selling overhead.


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C. distribution overhead. D. administration overhead. Answer: D ANSWER: D

27. Counting house salary is part of _____. A. factory overhead. B. selling overhead. C. distribution overhead. D. administration overhead. ANSWER: D

28. Factory overhead can be charged on the basis of__________. A. material cost. B. labour cost. C. prime cost. D. direct expenses. ANSWER: A

29. Office and administrative expenses can be charged on the basis of______. A. material cost. B. labour cost. C. prime cost. D. factory cost. ANSWER: C

30. Selling and distribution expenses can be charged on the basis of__________. A. material cost. B. labour cost. C. prime cost. D. factory cost. ANSWER: C

31. One of the most important tools in cost planning is _______. A. direct cost. B. budget. C. cost sheet. D. marginal costing. ANSWER: C

32. The purpose of financial accounting is to provide information for_____ . A. fixing prices. B. controlling cost. C. locating factors leading to wastages and losses. D. assessing the profitability and financial position of the firm. ANSWER: D

33. An example of variable cost is __________. A. property tax.


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B. interest on capital. C. direct material cost. D. depreciation of machinery. ANSWER: C

34. Cost accounting concepts include all the following exempt ________. A. planning. B. controlling. C. profit sharing. D. product costing. ANSWER: C

35. Toy manufacturing industry should use ___________. A. unit costing. B. process costing. C. batch costing. D. multiple costing. ANSWER: C

36. Job costing used in ____ . A. paper mills. B. chemical works. C. printing works. D. textile mill. ANSWER: C

37. When premises are owned, a charge for rent is _________. A. production cost. B. imputed cost. C. marginal cost. D. cost of sales. ANSWER: B

38. A document which provides for the detailed cost centre and cost unit is ______. A. tender. B. cost sheet. C. . invoice. D. profit statement. ANSWER: B

39. Cost unit of a sugar industry can be _______. A. per litre. B. per tonne. C. per acre. D. per metre. ANSWER: B

40. The ascertainment of costs after they have been incurred is known as _____.


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A. marginal costing. B. historical costing. C. sunk cost. D. notional cost. ANSWER: B

41. Direct material is a _________. A. fixed cost. B. variable cost. C. semi variable cost. D. semi fixed cost. ANSWER: A

42. Direct material is a ______. A. manufacturing cost. B. administrative cost. C. selling cost. D. distribution cost. ANSWER: A

43. The most important element of cost in manufacturing industries is __________. A. material. B. labour. C. direct costs. D. indirect costs. ANSWER: C

44. Which of the following is considered to be the normal loss of material __________. A. Loss due to accident. B. Pilferage. C. Loss due to breaking the bulk. D. Loss due to careless handling of materials. ANSWER: A

45. 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: B

46. Continuous stock taking is a part of __________. A. annual stock taking. B. perpetual inventory. C. ABC analysis. D. VED analysis. ANSWER: B


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47. Which of the following methods of stock control aims at concentrating efforts on selected items ofmaterial______. A. Perpetual inventory system. B. Material turnover ratio. C. Level setting. D. ABC analysis. ANSWER: D

48. In which of the following methods issues of materials are priced at a predetermined rate ________. A. Inflated price method. B. Standard price method. C. Replacement price method. D. Specific price method. ANSWER: B

49. In which of the following methods issues of materials are priced at the price prevailing at the time ofissue___________. A. Inflated price method. B. Standard price method. C. Replacement price method. D. Specific price method. ANSWER: C

50. In base stock method of pricing the material issues, the term base stock represents the quantity of stockbeing issued __________. A. stock in balance. B. minimum stock. C. maximum stock. D. re-order level ANSWER: B

51. The ratios which reflect managerial efficiency in handling the assets is ________. A. turnover ratios. B. profitability ratios. C. short term solvency ratio. D. long term solvency ratio. ANSWER: A

52. The ratios which reveal the final result of the managerial policies and performance is _____________. A. turnover ratios. B. profitability ratios. C. short term solvency ratio. D. long term solvency ratio. ANSWER: B

53. Return on investment is a _____________. A. turnover ratios. B. short term solvency ratio.


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C. profitability ratios. D. long term solvency ratio. ANSWER: C

54. Net profit ratio is a ___________. A. turnover ratio. B. long term solvency ratio. C. short term solvency ratio. D. profitability ratio. ANSWER: D

55. Stock turnover ratio is a __________. A. turnover ratio. B. profitability ratio. C. short term solvency ratio. D. long term solvency ratio. ANSWER: A

56. Current ratio is a _________. A. short-term solvency ratio. B. long-term solvency ratio. C. profitability ratio. D. turnover ratio. ANSWER: A

57. Proprietary ratio is a ___________. A. short-term solvency ratio. B. long-term solvency ratio. C. profitability ratio. D. turnover ratio. ANSWER: B

58. Fixed assets ratio is a __________. A. short-term solvency ratio. B. long-term solvency ratio. C. profitability ratio. D. turnover ratio. ANSWER: B

59. Fixed assets turnover ratio is a ______. A. short-term solvency ratio. B. long-term solvency ratio. C. profitability ratio. D. turnover ratio. ANSWER: D

60. The ratio which measures the profit in relation to capital employed is known as_______. A. return on investment.


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B. gross profit ratio. C. operating ratio. D. operating profit ratio. ANSWER: A

61. The ratio which determines the profitability from the shareholders point of view is____. A. return on investment. B. gross profit ratio. C. return on shareholders funds. D. operating profit ratio. ANSWER: C

62. Return on equity is also called ___________. A. return on investment. B. gross profit ratio. C. return on shareholders funds. D. return on net worth. ANSWER: D

63. Preliminary expenses is an example of ___________. A. fixed assets. B. current assets. C. fictitious assets. D. current liabilities. ANSWER: C

64. Prepaid expenses is an example of _______. A. fixed assets. B. current assets. C. fictitious assets. D. current liabilities. ANSWER: B

65. The ratio which is calculated to measure the productivity of total assets is_________. A. return on equity. B. return on share holders funds. C. return on total assets. D. ANSWER: C

66. The ratio which shows the proportion of profits retained in the business out of the current years profitsis _________. A. retained earnings ratio. B. pay out ratio. C. earnings per share. D. price earnings ratio. ANSWER: A


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67. The ratio which indicates earnings per share reflected by the market price is ______. A. retained earnings ratio. B. pay out ratio. C. earnings per share. D. price earnings ratio. ANSWER: D

68. The ratio establishes the relationship between profit before interest and tax and fixed interest charges is________.

A. interest cover ratio. B. fixed dividend cover ratio. C. debt service coverage ratio. D. dividend yield ratio. ANSWER: A

69. The ratio shows the preference dividend as a proportion of profit available for shareholders is__________ .

A. interest cover ratio. B. fixed dividend cover ratio. C. debt service coverage ratio. D. dividend yield ratio. ANSWER: B

70. The dividend is related to the market value of shares in _________. A. interest cover ratio. B. fixed dividend cover ratio. C. debt service coverage ratio. D. dividend yield ratio. ANSWER: D

71. Turnover ratio is also known as ______________. A. activity ratios. B. solvency ratios. C. liquidity ratios. D. profitability ratios. ANSWER: A

72. Inventory or stock turnover ratio is also called __________. A. stock velocity ratio. B. debtors velocity ratio. C. creditors velocity ratio. D. working capital turnover ratio. ANSWER: A

73. Which ratio is calculated to ascertain the efficiency of inventory management in terms of capitalinvestment __________. A. stock velocity ratio. B. debtors velocity ratio.


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C. creditors velocity ratio. D. working capital turnover ratio. ANSWER: A

74. The ratio which measures the relationship between the cost of goods sold and the amount of averageinventory is __________. A. stock turnover ratio. B. debtors velocity ratio. C. creditors velocity ratio. D. working capital turnover ratio. ANSWER: A

75. Sales-Gross Profit = _________. A. net profit. B. cost of production. C. administrative expenses. D. cost of goods sold. ANSWER: D

76. Opening stock + purchases + direct expenses-closing stock = __________. A. net profit. B. cost of production. C. administrative expenses. D. cost of goods sold. ANSWER: D

77. Which ratio measures the number of times the receivables are rotated in a year in terms of sales_________.

A. stock turnover ratio. B. debtors turnover ratio. C. creditors velocity ratio. D. working capital turnover ratio. ANSWER: B

78. Debtors turnover ratio is also called _______. A. stock turnover ratio. B. debtors velocity ratio. C. creditors velocity ratio. D. working capital turnover ratio ANSWER: B

79. Creditors turnover ratio is also called ________________. A. stock turnover ratio. B. debtors velocity ratio. C. accounts payables ratio. D. working capital turnover ratio. ANSWER: C


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80. The indicates the number of times the payables rotate in a year is______. A. stock turnover ratio. B. stock turnover ratio. C. creditors velocity ratio. D. working capital turnover ratio. ANSWER: C

81. Current assets-current liabilities = ___________. A. fixed capital. B. working capital. C. opening capital. D. closing capital. ANSWER: B

82. The ratio of current assets to current liabilities is called __________. A. liquid ratio. B. acid test ratio. C. current ratio. D. cash position ratio. ANSWER: C

83. Internationally accepted current ratio is ___________. A. 1:1. B. 2:1. C. 3:1. D. 4:1. ANSWER: B

84. Liquid ratio is also called __________. A. super quick ratio. B. acid test ratio. C. current ratio. D. cash position ratio. ANSWER: B

85. Current assets- (stock + prepaid expenses = _____________. A. current assets. B. fixed assets. C. liquid assets. D. fictitious assets. ANSWER: C

86. An ideal liquid ratio is _____________. A. 0.25 : 1. B. 0.50 : 1. C. 0.75 : 1. D. 1 : 1. ANSWER: D


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87. An ideal cash position ratio is ___________ . A. 0.25 : 1. B. 0.50 : 1. C. 0.75 : 1. D. 1 : 1. ANSWER: C

88. An ideal debt equity ratio is ____________. A. 1. B. 2. C. 3. D. 4. ANSWER: A

89. The ratio establishes the relationship between fixed assets and long-terms funds is ______. A. current ratio. B. fixed assets ratio. C. fixed assets turnover ratio. D. debt equity ratio. ANSWER: B

90. The ratio compares the shareholders funds and total tangible assets is ___________. A. capital gearing ratio. B. fixed assets turnover ratio. C. proprietary ratio. D. debt equity ratio. ANSWER: C

91. The ratio expresses the relationship between the proprietors funds and the total tangible assets is___________.

A. capital gearing ratio. B. fixed assets turnover ratio. C. proprietary ratio. D. debt equity ratio. ANSWER: C

92. The ratio establishes relationship between fixed interest and dividend bearing funds and equityshareholders funds is __________. A. capital gearing ratio. B. fixed assets turnover ratio. C. proprietary ratio. D. debt equity ratio. ANSWER: A

93. Capital gearing ratio is also known as ____. A. leverage ratio. B. fixed assets turnover ratio.


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C. proprietary ratio. D. debt equity ratio. ANSWER: A

94. A low capital gearing ratio indicates___________. A. under capitalization. B. over capitalization . C. borrowed capital. D. long term funds. ANSWER: B

95. A high capital gearing ratio indicates _____________. A. under capitalization. B. over capitalization . C. borrowed capital. D. long term funds. ANSWER: A

96. Shareholders funds + Long-term loans = __________ . A. current assets. B. current liabilities. C. fixed assets. D. capital employed. ANSWER: D

97. Low turnover of stock ratio indicates _________. A. solvency position. B. monopoly situation. C. overinvestment in inventory. D. liquidity position. ANSWER: C

98. Net capital employed is equal to _______. A. total assets minus total liabilities. B. fixed assets plus net-working capital. C. total assets minus long-term liabilities. D. total assets. ANSWER: B

99. Return on investments is a ________. A. profit and loss account ratio. B. balance sheet ratio. C. combined ratio. D. turnover ratio. ANSWER: C

100. Ratio of net profit before interest and tax to sales is __________. A. solvency ratio.


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B. capital gearing. C. turnover ratio. D. operating profit ratio. ANSWER: D

101. Funds flow statement is based on the _________. A. working capital concept of funds. B. cash concept of funds. C. fixed assets concept of funds. D. long term funds. ANSWER: A

102. All those assets which are converted into cash in the normal course of business within one year areknown as __________. A. fixed assets. B. current assets. C. fictitious assets. D. wasting assets. ANSWER: B

103. All those liabilities which are payable in cash in the normal course of business within a period of oneyear are called ___________. A. long term liabilities. B. overdraft. C. short term loans. D. current liabilities. ANSWER: D

104. Any transaction between a current account and another current account does not Affect _________. A. profit. B. funds. C. working capital. D. capital. ANSWER: B

105. Any transaction between a non current account and another non current account does not affect. A. profit. B. funds. C. working capital. D. capital. ANSWER: B

106. Principle for preparation of working capital statement -Increase in current asset________. A. increases working capital. B. decreases working capital. C. decrease fixed capital. D. increase fixed capital. ANSWER: A


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107. Principle for preparation of working capital statement - Decrease in current asset ______ . A. increases working capital. B. decreases working capital. C. decrease fixed capital. D. increase fixed capital. ANSWER: B

108. Principle for preparation of working capital statement -Increase in current liability __________. A. increases working capital. B. decreases working capital. C. decrease fixed capital. D. increase fixed capital. ANSWER: B

109. Principle for preparation of working capital statement -Decrease in current Liability ____________. A. increases working capital. B. decreases working capital. C. decrease fixed capital. D. increase fixed capital. ANSWER: A

110. Depreciation on fixed assets is __________. A. non operating income B. operating expense. C. operating income. D. non operating expense. ANSWER: D

111. Provision for Income tax is ________ . A. non operating income. B. operating expense. C. operating income. D. appropriation of profits. ANSWER: D

112. Profit on sale of fixed assets is _______. A. non trading income. B. operating income. C. non trading gains. D. long term gain. ANSWER: A

113. Purchase of machinery, debit the __________. A. purchases account. B. machinery account. C. cash account. D. bank account.


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ANSWER: B

114. Purchase of goods, debit the __________. A. purchases account. B. machinery account. C. cash account. D. bank account. ANSWER: A

115. Purchased furniture returned to supplier, credit the ________. A. supplier account. B. cash account. C. purchase returns account. D. furniture account. ANSWER: D

116. Goods returned to the supplier, credit the _______. A. supplier account. B. cash account. C. purchase returns account. D. furniture account. ANSWER: C

117. Goods withdrawn by the proprietor for personal use, debit the __________. A. proprietors account. B. drawings account. C. goods account. D. purchases account. ANSWER: B

118. Trial balance is a __________. A. statement. B. account. C. ledger. D. journal. ANSWER: A

119. Balance sheet is a ________. A. account. B. ledger. C. journal. D. statement. ANSWER: D

120. In balance sheet gross profit will be added with __________. A. reserves. B. capital. C. current liabilities.


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D. current assets. ANSWER: B

121. In P & L account, expenses will be __________. A. debited. B. credited. C. deducted. D. added. ANSWER: A

122. In P & L account, incomes will be ____________. A. debited. B. credited. C. deducted. D. added. ANSWER: B

123. The basic function of accounting is to ___________. A. attain non-economic goals. B. record economic data. C. classify and record business transactions. D. prepare profit and loss. ANSWER: C

124. Financial accounting record only _____________. A. standard figures. B. estimated figures. C. actual figures. D. approximate figures. ANSWER: C

125. The branch of accounting which primarily deals with processing and presenting accounting data forinternal use in a concern is ____________. A. inflation accounting. B. cost accounting. C. financial accounting. D. management accounting. ANSWER: D

126. The term management accountancy was first used in __________. A. 1950. B. 1939. C. 1910. D. 1947. ANSWER: B

127. Management accounting is also known as ________. A. price level accounting.


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B. historical cost accounting. C. financial accounting. D. decision accounting. ANSWER: D

128. The prime function of management accounting is to _______. A. assist tax authorities. B. assist the management in performing its functions effectively. C. interpret the financial data. D. record business transactions. ANSWER: B

129. Management accounting provides valuable services to management in performing ____. A. coordinating functions. B. controlling functions. C. planning functions. D. all managerial functions. ANSWER: D

130. Management accounting is an offshoot of _____. A. financial accounting. B. cost accounting. C. cost accounting and inflation accounting. D. cost accounting and financial accounting. ANSWER: D

131. Management accounting analyses accounting data with the help of ______. A. auditors. B. statutory forms. C. tools and techniques. D. formula. ANSWER: C

132. Management accounting is suitable for _______. A. large industries and trading concerns. B. co-operative societies. C. small businesses. D. non-profit organizations. ANSWER: A

133. 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

134. Management accounting use _____________.


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A. quantitative data only. B. qualitative data only. C. descriptive data only. D. both qualitative and qualitative data. ANSWER: D

135. In making managerial decisions, relevant information is ______. A. future cost that differ between alternatives. B. future costs that do not differ between alternatives. C. past costs that differ between alternatives. D. past costs that do not differ between alternatives. ANSWER: A

136. The role of historical data from the accounting system in making managerial decisions is ________. A. to assist in making productions that inputs to a decision model. B. to serve directly as inputs in decision models. C. to assist in making predictions about other information needed for making decisions. D. to assist in making productions that inputs to a management. ANSWER: A

137. The tracing or reassigning of costs to one or more cost objectives is referred to as ______. A. cost allocation B. historical costing C. step up costing D. cost apportionment ANSWER: A

138. The three main categories of manufacturing costs are _______________ A. direct materials, direct labor and factory overheads. B. direct labor, indirect labor and overtime premiums. C. raw materials, work in progress and finished goods D. raw materials, direct labor and finished goods. ANSWER: A

139. According to economic theory, costs play a role in price determination when ______. A. the company operates in an industry characterized as having imperfect competition. B. a company is selling commodities such as wheat and rice. C. perfect competition exists. D. a company is selling commodities such as yarn and cotton. ANSWER: A

140. When a multi product plant is being operated at capacity, the products which should be emphasizedare those that provide _________. A. the highest contribution margin per unit of the limited resource. B. the highest contribution margin per unit of product. C. the highest contribution margin per sales dollar. D. the highest contribution margin ratio. ANSWER: A


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141. In cash flow statement, closing balance of cash balance is posted in which side of the statement_____.

A. sources of cash. B. application of cash. C. sources of funds. D. application of funds. ANSWER: B

142. In cash flow statement, closing balances of bank balance is posted in which side of the statement__________.

A. sources of cash. B. application of cash. C. sources of funds. D. application of funds. ANSWER: B

143. In cash flow statement, issue of shares is posted in ______. A. sources of cash. B. application of cash. C. sources of funds. D. application of funds. ANSWER: A

144. In cash flow statement, issue of debentures is posted in ______. A. application of cash. B. sources of funds. C. application of funds. D. sources of cash. ANSWER: B

145. In cash flow statement, sale of fixed assets is posted in ____. A. sources of cash. B. application of cash. C. sources of funds. D. application of funds. ANSWER: A

146. In cash flow statement, sale of investments is posted in ___________ . A. sources of cash. B. application of cash. C. sources of funds. D. application of funds. ANSWER: A

147. In cash flow statement, redemption of debentures is posted in ___________. A. sources of cash. B. application of cash.


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C. sources of funds. D. application of funds. ANSWER: D

148. In cash flow statement, redemption of preference shares is posted in __________. A. sources of cash. B. application of cash. C. sources of funds. D. application of funds. ANSWER: B

149. In cash flow statement, loans repaid is posted in ___________. A. sources of funds. B. application of funds. C. application of cash. D. sources of cash. ANSWER: C

150. In cash flow statement, tax paid is posted in _________. A. sources of funds. B. application of funds. C. application of cash. D. sources of cash. ANSWER: C

151. Production cost under marginal costing includes _____________. A. prime cost only . B. prime cost and fixed overhead . C. prime cost and variable overhead. D. prime cost, variable overhead and fixed overhead. ANSWER: C

152. One of the primary differences between marginal costing and absorption costing regarding thetreatment of __________. A. prime cost . B. fixed overheads. C. variable overheads D. direct materials. ANSWER: B

153. Absorption costing differs from marginal costing is the ___________. A. fact that standard costs can be used with absorption costing but not with marginal costing . B. amount of costs assigned to individual units of products . C. kind of activities for which each can be used . D. amount of fixed costs that will be incurred. ANSWER: B

154. Contribution margin is also known as __________.


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A. marginal income . B. gross profit. C. net profit. D. net loss. ANSWER: A

155. Period costs are _______. A. overhead costs . B. prime cost. C. variable cost. D. fixed costs. ANSWER: D

156. Contribution margin is equal to __________. A. fixed cost - loss. B. profit + variable cost. C. fixed cost- profit. D. sales- profit. ANSWER: A

157. Profit volume Ratio is an indicator of __________. A. the rate at which goods are sold . B. the volume of sales . C. the volume of profit. D. the rate of profit. ANSWER: D

158. Margin of Safety is the difference between _______. A. planned sales and planned profit . B. actual sales and break-even sales. C. planned sales and actual sales . D. planned sales and planned expenses. ANSWER: B

159. An increase in variable costs ___________. A. increases p/v ratio . B. increases the profit. C. reduces contribution . D. increase margin of safety. ANSWER: C

160. An increase in selling price _________. A. increases the break-even point. B. decreases the break-even point. C. does not affect the break-even point. D. optimize the break even point. ANSWER: B


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161. A large Margin of Safety indicates ________. A. over production. B. over capitalization . C. the soundness of the business. D. under capitalization. ANSWER: C

162. Angie of incidence is _________. A. the angle between the sales line and the total cost line. B. the angle between the sales line and the y-axis. C. the angle between the sales line and the x-axis. D. the angle between the sales line and the total profit line. ANSWER: A

163. CVP analysis is most important for the determination of ______. A. sales revenue necessary to equal fixed costs. B. relationship between revenues and costs at various levels of operations. C. variable revenues necessary to equal fixed costs . D. volume of operations necessary to Break-even. ANSWER: A

164. The conventional Break-even analysis does not assume that ___________. A. selling price per unit will remain fixed. B. total fixed costs remain the same. C. variable cost per unit will vary . D. productivity per worker will remain unchanged. ANSWER: B

165. 1f fixed costs decrease while variable cost per unit remains constant, the new B.E.P in relation to theold B.E.P will be _______. A. lower. B. higher. C. unchanged. D. indeterminate. ANSWER: B

166. If fixed costs decrease while the variable cost per unit remains constant, the new contribution marginin relation to the old contribution margin will be ________. A. lower. B. unchanged . C. higher. D. indeterminate. ANSWER: B

167. Selling price per unit Rs. 10; Variable cost Rs. 8 per unit; Fixed cost Rs. 20,000; Break-evenproduction in units __________. A. 10,000. B. 16,300.


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C. 2,000. D. 2,500. ANSWER: A

168. Sales Rs. 25,000; Variable cost Rs. 8,000; Fixed cost Rs. 5,000; Break-even sales in value _________. A. Rs. 7,936. B. Rs. 7,353. C. Rs. 8,333. D. Rs. 9,090. ANSWER: B

169. Fixed cost Rs. 80,000; Variable cost Rs. 2 per unit; Selling price_Rs. 10 per unit; turnover required fora profit target of Rs. 60,000 _____. A. Rs. 1,75,000. B. Rs. 1,17,400. C. Rs. 1.57,000. D. Rs. 1,86,667. ANSWER: A

170. Sales Rs. 25,000; Variable cost Rs. 15,000; Fixed cost Rs .4,000; P/V Ratio is _______. A. 40%. B. 80% . C. 15% . D. 30%. ANSWER: A

171. Sales Rs. 50,000; Variable cost Rs. 30,000; Net profit Rs. 6,000; fixed cost is ______ . A. Rs. 10,000. B. Rs. l4,000 . C. Rs. 12,000. D. Rs. 8,000. ANSWER: B

172. Actual sales Rs .4,00,000; Break-even sales Rs. 2,50,000; Margin of Safety in percentage is________.

A. 33.33%. B. 66.67% . C. 37.5% . D. 76.33%. ANSWER: C

173. P/V Ratio 50%; Variable cost of the produce Rs. 25; Selling price is ______ . A. Rs. 50 . B. Rs. 40. C. Rs. 30 . D. Rs. 55. ANSWER: A


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174. Fixed cost Rs. 2,00,000; Sales Rs. 8,00,000; P/V Ratio 30%; the amount of' profit is _____________. A. Rs. 50,000. B. Rs. 40,000 . C. Rs. 35,000 . D. Rs. 45,000 ANSWER: B

175. Profit Volume Ratio is 25% and Margin of Safety is Rs; 3,00,000, the amount of profit is _____. A. Rs. 1,00,000. B. Rs. 80,000. C. Rs. 75,000. D. Rs. 60,000. ANSWER: C

176. Total sales Rs. 20,00,000; Fixed expenses Rs. 4,00,000; P/V Ratio 40%; Break-even capacity inpercentage is _____. A. 40% . B. 60% . C. 50% . D. 45%. ANSWER: C

177. Break - even point occurs at 40% of` total capacity, margin of safety will be _______. A. 40% . B. 60% . C. 80% . D. 85% ANSWER: B

178. If the P/V Ratio of a product is 30% and selling price is Rs. 25 per unit, the marginal cost of theproduct would be __________. A. Rs.18.75 . B. Rs.16 . C. Rs. 15 . D. Rs.20 . ANSWER: A

179. Absorption costing is also known as ____________ . A. historical costing. B. real costing. C. marginal costing. D. real costing . ANSWER: A

180. Under marginal costing stock are valued at __________. A. fixed cost. B. semi-variable cost. C. variable cost.


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D. market price. ANSWER: C

181. Absorption costing lays emphasis on __________. A. production. B. sales. C. marketing . D. advertising . ANSWER: A

182. Marginal costing lays emphasis on _________. A. production. B. sales. C. marketing . D. advertising . ANSWER: B

183. Selling price - marginal cost = ________. A. fixed cost. B. semi-variable cost. C. contribution. D. break-even point. ANSWER: C

184. Total sales - total variable cost _______. A. fixed cost. B. semi-variable cost. C. contribution. D. break-even point. ANSWER: C

185. Fixed cost + profit = ________. A. fixed cost. B. semi-variable cost. C. margin of safety. D. contribution. ANSWER: D

186. A high P/V ratio indicates __________. A. high profitability. B. low profitability. C. high loss. D. break even. ANSWER: A

187. A low P/V ratio indicates _____________. A. high profitability. B. low profitability.


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C. high loss. D. break even. ANSWER: B

188. Fixed cost / P/V ratio = __________. A. break even point. B. margin of safety. C. contribution. D. variable cost. ANSWER: A

189. Profit / P/V ratio = __________. A. break even point. B. margin of safety C. contribution. D. variable cost. ANSWER: B

190. Sales x P/V ratio- fixed cost = _______ . A. break even point. B. margin of safety. C. profit/ loss. D. variable cost. ANSWER: C

191. Office rent is an example of _______. A. fixed cost. B. variable cost. C. semi-variable cost. D. direct cost. ANSWER: A

192. Raw material is an example of __________. A. fixed cost. B. variable cost. C. semi-variable cost. D. direct cost. ANSWER: B

193. Depreciation is an example of _______________. A. fixed cost. B. variable cost. C. semi-variable cost. D. direct cost. ANSWER: A

194. Marginal costing is a technique of _______________. A. cost reduction.


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B. cost control. C. budgeting. D. standard costing. ANSWER: B

195. The costs which increase or decrease in proportion to the output and sales are known As ______. A. fixed cost. B. variable cost. C. semi-variable cost. D. total cost. ANSWER: B

196. Break even point is also called _____________. A. no profit, no loss point. B. profit zone. C. loss zone. D. profit and loss zone. ANSWER: A

197. Break even chart is a graphical representation of _______. A. absorption costing. B. marginal costing. C. full costing. D. contract costing. ANSWER: B

198. Key-factor in marginal costing is also called _________. A. non cost factor. B. cost factor. C. sales factor. D. limiting factor. ANSWER: D

199. Contribution - fixed cost = ___________. A. sales . B. variable cost. C. profit. D. fixed cost. ANSWER: C

200. Break even sales x P/V ratio = ___________. A. variable cost. B. fixed cost. C. semi-variable cost. D. contribution. ANSWER: B

201. The budget is a ______________.


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A. a post-mortem analysis . B. a substitute of management . C. an aid to management . D. calculation . ANSWER: C

202. One of the most important tools of cost planning is _________. A. budget. B. direct cost. C. unit cost. D. cost sheet. ANSWER: A

203. Sales budget is a _________. A. Functional budget. B. Expenditure budget. C. Master budget . D. Flexible budget. ANSWER: A

204. The budget which usually takes the form of budgeted profit and loss account and balance sheet isknown as ___________. A. Flexible budget . B. Master budget. C. Cash budget . D. Purchase budget. ANSWER: B

205. Which of the following is usually a long-term budget _______. A. Fixed budget. B. Cash budget. C. Sales budget. D. Capital expenditure budget. ANSWER: D

206. The fixed-variable cost classification has `a special significance in the preparation of ________. A. Capital budget. B. Cash budget. C. Master budget . D. Flexible budget . ANSWER: D

207. The budget, which is prepared first of all is.________. A. Master budget. B. Cash budget. C. Budget for key factor. D. Flexible budget. ANSWER: C


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208. Preparing budget figures for different levels of activity within a range under flexible budgeting is_______.

A. Formula method. B. Multi-activity method. C. Budget cost allowance method. D. Proportionate method. ANSWER: B

209. What type of budget is designed to take into account forecast change in costs, prices, etc ________. A. Master budget. B. Rolling budget. C. Flexible budget . D. Functional budget. ANSWER: B

210. Operation budgets normally cover a period of _____. A. one to ten years. B. one to two years. C. one to five years. D. one year or less. ANSWER: D

211. The entire process of preparing the budgets is known as _______. A. Planning. B. Organizing. C. Budgeting. D. Controlling. ANSWER: C

212. Budgetary control starts with ________________. A. Planning. B. Organizing. C. Budgeting. D. Controlling. ANSWER: C

213. Budgetary control ends with ____________. A. Planning. B. Organizing. C. Budgeting. D. Control. ANSWER: D

214. Budget designed to remain constant irrespective of the level of activity attained is called _________. A. Fixed budget. B. Flexible budget. C. Sales budget.


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D. Production budget. ANSWER: A

215. Long-term budgets are prepared for _______________. A. 1 year. B. 1-3 years. C. 1-5 years. D. 5-10 years. ANSWER: D

216. The budget which shows the budgeted quantity of output to be produced during a specific period is__________.

A. Fixed budget. B. Flexible budget. C. Sales budget. D. Production budget ANSWER: D

217. Material consumption budget is prepared on the basis of ______________. A. Production budget. B. Sales budget. C. Fixed budget. D. Flexible budget. ANSWER: A

218. . Material budget consists of two parts, one is the consumption budget and another Is ________. A. Material purchase budget. B. Material sales budget. C. Material production budget. D. Material budget. ANSWER: A

219. Materials purchase budget is prepared on the basis of_________ . A. Material sales budget. B. Material consumption budget. C. Material production budget. D. Material budget. ANSWER: B

220. Labour budget is a part of ____________. A. Fixed budget. B. Sales budget. C. Production budget. D. Flexible budget. ANSWER: C

221. Labour budget is prepared by ________________. A. Personnel department.


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B. Sales department. C. Purchase department. D. Accounts department. ANSWER: A

222. Budget of indirect costs in the form of indirect wages, indirect material and indirect expenses in thefactory is _________ . A. Production overhead budget. B. Administration overhead budget. C. Selling and distribution overhead budget. D. Master budget. ANSWER: A

223. The budget prepared to estimate the expenditure to be incurred for planning, organizing, direction andcontrol function of the management is _________. A. Production overhead budget. B. Administration overhead budget. C. Selling and distribution overhead budget. D. Master budget. ANSWER: B

224. The budget prepared to estimate expenditure to be incurred to sell the product and its distribution is____________.

A. Production overhead budget. B. Administration overhead budget. C. Selling and distribution overhead budget. D. Master budget. ANSWER: C

225. The budget prepared to estimate the research and development expenditure to be incurred during aspecific period is _____________. A. Production overhead budget. B. Administration overhead budget. C. Selling and distribution overhead budget. D. Research and development budget. ANSWER: D

226. The budget prepared to estimate the expenditure on fixed assets is known as _____. A. Capital expenditure budget. B. Production overhead budget. C. Administration overhead budget. D. Selling and distribution overhead budget. ANSWER: A

227. The budget prepared for replacement of assets, expansion of production facilities, adoption of newtechnologies etc. is _______. A. Capital expenditure budget. B. Production overhead budget.


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C. Administration overhead budget. D. Selling and distribution overhead budget. ANSWER: A

228. A fixed budget is prepared for only _________. A. One level of activity. B. Range of activity. C. Two level of activity. D. Three level of activity. ANSWER: A

229. A flexible budget is prepared for a _____________. A. One level of activity. B. Range of activity. C. Two level of activity. D. Three level of activity. ANSWER: B

230. The budget starts without any base is _______________. A. Master budget. B. Flexible budget. C. Zero base budgeting. D. Fixed budget. ANSWER: C

231. The budget which reviews a programme or project from scratch is ____. A. Master budget. B. Flexible budget. C. Zero base budgeting. D. Fixed budget. ANSWER: C

232. The budget said as resource planning and redeployment process is _______ . A. Zero base budgeting. B. Master budget. C. Flexible budget. D. Fixed budget. ANSWER: A

233. Expected sales + desired closing stock - estimated opening stock= ________ A. Expected production. B. Expected sales. C. Expected purchase. D. Expected loss. ANSWER: A

234. In production budget closing stock is added with ___________. A. expense.


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B. sales. C. purchase. D. material. ANSWER: B

235. In production budget opening stock is deducted with_____________. A. expense. B. sales. C. purchase. D. material. ANSWER: B

236. Material consumed is Rs. 5,00,000 Opening stock of raw material is Rs. 50,000 and Closing stock ofraw material is Rs. 25,000. What is the cost of raw material purchased _________. A. Rs. 4,50,000. B. Rs. 4,75,000. C. Rs. 5,25,000. D. Rs. 5, 50,000. ANSWER: B

237. If selling price is Rs. 25,000 and profit is Rs. 5,000 then what is the percentage of profit oncast_______. A. 20%. B. 25%. C. 33.33%. D. 35% ANSWER: B

238. Material control involves ________. A. consumption of material. B. issue of material. C. purchase of material. D. purchase, storage and issue of material. ANSWER: D

239. Material requisition is meant for _________. A. purchase of material. B. supply of material from stores. C. sale of material. D. storage of material. ANSWER: B

240. Stock control through stock levels and EOQ is called ________. A. demand and supply method. B. perpetual inventory system. C. control by important and exception D. automatic order method. ANSWER: B


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241. ABC analysis is _____________. A. At Best Control. B. Always Better Control. C. Average better Control. D. All best control. ANSWER: B

242. JIT inventory system is _____________. A. Just In Time. B. Just Inventory Time. C. Job In Time. D. Job Inventory Time. ANSWER: A

243. Perpetual inventory system involves _________. A. bincard and stores ledger. B. bill of material and material requisition. C. purchase requisition and purchase order. D. inward and outward invoices. ANSWER: A

244. FIFO is____________. A. Fast Investment in Future Order. B. First In First Out. C. Fast In Fast Out D. Fast Issue Of Fast Order. ANSWER: D

245. LIFO method of pricing of materials is more suitable when ______. A. material prices are rising. B. material prices are falling. C. material prices are constant. D. material prices are fluctuating. ANSWER: A

246. Average method of pricing the material issues is useful when_______. A. material prices are rising. B. material prices are falling. C. material prices are constant. D. material prices are fluctuating. ANSWER: D

247. Scrap is _________. A. residue of material. B. wastage of material. C. surplus material. D. abnormal loss of material.


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ANSWER: A

248. Material is issued by store keeper against. A. material requisition. B. material order. C. goods received note. D. purchase requisition. ANSWER: A

249. EOQ stands for______________. A. Economic Order Quantity. B. Essential Order Quantity. C. Economic Output Quantity. D. Essential Output Quantity. ANSWER: A

250. The document which is prepared after receiving and inspecting material_____. A. material record note. B. goods received note. C. bill of material. D. inventory record. ANSWER: B

Staff Name Kumaresan A .


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COST ACCOUNTING.3.pdf

Documents

overhead cost

production cost

cost ascertainment

imputed cost

distribution cost

labour cost

cost classification

classification of cost