Management Accounting 2

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Management Accounting ________ Accounting assists the management in establishing the plans to attain the Management economic objectives and take proper decisions for the attainment of its objectives. ________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting ________ and ________ are examples of element wise classification ofoverhead costs ________ and ________ are examples of semi- variable overheads. ________ and ________ are non monetary incentives ________ is any documentary evidence to justify that a particular transaction has taken place. ________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account ________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting . ________ system of wage payment is a combination of Halsey system and Gantt system. ________ variance arises when the mix of materials used in the production is different from the predetermined standard mix of operation.

Management Idirect material

indirect labour

Maintenance cost electricity Safety services education facility Voucher Like office rent, Talling

Audit fees

arithmetical

Diemer Materials mix

________ variance represents the over or under utilisation of pland and machinery. Capacity __________ Accounting becomes a source of information for Management Accounting.

Financial

__________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities like investors, suppliers, customers etc.

Financial

________account can be defined as the record of all the transactions pertaining to a person, asset, liability income or expenditure which have taken place in a specified period. ________is the summary of all the balances in all the accounts listed in ledger account of an organization at any given point of time. 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were purchased from Y @ Rs.6/- per unit. The 4.Under the differential time rate method the wages are paid at Rs. 1.50 per hour between ________ efficiency and Rs.1.25 per hour between ________ efficiency A ________ inventory turnover period indicates efficient utilisation of material. A budget manual is a document setting out the ________ of the persons and ________ required for the budget control.

Ledger Trial Balance tion follows FIFO system of pricing of issues and the above purchases 101% to 125 %

80% to90%

Low Responsibilities

Forms and procedures

Management Accounting A Budget Manual may contain the following particulars A business's telephone bill should nromally be classified into which one of the following categories? A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in : A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2

Duties and responsibilities of various executives , Functions and duties of Budget Officer , Scope of the Budget and area to be covered Semi-variable cost Difference in the balance as per bank book and as per pass book 14,59,200

A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch 68,182 units a profit of 15% on total cost. What is the break even point for the company? A company has normal capacity of 100 machines working 8 hours per day of 25 days in a month. The budgeted fixed overheads of a month are Rs.150,000/-. The standard time to manufacture one unit of product is 4 hours. In a particular month, Rs.9,000/- (Adverse) the company worked for 24 days of 750 machine hours per day and produced 4,500 units of the product. The actual fixed overheads incurred amounted to Rs.145,000/-. Compute capacity variance. A company manufactures and sells four products, viz. A, B, C and D. The details are as follows : Profit volume ratio:-Product A- 20%, Product B- 40%, Product C25%, Product D-18%; Incremental rupee sale for each Rupee spent on Product B advertisement:-Product A- Rs.11/-, Product B-Rs.6/-, Product C-Rs.12/-, Product DRs.10/-. Amount of advertisement available is only Rs.5,000/-. A company wishes to earn a 15% profit margin on selling price when quoting for a job. Which of the following is the profit margin of cost which will achieve the required profit margin ? A complete list of all material required, with quantities, for a particular job is given in the ________. A dividend warrant of Rs.2,076/- was paid direct to the bank and nothing appeared in the cash book. This is an example of : A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate System.

0.1765 Bill of material Direct deposit into the bank

P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80

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Management Accounting A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labour cost for the job under the Rowan Plan. A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual break even point. A firm has purchased a machine for manufacturing a new product, the cost data for which is given below. A firm is able to break even at 60% capacity with budgeted fixed cost of Rs.300,000/-, budgeted selling price Rs.20/- per unit and budgeted contribution Rs.6/- per unit. The firm can produce and sell at 90% capacity but it is estimated that in that case A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be followed. A key factor is defined as the factor which, at a particular point of time or over a period will ________ the volume of ________ A lathe machine was purhcased on 31st March, 2004 for Rs.65,000/-, however it was installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of depreciation charge for the said lathe machine for the year ended 31st March, 2004. A low margin of safety indicates ________ fixed overheads. A materials requisition form normally contains the following aspects:

Rs.9,333.33

80,000 units Rs.9.20/-

Rs.82,500/-

Budget limit

output

Nil higher Quantity requisitioned , Per unit material cost , Job number

A person in charge of a ________ may be held responsible for its proper functioning Cost centre and cost control. A producer has a policy of fixing selling price at two-and-a-half times the variable cost. He also wants to have a monthly break-even at sales of 20,000 units. Annual fixed cost is Rs.18,00,000/-. What is the selling price per unit of the product?

Rs.12.50

A producer is using certain tool item in productive process. Annual requirement is 20,000 units of the tool. Cost of ordering a lot is Rs.160/-. Per unit price of the tool is Rs.360/-. Annual interest cost is 10%, insurance cost is 0.5% of the average Rs.8,000/inventory in stores, and other storage expenses are Rs.2.20 per unit. Calculate annual ordering cost. A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 500 rectification of the suspense accounted debited to Rs A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10% on building. The total amount of capital comes to Rs. 11500 __________

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Management Accounting A worker is paid a monthly salary of Rs.500/- alongwith a bonus of 50 paise per unit Semi-variable completed, this type of labour cost may be classified as ________ cost. A written order sent to inform the purchasing department of a need for materials is Purchase requisition note called a ________. A written request sent to a supplier for specified goods at an agreed upon price is Purchase order often called as : ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/- and the variable costs are 60% of the selling price. In order to realize a Rs.6.25 profit of Rs.100,000/-, the selling price per unit would have to be : Accounting is the art where transactions are … Summarized , Classified , Recorded Longer life-span on business is divided into shorter segments , Each one being in the form of accounting Accounting period Concept________________ period , Selection of accounting period may depend on various factors Accounting to the matching principles of accounting, the ________ incurred during an accounting period are required to be match with ________ during that period

cost

Accounts is a

Record of all transaction

Accrued income indicates:

Current year's income not received in the current year

Actual costs may be affected due to inefficient functioning such as Adjustment entries always have ________ effects. Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management Advance received from customers is ________ for the organisation. After material is received from the supplier, quantity actually received is compared with quantity ________-and ________-if any, are taken up with the supplier Along with financial accounting, ________ and ________ are the other streams of accounting Alpha Bros. manufactures and sells four products-A, B, C and D. The sales mix in value comprises 33-1/3%, 41-2/3%, 16-2/3% and 8-1/3%, respectively, out of the total sales of Rs.60,000/-. Operating costs are 60%, 68%, 80% and 40%, respectively of the selling price. Fixed costs are Rs.14,700/- per month. You are required to find out the break even point for the products on an overall basis for Alpha Bros.

revenues

Abnormal expenses , In efficient use of labour , In efficient use of material Two fixed

top

A liability ordered

variation

Cost Accounting

Rs.42,000/-

Management Accounting

Management Accounting Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as 6170 rectifying the transaction the creditor A/C is to be debited amount to Rs Amit sold Goods to Atul for Rs. 50,000 on cash & Rs. 50,000 on credit basis & allowed 10% discount on on the spot transaction. Cash Account debited to Rs. _____________ Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account? An adjustment relating to outstanding expenses will ________ the net profit. An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find the expenditure on account of advertisement. An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________ An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe.

540

45000

Rs.45,000/Decrease Rs.49,248/-

P's A/c and Q's A/c suspense

An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final The net profit will not be affected statements of accounts for the year ended 31st March, 2004. Angle formed by the intersection of total cost line and sales line is called angle of ________. Annual fixed cost of a producer is Rs.500,000/-. The price of its product is Rs.60/and per unit variable cost is Rs.40. In the next year his fixed cost commitments are expected to go up by 20%. By what percentage the break even point will go up in the next year. Annual sales were Rs.10,50,000/- and sales returned by customers amounted to Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount of incentive due to the salesmen. Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to: As a part of the data presented in support of a proposal to increase the production of clock radios, the sales manager of Wittman Electronics reproted the total additional cost required for the proposed increased production level. The increase in total cost is known as :

Incidence

0.2

Rs.30,660/Balance as per bank book > Balance as per pass book

Incremental cost

As cost centers facilitate the control function, in many cases, they are termed as . . . Responsibility centers

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Management Accounting As on 30th September, 2004 the cost of closing stock was Rs.84,696/- and its market price as on the same day was Rs.66,584/-. Which value of closing stock should be considered in the final statement of accounts for the year ended on 30th September, 2004? As per the provisions of Section 209 of ________, all the company form of organisation is legally required to follow the mercantile or accrual system of accounting. At 60% capacity utilisation the overhead recovery rate is Rs.35/- per unit. At 70% capacity the rate gets reduced to Rs.32/- per unit. What should be the recovery rate if the production attains 90% capacity utilisation? At a break even point of 400 units, the variable costs are Rs.400/- and the fixed costs are Rs.200/-. What will the 401st unit sold contribute to profit? Average stock = ________ + (Order size / 2) Bank reconciliation statement is the statement prepared to explain the ________ as to why the bank balance as per ________ and bank balance as per bank book does not match Based on the journal entry given, identify what transaction has taken place. Suresh Account………….Dr. Rs.500 To Cash Account Rs.500 (Being paid to Kailash on behalf of creditor Suresh) Basic assumptions made by marginal costing are Basic objective of Uniform Costing is . . . Bin card is maintained by ________ department whereas ________ is maintained by costing department. Bin Card is not an ________ record but only a ________ record. Break even point is a situation of no ________ no ________ Budget is prepared in terms of Budgetary Control is useful for ________-and ________-as a powerful tool in the hands of management Budgeted profit and loss account and budgeted balance sheet are also known as ________.

Rs.66,584/-

The Companies Act, 1956

Rs.28/- per unit Re.0.50 Safety stock reasons

pass book

Cash paid to Kailash should not be recovered from creditor Suresh per unit selling price remains constant at all the levels of activities. , whatever is produced by the organisation is sold off. , per unit variable cost remain constant. comparison Stores

Store ledger

Accounting Quantitative profit loss Quantity and/or Money Cost control

Maximization of profits

Master budget

Budgetory Control deals with

Establishment of budgets , Comparison of budgeted results with actuals , Computation of variance.

Business Entity Concept ______________.

Business is separated from the owner. , The accounting process carried out for the business , Separate legal entity

Management Accounting Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-.

Rs.1,500/-( Favorable )

Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 66.9 days units. Calculate Labour Efficiency Variance, If actual rate per hour is Rs.3.50/- , Standard Rs.4500/- ( Favorable ) rate is Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500. Calculate Labour Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13, 500. Calculate Labour Rate Variance, If actual rate per hour is Rs.3.50/- , Standard rate is Rs.3/- per unit and actual hours are 13, 500. Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/- per unit and actual sales volume is 500 units. Calculate the earnings of workers Monica and Sonica under Taylor's differential piece rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30 seconds; rate differential : 80% of piece rate below standard, 120% of piece rate at or above standard. Monica produces 900 units per day and Sonica produces 1,100 units per day.

Rs.9,000/- ( favourable ) Rs.6750/- ( Adverse ) Rs.200/- ( Favorable )

Monica -Rs.72/-; Sonica - Rs.132/-

Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. Rs.29.98 During the month June, 2004 the machine operator has been paid for 5,670 hours. Calculate Volume Variance, If budgeted production is 20,000 units, actual production is 22,000 units and Standard rate per unit is Rs.1.5/-. Calendar Variance arises only if there is abnormal increase or decrease in Cash and---------------are the two systems of accounting. Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory. Causes for adverse material price variance are:

Characteristics of budget can be said to be Collection charges of Rs.4/- on a cheque received from Calcutta should be ________ in the bank book.

Rs.3,000/- ( Favorable ) Actual number of working days Mercantile less than 10 Uneconomical size of purchase orders , Failure to avail discounts allowed by suppliers. , Excessive freight charges It may be prepared in terms of quantity or money or both , It is prepared for a fixed period of time , It spells out objectives to be attained Credited

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Management Accounting Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs, 35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost. Computation of gross wages, deductions and net wages payable is the function of the ________ department. Contents of Uniform Cost Manual are Contribution represents pool of resources available for meeting all costs other than ________. Contribution represents pool of resources available for meeting all costs other than ________. Convention of Materiality __________________

10,50,000 Personnel Organization , Cost Accounting system , Presentation of information Variable costs Variable costs Only those transactions will be considered which have material impact on profitability , Insignificant transaction will be ignored , The cost of non-used should not be considered as the item of cost

Cool-wind Ltd., manufactures fans, which at sold at Rs.400 pre piece. The cost of sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle Rs.452/by 39% of present gross profit. With the above information, you are required to determine the future selling price, if the present rate of gross profit is to be maintained. Copy of a firm's account in the bank's ledger is known as ________. Bank statement Science indicates the possession and the application of relevant systematic knowledge. , Art indicates the skill Cost Accountancy is a science, art and practice of a cost Accountant. and ability. , Practice indicates continuous effects on the part of cost accountant. Concerned with specific activities. , Classified Cost Accounting ______________. according to their nature. , It deals with both i.e. past & present. Cost of asset is 1,20,000, estimated scrap value 20,000, cost of assets subjected to depreciation 2,00,000, rate of depreciation is 10%. Calculate depreciation for 3 yrs 20,000,18,000,16,200 as per the reducing balance m Cost-sheet may be prepared separately for each Different Cost Centre Crane expenses should be apportioned on the basis of ________. Number of hours crane worked in the department Creche expenses may be appropriately approtioned on the basis of ________. Current standards includes Depreciation

Number of female workers Expected standards , Normal standards , Ideal standards Amount charged on Fixed Assets.

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Management Accounting Depreciation charged on office furniture on straight line basis is an example of ________. Depreciation is caused by use factor, obsolescence and ________. Determine re-order level from the following : Maximum daily consumption - 200 units; maximum delivery period - 12 days; average daily consumption - 150 units and average delivery period - 8 days. Direct Cost includes Discount received from the creditor has been entered in the creditor's account but discount has not been credited; what type of error is this ________ Discount received from the Creditors has been entered in the Creditors A/C but discount amount has not been credited, for rectifying such error which account to be debited. Dividend received on amount invested in shares is an example of ________. Double Entry Accounting System__________________ During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg , what is the quantity of sales During one week X makes 200 units. He receives wages for a guaranted 44hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Economical use of labour, materials and facilities can achieved with the help of ________. Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives. Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives. Entry for dishonour of cheque appears only in the pass book, this entry should be ________ in the bank book. Essentials for effective implementation of budgetary control system are Examples of indirect material are Excess direct labour wages will be disclosed by 'Direct labour________ variance'.

Administration overheads Time factor 2,400 units Direct material , Direct labour , Direct expenses Omission of posting an amount in the ledger Suspense A/C non-operating income Every business transactions have two elements , When business receives something, it has to pay something , Every debit has a corresponding credit 20,000 kg Rs. 83.60 Budgetary control Non-monetary Non-monetary Passed Commitment of top management , Clearly defined objectives , Continous budget education Consumable stores , Glue used in book binding , Nails used in packing boxes Rate

Expenditure like general lighting are apportioned considering ________ as a base number of light points and expenditure like depreciation are apportioned considering ________ as a base. Expenditure on income-tax is an example of ________.

value of assets

non-operating expenditure

Management Accounting Factory cost of a product is Rs.335,000/-, if the selling overheads are charged @25% of factory cost, then the amount of selling overheads should be Rs.________/Factory light, telephone expenses are examples of ________ expenses. Factory overheads are termed as

Features of a cost sheet are as follows

Features of convention of conservation are . . .

Features of convention of consistency are . . .

Features of convention of materiality are . . .

Features of double entry accounting system are . . .

Features of material usage variance are :

Features of money measurement concept are . . .

Features of purchase requisition slip are :

Features of real account are . . .

83750 Indirect Production overheads , Works overheads , Manufacturing overheads Indicates the total cost of production during a given period , Indicates the unit cost of production during a given period , Helps the management in fixing the selling price to be quoted for the Anticipates all future losses and expenses , Ignores all future incomes and profits, unless they are actually realised , Applicable to valuation of current assets The accounting policies and procedures should be followed consistently , Facilitates the comparison of financial statements , It facilitates comparison of financial statements on period-to-period basis transactions having material impact on profitability should be considered , Insignificant transactions will be ignored Every business transaction has two elements , When business receives something, it has to pay something , Every debit has a corresponding credit Measures the difference between the quantity of materials actually used and that should have been used. , Considers standard price X actual quantity , Considers standard price X standard quantity Only those transactions and facts are included expressed in terms of money are considered , Imposes severe restrictions on the kind of information available from financial statements , Works as a major drawback of financial accounting Raised when the stock of a raw material has fallen to the re-order level. , Indicates the type, quantity and quality of material required , The information about the price of material is excluded Mainly deals with items which are having physical , Consists of some intangible assets , examples include Lane, Building, Vehicles

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Management Accounting Features of Sunk cost are . . .

Indicates historical cost , Not relevant in decision making process , Incurred in past

Features of Taylor's differential piece rate system are as follows :

Minima clerical work is involved in calculating the wages , Helps in building up an efficient labour force , Strong incentive to efficient and ambitious workers.

FIFO method

The price of the earliest available lot is considered first , If the lot is exhausted, the price of the next available lot is considered , It is used for issue of material

Financial Accounting ______________

Financial Accounting is … Financial Accounting protects the interest of outsiders . it considers ________ transaction and it is a ________ requirement Find out Labour Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours are 12,600. Fixed cost is the cost that tend to remain ________ irrespective of ________ Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on 1st June, 2003, for a period of one year. Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________ level of the management

Designed to supply information for internal/ external uses. , Deals with the transaction during specific period. , It is compulsory Designed to supply information to internal/ external users , Referred as 'Historical' form of accounting , Concerned with financial factors historical

legal

Rs.900/- ( Adverse ) constant

level of activity

of the fixed deposit is cumulative, i.e. interest shall be uncontrollable

lower

Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed. The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/The net profit will decrease by Rs.18,000/only. The claim amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the year ending 31st March, 2004. Following are called the element of Cost Following are the examples of service cost centre Following error affect the trial balance

Following errors affect the trial balance

Material , Labour , Expenses Stores department , Transport department , Accounting department Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger Wrong totaling of subsidiary books , Posting on the wrong side of an account , Omission of posting an account in the ledger

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Management Accounting Following errors do not affect the trial balance Following example comes under service cost centre Following points are taking into consideration for evaluation of receipts

Error of Principle , Error of Omission , Error of Commission Store department , Internal Transport department , Accounting/Costing department The Price , The trade discount is to be deducted , Other amounts such as sales tax, excise duty, octroi duty

For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.375/-( Adverse ) Rs.3.60/- per kg. For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.600/-( favorable ) Rs.6/- per kg. For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is 5,000 units and consumption is 3,20,000 units, what will be the quantum 3,15,000 of raw material to be purchased For successful implementation of uniform costing system, it is very essential to devise ________, containing recommended cost accounting plan and procedures. For the month of November, a firm has budgeted sales of 20,000 units of X at a price of Rs.10/- and sale of 30,000 untis of Y at a price of Rs.6/- per unit. Actual sale during the month was 35,000 units of X at Rs.9/- per unit and 25,000 units of Y at Rs.8/- per unit. Calculate sales volume variance, sales mix variance and sales quantity variance. For the proper interpretation and presentation of cost the overhead further classified as From the following data, determine the net profit if sales are 20% above the break even point. Selling price Rs.20/- per unit, variable cost Rs.15/- per unit and fixed overheads Rs.20,000/From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average inventory From the following select the examples of errors of commission -

cost manual

Sales volume variance -Rs.120,000/- (Favourable) , Sales mix variance -Rs.44,000/- (Favourable) , Sales Quantity variance-Rs.76,000/- (Favourable) Factory overheads , Office and administration overheads , Selling & distribution overhead Rs.4,000/-

300 Sales recorded in the sales register as Rs.2,020/instead of Rs.2,200/- , Received cash from Sham, credited to Ram's account , Paid transport charges, credited to transport charges account Sundry debtors , Stock , Pre paid expenses Debit

From the following, select current assets: Furniture account will always have a ________ balance. Generally accounts of the assets will have ________ balance and liabilities will have debits ________ balance

credits

Management Accounting Generally all the liabilities will have ________balance. Generally, all real accounts will have a ________ balance Going Concern Concept __________________ Going concern concept is also known

Credit Debit Indefinite longer period , Not likely to close down in shorter period , This affects the values of asset and liabilities Continuity concept

Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 15000 5000. The total amount transfer to advertisement account is Rs.____ Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The goods were not insured. Find the amont which should be debited to the profitability statement.

Rs.18,950/-

Goods received note or goods received report is prepared in following copies

One copy to Purchase department , One copy to Accounts department , One copy to Costing department

Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the same. Following account to be credited

Suspense A/C

Goods returned to the suppliers from whom it was ________d is recorded in thePurchasereturn register.

Purchase

Identify the budgets for which the production manager should be held responsible : Identify the budgets for which the production manager sould be held responsible : Identify the causes due to which the cost of labour may be high: Identify the fixed expenses from the following.

Identify the items which are correctly classified.

Identify the steps involved in the process of decision making :

Identify the variable expenses.

Production budget , Production overheads budget , Plant utilisation budget Production budget , Production overheads budget , Plant utilisation budget Excess staffing , Lack of experienced and efficient personnel , High labour turnover Rent and taxes of the factory , Wages paid to indirect workers like cleaners, helpers,etc. , Salary paid to factory supervisor Carriage inward - Factory overheads , Carriage outward - Selling and distribution overheads , Sales research expenses -Selling and distribution overheads Determination of the problem , Ascertainment of alternative courses of action , Screening each alternative so as to select the best one Repairs of plant when it is undertaken by an outside agency , Carriage inward by hired carriers , Wages paid to casual workers

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Management Accounting If ________ books are the books which record the transactions in the chronological order, ________ is the book where transactions of a similar nature are pooled together If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to : If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what will the amount of total factory overheads at 60% capacity If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is 500 kg then what will be the quantity of production If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ________. If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate will be, If production overheads to be absorbed are Rs. 50000/- and labour hours worked are 100000 then the labour hour rate will be, If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business. If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________ the overdraft as per pass book. If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________. If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________. If the ordering cost ________s, then the economic order quantity will Increase. If the owner brings in personal calculator for office use, ________ account should be credited. If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value. If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value. If the quantity of material purchased and quantity used are different, then which quantity should be used to compute the material price variance? If the sales budget shows a sharp increase in a particular month, then (in order to meet the sales forecast) the production budget must call for increased production in the :

subsidiary

ledger

depreciation

overstated

Decrease for fixed costs and remain unchanged for variable costs Rs.10,800/4,500 kg Over-absorbed Re. 4 per machine hour. Re. 0.50 per labour hour. Drawings Lesser than Bad debts Loss Increase Capital 0.75 0.75 Quantity of material purchased Previous month

Management Accounting If the sales forecast is less than the past sales but the top management insists upon Increase the selling price , Reduce cost of sales , a certain amount of additional profits, then following steps can be taken to achieve Increase the selling efforts the target profit If the standard contribution is less than the actual contribution, then ________ Favourable variance arises. If the total amount on the ________ side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance. If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/- per sq.ft, then the production for the period can be stated as ________ sq.ft. tiles. If wages for the month of January, February and March are Rs.4,000, Rs.4,400 and Rs.4,600 respectively and if delay in payment of wages is ½ month , payment of wages for the month of February is If you are required to enforce uniform costing system in your industry, how would you proceed ? If you are required to enforce uniform costing system in your industry, how would you proceed ? If you are required to enforce uniform costing system in your industry, how would you proceed?

Important advantages of Uniform Costing can be said to be

Debit hen the production for the period can be stated as ________ sq.ft. 300000

4200 Collecting data from all units of your industry , Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Maintaining secrecy of the data collected Collecting data from all units of your industry , Ensuring that the data collected is complete and correct , Maintaining secrecy of the data collected It is a useful tool for management control , It avoids cut throat competition , Weaker units can take advantage of settled systems of better managed units

In a factory, bonus to workmen is paid according to the Rowan plan. The allotted time for a job is 40 hours and the normal rate of wages is Rs.1.25 per hour. The factory overhead charges are 50 paise per hor for the hours taken. The factory cost 30 hours of a work order, executed by one worker, X, is Rs.161.875 and that by another, Y, is Rs.155.46. The cost of material in each case is Rs.100/-. Calculate the amount of time taken by the the workman X to complete the work order. In calculation of total sales margin variance, the ________cost of sales is deducted Standard from the actual sales revenue. In case of defective material being returned by the stores department to the vendor, ___. such material should be valued at

15

Management Accounting In case of industries where capital investment is very high, budget should be prepared for a

Longer period

In Cash budget , Non operating cash inflow includes

Receipt of loan/borrowings , Issue of shares , Sale of fixed assets

In Cash budget , Non-Operating cash outflow includesVarious kinds of over heads

Loan instalments , Taxes , Purchase of fixed assets.

In Cash budget , Operating cash outflow includes In Cash budget Operating cash inflow includes

Payment to Creditors , Cash purchases of raw material , Wages/salaries Cash Sales , Collection from Debtors , Interest/Dividend received

In EOQ, to express carrying cost as a percentage of the unit cost of purchases this i is used in the formula----------In financial statements P& L Accounts relates to a specific duration whereas P& L Accounts Balance sheet ________ is for a given point of time Variance Efficiency Variance , Capacity Variance , In fixed overhead variance, the volume variance is further analyzed as Calendar Variance In India the gas industry and electricity industry, and ________ industry are fertilizer examples of industries using the uniform costing system. In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative assessment to be made of the two uniform costing sectors. In order to rectify the totaling mistake, wherein the sales return ledger was credited undercast by Rs.2,000/-, the suspense account should be ________ with Rs.2,000/In practical circumstances, the ________ are referred to as application of funds.

Assets

In practical circumstances, the ________ are referred to as application of funds.

Assets

In the adjustment entry passed for closing stock, the ________ account should be Trading credited. In the determination of factory overhad application rates, the numerator of the Estimated factory overhead for the next period formula is the : In the trial balance prepared on 31st March, 2004, the insurance premium account had a debit balance of Rs.12,865/-. This amount is the premium of the policy which expired on 29th February, 2004. The policy has been renewed from 1st March, 2004 Rs.1,169.55 but the premium is not yet paid. Find the amount of insurance premium still payable as on 31st March, 2004. Sales are too difficult to predict , Supply level of input In which of the following situations, the flexible budget should be preferred? cannot be predicted , Varying levels of production activity

16

17

Management Accounting Included in the trial balance is the sales promotion suspense account with a debit balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its The net profit will decrease by Rs.6,300/impact on profit of the company. Income Tax Act, recognise only one method of depreciation namely ________.

Written down value method

Indirect Cost is termed as ________. Indirect Expenses includes

Overhead Rent , Telephone expenses , Insurance Wages paid to storekeeper , Salary of works manager , Wages paid to gatekeeper

Indirect Labour Cost Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by Management accounting. Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the date of payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss account as expenditure on account of insurance premium? Interest on ________ is credited to Capital account. Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________ . Interest on drawings of partners should be credited to which account? Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book Inventory holding cost comprises of : It is an appropriate basis of apportionment of depreciation expenditure It is difficult to apply Uniform costing system for an industry which has labour intensive companies as well as capital intensive companies, because :

Management

Rs.3,750/Capital Income Tax Act, 1961 Profit and loss account debited

credited

Cost of insurance , Rent of store house , Salary of store keeper value of assets The cost structure is different

It is said that adoption of uniform costing creates customer confidence because . . . Prices are reliable Items credited to Trading Account are … Items debited to Profit & Loss Account are… Items debited to Profit & Loss Account area Journal is popularly known as 'Book of . . . Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with Judge the following narrative according to the criteria given : There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc. Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory.

Sales , Goods lost by fire , Closing stock Salary , Discount allowed , Postage & telegram Salary , Discount allowed , Postage & telegram Original Entry ions in the weather, viz. ice-cream, sweaters, etc. The statement and the reason are both incorrect

The statement is correct but the reason is incorrect

18

Management Accounting Judge the sentence in italics according to criteria given below : " It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used." Juhi started business with Rs borrowed capital of Rs. 1,00,000 with 10% interest per year. What is the total amount of the capital KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003, assuming there were no additions or disposals during the year? Keeping company's liquid position sufficiently sound to meet its daily obligation is the main object of preparing ________ budget. Labour cost indicates that labour cost which cannot be identified with the individual cost centre and is incurred for those employees who are not engaged in the manufacturing process but only assist i Labour cost is the cost of __________ paid to employees of the organization. Labour Efficiency Standards are decided by considering following factors Labour efficiency variance arises due to: Labour efficiency variance Rs.1,000/- (favourable); labour mix variance Rs.260/(adverse) and labour rate variance Rs.300/- (adverse). Compute labour cost variance and labour yield variance. Labour Turnover indicates ________ in labour force showing a highly increasing trend or highly ________ trend Labour turnover means : Labour turnover rate is best defined as :

LAST IN FIRST OUT (LIFO)

The assertion and the reason are both correct

1,10,000

Rs.100,000/-

Cash Remuneration Remuneration Records of past performance , Time & Motion Study , Trial Runs Inefficient supervisor , Poor working conditions , Use of sub-standard quality of material Labour cost variance -Rs.700/- (Favourable) , Labour yield variance -Rs.1,260/- , Labour yield variance is favourable change

decreasing

Influx and exit of employees , Quantitative measurement of instability of working force , Rate of change in the average working force The number of leavers replaced divided by the average of employees on the payroll The price of the latest available lot is considered first , If that lot is exhausted, the price of the 10% prior to that is considered , Physical issue of the material may not be made out of the said lot

Lata and Tara are partners of Latara & Co. As on 31st March, 2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual drawings amounted to Rs.18,000/Rs.6,450/. If interest on drawings is charged @ 15% p.a., what is the amount of income for Latara & Co.? Like initial formation expenses, ________ and R & D are the examples of Deferred Initial Advertisement Revenue Expenditure

R&D

Management Accounting Limitations of Management Accounting includes-------------------

Limitations of marginal costing are Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004. Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet.

Its wide scope , Possibility of intuitive decision , Requires elaborate organizational structure difficult for classification as fixed cost and variable cost. , does not provide any standard for the evaluation of performance. , it is useful technique only in the short run. Rs.500/Long term liabilities

Locate the error and its features in the following -

Compensating errors , Trial balance will not be affected , Trial balance will be affected

Locate the steps involved in rectifying the errors in the books of accounts

Find the wrong entry passed , Find the correct entry

Locate the steps involved in rectifying the errors in the books of accounts Loss is equal to fixed cost minus ________ Loss on account of goods lost due to earthquake should be debited to which account? M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-, Rs.80/- and Rs.50/-, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantitywise proportion in which these products are manufactured and sold are 20%, 30% and 50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to work out the overall break even point qunatity for

Find the wrong entry passed , Find the correct entry to be passed , Find the entry that will resolve the mistake in the books Contribution Profit and loss account

40,000 units

M/s Vivek Enterprises has paid rent relating to the residence of Mr. Vivek, proprietor Drawings of Vivek Enterprises. This payment should be treated as Management Accounting has a very ________ scope and it requires ________ wide elaborate organizational structure Decision making , Safeguarding assets , Planning and Management accounting is concerned with the following activities : controlling activities Designed particularly for internal use , Helpful in estimating the future along with past period , Useful in Management Accounting is… furnishing the necessary information to the management Designing the product , The quantity and quality , Manufacturing process involves study of Material used Margin of safety are the sales beyond break even point

19

Management Accounting Margin of safety indicates ________ of operations. Marginal costing is found to be unsuccessful in the following situations :-

Profitability Impossible to distinguish costs into fixed and Decision to drop a product line , Decision to accept a Marginal costing technique is useful in taking decisions relating to which of the special offer at price lower than the normal selling price following courses of action? , Decision regarding temporary shut-downs Master budget provides a basis for computing effect of changes in : product mix of the company , sales volume , Change in price of material , Failure to take discounts , Material Price Variance may occur due to Weak purchase organization Material Yield variance -Rs.1,000/- (Adverse); material mix variance -Rs.250/Material cost variance -Rs.400/- (Adverse) , Material (Favourable) and material price variance - Rs.350/- (Favourable). Find material cost usage variance -Rs.750/- , Material usage variance is variance and material usage variance. adverse Meera Industries Ltd. is a single product organisation having a manufacturing capacity of 6,000 units per week of 48 hours. The output data vis-à-vis different elements of cost for two consecutive weeks are given below : Week 1 : units Rs.18.75 produced 2400; direct material Rs.4,800/-; direct labour Rs.6,000/- and total factory overheads Rs.37,200/-. Week 2 : units produced 2,800; direct material Rs.5,600/-; direct labour Rs.7,000/Metal India Ltd. is holding two accounts, savings and current, with the Central Bank of India. On 31st January, 2004 his ledger shows the following balances : Savings account Rs.5,000/-; Current accountRs.2,250/- (overdraft). It is found that a deposit Savings account-Rs.6,500/-, current account-Rs.3,750/(overdraft) of Rs.1,500/- made into the savings account on 20th January, 2004 has been entered in the ledger in the of Current account. Find the correct ledger balances of savings and current accounts. Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows Rs.100/- (Favourable) : X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance. Only those transactions and facts expressed in terms of money , This Concept imposes severe restrictions Money Measurement Concept__________________ on the kind of information available from financial statements , Due to several restrictions it becomes drawback of financial accounting Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that the real worth of these loose tools is only By providing depreciation to the extent of Rs.15,000/Rs.30,000/-. What can be done to achieve the desired reduction in the net book value of loose tools? Net sales Rs,7,50,000/-, opening stock Rs.1,14,375/-, purchases Rs.483,375/- and Rs.3,00,000/closing stock Rs.1,47,750/-. Calculate the Gross Profit. Non-trading income is disclosed on the credit side of ________ account. Profit and loss

20

21

Management Accounting Number of days inventory is held can be calculated by dividing number of days in a year by ________. Office & Administration overhead includes Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C credited to Rs Omission of posting an amount in the ledger One of the limitations of the budgetory control is that it ________.

Inventory turnover ratio Salary , Rent & Taxes , Stationary & postage 900 Error of Omission is an expensive affair

Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be the amount of debtors that must be disclosed in the balance sheet?

Rs.53,750/-

Over absorption of overheads may take place due to the reasons like ________ overheads being less than the ________ overheads

actual

Overhead capacity variance is the outcome of:

Shortage of labour , Enforced idle time, e.g.power breakdowns , Customer demand being more or less than anticipated

Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour Overheads chargeable to a product, using direct labour cost basis, may be calculated by multiplying percentage of direct labour cost and ________. P/L A/C debit side includes Panna Ltd. temporarily has excess production capacity. The idle plant facilaties can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its: Piece rate systems are very useful in the following circumstances:

estimated

________. Direct labour cost of the product salary , discount allowed , postage & telegram Variable costs Units of output are measurable , Job is standardised , The flow of work is regular

Planning lays down the course of action to be taken in future. In case budgetary standard control, it is in the form of the ________ and in case of ________ costing, it is in the budgets form of the standard cost Limted capacity due to lack of capital , Insufficient Plant and equipment can become a key factor in the following circumstances : capacity due to shortage of space , Limited number of hours for which the plant can be used Spirit of mutual trust , Free Exchange of ideas , No Pre-requisites of Uniform Costing are . . . rivalry Presentation of information to enable managerial decision making' is one of the Cost Accounting objects of which of the following Preventive costs of labour turnover refers to all the costs which may be incurred by discourage the organisation to keep workers happy and ________ them from ________ the job Product costs under direct costing include:

leaving

Prime cost and variable factory overheads

Management Accounting Profit & Loss A/C credit side has Profit volume ratio is also known as ________. Purchase day book for the month of April was under cast by Rs.1000/- which account should be credited? ________ Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______ Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction.

Gross profit , Commission received , Interested received Contribution to sales ratio Suspense Account 750 Investments Investment account - Rs.170,000/-

The gross profit will increase by Rs.6,450/-

Quantify the increase in profit on account of following errors : (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses.

Rs.43,200/-

Quantify the increase in profit on account of following errorss: (a) Repairs of furniture amounting to Rs.2, 000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses.

Rs.43,200/-

Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be Ram's capital Rs.55,000/- , Laxman's capital provided @ 10% p.a., what will be amount of capital of each of the partners as on Rs.88,000/- , Interest on capital should be debited to 31st March, 2004, assuming there were no additions during this period? Also, state the Profit and loss account the treatment of this item in the Profit and loss account. Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Re-order quantity may be measured as : Replacement costs of labour turnover are ________ and ________

Rent received in advance account Maximum stock level - re-order level + (minimum usage X minimum re-order period) training breakages of machine

22

23

Management Accounting Revenues are more than the differential costs, then the proposed project should be accepted ________ Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to Drawing A/C general expenses account for rectifying the error, which A/C to be debited Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction? Rs.5000 paid as ________ to ________ should be debited to salary account S Ltd., a multi-product company, furnishes the following data: 1st half of 2004 Total sales Rs.45, 000 /- and total cost Rs.40, 000/-. 2nd half of 2004: Total sales Rs.50, 000 /- and total cost Rs.43, 000/-. Assuming stability in prices and that fixed expenses are incurred equally in the two half year periods, calculate the break even sales for S Ltd. for the year 2004. Salary given in trial balance Rs. 5000/-, and Rs. 2,000/- is yet to be paid . The outstanding salary account will be disclosed in the … Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid . The outstanding salary is debited to Profit &Loss A/C. The second effect is -Salary paid to employee amounted Rs. 10,000, transferred to Trading A/C is an example of_______ Sales quantity may be forecasted after taking into consideration various factors such as Select the advantages of standard cost system.

Maintenance of machine account Mahesh

salary

Rs.65,000/-

Balance Sheet - liability side Transfer to balance sheet liability side Error of Commission Analysis of past trends , Market research , Reports by salesmen Provides reliable basis for budgeting , Facilitates delegation of authority , Promotes economy and efficiency

Select the appropriate rectification entries for the following transactions (i) Rs.200/received in respect of a bad debt previously written off was credited to Debtors Debtors A/c ..........Dr. Rs.200/- to bad debts recovered account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This A/c Rs.200/- , Rs.6,000/- to Rao's A/c Rs.6,000/- , amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.250/- to General Expenses A/c Rs.250/Rs.5,000/- was debited to general expenses account. Closing stock is valued at cost or market price whichever is lower , Providing for discount on debtors , Select the cases where convention of conservation is applied : Amorisation of goodwill (goodwill being written off to Profit and Loss Account) Select the correct formulae for calculating break even point.

Fixed cost / (Selling price per unit - Variable cost per unit) , [Fixed cost / Marginal contribution] X Sales , [Fixed cost / (Fixed cost + Net Profit)] X Sales

Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000

Ram is a creditor , Rs.10,000/- has been paid to Ram , The payment is made by cheque

24

Management Accounting Select the cost that indicates increased or decreased total cost due to the increased Differential cost or decreased volume of operations. Purchase A/c ......... Dr. to Damodar's A/c (Being furniture purchased from Damodar) , Gopal's A/c ........... Dr. to cash A/c (Being entry for payment of Select the entries which need to be rectified railway freight for goods purchased) , Cash A/c ............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for) Sales budget , Production budget , Research and Select the examples of functional budgets: development budget Select the information to be considered before installing a costing system Labour intensivity of the product Depreciation on office furniture , Director's Select the items which may be classified as administration overheads. remuneration , Telephone expenses Delivery van expenses , Rent of finished goods Select the items which may be classified as selling and distribution overheads. warehouse , Sales research expenses Health and safety services , Canteen facility , Loans at Select the non-monetary incentives reduced rate of interest Compare the transactions in the bank book and the pass book , Check the totals and the balancing of both Select the steps to be followed while preparing bank reconciliation statement. the books , Confirm that the opening balances of both the books are tallying Select the transactions which can be entered in the Journal proper.

Opening entries , Closing entries , Rectification entries

Select the various methods adopted for treatment of under or over absorbed overheads

Use of supplementary rates , Carrying over the amount to remaining period , Writing off to the Costing Profit and Loss Account

Selecting an appropriate method of valuation of inventory is important because :

It influences the figure of gross profit

Selling and distribution overheads includes

Indirect Material such as packing material, samples etc., , Indirect labour like salaries to sales personnel manager , Indirect expenses like warehouse charges, advertisement

Selling price per tonne is Rs. 69.50 , variable cost per tonne is Rs. 35.50 and fixed 53000 cost is Rs. 18,02000. Find out the BEP in units, Semi ________ overheads are neither ________ nor variable in nature. fixed Since the pass book and the bank book record the ________ transactions, the bank Same balance as per these books should be equal.

variable

25

Management Accounting Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be Profit and loss account should be debited with provided @ 10% p.a., what should be the treatment of this interest in the profitability Rs.1,866.67 statement, assuming there were no additions to capital during this period? Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account ___________ Standard Costing may not be useful in Standard Costing specifically relates to the function of Standard Costing system facilitates ________ and ________ for each individual or department Standard costs are the targets to be attained by the actual performance. Standard Costs are used as tool for

12750 Small concerns , Industries having non-standardized products , Contract jobs Production Delegation of authority

Fixation of responsibility

Minimum Cost Control

Standard labour cost of a job has been specified as 50 hours work by skilled workers @ Rs.20/- per hour and 150 hours work by unskilled workers @ Rs.10/- per Rs.500/- (Adverse) hor. Actual time taken was 70 hours by skilled workers @ Rs.18/- per hour and 170 hours by unskilled workers @ Rs.13/- per hour. Calculate labour yield variance. Standard may not be necessarily useful for this purpose. Forecasting Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has 60 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is actually completed the job in 6 hours, i.e.6 shared Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.180/Rs.20/- per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System. State the features of these transactions : (i) Commission paid Rs.250/- was posted The debit side of the trial balance will be in excess by twice to Commission account (ii) Rs.5,000/- representing goods sold to A, was Rs.250/- , Involves an error of principle , Involves an posted to the credit to commission received account (iii) Sold machine for Rs.8000/error of commission , was credited to Sales account. Store ledger

Record of all receipts and issue transactions , Financial expressions of all transactions , Maintenance of Store ledges provides a second check

Techniques of management accounting include:

Marginal costing , Budgetary control , Standard costing

The ________ adjustment is necessary to relfect the cost for the use of fixed asset Depreciation during the year.

Management Accounting The ________ adjustment is necessary to relfect the cost for the use of fixed asset during the year. The ________ is a perpetual inventory record. The ________ is of immense help in guiding the companies to operate their accounts on uniform basis. The ________ is responsible for material losses while in storage. The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions. The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. The aims of perpetual inventory system are as follows

Depreciation Bin card uniform cost manual Store-keeper Control Total variable overhead Maintaining Bin cards , Maintaining store ledger , Continuous verification of physical stock Sell cloth Cost volume profit analysis become zero

The alternative courses of action for an integrated textile mill are: The analysis which is also referred as 'what if' analysis is known as________. The balance of the suspense account will ________ after all the errors are The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured Rs.128/- (overdraft) cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book. Arithmetical errors in calculating , Non- posting a The Bin card and stores ledges do not match due to the following reasons: certain document , Posting a wrong Bin card The budget manual must contain statement regarding: Objectives of the orgainsation The budget that represents the funds investment for expansion, diversification, etc. Capital expenditure budget is known as ________. The capacity utilised to installed capacity ratio is 80% for the company. The capacity utilisation ratio in respect of a machine for a particular month is 90%. The available working hours in a month are 200 hours. The break of idle time is as follows : Rs.96/Waiting for job - 5hours, breakdown - 4 hours and waiting for tools - 3 hours. Calculate the idle time cost when the hourly fixed cost of running the machine is Rs.8/-. Administrative causes , Productive causes , economic The causes of idle time can be analysed as causes Administrative causes , Productive causes , Economic The causes of idle time can be analysed as causes The characteristics of a good wage system are : Flexible , Economical to use , Easy to understand The column which refers to the page number of the ledger is known as ________.

Ledger folio

The combination in which different products are sold by a company is known as ________.

Sales mix

26

27

Management Accounting The components of the selling and distribution cost budget are : The composition of selling costs is given below : salaries 4% of sales, travelling expenses 1.5% of sales, and sales office 2% The concept of marginal costing is based on the important distinction between product costs and ________ costs. The cost accountancy is defined as “ the application of costing principles,methods and techniques to the ________, art and practice of ________ ascertainment of the profitability and the presenta The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs. Calculate the depreciation according to straight line method The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage The cost of idle time incurred by employees that is considered normal for the production process should be charged to : The cost that indicates historical cost, which is incurred in past, is known as The cost that varies in direct proportion with the level of activity is called The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in the ________. The credit purchases are as follows : July Rs.80,000/- and August Rs.140,000/-. Creditors are paid either on a 'prompt basis' (on the spot) or 30 days basis. It is estimated that 10% of the creditors are in the prompt category. Find the amount paid to The credit side of the sales book was overcast by Rs.2,000/-. As a result of this rectification, what of the given impacts is likely to happen?

Distribution expenses , Publicity expenditure , Salary of sales-office workers . Find the amount of selling overheads if the sales are period science

cost control

10000 0.17 Factory overheads Sunk cost variable cost short run

Rs.177,000/The liability side of the balance sheet will increase by Rs.2,000/-

The data for two materials P and Q is given below : Material P : opening stock Inventory turnover period for material P is 40.5 days , Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q : Material P is faster moving material , Consumption of opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. material Q is Rs.860,000/Identify which of the given statements relevant to the data given are correct. The data for XYZ Ltd. is as follows : Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the C.Ans :-s: The difference between sales and cost of sales is termed as ________. The difference between sales and factory/ works cost is termed as ________ the difference between sales and ________ ermed as net profit The different purposes served by standard costing technique are :

Sales Rs.128,000/- , Return on capital employed , Working capital Rs.32,000/Net Profit gross profit

cost of sales

Cost control , Cost awareness , Performance appraisal

Management Accounting The direct material useage budget and direct material purchase budget differ because of which of the following:

A planned change in the level of material stock

The disadvantages of time rate system are :

Ignores the efficiency of workers , Higher labour cost , Lack of motivation to increase productivity

The document which lays down the cost accounting plans and procedures to be . followed by the constituent units is known as The document which lays down the cost accounting plans and procedures to be uniform cost manual followed by the constituent units is known as ________. The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 153,000 units 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter of 20 Type of budget, viz. Sales or capital expenditure The factors that influence determination of budget period are : budget , General economic conditions , Trade cycle of business The factors which influence the selection of the method for absorption of overheads Type of industry , Nature of products , Manufacturing are: process More than one key factors , Refers to a complex The features of multiplicity of key factors are as follows : situation , Can be resolved by using linear programming technique The benefit of time saved is divided equally between The features of the Halsey Plan are: the employer and employee The final result disclosed by Profit & Loss Account is the ________ profit after taxes Net earned by the organization. The final result disclosed by the Manufacturing account is the ________. Cost of production The final result disclosed by trading account is the ________profit earned by the Gross organization. The finance manager is responsible for which of the following budget? Cash budget Percentage of profits , Availability of funds , The following factors affects the budgeted advertisement cost Competitors policy The following information is available regarding two orders for the same product. Order I : material Rs.20,000/-; wages Rs.25,000/-; selling price Rs.120,000/- and 100% of works cost percentage of profit on cost 20%. Order II : material Rs.30,000/-; wages Rs.40,000/; selling price Rs.195,000/- and percentage of profit on cost 25%. The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the Rs.75,981/director's remuneration worked out to be Rs.95,784/-. Find the net profit for the year 2004.

28

29

Management Accounting The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company. The half-yearly sales of product X are as follows : 1st half -30,000 units; 2nd half 37,500 units. The production pattern of the company is based on 80% of the sales of the current six months and 20% of the budgeted sales of the next six months. Calcu The ideal standards are generally ________ in nature and the variances always shows ________ trends The integrated form of all functional budgets is known as : The key factor determines the : The levels indicated on the Bin card enables the ________ department to keep a watch on the balance and replace the material as soon as it reached at ________ level. The lowest profit volume ratio can be ________%. The main advantages of profit sharing are :

The main objectives of determining overhead rates are : The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision. The material issued to production department may be returned back to the stores because material issued in excess requirement and The material physically received is compared with material ordered as per the this order The material Requisition note contains

Rs.34,408.09

1st half -31,500 units; 2nd half - 30,000 units

theoretical

unfavorable

Master budget Level of activity , Capacity utilization , Level of sales Stores

Re-order level

0 Employees try to increase productivity , Incentives are shared by all the employees , Augments emplyees' efficiency Helps in immediate compilation of costs , Helps application of overhead on an equitable basis , Assits in calculating unit cost before starting production Loss of trained personnel , Loss of regular customers , Expenditure required to restart the factory Material issued is defective Purchase order Number and date , Department demanding the material , Signature of the authority approving the demand

The method of overhead apportionment which considers both the material cost as Prime cost percentage rate well as the labour cost, is known as ________ method. The method of remuneration under which the workers are given in share in profits of the organization, at a specified percentage, along-with their wages, is known as Profit-sharing ________ method.

Management Accounting The method which deals with ownership rights being given to workers is known as ________ method of remuneration.

Co-partnership

The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change.

Accrued commission income of-Rs.32,960/- was not entered in the books , Rent for the month of March was payable and yet to be recorded Rs.19,280/- , Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account

The objectives of cost accounting are :

The objectives of Uniform costing system are as follows :

The objects of cost accountancy are . .

Cost control , Ascertain ment of cost of each product , Assist in managerial decision-making To fix a common selling price for the industry as a whole , To compare efficiency of each unit against industry's overall performance , To compile reliable cost data for inter-firm comparison of costs To ascertain cost and profitability , Cost Control , Presentation of Information

The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of

Depreciation on plant and machinery , Interest on loans taken from other , Interest on loans granted to others

The organization chart shows the following aspects :

Functional responsibility of different functional managers , Delegation of authority to various managers , Inter-functional relationships of these managers

The overheads apportioned to three production departments A, B and C and two service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of 4 : 3 : 2 : 1 and that of department Q are shared by A, B, C and P in the ratio of 3 : 3 : 2 : 2. Ascertain the total overheads of each production department. The periodical total of sales book was cash short by Rs. 5000 for rectifying the same, which A/C to be debited

A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/-

Suspense A/C

The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales ratio?

0.333

The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost?

37,86,000

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31

Management Accounting The principal functions of the cost accounting department are : The principle of ________ is followed while preparing the financial statements. The process of Allocation & apportionment can followed to decide the ________ of overheads to each budget center The process of attributing proportions of items of costs amongst const centres is called ________. The process of recording the business transactions in a defined set of records is referred to as ________. The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from a ascertain the cost, is known as . . . The profit volume ratio of BB & Co, dealing in precision instruments, is 50% and the margin of safety is 40%. You are required to work out the break-even point and the net profit if the sale volume is Rs.50,00,000/The profit volume ratio of X Ltd. is 50% and the margin of safety to sales ratio is 40%. You are required to calculate the net profit if sale volume is Rs.100,000/The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of 30 days, no rebate is offered. The company purchase

Classifying labour cost according to jobs, processes, etc. , Preparation of different reports based on direct, indirect labour cost, etc. , To focus on areas where labour cost may be reduced. Going concern Allocation & apportionment

Loading

Cost apportionment Balance sheet Cost accounting Break even point-Rs.30,00,000/-, net profitRs.10,00,000/Rs.20,000/ing a rebate of 5%. If the materials are purchased on credit of October- NIL, November- Rs.26,750/-

The reasons and objectives of budgets may be stated as :

To aid the planning of annual operations , To communicate the organisational plans to the different departments , To motivate the managers to strive for attainment of the organisational goals

The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to handle this level of sales.

Production capacity

The selection of ________ may depend upon the various factors like characteristics Accounting period of the business organisation, tax considerations, statutory requirements etc. The selection of the base on which overheads should be apportioned depend on the service or use basis , survey basis , ability to pay basis following principles. The short run financial plan which acts as a guide to achieve the predefined targets Budget is known as ________.

Management Accounting The sources which have been used by an organisation to raise funds indicate ________for the organisation. The stores department is a ________ department. The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as ________ system.

A liability Service Uniform costing

The systematic process of identifying and reporting variance is known as ________. Variance analysis The term ________ indicates expenditure incurred on or attributable to a given thing. The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is: The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time. The use of contribution per unti of limiting factor as the basis for ranking products to be produced and sold is aimed at which of the following? The variance which denotes the variation in overhead recovery due to the budgeted quantity of products being greater or less than actual production, is known as ________ variance. The variance which measures the deviation of the rate actually paid to labour as from the standard hourly rate is known as: The variance which measures the profit consequences of selling different products in proportions other than the standard, is The variance which measures the profit consequences of selling different products in proportions other than the standard, is known as ________ variance.

Cost

Re.0.98

Idle Maximisation of short-term profit Volume Labour rate variance ________ variance. Sales margin mix

The varinace that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ Sales margin volume variance. Valuation of inventories , Charging of depreciation , The various areas in which uniform costing can be adopted are . . Apportionment of overheads The wages paid to a trainee who constructs wooden mould for concrete laying on a Direct labour cost building contract should be defined as : The wages paid to maintenance department workers who do repair work principally for production departments but also on the vehicles in the distribuiton department Service costs shoud be charged as: total cost remains the same , per unit cost may vary , These are the features of fixed overheads not dependent on volume of output

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33

Management Accounting These are the features of variable overheads These are the methods of measuring labour turnover. These are the preventive costs of labour turnover. These are the replacement costs of labour turnover. This cost indicates historical cost which is incurred in past. This cost indicates increased or decreased cost due to the increased or decreased volume of operations. This is not the non monetary incentive. This is the best example of element wise classification of cost. This is the process of recording attendance time of the workers. To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________ Token or disc method is a related to the system of ________. Tom company has sales of Rs.200, 000/- with variable expenses of Rs.150,000/-, fixed expenses of Rs.60,000/-, and an operating loss of Rs.10,000/-. By how much would Tom have to increase its sales in order to achieve an operating income of 10% of sales? Trade Discount refers to the discount . . . Trading a/c credit side includes Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit and loss accounts for the year ending December 2003 are as follows : Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-. You are Uncontrollable variances are

vary directly in proportion to volume of output. , per unit cost remains the same , total overheads may increase or decrease as per volume of output. Replacement Method , Separation Method , Flux Method Cost of maintaining good relations with the workers , Cost of medical services , Cost of welfare facilities Inefficiency of new workers , Cost of selection and placement , Increased spoilage and defectives Sunk cost Differential cost Co-partnership material Time keeping Net effect

Balanced

Time-keeping Rs.200,000/received on purchases sales , goods lost by fire , closing stock

Hero Ltd.

Strike , Change in customers demand , Devaluation of currency

Under Differential Time Rate method payment is made at Rs. 1.40 per hour when 90% to 100% the level of efficiency is between________. Under Gannt Task bonus system where the output is ________ payment is made as per minimum time rate, output is ________ payment is made as per time wages below standard plus some increase in wage rates Under Merrick Differential Piece rate System of wage payment up to 83% of Normal efficiency following rate is offered.

at standard

34

Management Accounting Under stocking may have following consequences Under the average cost method of valuing material issues, new issue price is determined after ________ issue. Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered. Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable. Under the repeated distribution method the overheads of ________ department are distributed to other departments on agreed ________ Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact. Uniform costing is not a separate method of ________.

Payment for idle time to workers , Production hold ups resulting into disturbed delivery schedule , Eleventh hour purchase Each Rs. 1.40 per hour Below 66.66% service

percentage

The asset side of the balance sheet will increase by Rs.5,000/cost accounting In single organization having number of branches. , Uniform Costing Methods may be advantageously applied Number of companies in same industry. , Similar Industries such as cotton, jute etc. Single organization having number of branches. , Uniform Costing Methods may be advantageously applied to . . . Number of companies in same industry , Similar Industries such as cotton, jute etc. Information is freely supplied by all the units , Well Uniform costing system can be successfully implemented in any industry only when organised sector is ready to share the technological : improvements , Information furnished by the units is complete and correct Valuation of material uses the following methods

FIFO and LIFO , Average price method , Market price

variable cost is the cost that tend to ________ in direct proportion with ________

vary

Variable costs are the controllable costs at the ________ level of the management whereas fixed costs can be controlled only on the ________ level of the management

Lower

Wage rate standards takes into consideration the following factors

level of activity Top

The system of wage payments , System for bonus payment , Grades of workers required Distribution overheads

Warehousing cost is an item of ________ What will be the impact of following transactions on the cost of a lathe machine : (a) Transport charges on the lathe machine were debited to Carriage inward account, Cost will increase by Rs.1,300/Rs.1,100/- (b) Cost of installing the machine stands debited to miscellaneous expenses account, Rs.200/When bank balance as per bank book is considered for preparing bank Cheques issued but not presented , Direct deposit reconciliation statement, then following items need to be added : made by customer , Wrong credits given by bank

Management Accounting When bank balance as per bank book is considered then following to be added. When bank balance as per pass book is considered then following to be added. When bank balance as per pass book is considered then following to be deducted. Which cost is defined as an estimated cost, prepared in advance of production or supply, estimated within a prescribed set of working conditions? Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system. Which of the following budgets may be termed as a long term budget? Which of the following cost is also termed as Prime Cost ? Which of the following costs is most likely to have a cost behaviour pattern described as ..a fixed cost upto an activity level of Which of the following documents contains information as to quantity and value of material stock?

cheques issued but not presented , direct deposit by customer , wrong credits given by bank cheques deposited but not cleared , Interest debited by bank , bank charges debited by bank cheques issued but not presented , direct deposit by customer , wrong credits given by bank Standard cost Capital investment , Plant size , Location Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company Direct cost its, with a variable cost there after which decreases from 10 Stores ledger

Which of the following information is included in the goods received note?

Date of receipt of material , Quantity received , Description of goods

Which of the following is a correct definition of the key factor?

The factor which limits the activites of the undertaking

The level of control of the used of material in the Which of the following is likely to be a contributory factor to the incidence of excess production cycle , The incorrect choice of purchase expenditure on material cost? order quantity , Failure to control the issue of materials from stores Which of the following is most likely to be an allocated production overhead cost to Salary of the finishing centre's manager the finishing cost centre? To facilitate payment for time spend on the work Which of the following is the most efficient use of the clock card? premises Which of the following is usually prepared daily by employees for each job worked Job card on? Which of the following operations would normally be carried out first when preparing Determining the budget period a master budget? Which of the following source documetns in a cost accounting system is designed to exercise control over the delivery of and accurate recording of the receipts of Goods received note goods? Which of the following transactions should be excluded while preparing a cost sheet Interest on loan , Bad debts , Expenses on criminal law ? suit

35

36

Management Accounting Which of the formulae can be used to calculate profit volume ratio : Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all units belonging to that industry ? Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry ? Which variance is used to analyse the effect of change in the quantity of output from a given mix of inputs? While preparing sales budget the following factors must be considered : While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy : 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004? While preparing trial balance, the balance as per ________ book is considered as bank balance. While preparing trial balance, the balance as per ________ book is considered as bank balance. While selecting source of supply ________ epartment may call for the ________ from the prospective suppliers XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004?

Change in contribution / Change in sales , 1 - (Change in variable cost / Change in sales) , (Fixed cost + Profit) / Sales longing to that industry ? Uniform costing Uniform costing Materials yield variance The number and types of products sold by the organisation , Whether the organisation's market share is increasing or decreasing? , Details of seasonal fluctuations in sales

Balance as per pass book < Balance as per bank book

Bank Bank purchase

quotation

Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55

XYZ & Co. is a partnership with X and Z as partners. The capital of X is Rs.58, 000/and that of Z is Rs.75, 000/-. Interest on capital is charged @ 12% p.a. and interest on drawings is charged @ 5% p.a. The drawings of X totaled to Rs.15, 000/- and X - Rs.118,721.28 and Z -Rs.153,888.72 that of Z totaled to Rs.12, 000/-. The profit for the year after considering interest on capital and drawings is Rs.125, 000/- and the profits are shared in the ratio of their capitals, i.e. 58: 75. Find the balance of capital accounts after giving

Management Accounting XYZ Ltd. has set up the following standards for variable production overheads : standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows : actual variable overheads incurred Rs.20,000/- (Adverse) Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres Loss due to spillage and evaporation - 30 litres. , Rate drum was as follows : To job X 200 litres; job Y 400 litres and job Z 320 litres. After of charge per litre of petrol - Rs.30/these issues the drum was empty. Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z. Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labour cost. Profitability statement indicates the amount of assets & liabilities. Provision for discount on debtors account should be credited to the Profit and Loss Account. Balance sheet indicates the expenditure & income from the business. Absorption costing is more suitable for decision making than marginal costing Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. While preparing the labour cost budget, factors such as overtime working or night shift working may be ignored. To take make or buy decision under the marginal costing , if purchase price of the product is less than its variable cost it is advisable to go for manufacturing proposition. Credit balances in all the Personal & Real accounts appear on asset side. Non-operating / financial expenses are added while calculating net profit. Bin Card is having all the information of item received and issued. Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Amount invested in purchasing Fixed Asset is a revenue expenditure. Valuation of returns indicates the material returned by store department to production department A good wage payment system will punish the workers for the matters beyond the control of the workers. Under marginal costing technique only fixed costs are considered as relevant for decision making.

FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE

37

Management Accounting Uniform Costing disturbs the healthy competition in the industry The danger level fixed below maximum level (No. of unit * Rate of depreciation per unit ) this formula is used for written down value method. If the product is labour intensive, more stress may be necessary on inventory control procedure.

FALSE FALSE FALSE FALSE

Under time rate system a worker is paid on the basis of production achieved by him. FALSE Cost Accounting restrict itself with historical transactions Generally speaking income represents wealth increase and business success; higher the income, lower will be the success of a business. Bank reconciliation statement is a systematic presentation of errors made by the accountant. Control on purchase of material is exercised by the storekeeper. The best way to reduce labour cost is to recruit cheap labour. Sundry creditors transfer to asset side. As soon as the suspense account balance is wiped out , it may be assumed that all mistakes have been corrected. Credit sale of Rs. 5000 to Bobby should be entered in the purchase book. Flux method is important method of wage payment. Material Mix Variance occurs where only one raw material is required Variable cost + Profit = Sales Treating capital receipt as revenue income is an example of errors of commission. Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the pass book. Under time rate system a worker is paid on the basis of production achieved by him in a given time. A pre-determined factory overhead rate holds up product costing. A bill of Rs. 500 for old furniture sold to Raj, was entered in the sales day book Abnormal cost indicates that cost which is normally incurred at a certain level of output under normal circumstances. Indirect material cost assist the manufacturing process is an integral part of finish goods. Fixed cost is the cost that varies in direct proportion with the level of activity or volume of operations. Standard costing and Marginal Costing are the best possible tools available to the management for cost control Penalty paid for delay in payment to creditors represents uncontrollable cost.

FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE

38

Management Accounting The bin card and stores ledger, being independent records, comparison of these two records should be avoided. Amortisation of goodwill should be considered while preparing cash budget. Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries. The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees. Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors. Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using machines. The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted. The sum of indirect material cost, indirect labour cost and indirect expenses is termed as factory cost.

FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE

In the ledger account only credit entries relating to a particular account are posted.

FALSE

Cost Accounting is a legal requirement. Cash account can have a credit balance. Period cost is the cost assigned to the products. Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole. An entry in the stores ledger is required for transfer of material from one job to another in the same department. GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. The balance sheet has three columns, viz. assets, liabilities and ledger folio. It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the product Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit) All cash sales are recorded in the sales register. Indirect material cost is an integral part of finished goods. All personal expenses of the owner should be debited to the organisation's profit and loss account. Material mix and material yield variance can be calculated even when only one raw material is used for production.

FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE

39

Management Accounting In marginal costing, under and over absorption of fixed overheads is bound to arise. FALSE There is no need to open a suspense account if the trial balance does not agree. A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account Under time rate system a worker is paid on the basis of production achieved by him in a given time. The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Piece rate system is suitable when quality of goods produced is of extreme importance.

FALSE FALSE FALSE FALSE FALSE

A firm earns profit when contribution is equal to fixed costs under variable costing.

FALSE

Profitability statement indicates the amount of assets & liabilities. Balance sheet indicates the expenditure & income from the business. According to the standard costing principles, only adverse variance must be further investigated. The purchase account should be debited when an order is placed with the supplier of material. Control on purchase of material is exercised by the storekeeper. Differential cost analysis is incorporated in the cost books.

FALSE FALSE FALSE FALSE FALSE FALSE

The process of recording attendance time of the workers is known as time booking. FALSE The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Margin of safety = Contribution / Profit volume ratio While calculating the minimum level, normal lead time is not necessary Favorable variances need on investigation Debit the receiver & credit the giver is a rule of Real a/c. The situation of over absorption arises if the overheads absorbed are less than the actual overheads.

FALSE FALSE FALSE FALSE FALSE FALSE

Due to errors of principle the arithmetical accuracy of the trial balance get affected. FALSE canteen facility to workers, health and safety services are examples of monetary incentives.

FALSE

If actual cost is more than the standard cost then it is called favorable variance.

FALSE

The aggregate of indirect material cost, indirect labour cost and indirect expenses is FALSE termed as factory cost.

40

Management Accounting According to the standard costing principles, only adverse variance must be further FALSE investigated. Error of commission refer to a situation where a transaction is not recorded in the FALSE books of account. Semi variable expenses fluctuate in direct proportion to volume. FALSE The greater the volume of production, the greater is the unit cost of production. Routing the purchase requisition through the purchase department entails unnecessary delay in receiving the required materials. Under ABC analysis, category A represents items with high volumes. Narration must be mentioned in the ledger. Receipts and payments method of cash budget is useful for preparing long term estimates. Make or buy decisions are made by comparing fixed cost with outside purchase price. Depreciation on assets is credited to the trading account. Balance sheet is a part of the ledger accounts maintained by the company.

FALSE FALSE FALSE FALSE FALSE FALSE FALSE FALSE

The term 'scheduled costs' is used interchangeably with the word 'standard costs'.

FALSE

A low inventory turnover ratio should always be preferred. Under the Rowan plan bonus is a fixed percentage. High time wages means necessarily high cost of production. Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of finished goods. If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of material. Marginal costing is a technique of cost control. The problem of multiple key factors can be solved with the help of techniques like linear programming, operations research, etc.

FALSE FALSE FALSE TRUE TRUE TRUE TRUE

Accounting is an art of recording, classifying & summarizing in a significant manner. TRUE The process of accounting split into three steams i.e. financial, cost, management accounting. Financial statements are basically in two forms i.e. profitability statement and balance sheet. A business is an activity carried out with the intention of earning the profit. Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. Depreciation, interest and property tax continue even when the operations are discontinued.

TRUE TRUE TRUE TRUE TRUE

41

Management Accounting Balance sheet indicates the financial status of the business at given period. Income received in advance transfer to current liabilities For taking make or buy decision marginal costing technique provide useful assistance. The variable costs are controllable at the lower level. Due to errors of principle the arithmetical accuracy of the trial balance does not get affected. Budget is prepared for a fixed period of time. A very wide scope of Management Accounting is the limitation by itself. Financial Accounting discloses the financial performance & financial statements of the business as a whole. Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting P&L statement which is a period statement & relates to a certain period tells about results of operations. Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities. Cheques issued but not yet presented – the balance as per the bank pass book will be higher. The wage payment system should take into consideration the external obligations such as the Minimum wages Act and the agreement entered into by the organization with the workers. Product mix refers to the proportion in which various products of a company can be sold. Depreciation does not involve cash out flow The difference between standard cost and actual cost is termed as Variance.

TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

Wage payment system should be properly tied up with quality control procedures to TRUE ensure that the workers are paid only for good and quality production. A good wage payment system will not punish the workers for the matters beyond the control of the workers. Fixed assets do not give the returns during the same period during which they are paid for Amount with drawn for personal purpose drawing A/C to be debited. In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities. New companies can adopt Uniform costing system as a ready-made system.

TRUE TRUE TRUE TRUE TRUE

42

Management Accounting Re-order level for materials is determined considering maximum consumption and maximum delivery period. Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost. A bank reconciliation statement is prepared on a particular date. Fixed cost tends to vary with time rather than with level of activity. Flexible budget is an effective tool for evaluation of performance. Maintenance Department is a service cost centre. For a manufacturing company, dividend received is a non-operating income. Suspense account is closed automatically after rectification of all the errors. The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Error of commission refer to calculation errors, totaling errors, errors in carrying forward etc.

TRUE TRUE TRUE TRUE TRUE TRUE

Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable.

TRUE

Budgetary control system provides a basis for establishment of the incentive systems. A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Price based on Uniform Costing may be taken to be reliable and representative of the whole industry. Bank reconciliation statement can be prepared on weekly basis. Real Accounts may also consist the accounts of some intangible assets like Goodwill Account The rate at which the depreciation is to be calculated are also specified in the Income Tax Act 1961. Material cost is the first and probably the most important element of cost. If the organisation follows the policy of considering predetermined overhead absorption rates, it may face the problem of under or over absorption of overheads if the actual overheads to be absorbed o The analysis of overhead variances is different and the most complex task. Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset. Linking overhead to a cost unit is known as overhead absorption. Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-.

TRUE TRUE

TRUE TRUE

TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

43

Management Accounting While passing the journal entry, it is of utmost importance to ensure that the total of TRUE amount debited is equal to the total of the amount credited. The cost of abnormal time may be recovered by inflating the hourly labour rate. Interim dividend paid by the company should be debited to the profit and loss appropriation account. A grinding machine is an example of impersonal cost centre Overhead absorption rate will be different at different capacity levels. Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages. Balance sheet is considered to be a part of the financial statements. Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer. Budgetary control is one of the techniques of management accounting. Management Accounting is a developed stage of Cost Accounting Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours. Financial Accounting discloses the financial performance & Financial status of the business as a whole Book keeping is clerical while accounting is managerial 1) Cost Accounting and Management Accounting are similar to each other in many respects. The reports generated by financial accounting are meant for the use by management for effective decisions. Cost Accounting may be considered to be a part of management Accounting. It is said that marginal costs are used primarily in guiding decisions that are yet to be made. Management Accounting is not at all a legal requirement The role of the budget committee may be taken as an advisory role to the Chief Executive. Trading account is an important account which will be used to analyse how successful and how efficiently the firm runs its business. The labour cost which can be identified with the individual cost centre is known as the Direct Labour Cost. The amount of profit which is retained by the organisation is transferred to 'Reserves and Surplus' in the balance sheet. Yield variance equal to zero indicates that the standard yield and actual yield are the same.

TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

44

Management Accounting Trading account is used to analyse how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Credit balance in interest account indicates income for the organisation. Patents and Trade Marks Account is a Real Account. Dividend received is a Non-operating Income. The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet. Long term loan borrowed from financial institution comes under the heading of long term liabilities. Balance sheet indicates the financial status of the business at given period. Category C items, as per the ABC analysis, usually refers to indirect material. A business is an activity carried out with the intention of earning the profit. Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages. Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts.

TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

Accounting is an art of recording, classifying & summarizing in a significant manner. TRUE Match Profit = Profit volume ratio X Margin of safety To Increase the existing production capacity, additional capital expenditure is required. Whatever is to be sold need not be produced. Purchased computers of Rs. 50,000 come under the heading of fixed asset Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0 There is reverse relationship between the ordering cost and carrying cost Where overheads chargeable to the department are Rs. 5000/- , direct labour hours worked are 24000 then labour hour rate is Re. 0.2083 labour hour. The Budget key factor may be in the form of sales, raw material, labour etc. Indirect labour cost indicates that labour cost which cannot be identified with the individual cost centre. Head of the Department should sign the purchase requisition. Compound journal entry avoids duplication of effort. Fundamentally, changes in price and changes in sales volume give rise to sales variances.

TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

45

Management Accounting The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and the amount of claim settled by the insurance company. Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product. The purpose of profit and loss account is to brign together information which relates to gross profit and the expenses for running the business. According to Reducing Balance Method, the depreciation is provided at a predetermined percentage on the balance of cost of asset after deduction of the depreciation previously charged. The perpetual inventory system enables management to ascertain stock without physical verification. The rates at which the depreciation is to be calculated are specified in the Income Tax Act 1961 and The Companies Act, 1956. The actual hours taken by the labour are compared with the standard hours allowed for output to find out the labour yield variance. Uniform costing system is defined as a system using common concepts and standard accounting practices by different entities in different industry to facilitate inter-firm comparison. Marginal costing rewards sales whereas absorption costing rewards production.

TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE

Match the following Real A/C Trade Discount Cash Discount Rs.1 Personal A/C

Debit what comes in, Credit what goes out Not accounted for in the books of Accounts Accounted for in the books of Accounts Debit the receiver, Credit the giver

Advantageously applicable in similar industries Spirit of mutual trust Avoids cut throat competition Treatment given to research and development costs

Scope of uniform costing Requisite for uniform costing Advantage of uniform costing Fields covered by uniform costing

Journal Ledger Assets Liabilities

Book of original entry Maintain all types of Accounts All the properties owned by the business All the amount owed by the business

46

Management Accounting Drawing

Withdrawn for personal use

Financial Accounting Cost Accounting Management Accounting

Systematic recording of business transactions Ascertainment of cost Analyzing & interpretation of financial data

Accounting

Art of interpreting & classifying business transaction

Book Keeping

Recording of business transactions

Bills Payable Bills Receivable Trade Discount Cash Discount Bad debts

Amount payable to supplier Amount received from the customer Not accounted for in the books of Accounts Accounted for in the books of Accounts Amount not received from customer

Straight Piece rate system Diemer system Time rate System

The rate of payment is fixed per piece Halsey system & Gantt System Worker is paid on the basis of time attended by him Workers are paid according to the production achieved by him Different hourly rates are fixed for different levels of efficiency

Payment by Result Differential Time rate Fixed cost + variable cost Total cost – fixed cost sales- variable cost contribution – fixed cost Total cost + profit

Total cost variable cost contribution profit Sales

Indirect Material Administration overheads Fixed overheads Abnormal overheads

Element wise classification Function wise classification Variability wise classification Normality wise classification

Increase in fixed cost will lead to Decrease in variable cost will lead to Decrease in selling price will lead to Increase in contribution will lead to

Increase in break even point Increase in profit volume ratio Decrease in contribution Increase in profits

Accounting

Process of analyzing & interpretation

47

Management Accounting Profitability statement Balance-sheet Book-Keeping Financial statement

Indicates the amount of profit earned Financial status Books of Accounts Profitability statement & Balance-sheet

Ordering cost Carrying cost Total cost Inventory control E.O.Q

Associated with administrative efforts Cost of holding the inventory Ordering cost + carrying cost Maintain the inventory of any kind Economic Ordering Quantity

Liabilities Drawing Journal Ledger Assets

All the amount owed by the business Withdrawn for personal use Book of original entry Maintain all types of Accounts All the properties owned by the business

Advantageously applicable in similar industries Spirit of mutual trust Avoids cut throat competition Treatment given to research and development costs

Scope of uniform costing Requisite for uniform costing Advantage of uniform costing Fields covered by uniform costing

Cost Centre Cost Control Differential Cost Sunk Cost

Facilitate the fixation of responsibility Process of controlling costs of operations Increase or Decrease in cost Historical Cost

Drawings Deferred revenue expenditure Deferred revenue expenditure written off Loan

Proprietor's account Real account Nominal account Personal account

Global Tender

Any supplier from the global market can fill the tender

Single Tender Limited Tender

Tender from only one supplier Tenders from reliable but few suppliers

Open Tender

Any supplier from the local market can fill the tender

Fixed overheads

Variability wise classification

48

Management Accounting Abnormal overheads Indirect Material Administration overheads

Normality wise classification Element wise classification Function wise classification

Non-Operating income Plan of investment in fixed assets Plan for surplus/shortage of cash Operating income

Issue of shares Capital Expenditure Budget Cash Budget Cash Sales

Transport facilities to employees Relationship between supervisor and worker Dismissal of employee Increased spoilage and defectives

Preventive cost of labour turnover Avoidable cause of labour turnover Unavoidable cause of labour turnover Replacement cost of labour turnover

Normal Standards Basic Standards Current Standards Expected Standards

Anticipated to be achieved in future Established for a longer period of time Established for a shorter period of time Anticipated to be achieved in the budget period

Purchase budget

Forecast of quantity and value of materials

Budget committee

Analyses the performance of different budget centres

Cash budget Budget

Assists in predicting shortage of cash Objective is performance evaluation

Total cost Non operating income Selling and distribution overheads Factory overheads

Cost of finished goods Profit on sale of investment Advertisement expenses Repair for factory building

Error of Principle Error of Omission Error of commission Compensating Error Difference in trial balance

Trial Balance does not get affected The transaction is totally omitted Wrong Posting Wrong classification Transferred to suspense account

Opportunity Cost Differential Cost Sunk Cost Controllable Cost

Cost can be controlled Historical Cost Cannot be controlled Increase or Decrease in cost

49

Management Accounting Uncontrollable Cost Closed the account with State Bank of India Debit side of bank book is overcast Interest on debentures directly credited by bank Received sanction for a loan of Rs.10 lakhs Ledger Audit Accounting Journal

Return or yield Henceforth, there shall be no difference in overdraft balances Overdraft as per bank book < Overdraft as per pass book Overdraft as per bank book > Overdraft as per pass book Overdraft as per bank book = Overdraft as per pass book Maintain all types of accounts Reviewing internal control system Process of analyzing & interpretation Book of original entry

Time Recording Clock Method Daily Time sheets

Token number & identification number allotted to worker Ticket number & clock card allotted to worker Time spent by worker on job is recorded

Weekly Time sheets

Record of time for all the jobs during the week is made

Hand Written method

Attendance register

Advance Application Outstanding Prepaid Drawing

Not related in current year Increase in Assets Amount still payable in current year Amount paid for next year Amount of personal use

Discount received Outstanding expenses Depreciation Interest on capital Discount allowed

Suppliers Liabilities Assets Borrowed capital Debtors

Tool-room expenses Power Stores department Boiler house

Direct labour hours Horse power of machine Number of material requisitions Cubic feet of steam supplied

Token or Disc Method

50

Management Accounting [( Actual sales - Break even sales) ]/ Actual sales Fixed cost / Contribution margin ratio Fixed cost - (Sales X Profit volume ratio) (Sales X Profit volume ratio) -Fixed cost

Margin of safety as a percentage of actual sales Break even point Profit Loss

Daily Time sheets Time Keeping Department Time booking department Time Recording Clock Method

Time spent by worker on job is recorded Recording of workers time Jobwise booking of time. Ticket number & clock card allotted to worker

Purchase budget

Forecast of quantity and value of materials

Budget committee

Analyses the performance of different budget centres

Cash budget Budget

Assists in predicting shortage of cash Objective is performance evaluation

Change in profit/ Change in activity level Change in total cost/ Change in activity level Total sales X Profit volume ratio Selling price ( Actual sales - Break even sales)

Profit volume ratio Variable cost per unit Total contribution Margin of safety

Power Stores department Boiler house Tool-room expenses

Horse power of machine Number of material requisitions Cubic feet of steam supplied Direct labour hours

Selling and distribution budget Administration budget Materials budget Cash budget

Cost of demand creation Salary of CEO Carriage inwards Interest on loan

Budgetary Control Standard Costing Current Standards Normal Standards

Points out efficiency/inefficiency Further probe and investigation Established for a shorter period Considers past performance

51

Management Accounting True/False Fundamentally, changes in price and changes in sales volume give rise to sales variances. Correct Answer: True Select The Blank The various contents of a uniform cost manual are organization, cost accounting system and ________. Correct Answer: Presentation of information Select The Blank While preparing trial balance, the balance as per ________ book is considered as bank balance. Correct Answer: Bank Multiple Choice Multiple Answer Select the correct formulae for calculating break even point:Correct Answer: Fixed cost / (Selling price per unit - Variable cost per unit), [Fixed cost / Marginal contribution] X Sales, [Fixed cost / (Fixed cost + Net Profit)] X Sales Multiple Choice Single Answer A manufacturer is producing alloy for which standard mix is 25% copper and 75% iron. Standard price for copper is Rs.80/- per kg. and for iron Rs.20/- per kg. 20% of input is standard loss. Actual output is 8,000 kg. of alloy using 2,000 kg of copper at Rs.90/- per kg. and 9,000 kg of iron at Rs.15/- per kg. Calculate the standard cost of copper. Correct Answer: Rs.200,000/True/False Narration must be mentioned in the ledger. Correct Answer: False Multiple Choice Single Answer XYZ Ltd. has a profit volume ratio of 40%. By what percentage should sales be increased to offset 20% reduction in selling price, so that the existing profit remains intact? Correct Answer: 0.6 True/False One of the main objection to the contribution approach of costing is that it ignores fixed cost. Correct Answer: True Multiple Choice Multiple Answer For the following transactions find out the value of material issued using FIFO (First in first out) method. 1/7/04 - Opening balance 200 units @ Rs.10/- 3/7/04 - Issued to production department 80 units. 4/7/04 - Purchased 300 units @ Rs.11/-. 6/7/04 - Issued to production department 150 units. 8/7/04 - Purchased 250 units @ Rs.13/-. 11/7/04 - Issued to production department 170 units. Correct Answer: 3/7/04 - 80 units @ Rs.10/-, 6/7/04 - 120 units @ Rs.10/- and 30 units @ Rs.11/-, 11/7/04 - 170 units @ True/False It is said that the income statement represents wealth increase /decrease for the organization. Correct Answer: True Multiple Choice Single Answer Select the correct journal entry for the following transaction. "Received Rs.475/- from M/s.Manohar & Co. in full settlement of Rs.500/-'. Correct Answer: Cash account…………....Dr. Rs.475/- Discount account ………..….Dr. Rs.25/- To M/s. Manohar & Co. A/c Cr. Rs.475/True/False The sum of indirect material cost, indirect labour cost and indirect expenses is termed as Overheads. Correct Answer: True Select The Blank In the scheme of cost-________-profit analysis, an attempt is made to measure the variations of cost with Volume. Correct Answer: Volume Multiple Choice Single Answer M Ltd. manufactures three products P, Q and R. The unit selling price of these products are Rs.100/-, Rs.80/- and Rs.50/, respectively. The corresponding unit variable costs are Rs.50/-, Rs.40/- and Rs.20/-, respectively. The quantity wise proportion in which these products are manufactured and sold are 20%, 30% and 50%, respectively. The total fixed costs are Rs.14,80,000/-. You are required to work out the overall break even point quantity for M Ltd. Correct Answer: 40,000 units Multiple Choice Single Answer Judge the following narrative according to the criteria given: There are many organizations whose sales fluctuate with fluctuations in the weather, viz. ice-cream, sweaters, etc.

Correct Answer: The statement and the reason are both incorrect True/False The actual loss incurred by a company, due to fire, is the extent of difference between the cost of goods destroyed and the amount of claim settled by the insurance company. Correct Answer: True Multiple Choice Multiple Answer Which of the following transactions should be excluded while preparing a cost sheet? Correct Answer: Interest on loan, Bad debts, Expenses on criminal law suit Multiple Choice Single Answer A withdrawal of Rs.500/- from Mr. Jone's account on 2nd October, 2004 has been entered by the bank in the pass book of Mr. Johny's account.' If you are preparing the bank reconciliation statement considering the balance as per pass book as on 31st October,2004 is Rs.2,250/- for Mr. Johny, find out the balance as per his bank book. Correct Answer: Rs.1,750/- (debit) Multiple Choice Single Answer Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations:Correct Answer: Differential cost Select The Blank Number of days inventory is held can be calculated by dividing number of days in a year by ________. Correct Answer: Inventory turnover ratio Select The Blank Re-order level should be higher than ________ but lesser than maximum stock level. Correct Answer: Minimum level Multiple Choice Multiple Answer The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of:Correct Answer: Depreciation on plant and machinery, Interest on loans taken from other, Interest on loans granted to Select The Blank A worker is paid a monthly salary of Rs.500/- along with a bonus of 50 paise per unit completed, this type of labour cost may be classified as ________ cost. Correct Answer: Semi-variable Multiple Choice Multiple Answer Labour turnover means:Correct Answer: Influx and exit of employees, Quantitative measurement of instability of working force, Rate of change in the average working force Select The Blank One of the limitations of the budgetary control is that it ________. Correct Answer: Is an expensive affair Multiple Choice Single Answer A group of 10 men and 20 women workers were expected to produce 400 units of a product in an 8 hour day. The standard hourly rate was fixed at Rs.25/- and Rs.15/-, respectively. Actually, a group of 15 men and 10 women workers was deployed and paid for 8 hours a day at an hourly rate of Rs.22/- and Rs.18/-, respectively. Two hours were wasted for the entire group due to power failure and only 300 units were produced. Calculate labour rate variance. Correct Answer: Rs.120/- (Favourable) Select The Blank Revenues are more than the differential costs, then the proposed project should be ________ Correct Answer: Accepted Select The Blank The lowest profit volume ratio can be ________%. Correct Answer: 0 True/False Differential cost analysis is incorporated in the cost books. Correct Answer: False Multiple Choice Single Answer The annual variable production overheads of a factory are Rs.70,000/-. The production manager anticipates that in the next year, the production efficiency will decrease by 4%. Find out budgeted production overheads for the next year. Correct Answer: Rs.72,800/Multiple Choice Single Answer KDL Ltd. charges depreciation @ 20% on written down value method. The net book value of its machinery on 1st January, 2003 was Rs.125,000/-. What will be the net book value of its machinery on year end, i.e.31st December, 2003, assuming there were no additions or disposals during the year?

Correct Answer: Rs.100,000/Multiple Choice Multiple Answer Merits of break even point analysis are as follows:Correct Answer: Useful diagnostic tool., Used for analyzing the risk implication of alternative actions., Used to graphically represent complicated data. Select The Blank The process of finding the reasons for the difference in the balance as per bank book and pass book is known as Correct Answer: Reconciliation Multiple Choice Multiple Answer The management of Horngreen Ltd. is deciding whether to continue working at loss or to temporarily shut down the factory. State the qualitative aspects that must be considered before arriving at a decision:Correct Answer: Loss of trained personnel, Loss of regular customers, Expenditure required to restart the factory Select The Blank If the bank pays off the credit card bill, as per the standing instructions, the overdraft as per bank book will be ________ the overdraft as per pass book. Correct Answer: Lesser than Multiple Choice Single Answer Commission payable to General Manager is 10% of the net profits. If the net profit before charging commission is Rs.29,200/-, then what will be the amount of his net profit after commission? Correct Answer: Rs.26,545.45 True/False The purchase account should be debited when an order is placed with the supplier of material. Correct Answer: False Multiple Choice Single Answer If the proprietor has taken away goods worth Rs.5,500/- for personal use, find its impact on the proprietor's account in the organization. Correct Answer: The capital will decrease by Rs.5,500/True/False Direct labour hour rate method of absorption of overheads is suitable where most of the production is done by using Correct Answer: False Multiple Choice Single Answer XYZ Ltd. has set up the following standards for variable production overheads: standard hours per unit -3 hours; standard variable overhead per hour -Rs.10/-. The actual data for the month is as follows: actual variable overheads incurred Rs.620,000/-; actual output -20,000 units and actual hours worked- 54,000 hours. Find variable overheads cost variance. Correct Answer: Rs.20,000/- (Adverse) Multiple Choice Single Answer Cost of fringe benefits provided to a factory worker should be charged to:Correct Answer: Factory overheads Multiple Choice Multiple Answer Select the accounts to be disclosed on the assets side of the Balance sheet:Correct Answer: Furniture, Loan to Bank of U.S.A., Land & building Multiple Choice Multiple Answer Piece rate systems are very useful in the following circumstances:Correct Answer: Units of output are measurable, Job is standardized, The flow of work is regular Multiple Choice Single Answer From the following information for the year ending 31st December, 2004, compute the cost of materials consumed. Purchases Rs.208,000/-; opening stock Rs.40,000/- and closing stock Rs.24,000/Correct Answer: Rs.224,000/Multiple Choice Multiple Answer Following errors affect the trial balance:Correct Answer: Wrong totaling of subsidiary books, Posting on the wrong side of an account, Omission of posting an account in the ledger Multiple Choice Single Answer Mr. Oak, materials manager, spends 40% time in the factory and the remaining in office. If his annual salary is Rs.500,000/-, what amount should be charged as office overheads? Correct Answer: Rs.300,000/True/False A business is an activity carried out with the intention of earning the profit. Correct Answer: True

Select The Blank Angle formed by the intersection of total cost line and sales line is called angle of ________. Correct Answer: Incidence True/False The role of the budget committee may be taken as an advisory role to the Chief Executive. Correct Answer: True True/False The problem of multiple key factors can be solved with the help of techniques like linear programming, operations Correct Answer: True True/False If the storage cost of inventory increases, then the economic order quantity also increases. Correct Answer: False Multiple Choice Single Answer A cheque of Rs.400/- received and deposited into bank on 26th September, was credited in the pass book but was omitted to be entered in the bank book: this error will result in: Correct Answer: Difference in the balance as per bank book and as per pass book Multiple Choice Multiple Answer Features of convention of materiality are:Correct Answer: Transactions having material impact on profitability should be considered, Insignificant transactions will be ignored Multiple Choice Multiple Answer The quarterly production of a company's product which has a steady market is 20,000 units. Each unit of product requires 0.5 kg of raw material. The cost of placing one order for raw material is Rs.100/- and the inventory carrying cost is Rs.2/per kg per annum. The lead time for procurement of raw material is 36 days and a safety stock of 1,000 kg of raw materials is maintained by the company. The company has been able to negotiate the following discount structure with the raw material supplier: For order quantity below 7,000 kg -discount per order is NIL. For order quantity between 7,000 kg and 8,000 kg., discount per order is Rs.400/-. For order quantity between 8,000 kg and 16,000 kg., discount per order is Rs.2,000/-. For order quantity between 16,000 kg and 30,000 kg., discount per order is Rs.3,200/-. Find the statements which indicate the correct costs for the different order sizes. Correct Answer: If order size is 6,667 units, total cost is Rs.6,867/-, If order size is 10,000 units, total cost is Rs.8,400/-, If order size is 20,000 units, total cost is Rs.17,000/True/False Overhead absorption is an exercise by which overhead is properly spread over production for the period. Correct Answer: True Multiple Choice Multiple Answer In practical circumstances, control ledgers may be maintained for the following categories:Correct Answer: Sundry debtors, Sundry creditors, Advance to Staff True/False Credit balance in interest account indicates income for the organization. Correct Answer: True Select The Blank An adjustment relating to outstanding expenses will ________ the net profit. Correct Answer: Decrease True/False Malik started business by contributing cash Rs.50,000/- and his personal car worth Rs.25,000/-; thus his capital account should be credited with Rs.75,000/-. Correct Answer: True Multiple Choice Multiple Answer The selection of the supplier may depend upon the following aspects:Correct Answer: Geographical location of the supplier, Price quoted by the supplier, Goodwill of the supplier Select The Blank Profit = Contribution per unit X ________. Correct Answer: Margin of safety (units) Select The Blank Copy of a firm's account in the bank's ledger is known as ________. Correct Answer: Bank statement Select The Blank If the firm is operating with zero margin of safety, decline of even a single unit in sales will result in ________. Correct Answer: Loss

Select The Blank If the customer is not likely to pay the amount receivable from him, this amount should to be treated as ________. Correct Answer: Bad debts Select The Blank Under the Merrick's differential piece rate system of wage payment if the efficiency level of a worker is below 83%, then he is paid wages at ________ piece rate. Correct Answer: Normal Select The Blank A standard that is never altered, after being established, is known as ________ standard. Correct Answer: Ideal Select The Blank The ________ is of immense help in guiding the companies to operate their accounts on uniform basis. Correct Answer: uniform cost manual Select The Blank The indirect material cost, indirect labor cost and indirect expenses cost, collectively are termed as ________. Correct Answer: Overhead Multiple Choice Single Answer Lata and Tara are partners of Latara & Co. As on 31st March, 2004 Lata's annual drawings were as Rs.25,000/- and Tara's annual drawings amounted to Rs.18,000/-. If interest on drawings is charged @ 15% p.a, what is the amount of income for Latara & Co.? Correct Answer: Rs.6,450/Multiple Choice Single Answer Benefits available from revenue expenditure are received in the: Correct Answer: Same year Multiple Choice Single Answer Judge the sentence in italics according to criteria given below: “It is difficult to adopt Uniform costing system when a product can be manufactured by employing more than one method because the cost of production will vary according to the method used." Correct Answer: The assertion and the reason are both correct Multiple Choice Single Answer Judge the statement in italics based on the criteria given. On 31st March, 2004 Sita Enterprises sent goods worth Rs.30,000/- on approval basis to Mr. Ram. These goods should be included in the closing stock as on 31st March, 2004 because the ownership is still with the seller, viz. Sita Enterprise. Correct Answer: The statement and the reason both are correct Multiple Choice Multiple Answer The characteristics of a good wage system are: Correct Answer: Flexible, Economical to use, Easy to understand Multiple Choice Multiple Answer Select the steps to be followed while preparing bank reconciliation statement. Correct Answer: Compare the transactions in the bank book and the pass book, Check the totals and the balancing of both the books, Confirm that the opening balances of both the books are tallying Multiple Choice Multiple Answer Following are the examples of service cost centre Correct Answer: Stores department, Transport department, Accounting department Multiple Choice Multiple Answer Accounting is the art where transactions are … Correct Answer: Summarized, Classified, Recorded Multiple Choice Multiple Answer An order for goods worth Rs.18,000/- was placed on 25th March, 2004. The goods were received on 1st April, 2004. Calculate the impact of this transaction on the final statements of accounts for the year ended 31st March, 2004. Correct Answer: The net profit will not be affected Multiple Choice Multiple Answer Error of commission refers to calculation errors, totaling errors, errors in carrying forward etc. Correct Answer: True Multiple Choice Multiple Answer Select the appropriate rectification entries for the following transactions (i) Rs.200/- received in respect of a bad debt previously written off was credited to Debtors account. (ii) Paid Rs.6,000/- to a Mr. Rao, clerk, as salary in lieu of notice. This amount was debited to his personal account (iii) Interest @ 5% p.a. on a loan of Rs.5,000/- was debited to general

Correct Answer: Debtors A/c..........Dr. Rs.200/- to bad debts recovered A/c Rs.200/-, Rs.6,000/- to Rao's A/c Rs.6,000/-, Rs.250/- to General Expenses A/c Rs.250/True/False Accounting is an art of recording, classifying & summarizing in a significant manner. Correct Answer: True True/False Profitability statement indicates the amount of assets & liabilities. Correct Answer: False True/False Balance sheet indicates the expenditure & income from the business. Correct Answer: False True/False Generally speaking income represents wealth increase and business success; higher the income, lower will be the success of a business. Correct Answer: False True/False Profit and loss account indicates the profit earned as on a particular date. Correct Answer: False True/False Uniform costing system is a pre-requisite to an inter-firm comparison of firms belonging to the different industries. Correct Answer: False True/False The process of accounting split into three steams i.e. financial, cost, management accounting. Correct Answer: True True/False Financial statements are basically in two forms i.e. profitability statement and balance sheet. Correct Answer: True Multiple Choice Multiple Answer These are the replacement costs of labor turnover. Correct Answer: Increased spoilage and defectives, Inefficiency of new workers, Cost of selection and placement Select The Blank Goods returned to the suppliers from whom it was ________d is recorded in the Purchase-return register. Correct Answer: Purchase Multiple Choice Single Answer Interest on drawings of partners should be credited to which account? Correct Answer: Profit and loss account True/False Balance sheet indicates the financial status of the business at given period. Correct Answer: True True/False Cheque received from a client on 28th September, 2004 must be entered in the bank book only after it is credited in the pass book. Correct Answer: False True/False Time rate system is suitable for workers of the maintenance department. Correct Answer: True Multiple Choice Single Answer The overheads of a machine shop X should be apportioned using which of the following basis? Correct Answer: Machine hours True/False The perpetual inventory system enables management to ascertain stock without physical verification. Correct Answer: True True/False Long term loan borrowed from financial institution comes under the heading of long term liabilities. Correct Answer: True Multiple Choice Single Answer A business's telephone bill should normally be classified into which one of the following categories? Correct Answer: Semi-variable cost Select The Blank

A forecast is mere estimate of what is likely to happen, but ________ is the action plan to be followed. Correct Answer: Budget Multiple Choice Single Answer Select the cost that indicates increased or decreased total cost due to the increased or decreased volume of operations. Correct Answer: Differential cost Multiple Choice Multiple Answer Locate the error and its features in the following Correct Answer: Compensating errors, Trial balance will not be affected, Trial balance will be affected True/False Uniform Costing simplifies the work of wage boards of fixing minimum wages and fair wages. Correct Answer: True Select The Blank Since the pass book and the bank book record the ________ transactions, the bank balance as per these books should be equal. Correct Answer: Same Select The Blank The system which provides an opportunity to the small units to take advantage of the research work taken by the large scale units of the same industry is known as ________ system. Correct Answer: Uniform costing True/False Accounting refers to the process of analyzing & interpreting the information already recorded in the books of accounts. Correct Answer: True Select The Blank Income Tax Act, recognizes only one method of depreciation namely ________. Correct Answer: Written down value method Multiple Choice Multiple Answer For the given transaction find the wrong entry that has been passed in the books of accounts, the correct entry that should have been passed and the rectification entry required to rectify the mistake.†On 1st September, 2004 the total of the previous month's wages was debited to†Manufacturing Wages Account†. During the previous month, a new machine was installed, and the firm's own employees had spent time thereon; the previous month's wages for all such Correct Answer: Machinery A/c... Dr. Rs.14,100 /- To Manufacturing Wages A/c Rs.14,100 /-, Machinery A/c... Dr. Rs.14,100 /- To Cash A/c Rs.14,100 /-, Rs.14,100 /- To Cash A/c Rs.14,100 /True/False Error of commission refers to a situation where a transaction is not recorded in the books of account. Correct Answer: False Select The Blank The term ________ indicates expenditure incurred on or attributable to a given thing. Correct Answer: Cost Select The Blank Factory cost of a product is Rs.335,000/-, if the selling overheads are charged @25% of factory cost, then the amount of selling overheads should be Rs. ________/Correct Answer: 83750 Select The Blank Dividend received on amount invested in shares is an example of ________. Correct Answer: non-operating income Select The Blank Information as to the cost and profit / loss associated with the firm's operations is provided to the ________ by Management accounting. Correct Answer: Management Select The Blank The various contents of a uniform cost manual are organisation, cost accounting system and ________. Correct Answer: presentation of information Select The Blank In India the gas industry and electricity industry, and ________ industry are examples of industries using the uniform costing system. Correct Answer: fertilizer Multiple Choice Single Answer Which system involves adoption of same costing principles, practices and procedures by the individual firms of an Correct Answer: Uniform costing

Multiple Choice Multiple Answer Which of the following aspects are mainly responsible for difficulty in application of Uniform costing system. Correct Answer: Capital investment, Plant size, Location True/False Price based on Uniform Costing may be taken to be reliable and representative of the whole industry. Correct Answer: True Multiple Choice Single Answer Loss on account of goods lost due to earthquake should be debited to which account? Correct Answer: Profit and loss account Multiple Choice Single Answer If the proprietor has taken away goods worth Rs.5,500 /- for personal use, find its impact on the proprietor's account in the organization. Correct Answer: The capital will decrease by Rs.5,500 /Multiple Choice Single Answer Accrued income indicates: Correct Answer: Current year's income not received in the current year Multiple Choice Single Answer Which of the following transactions fall within the definition of the 'standing instruction' Correct Answer: Club membership subscription Multiple Choice Single Answer The pass book showed a credit balance of Rs.1,000/-. This balance was after considering the dividend of Rs.25/collected by bank and Rs.5/- charged as collection expenses: these entries are not made in the bank book. Find the balance as per bank book. Correct Answer: Rs.1,020/Multiple Choice Multiple Answer The selection of the supplier may depend upon the following aspects: Correct Answer: Geographical location of the supplier, Price quoted by the supplier, Goodwill of the supplier Multiple Choice Single Answer Calculate inventory turnover ratio from the following: Maximum stock -7,000 units; minimum stock - 3,000 units and quantity of material issued during the year - 150,000 units. Correct Answer: 30 Multiple Choice Single Answer Re-order quantity may be measured as: Correct Answer: Maximum stock level - re-order level + (minimum usage X minimum re-order period) Multiple Choice Multiple Answer Labor turnover means: Correct Answer: Influx and exit of employees, Quantitative measurement of instability of working force, Rate of change in the average working force Multiple Choice Multiple Answer Select the non-monetary incentives Correct Answer: Health and safety services, Canteen facility, Loans at reduced rate of interest True/False The best way to reduce labor cost is to recruit cheap labor. Correct Answer: False True/False Under the accelerating premium system incentive increases at a fast rate with the decrease in output. Correct Answer: False Multiple Choice Multiple Answer Merits of break even point analysis are as follows: Correct Answer: Useful diagnostic tool, Used for analyzing the risk implication of alternative actions, Used to graphically represent complicated data. True/False Profit = Profit volume ratio X Margin of safety Correct Answer: True True/False Marginal costing is a technique of cost control Correct Answer: True Multiple Choice Multiple Answer Identify the budgets for which the production manager should be held responsible:

Correct Answer: Production budget, Production overheads budget, Plant utilization budget Multiple Choice Single Answer The composition of selling costs is given below: salaries 4% of sales, traveling expenses 1.5% of sales, and sales office 2% of sales. Find the amount of selling overheads if the sales are Rs.120,000/-. Correct Answer: Rs.9,000/Multiple Choice Single Answer Production costs of a factory for the year 2003-04 are as follows: direct labor cost Rs.100,000/-; direct material cost Rs.150,000/-; production overheads (fixed) Rs.50,000/- and production overheads (variable) Rs.80,000/-. The production manager project Correct Answer: Rs.426,800/True/False It is very easy to measure the portion of increased sales which is due to expenditure incurred for advertisement of the Correct Answer: False Multiple Choice Multiple Answer Overhead capacity variance is the outcome of: Correct Answer: Shortage of labor, Enforced idle time, e.g. power breakdowns, Customer demand being more or less than anticipated Select The Blank The systematic process of identifying and reporting variance is known as ________. Correct Answer: Variance analysis True/False The sales mix variance highlights the fact that the actual mix of sales has been in the same ratio as budgeted. Correct Answer: False True/False Factory overheads consist of all overhead costs incurred from the stage of procurement of material till the production of finished goods. Correct Answer: True True/False Manufacturing overheads represents all costs incurred in the factory including direct material cost and direct labor cost. Correct Answer: False Multiple Choice Single Answer The use of contribution per unit of limiting factor as the basis for ranking products to be produced and sold is aimed at which of the following? Correct Answer: Maximization of short-term profit Multiple Choice Multiple Answer Identify the variable expenses. Correct Answer: Repairs of plant when it is undertaken by an outside agency, Carriage inward by hired carriers, Wages paid to casual workers Select The Blank Profit volume ratio is also known as ________. Correct Answer: Contribution to sales ratio True/False If the physical stock is less than the stock as per the stores ledger, such shortage should be treated as an issue of Correct Answer: True Multiple Choice Single Answer Which of the following is the most efficient use of the clock card? Correct Answer: To facilitate payment for time spend on the work premises Multiple Choice Single Answer Which of the following is a correct definition of the key factor? Correct Answer: The factor which limits the activities of the undertaking Multiple Choice Single Answer The process of recording the costs in a formal and systematic manner with the intention of preparing statistical data there from ascertain the cost, is known as... Correct Answer: Cost accounting Select The Blank A ________ inventory turnover period indicates efficient utilization of material. Correct Answer: Low True/False Provision for discount on debtors account should be credited to the Profit and Loss Account.

Correct Answer: False Multiple Choice Single Answer Insurance premium of Rs.18,000/- was paid on 15th January, 2004. The policy period is one year from the date of payment of insurance. On 31st March, 2004 what amount should be debited to the Profit and Loss account as expenditure on account of insurance premium? Correct Answer:Rs.3,750/Multiple Choice Multiple Answer The factors which influence the selection of the method for absorption of overheads are: Correct Answer: Type of industry, Nature of products, Manufacturing process Multiple Choice Multiple Answer Select the transactions which can be entered in the Journal proper. Correct Answer: Opening entries, Closing entries, Rectification entries Multiple Choice Single Answer Out of debtors totaling to Rs.58,750/-, Rs.5,000/- were expected to be bad. What should be the amount of debtors that must be disclosed in the balance sheet? Correct Answer:Rs.53,750/Select The Blank ________ variance represents the over or under utilization of plant and machinery. Correct Answer: Capacity Multiple Choice Multiple Answer The objects of cost accountancy are: Correct Answer: To ascertain cost and profitability, Cost Control, Presentation of Information Select The Blank Under Differential Time Rate method payment is made at Rs. 1.40 per hour when the level of efficiency is Correct Answer: 90% to 100% True/False Absorption costing is more suitable for decision making than marginal costing Correct Answer: False Multiple Choice Multiple Answer Features of Taylor's differential piece rate system are as follows: Correct Answer: Minima clerical work is involved in calculating the wages, Helps in building up an efficient labor force, Strong incentive to efficient and ambitious workers. Select The Blank ________account can be defined as the record of all the transactions pertaining to a person, asset, liability income or expenditure which have taken place in a specified period. Correct Answer: Ledger Multiple Choice Multiple Answer State the features of these transactions: (i) Commission paid Rs.250/- was posted twice to Commission account (ii) Rs.5,000/- representing goods sold to A, was posted to the credit to commission received account (iii) Sold machine for Rs.8000/-, was credited to Sales account. Correct Answer: The debit side of the trial balance will be in excess by Rs.250/-, Involves an error of principle, Involves an error of commission True/False Bank charges debited in the pass book represent clerical mistake on the part of the bank employees. Correct Answer: False Multiple Choice Single Answer A dividend warrant of Rs.2,076/- was paid direct to the bank and nothing appeared in the cash book. This is an example Correct Answer: Direct deposit into the bank True/False While preparing the labor cost budget, factors such as overtime working or night shift working may be ignored. Correct Answer: False Select The Blank ________ Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting & cost accounting Correct Answer: Management Multiple Choice Single Answer The wages paid to a trainee who constructs wooden mould for concrete laying on a building contract should be defined Correct Answer:Direct labor cost Select The Blank

Margin of safety indicates ________ of operations. Correct Answer: Profitability True/False Depreciation, interest and property tax continue even when the operations are discontinued. Correct Answer: True Multiple Choice Multiple Answer Essentials for effective implementation of budgetary control system are Correct Answer: Commitment of top management, Clearly defined objectives, Continuous budget education Multiple Choice Multiple Answer Features of convention of consistency are... Correct Answer: The accounting policies and procedures should be followed consistently, Facilitates the comparison of financial statements, It facilitates comparison of financial statements on period-to-period basis True/False The bin card and stores ledger, being independent records, comparison of these two records should be avoided. Correct Answer: False Select The Blank Large angle of incidence indicates ________ amount of profits. Correct Answer: higher Multiple Choice Single Answer Relevant costs in decision making are: Correct Answer: Those costs which will arise as a result of the proposed action Select The Blank ________is the summary of all the balances in all the accounts listed in ledger account of an organization at any given point of time. Correct Answer: Trial Balance True/False Bank reconciliation statement must be prepared before the preparation of profit and loss account and balance sheet. Correct Answer: True Multiple Choice Single Answer Included in the trial balance is the sales promotion suspense account with a debit balance of Rs.6,300/-. It is given that this balance should be written off. Calculate its impact on profit of the company. Correct Answer: The net profit will decrease by Rs.6,300/Select The Blank In calculation of total sales margin variance, the ________cost of sales is deducted from the actual sales revenue. Correct Answer: Standard Multiple Choice Multiple Answer Marginal costing technique is useful in taking decisions relating to which of the following courses of action? Correct Answer: Decision to drop a product line, Decision to accept a special offer at price lower than the normal selling price, Decision regarding temporary shut-downs Multiple Choice Single Answer Basic objective of Uniform Costing is... Correct Answer: comparison True/False The variable costs are controllable at the lower lever. Correct Answer: True Select The Blank Economical use of labor, materials and facilities can achieved with the help of ________. Correct Answer: Budgetary control Select The Blank Goods returned by Pawan worth Rs.1,000/- is debited to Pawan's Account. In order to rectify the mistake, which account should be debited? ________ Correct Answer: Suspense account Select The Blank Interest receivable is a________ for the organization. Correct Answer: Current asset Multiple Choice Single Answer Purchases returns of Rs.18,000/- were wrongly transferred to the sales returns account. Calculate its impact on net profit. Correct Answer: The net profit will not be affected Multiple Choice Single Answer

Amit sold Goods to Atul for Rs. 50,000/- on cash & Rs. 50,000/- on credit basis. Amit allowed 10% discount for on the spot transaction. What is the amount that should be debited to the cash account? Correct Answer: Rs.45,000/Multiple Choice Single Answer Interest on bank loan, was paid till the quarter ending 30th September, 2003, Rs.36,000/-. Find the amount to be debited to the profit and loss account for the year ending on 31st March, 2004, assuming the loan is not yet repaid as on this date. Correct Answer:Rs.72,000/Multiple Choice Single Answer The features of the Halsey Plan are: Correct Answer: The benefit of time saved is divided equally between the employer and employee True/False The sum of indirect material cost, indirect labor cost and indirect expenses is termed as factory cost. Correct Answer: False Multiple Choice Single Answer Determine re-order level from the following: Maximum daily consumption - 200 units; maximum delivery period - 12 days; average daily consumption - 150 units and average delivery period - 8 days. Correct Answer:2,400 units Select The Blank An error of partial omission can be rectified by either debiting or crediting the ________ account, as the case maybe. Correct Answer: suspense Multiple Choice Multiple Answer Select the examples of functional budgets: Correct Answer: Sales budget, Production budget, Research and development budget Your Answer: Sales budget, Production budget, Research and development budget Multiple Choice Single Answer With the help of the given information, find actual fixed overheads for actual output. Fixed overheads volume variance Rs.75,000/- (Favorable); fixed overheads efficiency variance -Rs.95,000/- (Favorable); fixed overheads calendar variance Rs.20,000/- (Adverse); fixed overheads expenditure variance Rs.100,000/- (Adverse) and standard fixed overheads for actual output -Rs.575,000/-. Correct Answer:Rs.600,000/Your Answer:Rs.525,000/Select The Blank Furniture account will always have a ________ balance. Correct Answer: Debit Your Answer: Credit Select The Blank If the ordering cost ________s, then the economic order quantity will Increase. Correct Answer: Increase Your Answer: Increase Multiple Choice Multiple Answer Which of the following information is included in the goods received note? Correct Answer: Date of receipt of material, Quantity received, Description of goods Your Answer: Date of receipt of material, Quantity received, Price of goods, Description of goods Multiple Choice Multiple Answer Select the non-monetary incentives Correct Answer: Health and safety services, Canteen facility, Loans at reduced rate of interest Your Answer: Health and safety services, Canteen facility True/False Linking overhead to a cost unit is known as overhead absorption. Correct Answer: True Multiple Choice Multiple Answer The operating profit as per cost statement may differ from the profit as per Profit and Loss Account due to existence of Correct Answer: Depreciation on plant and machinery, Interest on loans taken from other, Interest on loans granted to Your Answer: Depreciation on plant and machinery, Interest on loans taken from other Multiple Choice Multiple Answer The main advantages of profit sharing are: Correct Answer: Employees try to increase productivity, Incentives are shared by all the employees, Augments emplyees' efficiency Your Answer: Employees try to increase productivity, Incentives are shared by all the employees

Multiple Choice Multiple Answer Labor efficiency variance Rs.1,000/- (favorable); labor mix variance Rs.260/- (adverse) and labor rate variance Rs.300/(adverse). Compute labor cost variance and labor yield variance. Correct Answer: Labor cost variance -Rs.700/- (Favorable), Labor yield variance -Rs.1,260/-, Labor yield variance is Your Answer: Labor cost variance -Rs.700/- (Favorable), Labor yield variance -Rs.1,260/Multiple Choice Multiple Answer Select the items which may be classified as selling and distribution overheads. Correct Answer: Delivery van expenses, Rent of finished goods warehouse, Sales research expenses Your Answer: Delivery van expenses, Rent of finished goods warehouse, Sales research expenses Multiple Choice Single Answer Fixed deposit bearing interest @ 5.50%, for Rs.10,000/- was kept with Bank of India on 1st June, 2003, for a period of one year. The type of the fixed deposit is cumulative, i.e. interest shall be received only on maturity. What treatment should be given in the books of accounts on 31st March, 2004, the year ending date? Correct Answer: An entry for Rs.458.34, debiting interest accrued but not due account should be passed Your Answer: An entry for Rs.458.34, crediting interest accrued but not due account should be passed True/False Financial accounting may deal with the ascertainment of cost & calculation of profitability of the individual product. Correct Answer: False True/False The reports generated by financial accounting are meant for the use by management for effective decisions. Correct Answer: True Multiple Choice Multiple Answer Cost Accounting ______________. Correct Answer: Concerned with specific activities, Classified according to their nature, It deals with both i.e. past & Your Answer: Concerned with specific activities, Classified according to their nature, It covers whole business Multiple Choice Multiple Answer Management Accounting __________________. Correct Answer: Designed particularly for internal use only, Looks forward in estimating the future along with past period, This furnishes the necessary information to management. Your Answer: Designed particularly for internal use only, Looks forward in estimating the future along with past period, This furnishes the necessary information to management, Only a, b, c. Multiple Choice Multiple Answer Accounting is the art of ______________, ____________ and ____________ in a significant manner and in terms of money transactions and events which are of a financial character and interpreting the res Correct Answer: Summarizing, Classifying, Recording Your Answer: Summarizing, Classifying, Recording Multiple Choice Multiple Answer The process of accounting has three streams of accounting ---------------, --------and ----------------------. Correct Answer: Financial Accounting, Cost Accounting, Management Accounting Your Answer: Financial Accounting, Cost Accounting, Management Accounting True/False Credit note is an intimation sent to person dealing with the business that his account being debited for the purpose indicated therein. Correct Answer: False True/False Amount invested in purchasing Fixed Asset is a revenue expenditure. Correct Answer: False True/False As per double entry system o accounting, total of all debits should be equal to all credits. Correct Answer: True Multiple Choice Multiple Answer Convention of Consistency Materiality ________________ Correct Answer: The accounting policies & procedures should follow consistently on period to period, It facilitates the comparison of financial statements on period to period, If any change the fact should be disclosed with its effects on Your Answer: The accounting policies & procedures should follow consistently on period to period, It facilitates the comparison of financial statements on period to period, If any change the fact should be disclosed with its effects on Multiple Choice Multiple Answer Cash and---------------are the two systems of accounting. Correct Answer: Mercantile

Your Answer: Mercantile Multiple Choice Single Answer The opening balance of cash account is Rs. 25,000, cash received from debtors Rs. 30,000, sold goods amounted to Rs. 50,000, paid to creditors Rs. 20,000, purchase furniture Rs. 5000. What is the closing balance? Correct Answer: 80,000 Your Answer: 80,000 Multiple Choice Single Answer Bank Reconciliation statement is required in case of Correct Answer: difference between the bank balance as per the bank book and as per pass book Your Answer: difference between the bank balance as per the bank book and as per pass book Multiple Choice Multiple Answer Direct Cost includes Correct Answer: Direct material, Direct labor, Direct expenses Your Answer: Direct material, Direct labor, Direct expenses Multiple Choice Single Answer Labor cost indicates that labor cost which cannot be identified with the individual cost centre and is incurred for those employees who are not engaged in the manufacturing process but only assist is: Correct Answer: Remuneration Your Answer: Indirect Multiple Choice Multiple Answer The Prime Cost includes the aggregate of Correct Answer: Direct Material Cost, Direct Labor Cost, Direct Expenses Your Answer: Direct Material Cost, Direct Labor Cost, Direct Expenses Multiple Choice Multiple Answer From the following particulars what must appear in purchase requisition Correct Answer: Material to be purchased should be cleanly specified, Material should purchase whenever the market for the same is favorable, Purchase requisition should state the quantity of material required. Your Answer: Material to be purchased should be cleanly specified, Purchase requisition should state the quantity of material required. Multiple Choice Multiple Answer Following points are taking into consideration for evaluation of receipts Correct Answer: The Price, The trade discount is to be deducted, Other amounts such as sales tax, excise duty, octroi Your Answer: The Price, The trade discount is to be deducted, Other amounts such as sales tax, excise duty, octroi duty Multiple Choice Multiple Answer While fixing the maximum level following factors are considered Correct Answer: Maximum usage, Storage facilities, Availability of funds Your Answer: Maximum usage, Rate of consumption True/False Fixed cost tends to vary with time rather than with level of activity. Correct Answer: True True/False To take make or buy decision under the marginal costing, if purchase price of the product is less than its variable cost it is advisable to go for manufacturing proposition. Correct Answer: False Multiple Choice Single Answer Find out the break even point and profit if sales are Rs. 50,00,000 and P/V Ratio is 50% and margin of safety is 40% Correct Answer: Rs.30,00,000 and Rs.10,00,000 Your Answer: Rs.30,00,000 and Rs.10,00,000 True/False For better control, variances of a period may be compared with the previous period. Correct Answer: True True/False Expected standards are more realistic and useful for cost control. Correct Answer: True True/False The difference between standard cost and actual cost is termed as Variance. Correct Answer: True Multiple Choice Multiple Answer For reporting of variance, following propositions should be considered

Correct Answer: Responsibility of each individual should be defined, Reporting should be simple, clear and quick, Analysis of variance should be accurate. Your Answer: Responsibility of each individual should be defined, Reporting should be simple, clear and quick, Analysis of variance should be accurate. Multiple Choice Multiple Answer Basic three steps in Standard Costing are Correct Answer: Setting standards, Comparing actual with standard, Measurement of variance Your Answer: Setting standards, Comparing actual with standard, Measurement of variance Multiple Choice Single Answer Find out Labor Efficiency Variance, if Standard Rate is Rs.1.50/- per hour, Standard hours are 12,000 and Actual hours are 12,600. Correct Answer: Rs.900/- (Adverse) Your Answer: Rs.900/- (Adverse) Multiple Choice Single Answer Standard costs are the targets to be attained by the actual performance. Correct Answer: Minimum Your Answer: Minimum Multiple Choice Single Answer Standard Costs are used as tool for Correct Answer: Cost Control Your Answer: Cost Control Select The Blank Accounting to the matching principles of accounting, the ________ incurred during an accounting period are required to be match with ________ during that period Correct Answer: cost Your Answer: cost Correct Answer: revenues Your Answer: revenues Select The Blank Along with financial accounting, ________ and ________ are the other streams of accounting Correct Answer: Cost Accounting Accounting Correct Answer: Management Accounting Select The Blank If the revenue expenditure is treated as ________ expenditure, it will not affect the agreement of ________ balance Correct Answer: capital Your Answer: capital Correct Answer: trial Your Answer: trial Select The Blank While selecting source of supply ________ department may call for the ________ from the prospective suppliers Correct Answer: purchase Your Answer: purchase Correct Answer: quotation Your Answer: quotation Select The Blank After material is received from the supplier, quantity actually received is compared with quantity ________-and ________if any, are taken up with the supplier Correct Answer: ordered Your Answer: ordered Correct Answer: variation Your Answer: variation Select The Blank Under the daily ________ sheets method, each worker is provided with a daily time sheet on which time ________ by him on various jobs is expected to be mentioned Correct Answer: time Your Answer: work Correct Answer: spent Your Answer: spent

Select The Blank Under the differential time rate method the wages are paid at Rs. 1.50 per hour between ________ efficiency and Rs.1.25 per hour between ________ efficiency Correct Answer: 101% to 125 % Your Answer: 90-100 Correct Answer: 80% to90% Your Answer: 101% to 125 % Select The Blank Under Gannt Task bonus system where the output is ________ payment is made as per minimum time rate, output is ________ payment is made as per time wages plus some increase in wage rates Correct Answer: below standard Your Answer: below standard Correct Answer: at standard Your Answer: at standard Select The Blank ________ and ________ are examples of element wise classification of overhead costs Correct Answer: Indirect material Your Answer: Indirect material Correct Answer: indirect labor Your Answer: selling overheads Select The Blank Fixed cost is the cost that tend to remain ________ irrespective of ________ Correct Answer: constant Your Answer: constant Correct Answer: level of activity Your Answer: level of activity Select The Blank The process of _________________ can followed to decide the ________ of overheads to each budget center Correct Answer: Allocation & apportionment Your Answer: Distribution Correct Answer: Loading Your Answer: Loading Multiple Choice Single Answer Net book value of loose tools as on 1st April, 2003 was Rs.45,000/-. As on 31st March, 2004 the management felt that the real worth of these loose tools is only Rs.30,000/-. What can be done to achieve the desired reduction in the net book value of loose tools? Correct Answer: By providing depreciation to the extent of Rs.15,000/Your Answer: By providing depreciation to the extent of Rs.15,000/True/False Overhead absorption rate will be different at different capacity levels. Correct Answer: True Select The Blank The budget that represents the funds investment for expansion, diversification, etc. is known as ________. Correct Answer: Capital expenditure budget Your Answer: Capital expenditure budget Select The Blank The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production. Correct Answer: Total variable overhead Your Answer: Total variable overhead Multiple Choice Single Answer The cost that indicates historical cost, which is incurred in past, is known as Correct Answer: Sunk cost Your Answer: Sunk cost Select The Blank Uniform costing is not a separate method of ________. Correct Answer: cost accounting Multiple Choice Multiple Answer Which of the following budgets may be termed as a long term budget?

Correct Answer: Capital expenditure budget, Research and Development expenditure budget, Budget of a transportation company Your Answer: Capital expenditure budget, Research and Development expenditure budget Multiple Choice Single Answer The following figures relate to a company manufacturing a varied range of products: Year 2003 Total sales Rs.22,23,000/and total cost Rs.19,83,600/-. Year 2004: Total sales Rs.24,51,000/- and Total cost Rs.21,43,200/-. Assuming stability in prices, calculate the profit volume ratio Correct Answer: 0.3 0.3 Multiple Choice Single Answer The cost of idle time incurred by employees that is considered normal for the production process should be charged to: Correct Answer: Factory overheads Your Answer: Direct labor Select The Blank Creche expenses may be appropriately apportioned on the basis of ________. Correct Answer: Number of female workers Your Answer: Number of female workers Multiple Choice Single Answer Opening stock of Rs.1,80,000/-, purchases Rs.8,00,000/-, freight inward Rs.35,000/-, closing stock Rs.2,00,000/-, direct wages Rs.2,35,000/-. Calculate the prime cost. Correct Answer:Rs.10,50,000/Your Answer:Rs.10,70,000/Multiple Choice Multiple Answer Limitations of Management Accounting includes ------------------Correct Answer: Its wide scope, Possibility of intuitive decision, Requires elaborate organizational structure Your Answer: Its wide scope, Possibility of intuitive decision, Requires elaborate organizational structure Select The Blank Indirect Cost is termed as ________. Correct Answer: Overhead Your Answer: Overhead Multiple Choice Multiple Answer Features of Financial Accounting includes----------------Correct Answer: It is a legal requirement, It protects the interest of outsiders, It considers historical transactions Your Answer: It is a legal requirement, It protects the interest of outsiders, It considers historical transactions Multiple Choice Multiple Answer Techniques of management accounting include: Correct Answer: Marginal costing, Budgetary control, Standard costing Your Answer: Cost control, Budgetary control, Standard costing Multiple Choice Single Answer Uniform costing system is useful in the following areas Correct Answer: Classification of cost accounts True/False Interim dividend paid by the company should be debited to the profit and loss appropriation account. Correct Answer: True Multiple Choice Multiple Answer A materials requisition form normally contains the following aspects: Correct Answer: Quantity requisitioned, Per unit material cost, Job number Multiple Choice Multiple Answer The production budget may be prepared in terms of: Correct Answer: Units produced, Production cost, Material cost, labor cost and overheads Multiple Choice Single Answer Panna Ltd. temporarily has excess production capacity. The idle plant facilties can be used to manufacture a low-margin item. The low-margin item should be produced if it can be sold for more than its: Correct Answer: Variable costs Multiple Choice Multiple Answer If the sales forecast is less than the past sales but the top management insists upon a certain amount of additional profits, then following steps can be taken to achieve the target profit Correct Answer: Increase the selling price, Reduce cost of sales, Increase the selling efforts True/False

Receipts and payments method of cash budget is useful for preparing long term estimates. Correct Answer: False Multiple Choice Multiple Answer Select the advantages of standard cost system. Correct Answer: Provides reliable basis for budgeting, Facilitates delegation of authority, Promotes economy and Select The Blank In case of seasonal industry, the budget period may be taken as ________. Correct Answer: One season True/False Lack of efficient control on various aspects related to raw-material increases the material cost component of the finished product. Correct Answer: True True/False Due to compensating errors the arithmetical accuracy of the trial balance is affected. Correct Answer: False Multiple Choice Single Answer Material price variance for a job is Rs.800/- (Favorable). Actual quantity of material used is 100 kg whereasthe standard quantity of material is 120% of actual quantity. Actual price paid for the material is 80% of the standard price. Calculate material cost variance. Correct Answer:Rs.1,600/- (Favorable) Select The Blank The process of recording the business transactions in a defined set of records is referred to as ________. Correct Answer: Balance sheet True/False Purchased goods by paying Rs.35,000/-: In this case, the cash account should be debited. Correct Answer: True Select The Blank The ________ books are preferred when the volume of transactions is very large. Correct Answer: Subsidiary True/False All costs are controllable. Correct Answer: False Multiple Choice Single Answer As cost centers facilitate the control function, in many cases, they are termed as... Correct Answer: Responsibility centers Multiple Choice Single Answer XYZ & Co. has taken a loan of Rs.100,000/- @ 15% p.a.on 1st October, 2003. Interest is to be paid on half yearly basis. What treatment should be given in the books of accounts of XYZ & Co. as on 31st March, 2004? Correct Answer: Interest account should be debited with Rs.7,520.55 and outstanding interest account should be credited with Rs.7,520.55 Multiple Choice Single Answer Labor turnover rate is best defined as: Correct Answer: The number of leavers replaced divided by the average of employees on the payroll Multiple Choice Single Answer Which system provides an opportunity to companies to adopt the one best method of cost accounting system known to the industry? Correct Answer: Uniform costing Multiple Choice Multiple Answer The key factor determines the: Correct Answer: Level of activity, Capacity utilization, Level of sales Select The Blank The difference between sales and cost of sales is termed as ________. Correct Answer: Net Profit Select The Blank The method which deals with ownership rights being given to workers is known as ________ method of remuneration. Correct Answer: Co-partnership Multiple Choice Multiple Answer Uniform Costing Methods may be advantageously applied to...

Correct Answer: Single organization having number of branches, Number of companies in same industry, Similar Industries such as cotton, jute etc. Select The Blank The short run financial plan which acts as a guide to achieve the predefined targets is known as ________. Correct Answer: Budget Multiple Choice Multiple Answer The objectives of cost accounting are: Correct Answer: Cost control, Ascertain ment of cost of each product, Assist in managerial decision-making Multiple Choice Single Answer The finance manager is responsible for which of the following budget? Correct Answer: Cash budget Select The Blank Interest on ________ is credited to Capital account. Correct Answer: Capital Select The Blank Under the average cost method of valuing material issues, new issue price is determined after ________ issue. Correct Answer: Each True/False The effect of price reduction is always reduction in the margin of safety and also reduction in the break even point. Correct Answer: False Multiple Choice Multiple Answer Which of the following is likely to be a contributory factor to the incidence of excess expenditure on material cost? Correct Answer: The level of control of the used of material in the production cycle, The incorrect choice of purchase order quantity, Failure to control the issue of materials from stores True/False If excess of cash is estimated in the cash budget, it may be possible to utilise it to give bonus to the employees. Correct Answer: False True/False A fixed budget is useful only when the actual level of activity corresponds to the budgeted level of activity. Correct Answer: True From the following select the examples of errors of commission Correct Answer: Sales recorded in the sales register as Rs.2,020/- instead of Rs.2,200/-, Received cash from Sham, credited to Ram's account, Paid transport charges, credited to transport charges account Expenditure on income-tax is an example of ________. Correct Answer: non-operating expenditure These are the preventive costs of labor turnover. Correct Answer: Cost of maintaining good relations with the workers, Cost of medical services, Cost of welfare facilities Select the items which may be classified as administration overheads. Correct Answer: Depreciation on office furniture, Director's remuneration, Telephone expenses Any amount of profit earned in the past which is not distributed to the owner, belongs to the creditors. Correct Answer: False Budgeted profit and loss account and budgeted balance sheet are also known as ________. Correct Answer: Master budget Management Accounting is the process of analysis and interpretation of financial data collected with help of financial accounting and cost accounting Correct Answer: True A grinding machine is an example of impersonal cost centre Correct Answer: True Piece rate systems are very useful in the following circumstances: Correct Answer: Units of output are measurable, Job is standardised, The flow of work is regular P&L statement which is a period statement & relates to a certain period tells about results of operations. Correct Answer: True Judge the given statement according to the given criteria. Goods being real account, when goods are lost by fire, the goods account should be debited because the goods are not going out of the factory. Correct Answer: The statement is correct but the reason is incorrect Management Accounting aims at enabling the management to take the decisions about the future. It may consider future data as well as non-financial factors. Correct Answer: True Financial Accounting primarily protects the interests of the outsiders dealing with organization in various capacities.

Correct Answer: True Purchased 200 shares of Bharat Forge Ltd. for Rs.850/- per share, which account should be debited? Correct Answer: Investment account - Rs.170,000/Contents of Uniform Cost Manual are Correct Answer: Organization, Cost Accounting system, Presentation of information The data for two materials P and Q is given below: Material P: opening stock Rs.80,000/-; closing stock Rs.40,000/- and purchases Rs.500,000/-. Material Q: opening stock Rs.170,000/-; closing stock Rs.60,000/- and purchases Rs.750,000/-. Identify which of the given statements relevant to the data given are correct. Correct Answer: Inventory turnover period for material P is 40.5 days, Material P is faster moving material, Consumption of material Q is Rs.860,000/Cost Accounting is concerned with calculation of the profitability and state of affairs of the organization as a whole. Correct Answer: False Features of a cost sheet are as follows Correct Answer: Indicates the total cost of production during a given period, Indicates the unit cost of production during a given period, Helps the management in fixing the selling price to be quoted for the The alternative courses of action for an integrated textile mill are: Correct Answer: Sell cloth Direct labor hour rate method of absorption of overheads is suitable where most of the production is done by using Correct Answer: False The Ezee Company Ltd. plans to sell 108,000 units of product E in first quarter of 2004, 120,000 units in second quarter of 2004, 132,000 units in third quarter of 2004, 156,000 units in fourth quarter of 2004and 138,000 units in the first quarter Correct Answer: 153,000 units The selection of ________ may depend upon the various factors like characteristics of the business organisation, tax considerations, statutory requirements etc. Correct Answer: Accounting period Your Answer: Accounting period Calculate the machine hour rate. The amount of overhead pertaining to June, 2004 to be apportioned is Rs.170,010/-. The machine cannot work without an operator. During the month June, 2004 the machine operator has been paid for Correct Answer: Rs.29.98 Balance sheet is considered to be a part of the financial statements. Correct Answer: True The process of attributing proportions of items of costs amongst const centres is called ________. Correct Answer: Cost apportionment The variance which measures the deviation of the rate actually paid to labor as from the standard hourly rate is known as: Correct Answer: Labor rate variance Advance received from customers is ________ for the organisation. Correct Answer: A liability Financial Accounting discloses the financial performance & financial statements of the business as a whole. Correct Answer: True If Rs.15,000/- has been paid to Kargil Relief Fund as the owner's personal contribution, ________ account should be debited in the books of accounts of the business. Correct Answer: Drawings Product costs under direct costing include: Correct Answer: Prime cost and variable factory overheads Uniform costing may lead to monopolistic conditions within the industry, prices may be raised and customers may suffer. Correct Answer: True Items debited to Profit & Loss Account are… Correct Answer: Salary, Discount allowed, Postage & telegram Multiple Choice Multiple Answer Select the entries which need to be rectified Correct Answer: Purchase A/c......... Dr. to Damodar's A/c (Being furniture purchased from Damodar), Gopal's A/c........... Dr. to cash A/c (Being entry for payment of railway freight for goods purchased), Cash A/c............Dr. to Suresh's A/c (Being cash received from Suresh for goods sold to him for) Multiple Choice Single Answer The bank book shows an overdraft of Rs.117/- as on 31st December, 2003. It is found that the pass book is debited with Rs.11/- representing a dishonoured cheque, originally received from Mr.A. The fact of dishonour was not recorded in the bank book. Find the balance as per pass book. Correct Answer: Rs.128/- (overdraft) Multiple Choice Multiple Answer

Identify the steps involved in the process of decision making: Correct Answer: Determination of the problem, Ascertainment of alternative courses of action, Screening each alternative so as to select the best one Multiple Choice Multiple Answer Identify the fixed expenses from the following. Correct Answer: Rent and taxes of the factory, Wages paid to indirect workers like cleaners, helpers,etc, Salary paid to factory supervisor True/False Budgetary control is one of the techniques of management accounting. Correct Answer: True True/False Management Accounting is a developed stage of Cost Accounting Correct Answer: True True/False In the ledger account only credit entries relating to a particular account are posted. Correct Answer: False Multiple Choice Multiple Answer Features of Sunk cost are... Correct Answer: Indicates historical cost, Not relevant in decision making process, Incurred in past True/False Fixed overhead variances may be calculated either on the basis of units of output or on the basis of standard hours. Correct Answer: True True/False Financial Accounting discloses the financial performance & Financial status of the business as a whole Correct Answer: True Select The Blank Loss is equal to fixed cost minus ________ Correct Answer: Contribution True/False Cost Accounting is a legal requirement. Correct Answer: False True/False Cash account can have a credit balance. Correct Answer: False Multiple Choice Multiple Answer Identify the causes due to which the cost of labor may be high: Correct Answer: Excess staffing, Lack of experienced and efficient personnel, High labor turnover True/False Period cost is the cost assigned to the products. Correct Answer: False True/False Book keeping is clerical while accounting is managerial Correct Answer: True True/False Financial Statements which are generated as a result of the management accounting report & financial performance of the organization as a whole. Correct Answer: False Multiple Choice Single Answer The half-yearly sales of product X are as follows: 1st half -30,000 units; 2nd half - 37,500 units. The production pattern of the company is based on 80% of the sales of the current six months and 20% of the budgeted sales of the next six Correct Answer: 1st half -31,500 units; 2nd half - 30,000 units Select The Blank The variance which denotes the variation in overhead recovery due to the budgeted quantity of products being greater or less than actual production, is known as ________ variance. Correct Answer: Volume Multiple Choice Single Answer Annual sales were Rs.10,50,000/- and sales returned by customers amounted to Rs.28,000/-. The salesmen are entitled to an incentive of 3% of net sales. Calculate the amount of incentive due to the salesmen. Correct Answer: Rs.30,660/-

True/False An entry in the stores ledger is required for transfer of material from one job to another in the same department. Correct Answer: False Select The Blank As per the provisions of Section 209 of ________, all the company form of organisation is legally required to follow the mercantile or accrual system of accounting. Correct Answer: The Companies Act, 1956 Multiple Choice Single Answer Sita and Gita are partners of SGL & Co. As on 1st August, 2003 Sita's capital stood as Rs.10,000/- and Gita's capital as Rs.18,000/-. If interest on capital is to be provided @ 10% p.a, what should be the treatment of this interest in the profitability statement, assuming there were no additions to capital during this period? Correct Answer: Profit and loss account should be debited with Rs.1,866.67 True/False GAIL having monopoly in the CNG (Compressed Natural Gas) market can implement the Uniform costing system. Correct Answer: False True/False Bank reconciliation statement can be prepared on weekly basis. Correct Answer: True Select The Blank The ________ ledger carries the individual accounts, whereas the general ledger records the consolidated effect of the individual transactions. Correct Answer: Control True/False Cost Accounting and Management Accounting are similar to each other in many respects. Correct Answer: True Multiple Choice Multiple Answer Following errors affect the trial balance Correct Answer: Wrong totaling of subsidiary books, Posting on the wrong side of an account, Omission of posting an account in the ledger Select The Blank Token or disc method is a related to the system of ________. Correct Answer: Time-keeping True/False Cost Accounting may be considered to be a part of management Accounting. Correct Answer: True True/False It is said that marginal costs are used primarily in guiding decisions that are yet to be made. Correct Answer: True True/False Management Accounting is not at all a legal requirement Correct Answer: True Multiple Choice Single Answer Which of the following cost is also termed as Prime Cost? Correct Answer: Direct cost Multiple Choice Multiple Answer Financial Accounting is … Correct Answer: Designed to supply information to internal/ external users, Referred as 'Historical' form of accounting, Concerned with financial factors Select The Blank The method of remuneration under which the workers are given in share in profits of the organization, at a specified percentage, along-with their wages, is known as ________ method. Correct Answer: Profit-sharing Multiple Choice Multiple Answer The disadvantages of time rate system are: Correct Answer: Ignores the efficiency of workers, Higher labor cost, Lack of motivation to increase productivity Multiple Choice Single Answer

Quantify the increase in profit on account of following errors: (a) Repairs of furniture amounting to Rs.2,000/- were debited to furniture account. Furniture is depreciated @10% p.a. (b) Interest received on bank deposits was credited to dividend received account, Rs.1,550/- (c) A television purchased for the managing director's office for Rs.45,000/- was debited to Interior decoration expenses. Correct Answer: Rs.43,200/Select The Blank The analysis which is also referred as 'what if' analysis is known as________. Correct Answer: Cost volume profit analysis True/False The balance sheet has three columns, viz. assets, liabilities and ledger folio. Correct Answer: False Select The Blank Income Tax Act, recognize only one method of depreciation namely ________. Correct Answer: Written down value method Multiple Choice Multiple Answer The various areas in which uniform costing can be adopted are: Correct Answer: Valuation of inventories, Charging of depreciation, Apportionment of overheads Multiple Choice Single Answer Flood occurred on 18th March, 2004 and goods worth Rs.28,000/- were destroyed. The insurance company accepted on 28th March, 2004 the claim for Rs.10,000/- only. The claim amount was received on 2nd April, 2004. Find the impact of this transaction on net profit for the year ending 31st March, 2004. Correct Answer: The net profit will decrease by Rs.18,000/Multiple Choice Single Answer Unearned commission of Rs.5,000/- needs to be recorded in the books of accounts. Find its correct impact. Correct Answer: The asset side of the balance sheet will increase by Rs.5,000/Multiple Choice Multiple Answer Examples of indirect material are Correct Answer: Consumable stores, Glue used in book binding, Nails used in packing boxes Select The Blank A person in charge of a ________ may be held responsible for its proper functioning and cost control. Correct Answer: Cost centre Select The Blank The varinace that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer: Sales margin volume Select The Blank Depreciation is caused by use factor, obsolescence and ________. Correct Answer: Time factor True/False Depreciation under Reducing Balance Method is calculated as (Number of units * Rate of depreciation per unit) Correct Answer: False True/False All cash sales are recorded in the sales register. Correct Answer: False True/False Indirect material cost is an integral part of finished goods. Correct Answer: False Multiple Choice Multiple Answer Select the various methods adopted for treatment of under or over absorbed overheads Correct Answer: Use of supplementary rates, Carrying over the amount to remaining period, Writing off to the Costing Profit and Loss Account Multiple Choice Single Answer It is difficult to apply Uniform costing system for an industry which has labor intensive companies as well as capital intensive companies, because: Correct Answer: The cost structure is different Multiple Choice Multiple Answer The objectives of Uniform costing system are as follows: Correct Answer: To fix a common selling price for the industry as a whole, To compare efficiency of each unit against industry's overall performance, To compile reliable cost data for inter-firm comparison of costs

Select The Blank Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer: Personnel Select The Blank Computation of gross wages, deductions and net wages payable is the function of the ________ department. Correct Answer: Personnel Multiple Choice Multiple Answer Features of purchase requisition slip are: Correct Answer: Raised when the stock of a raw material has fallen to the re-order level, Indicates the type, quantity and quality of material required, The information about the price of material is excluded True/False Trading account is an important account which will be used to analyse how successful and how efficiently the firm runs its business. Correct Answer: True Select The Blank Loans which are borrowed from financial institutions are to be paid off in 8 years, should be disclosed as ________ in the balance sheet. Correct Answer: Long term liabilities Multiple Choice Single Answer The gross profit for the year 2004 is Rs.184,326/-. The depreciation on furniture for the year is Rs.24,561/-; dividend received amounted to Rs.12,000/- and the director's remuneration worked out to be Rs.95,784/-. Find the net profit for the Correct Answer: Rs.75,981/Multiple Choice Multiple Answer The components of the selling and distribution cost budget are: Correct Answer: Distribution expenses, Publicity expenditure, Salary of sales-office workers Multiple Choice Single Answer The present unit cost data for a product is as follows: selling price Rs.15/-, variable costs Rs.8/-. If selling prices are reduced by 10% and variable costs are increased by 12.5%. Which of the following is the amended contribution to sales Correct Answer: 0.333 Multiple Choice Multiple Answer Select the correct statements. Ram's account…….Dr. Rs.10,000 To Bank account Rs.10,000 Correct Answer: Ram is a creditor, Rs.10,000/- has been paid to Ram, The payment is made by cheque Select The Blank Generally, all real accounts will have a ________ balance Correct Answer: Debit Select The Blank A written order sent to inform the purchasing department of a need for materials is called a ________. Correct Answer: Purchase requisition note Multiple Choice Single Answer The overheads apportioned to three production departments A, B and C and two service departments P and Q are Rs.75,000/-; Rs.100,000/-; Rs.80,000/-; Rs.60,000/- and Rs.40,000/- respectively. Overheads of department P are shared by A, B, C and Q in the ratio of 4: 3: 2: 1 and that of department Q are shared by A, B, C and P in the ratio of 3: 3: 2: 2. Ascertain the total overheads of each production department. Correct Answer: A -Rs.116,836/-; B -Rs.134,889/- and C -Rs.103,265/Select The Blank If the total amount on the ________ side of commission account is more than the total of its credit side, the commission account is said to have a Debit balance. Correct Answer: Debit True/False The labor cost which can be identified with the individual cost centre is known as the Direct Labor Cost. Correct Answer: True True/False Variable cost + Profit = Sales Correct Answer: False Multiple Choice Single Answer The integrated form of all functional budgets is known as: Correct Answer: Master budget Select The Blank

If overhead absorbed i.e. overheads charged to units during the period is more than the overhead incurred, it is said that the overheads are ________. Correct Answer: Over-absorbed Select The Blank The final result disclosed by trading account is the ________profit earned by the organization. Correct Answer: Gross True/False All personal expenses of the owner should be debited to the organisation's profit and loss account. Correct Answer: False True/False The amount of profit which is retained by the organization is transferred to 'Reserves and Surplus' in the balance sheet. Correct Answer: True Select The Blank Purchase of national saving certificates by the company from its profits, should be debited to ________ account. Correct Answer: Investments True/False Yield variance equal to zero indicates that the standard yield and actual yield are the same. Correct Answer: True Multiple Choice Single Answer Calculate inventory holding period. Safety stock - 250 units; maximum stock - 6,500 units; re-order quantity - 3,800 units and material issued during 2003 is 24,000 units. Correct Answer: 66.9 days True/False Material mix and material yield variance can be calculated even when only one raw material is used for production. Correct Answer: False Multiple Choice Single Answer A lathe machine was purchased on 31st March, 2004 for Rs.65,000/-, however it was installed only on 5th April, 2004. The depreciation is charged @ 15% p.a.. Find the amount of depreciation charge for the said lathe machine for the year ended 31st March, 2004. Correct Answer: Nil Multiple Choice Single Answer A factory has 8 hours a day and the standard daily wage is Rs.80/-. Standard output per hour is 5 units. During a day worker P produced 30 units, Q produced 36 units and S produced 42 units. Calculate wages payable to P,Q and S under Merrick Multiple Piece Rate System. Correct Answer: P - Rs.60/-; Q - Rs.79.20; S - Rs.100.80 Multiple Choice Single Answer A company budgets for a production of 150,000 units. The variable cost per unit is Rs.14/- and fixed cost is Rs.2/- per unit. The company fixes its selling price to fetch a profit of 15% on total cost. What is the break even point for the Correct Answer: 68,182 units Multiple Choice Multiple Answer The organization chart shows the following aspects: Correct Answer: Functional responsibility of different functional managers, Delegation of authority to various managers, Inter-functional relationships of these managers Multiple Choice Single Answer An advertisement contract was made with an artist which stated that the remuneration will be 12% of net sales. On an average the monthly sales were Rs.36,000/-, however the average rate of sales return was 5% of that month's sale. Find the expenditure on account of advertisement. Correct Answer: Rs.49,248/Multiple Choice Multiple Answer Management Accounting is… Correct Answer: Designed particularly for internal use, Helpful in estimating the future along with past period, Useful in furnishing the necessary information to the management Select The Blank Warehousing cost is an item of ________ Correct Answer: Distribution overheads True/False Trading account is used to analyse how successfully and how efficiently the firm runs, particularly with regards to the maintenance of the gross profit margin. Correct Answer: True

Multiple Choice Single Answer Calculate the earnings of workers Monica and Sonica under Taylor's differential piece rate system. Hours in a day =8; normal rate per unit = Rs.12/-; standard time per unit = 30 seconds; rate differential: 80% of piece rate below standard, 120% of piece rate at or above standard. Monica produces 900 units per day and Sonica produces 1,100 units per day. Correct Answer: Monica -Rs.72/-; Sonica - Rs.132/True/False Standard costing is always accompanied by a system of budgeting but budgetary control may be operated in business where standard costing is impracticable. Correct Answer: True Multiple Choice Multiple Answer The factors that influence determination of budget period are: Correct Answer: Type of budget, viz. Sales or capital expenditure budget, General economic conditions, Trade cycle of Multiple Choice Multiple Answer Inventory holding cost comprises of: Correct Answer: Cost of insurance, Rent of store house, Salary of store keeper Multiple Choice Multiple Answer Uniform costing system can be successfully implemented in any industry only when: Correct Answer: Information is freely supplied by all the units, Well organised sector is ready to share the technological improvements, Information furnished by the units is complete and correct True/False In marginal costing, under and over absorption of fixed overheads is bound to arise. Correct Answer: False True/False New companies can adopt Uniform costing system as a ready-made system. Correct Answer: True Select The Blank An amount of Rs.200/- is received from P and is credited to Q. The rectification entry would affect ________ Correct Answer: P's A/c and Q's A/c Multiple Choice Single Answer Trade Discount refers to the discount... Correct Answer: received on purchases Select The Blank In India, where public undertakings operate along with the private sector undertakings, ________ enables a comparative assessment to be made of the two sectors. Correct Answer: uniform costing Multiple Choice Single Answer A firm has monthly fixed cost commitment of Rs.200,000/-. It is producing only one product which is sold at a price of Rs.80/- per unit. Per unit variable cost is Rs.50/-. Calculate annual break even point. Correct Answer: 80,000 units Multiple Choice Single Answer Cool-wind Ltd, manufactures fans, which at sold at Rs.400 pre piece. The cost of sales is composed of 40% of direct material, 30% wages and 30% overheads. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle by 39% of present gross profit. With the above information, you are required to determine the future selling price, if the present rate of gross profit is to be Correct Answer: Rs.452/True/False Credit balance in interest account indicates income for the organisation. Correct Answer: True Multiple Choice Multiple Answer The advantages of written communication are Correct Answer: Accuracy, Can be recorded, Brevity Multiple Choice Multiple Answer Business letters can be useful in different ways like Correct Answer: Legal evidence, Permanent information, Recovering dues Multiple Choice Multiple Answer Essential parts of business letters would be Correct Answer: Head address, Date, Outward number Multiple Choice Multiple Answer The Head address includes

Correct Answer: Tel no, Name of organization Multiple Choice Multiple Answer The body of the letter may be divided into Correct Answer: Opening Para, Main communication, Closing paragraph Multiple Choice Multiple Answer Examples of salutations would be Correct Answer: Dear sir, Respected Sir Multiple Choice Multiple Answer The matter in the memorandum may include Correct Answer: Procedures, Rules, Instructions True/False People external to the organization do not have any access to the costing records. Correct Answer: True True/False A cheque received from a customer but not deposited into bank must be recorded in the cash book. Correct Answer: True Multiple Choice Single Answer Goods return by Pande worth Rs. 2000 should have appeared on the credit side of Pande’s account for rectifying the same. Following account to be credited Correct Answer: Suspense A/C Multiple Choice Single Answer Amit purchase of Rs. 6710 had been posted to the debit of the creditors A/C as 6170 rectifying the transaction the creditor A/C is to be debited amount to Rs Correct Answer:540 Multiple Choice Single Answer The periodical total of sales book was cash short by Rs. 5000 for rectifying the same, which A/C to be debited Correct Answer: Suspense A/C Multiple Choice Single Answer Old furniture sold for Rs. 5400 has been entered as Rs 4500 in the cash book, for rectifying the same Suspense A/C credited to Rs Correct Answer: 900 Multiple Choice Multiple Answer Following error affect the trial balance Correct Answer: Wrong totaling of subsidiary books, Posting on the wrong side of an account, Omission of posting an account in the ledger True/False Due to compensating errors the arithmetical accuracy of the trial balance get affected. Correct Answer: False Multiple Choice Single Answer This cost indicates historical cost which is incurred in past. Correct Answer: Sunk cost Multiple Choice Single Answer The prime cost is Rs. 10,00,000 the factory cost is Rs. 13,00,000, the total administration overheads are 14,00,000 and having selling overhead of Rs. 86000. What is the Total cost? Correct Answer:37,86,000 Multiple Choice Multiple Answer Non Operating Expenses includes Correct Answer: Loss on sale of asset, Goodwill, Only a, b True/False Perpetual inventory system includes continuous verification of physical stock at regular intervals. Correct Answer: True Multiple Choice Single Answer Under the differential time rate method of wage payment up to 80% of efficiency following rate is offered. Correct Answer: Rs. 1.00 per hour True/False Per unit cost of variable overheads may reduce as the volume of output increases but the total overheads remain Correct Answer: False True/False Machine hour rate is calculated as (amount of overheads to be absorbed)/(labor hours required for production)

Correct Answer: False Multiple Choice Single Answer This is the best example of element wise classification of cost. Correct Answer: material Multiple Choice Single Answer This is an example of semi variable overheads. Correct Answer: electricity Multiple Choice Multiple Answer wise classification of overheads takes the form of – Correct Answer: indirect material, indirect labor, indirect expenses True/False Budget is prepared for a fixed period of time. Correct Answer: True True/False Depreciation does not involve cash out flow Correct Answer: True Multiple Choice Multiple Answer Uncontrollable variances are Correct Answer: Strike, Change in customers demand, Devaluation of currency Multiple Choice Single Answer Calculate Labor Rate Variance, If actual rate per hour is Rs.3.50/-, Standard rate is Rs.3/- per unit and actual hours are Correct Answer:Rs.6750/- (Adverse) Multiple Choice Single Answer Calculate Labor Efficiency Variance, If actual rate per hour is Rs.3.50/-, Standard rate is Rs.3/- per unit and standard hours are 15,000 and Actual hours are 13, 500. Correct Answer:Rs.4500/- (Favorable) Multiple Choice Multiple Answer Following factors will have to be considered before preparing Production Budget in terms of quantity Correct Answer: Production capacity, Co-ordination with Sales forecast, Management Policy Select The Blank If ________ is not provided, the asset may appear in the Balance Sheet at an ________ amount Correct Answer: depreciation, overstated Select The Blank Generally accounts of the assets will have ________ balance and liabilities will have ________ balance Correct Answer: debits, credits Select The Blank In financial statements P& L Accounts relates to a specific duration whereas ________ is for a given point of time Correct Answer: P& L Accounts, Balance sheet Select The Blank Labor Turnover indicates ________ in labor force showing a highly increasing trend or highly ________ trend Correct Answer: change, decreasing Select The Blank Preventive costs of labor turnover refers to all the costs which may be incurred by the organisation to keep workers happy and ________ them from ________ the job Correct Answer: discourage, leaving Select The Blank Expenditure like general lighting are apportioned considering ________ as a base and expenditure like depreciation are apportioned considering ________ as a base. Correct Answer: number of light points, value of assets Select The Blank Under absorption of overheads may take place due to the reasons like ________ overheads being more than the ________ overheads Correct Answer: actual, estimated Select The Blank Fixed overheads normally arise as a result of policy and are largely ________ in nature at the ________ level of the management Correct Answer: uncontrollable, lower Select The Blank A key factor is defined as the factor which, at a particular point of time or over a period will ________ the volume of

Correct Answer: limit, output Select The Blank ________ of Trial Balance generally ensures ________ accuracy of the process of ledger posting. Correct Answer: Talling, arithmetical Multiple Choice Multiple Answer Business Entity Concept ______________. Correct Answer: Business is separated from the owner, The accounting process carried out for the business, Separate legal entity True/False The danger level fixed below maximum level Correct Answer: False Multiple Choice Multiple Answer Following example comes under service cost centre Correct Answer: Store department, Internal Transport department, Accounting/Costing department Multiple Choice Single Answer The material physically received is compared with material ordered as per the this order Correct Answer: Purchase order Multiple Choice Multiple Answer When bank balance as per pass book is considered then following to be added. Correct Answer: cheques deposited but not cleared, Interest debited by bank, bank charges debited by bank True/False (No. of unit * Rate of depreciation per unit) this formula is used for written down value method. Correct Answer: False Multiple Choice Single Answer Sold Goods of Amitabh worth Rs. 15,000 against 15% Trade discount. The Goods worth appear on account Correct Answer: 12750 Multiple Choice Single Answer This cost indicates increased or decreased cost due to the increased or decreased volume of operations. Correct Answer: Differential cost Multiple Choice Single Answer Under the differential time rate method of wage payment between 90% to 100% of efficiency following rate is offered. Correct Answer: Rs. 1.40 per hour Multiple Choice Multiple Answer Important advantages of Uniform Costing can be said to be Correct Answer: It is a useful tool for management control, It avoids cut throat competition, Weaker units can take advantage of settled systems of better managed units Multiple Choice Single Answer Margin of safety are the sales beyond Correct Answer: break even point Multiple Choice Multiple Answer Indirect Labor Cost Correct Answer: Wages paid to storekeeper, Salary of works manager, Wages paid to gatekeeper Select The Blank The difference between sales and factory/ works cost is termed as ________ the difference between sales and ________ ermed as net profit Correct Answer: gross profit, cost of sales Multiple Choice Single Answer Labor cost is the cost of __________ paid to employees of the organization. Correct Answer: Remuneration Multiple Choice Single Answer For a material, if standard quantity is 400 kg and standard price is Rs.3.75/- per kg. Find out the Material Usage variance if actual quantity is 500 kg and actual price is Rs.3.60/- per kg. Correct Answer: Rs.375/-(Adverse) Multiple Choice Multiple Answer Labor Efficiency Standards are decided by considering following factors Correct Answer: Records of past performance, Time & Motion Study, Trial Runs Select The Blank A budget manual is a document setting out the ________ of the persons and ________ required for the budget control. Correct Answer: Responsibilities, Forms and procedures

Multiple Choice Single Answer Selling price per tonne is Rs. 69.50, variable cost per tonne is Rs. 35.50 and fixed cost is Rs. 18,02000. Find out the BEP in units, Correct Answer: 53000 Select The Blank To ascertain the ________ of all the transactions recorded in the ledger account, the account is required to be ________ Correct Answer: Net effect, Balanced True/False Wage payment system should be properly tied up with quality control procedures to ensure that the workers are paid only for good and quality production. Correct Answer: True Select The Blank Semi ________ overheads are neither ________ nor variable in nature. Correct Answer: fixed, variable Multiple Choice Multiple Answer In Cash budget Operating cash inflow includes Correct Answer: Cash Sales, Collection from Debtors, Interest/Dividend received True/False If the product is labor intensive, more stress may be necessary on inventory control procedure. Correct Answer: False True/False A good wage payment system will not punish the workers for the matters beyond the control of the workers. Correct Answer: True True/False Fixed assets do not give the returns during the same period during which they are paid for Correct Answer: True Multiple Choice Single Answer The material issued to production department may be returned back to the stores because material issued in excess requirement and Correct Answer: Material issued is defective Multiple Choice Multiple Answer Following are called the element of Cost Correct Answer: Material, Labor, Expenses Multiple Choice Multiple Answer Convention of Materiality __________________ Correct Answer: Only those transactions will be considered which have material impact on profitability, Insignificant transaction will be ignored, The cost of non-used should not be considered as the item of cost True/False Amount with drawn for personal purpose drawing A/C to be debited. Correct Answer: True Select The Blank Under the repeated distribution method the overheads of ________ department are distributed to other departments on agreed ________ Correct Answer: service Correct Answer: percentage True/False Under time rate system a worker is paid on the basis of production achieved by him. Correct Answer: False Multiple Choice Multiple Answer The causes of idle time can be analyzed as Correct Answer: Administrative causes, Productive causes, economic causes Multiple Choice Multiple Answer Cost Accountancy is a science, art and practice of a cost Accountant. Correct Answer: Science indicates the possession and the application of relevant systematic knowledge, Art indicates the skill and ability, Practice indicates continuous effects on the part of cost accountant. Multiple Choice Single Answer __________ Accounting becomes a source of information for Management Accounting. Correct Answer: Financial True/False

Patents and Trade Marks Account is a Real Account. Correct Answer: True Multiple Choice Multiple Answer Money Measurement Concept__________________ Correct Answer: Only those transactions and facts expressed in terms of money, This Concept imposes severe restrictions on the kind of information available from financial statements, Due to several restrictions it becomes drawback of financial accounting Multiple Choice Multiple Answer P/L A/C debit side includes Correct Answer: salary, discount allowed, postage & telegram Multiple Choice Multiple Answer Profit & Loss A/C credit side has Correct Answer: Gross profit, Commission received, Interested received Multiple Choice Single Answer A started business with cash 5000, building 5000, furniture 2000, having depreciation of 10% on building. The total amount of capital comes to Rs. __________ Correct Answer11500 Multiple Choice Single Answer Goods distributed as free sample amounted to Rs. 10,000. Prepare Neonboard Rs. 5000. The total amount transfer to advertisement account is Rs.____ Correct Answer: 15,000 Multiple Choice Multiple Answer Following errors do not affect the trial balance Correct Answer: Error of Principle, Error of Omission, Error of Commission True/False There is no need to open a suspense account if the trial balance does not agree. Correct Answer: False True/False A contractor’s bill for the extension of premises amounting to Rs. 2750 has been debited to building repair account Correct Answer: False True/False Indirect material cost assist the manufacturing process is an integral part of finish goods. Correct Answer: False True/False Dividend received is a Non-operating Income. Correct Answer: True Multiple Choice Single Answer Company having opening stock of Rs. 1,80,000 purchase Rs. 8,00,000. Freight Inward Rs, 35000 & closing stock Rs. 2,00,000, having direct wages Rs. 2,35,000. What will be prime cost. Correct Answer: 10,50,000 Multiple Choice Single Answer A Co. having factory cost of Rs. 13,10,800. The administrative overheads are salaries 40,000, rent & rates 6400, Traveling expenses 12,400, Depreciation 2400, Directors fees 24,000, General Charges 2 Correct Answer: 14,59,200 Multiple Choice Multiple Answer Factory overheads are termed as Correct Answer: Production overheads, Works overheads, Manufacturing overheads Multiple Choice Multiple Answer Selling and distribution overheads includes Correct Answer: Indirect Material such as packing material, samples etc,, Indirect labor like salaries to sales personnel manager, Indirect expenses like warehouse charges, advertisement Multiple Choice Multiple Answer The aims of perpetual inventory system are as follows Correct Answer: Maintaining Bin cards, Maintaining store ledger, Continuous verification of physical stock Multiple Choice Multiple Answer These are the features of variable overheads Correct Answer: vary directly in proportion to volume of output, per unit cost remains the same, total overheads may increase or decrease as per volume of output. Multiple Choice Single Answer

The cost that varies in direct proportion with the level of activity is called Correct Answer: variable cost True/False The ultimate incorporation of all functional budgets takes the form of budgeted Profit & Loss Account and Balance Sheet. Correct Answer: True True/False Flexible budget is an effective tool for evaluation of performance. Correct Answer: True Multiple Choice Single Answer Calendar Variance arises only if there is abnormal increase or decrease in Correct Answer: Actual number of working days Multiple Choice Single Answer Standard may not be necessarily useful for this purpose. Correct Answer: Forecasting Multiple Choice Single Answer If during a month anticipated sales are 5,000 kg, opening stock is 1,000 kg and closing stock is 500 kg then what will be the quantity of production Correct Answer: 4,500 kg Multiple Choice Single Answer For a unit, if opening stock of raw material is 10,000 units, closing stock of raw material is 5,000 units and consumption is 3,20,000 units, what will be the quantum of raw material to be purchased Correct Answer: 3,15,000 Select The Blank Interest on overdraft charged by the bank is ________ to the pass book and ________ to the cash book Correct Answer: debited, credited Select The Blank ________ and ________ are non monetary incentives Correct Answer: Safety services, education facility Select The Blank variable cost is the cost that tend to ________ in direct proportion with ________ Correct Answer: vary, level of activity Select The Blank Variable costs are the controllable costs at the ________ level of the management whereas fixed costs can be controlled only on the ________ level of the management Correct Answer: Lower, Top Select The Blank ________ Legal charges and ________ are the accounts which are shown on the debit side of Profit & Loss Account Correct Answer: Like office rent, Audit fees Select The Blank If the profit volume ratio is 25%, then the variable cost is equal to ________ of sales value. Correct Answer: 0.75 True/False Under time rate system a worker is paid on the basis of production achieved by him in a given time. Correct Answer: False Multiple Choice Single Answer Which of the following costs is most likely to have a cost behaviour pattern described as..a fixed cost upto an activity level of 1,000 units, with a variable cost there after which decreases from 10 paise to 8 paise per unit at 2,000 units? Correct Answer: Wages payment which is fixed for a minimum output quantity after which a bonus per unit is paid which reduces when activity level exceeds 1,000 units True/False The phrase 'By Balance c/d.' written on the credit side of the rent account, indicates credit balance for this account. Correct Answer: False Select The Blank In case of defective material being returned by the stores department to the vendor, such material should be valued at the________. Correct Answer: Purchase price True/False Piece rate system is suitable when quality of goods produced is of extreme importance. Correct Answer: False

True/False A firm earns profit when contribution is equal to fixed costs under variable costing. Correct Answer: False Multiple Choice Single Answer Standard time required for a job is 10 hours, i.e.10 X 60 = 600 'Bs'. The worker has actually completed the job in 6 hours, i.e.6 X 60 = 360 'Bs'. Time wage rate is Rs.20/- per hour. Bonus is shared between the worker and the foreman in the ratio of 3:1. Calculate total earning of the worker as per Bedeaux Point System. Correct Answer: Rs.180/Select The Blank Contribution represents pool of resources available for meeting all costs other than ________. Correct Answer: Variable costs Multiple Choice Multiple Answer Locate the steps involved in rectifying the errors in the books of accounts Correct Answer: Find the wrong entry passed, Find the correct entry to be passed, Find the entry that will resolve the mistake in the books Select The Blank Overheads chargeable to a product, using direct labor cost basis, may be calculated by multiplying percentage of direct labor cost and ________. Correct Answer: Direct labor cost of the product Multiple Choice Multiple Answer Causes for adverse material price variance are: Correct Answer: Uneconomical size of purchase orders, Failure to avail discounts allowed by suppliers, Excessive freight charges Multiple Choice Single Answer 200 units of material were purchased from X @ Rs.5/- per unit and 300 units were purchased from Y @ Rs.6/- per unit. The organisation follows FIFO system of pricing of issues and the above purchases have been recorded in stores ledger. 120 units have already been issued. 60 units received from X are defective and are therefore returned. Find the value of the material returned to X. Correct Answer: Rs.300/Select The Blank If the total manufacturing overhead of a tiles producing factory amounted to Rs.15 lakhs and the overhead rate was Rs.5/per sq.ft, then the production for the period can be stated as ________ sq.ft. tiles. Correct Answer: 300000 True/False Category C items, as per the ABC analysis, usually refers to indirect material. Correct Answer: True Multiple Choice Multiple Answer These are the methods of measuring labor turnover. Correct Answer: Replacement Method, Separation Method, Flux Method True/False According to the standard costing principles, only adverse variance must be further investigated. Correct Answer: False Select The Blank Education facility to workers and their children, pension, superannuation fund are examples of ________ incentives. Correct Answer: Non-monetary Select The Blank The ________ adjustment is necessary to reflect the cost for the use of fixed asset during the year. Correct Answer: Depreciation Multiple Choice Single Answer The purchase budget for October is Rs.12,500/- and November is Rs.15,000/-. If the materials are purchased for cash the supplier is offering a rebate of 5%. If the materials are purchased on credit of 30 days, no rebate is offered. The company purchase Correct Answer: October- NIL, November- Rs.26,750/Select The Blank The variance which measures the profit consequences of selling different products in proportions other than the standard, is known as ________ variance. Correct Answer: Sales margin mix Multiple Choice Single Answer

Which system can assist in fixing a common selling price for the industry as a whole on the basis of cost of production of all units belonging to that industry? Correct Answer: Uniform costing True/False Control on purchase of material is exercised by the storekeeper. Correct Answer: False Select The Blank In practical circumstances, the ________ are referred to as application of funds. Correct Answer: Assets Select The Blank The document which lays down the cost accounting plans and procedures to be followed by the constituent units is known as ________. Correct Answer: uniform cost manual Multiple Choice Multiple Answer If you are required to enforce uniform costing system in your industry, how would you proceed? Correct Answer: Collecting data from all units of your industry, Ensuring that the data collected is complete and correct, Maintaining secrecy of the data collected Multiple Choice Multiple Answer Marginal costing is found to be unsuccessful in the following situations:Correct Answer: Impossible to distinguish costs into fixed and variable component, With respect to capital intensive industries where fixed costs are very large and hence cannot be ignored, With respect to service industries where employee costs are very large and almost fixed in nature Multiple Choice Multiple Answer Master budget provides a basis for computing effect of changes in: Correct Answer: product mix of the company, sales volume, production facilities Multiple Choice Multiple Answer The principal functions of the cost accounting department are: Correct Answer: Classifying labor cost according to jobs, processes, etc, Preparation of different reports based on direct, indirect labor cost, etc, To focus on areas where labor cost may be reduced. Select The Blank The treatment of ________ time in cost accounting depends upon the distinction between normal and abnormal time. Correct Answer: Idle True/False The process of recording attendance time of the workers is known as time booking. Correct Answer: False Select The Blank The balance of the suspense account will ________ after all the errors are Correct Answer: become zero Multiple Choice Single Answer If the quantity of material purchased and quantity used are different, then which quantity should be used to compute the material price variance? Correct Answer: Quantity of material purchased Select The Blank Factory light, telephone expenses are examples of ________ expenses. Correct Answer: Indirect Select The Blank For successful implementation of uniform costing system, it is very essential to devise ________, containing recommended cost accounting plan and procedures. Correct Answer: cost manual Select The Blank The combination in which different products are sold by a company is known as ________. Correct Answer: Sales mix Multiple Choice Single Answer Which of the following is usually prepared daily by employees for each job worked on? Correct Answer: Job card Multiple Choice Single Answer Rs.2,650/- were paid to ABC Ltd. for maintenance of machine; which account should be debited for this transaction? Correct Answer: Maintenance of machine account True/False

Margin of safety = Contribution / Profit volume ratio Correct Answer: False Select The Blank Over absorption of overheads may take place due to the reasons like ________ overheads being less than the ________ overheads Correct Answer: actual, estimated True/False While calculating the minimum level, normal lead time is not necessary Correct Answer: False True/False To Increase the existing production capacity, additional capital expenditure is required. Correct Answer: True Multiple Choice Single Answer During one week X makes 200 units. He receives wages for a guaranteed 44 hours per week at a rate of Rs. 1.50 per hour. Estimated time to produce one unit is 15 minutes. Time allowed is increased by 2 Correct Answer: Rs. 83.60 Select The Blank Financial Accounting protects the interest of outsiders. it considers ________ transaction and it is a ________ Correct Answer: historical, legal Multiple Choice Multiple Answer Office & Administration overhead includes Correct Answer: Salary, Rent & Taxes, Stationary & postage Multiple Choice Single Answer Cost-sheet may be prepared separately for each Correct Answer: Different Cost Centre Multiple Choice Multiple Answer The cost of asset is Rs. 1,10,000, Estimated scrap value 10,000,estimated life 10 yrs. Calculate the depreciation according to straight line method Correct Answer: 10,000 Multiple Choice Multiple Answer In fixed overhead variance, the volume variance is further analyzed as Correct Answer: Variance Efficiency Variance, Capacity Variance, Calendar Variance Multiple Choice Multiple Answer Accounts is a Correct Answer: Record of all transaction True/False Whatever is to be sold need not be produced. Correct Answer: True Multiple Choice Single Answer Budget is prepared in terms of Correct Answer: Quantity and/or Money True/False Favorable variances need on investigation Correct Answer: False Multiple Choice Multiple Answer Standard Costing may not be useful in Correct Answer: Small concerns, Industries having non-standardized products, Contract jobs Select The Blank The levels indicated on the Bin card enables the ________ department to keep a watch on the balance and replace the material as soon as it reached at ________ level. Correct Answer: Stores Correct Answer: Re-order level Multiple Choice Multiple Answer Accounting period Concept________________ Correct Answer: Longer life-span on business is divided into shorter segments, Each one being in the form of accounting period, Selection of accounting period may depend on various factors Multiple Choice Multiple Answer Depreciation Correct Answer: Amount charged on Fixed Assets.

True/False Purchased computers of Rs. 50,000 come under the heading of fixed asset Correct Answer: True Multiple Choice Single Answer Purchase Goods of Rs. 7500 on 10% cash discount. The discount amount is _______ Correct Answer: 750 Multiple Choice Multiple Answer When bank balance as per pass book is considered then following to be deducted. Correct Answer: Cheques issued but not presented, direct deposit by customer, wrong credits given by bank Multiple Choice Single Answer Rs. 2500 paid for the purchase of radio set for personal use of proprietor debited to general expenses account for rectifying the error, which A/C to be debited Correct Answer: Drawing A/C Multiple Choice Single Answer Discount received from the Creditors has been entered in the Creditors A/C but discount amount has not been credited, for rectifying such error which account to be debited. Correct Answer: Suspense A/C True/False Total of purchase register for the month of March is taken 50,000 instead of 55,000. Posting to individual A/C of supplier total to correct amount is 55,000 but purchase account is debited by Rs. 50,0 Correct Answer: True True/False There is reverse relationship between the ordering cost and carrying cost Correct Answer: True Multiple Choice Multiple Answer Store ledger Correct Answer: Record of all receipts and issue transactions, Financial expressions of all transactions, Maintenance of Store ledges provides a second check Multiple Choice Multiple Answer In EOQ, to express carrying cost as a percentage of the unit cost of purchases this is used in the formula----------Correct Answer: i True/False Where overheads chargeable to the department are Rs. 5000/-, direct labor hours worked are 24000 then labor hour rate is Re. 0.2083 labor hour. Correct Answer: True Multiple Choice Multiple Answer The selection of the base on which overheads should be apportioned depend on the following principles. Correct Answer: service or use basis, survey basis, ability to pay basis True/False The Budget key factor may be in the form of sales, raw material, labor etc. Correct Answer: True Multiple Choice Single Answer For a material, if standard quantity is 500 kg and standard price is Rs.6/- per kg. Find out the Material Cost variance if actual quantity is 400 kg and actual price is Rs.6/- per kg. Correct Answer:Rs.600/-(favorable) Multiple Choice Single Answer Calculate Efficiency Variance, If actual production is 22,000 units, Standard production in actual hours is 21,000 units and Standard rate per unit is Rs.1.5/-. Correct Answer:Rs.1,500/-(Favorable) Multiple Choice Single Answer Calculate Labor Mix Variance, If revised standard hours are 16,500/-, Standard rate is Rs.3/- and Actual hours are 13, Correct Answer: Rs.9,000/- (favorable) Multiple Choice Multiple Answer The following factors affects the budgeted advertisement cost Correct Answer: Percentage of profits, Availability of funds, Competitors policy Select The Blank Management Accounting has a very ________ scope and it requires ________ organizational structure Correct Answer: wide Correct Answer: elaborate

Select The Blank The cost accountancy is defined as: the application of costing principles, methods and techniques to the ________, art and practice of ________ ascertainment of the profitability and the presenta Correct Answer: science Correct Answer: cost control Select The Blank Replacement costs of labor turnover are ________ and ________ Correct Answer: training Correct Answer: breakages of machine Select The Blank Break even point is a situation of no ________ no ________ Correct Answer: profit Correct Answer: loss Select The Blank The process of Allocation & apportionment can followed to decide the ________ of overheads to each budget center Correct Answer: Allocation & apportionment Correct Answer: Loading Select The Blank Rs.5000 paid as ________ to ________ should be debited to salary account Correct Answer: Mahesh Correct Answer: salary Select The Blank Bank reconciliation statement is the statement prepared to explain the ________ as to why the bank balance as per ________ and bank balance as per bank book does not match Correct Answer: reasons Correct Answer: pass book Multiple Choice Multiple Answer Material Price Variance may occur due to Correct Answer: Change in price of material, Failure to take discounts, Weak purchase organization Select The Blank Bin Card is not an ________ record but only a ________ record. Correct Answer: Accounting Correct Answer: Quantitative Multiple Choice Single Answer Salary given in trial balance Rs. 5000/-, still 2000/- is to be paid. The outstanding salary is debited to Profit &Loss A/C. The second effect is -Correct Answer: Transfer to balance sheet liability side Multiple Choice Single Answer Calculate Sales Price Variance, If actual price is Rs.5.40/- per unit, Standard price is Rs.5/- per unit and actual sales volume is 500 units. Correct Answer:Rs.200/- (Favorable) True/False Debit the receiver & credit the giver is a rule of Real a/c. Correct Answer: False Select The Blank Administration overheads are ________ in nature and can be controlled mainly at ________ level of the management Correct Answer: fixed Correct Answer: top Multiple Choice Single Answer If at 50% capacity, total factory overheads are Rs.10,000/- (out of which 60% are fixed and 40 % are variable) then what will the amount of total factory overheads at 60% capacity Correct Answer:Rs.10,800/Multiple Choice Multiple Answer These are the features of fixed overheads Correct Answer: total cost remains the same, per unit cost may vary, not dependent on volume of output Multiple Choice Single Answer __________ Accounting is primarily protects the interest of the outsiders dealing with the organization various capacities like investors, suppliers, customers etc. Correct Answer: Financial

True/False Head of the Department should sign the purchase requisition. Correct Answer: True Multiple Choice Multiple Answer FIFO method Correct Answer: The price of the earliest available lot is considered first, If the lot is exhausted, the price of the next available lot is considered, It is used for issue of material Select The Blank Bin card is maintained by ________ department whereas ________ is maintained by costing department. Correct Answer: Stores Correct Answer: Store ledger True/False The situation of over absorption arises if the overheads absorbed are less than the actual overheads. Correct Answer: False Multiple Choice Single Answer If production overheads to be absorbed are Rs. 20000/- and machine hours worked are 5000 then the machine hour rate Correct Answer: Re. 4 per machine hour. True/False Due to errors of principle the arithmetical accuracy of the trial balance get affected. Correct Answer: False Multiple Choice Multiple Answer Trading a/c credit side includes Correct Answer: sales, goods lost by fire, closing stock Multiple Choice Multiple Answer From the following data, workout the EOQ annual demand. 5000 units, ordering cost Rs. 60 per unit, price per unit Rs. 100, inventory carrying cost15% on average inventory Correct Answer:300 Multiple Choice Single Answer Under the Emerson’s Efficiency Bonus System at following efficiency level no bonus is payable. Correct Answer: Below 66.66% Select The Blank Planning lays down the course of action to be taken in future. In case budgetary control, it is in the form of the ________ and in case of ________ costing, it is in the form of the standard cost Correct Answer: budgets Correct Answer: standard True/False canteen facility to workers, health and safety services are examples of monetary incentives. Correct Answer: False Multiple Choice Single Answer This is the process of recording attendance time of the workers. Correct Answer: Time keeping Multiple Choice Multiple Answer Wage rate standards takes into consideration the following factors Correct Answer: The system of wage payments, System for bonus payment, Grades of workers required Select The Blank Standard Costing system facilitates ________ and ________ for each individual or department Correct Answer: Delegation of authority Correct Answer: Fixation of responsibility True/False If actual cost is more than the standard cost then it is called favorable variance. Correct Answer: False True/False The aggregate of indirect material cost, indirect labor cost and indirect expenses is termed as factory cost. Correct Answer: False True/False Cost Accounting restrict itself with historical transactions Correct Answer: False True/False A very wide scope of Management Accounting is the limitation by itself.

Correct Answer: True Multiple Choice Single Answer Journal is popularly known as 'Book of... Correct Answer: Original Entry True/False In a Balance-Sheet right hand side is referred as assets side and left hand side is referred as liabilities. Correct Answer: True Multiple Choice Single Answer Presentation of information to enable managerial decision making' is one of the objects of which of the following Correct Answer: Cost Accounting Select The Blank The principle of ________ is followed while preparing the financial statements. Correct Answer: Going concern Multiple Choice Single Answer It is said that adoption of uniform costing creates customer confidence because... Correct Answer: Prices are reliable Multiple Choice Multiple Answer Pre-requisites of Uniform Costing are... Correct Answer: Spirit of mutual trust, Free Exchange of ideas, No rivalry Multiple Choice Multiple Answer Ram and Laxman are partners of Kush & Bros. As on 1st April, 2003 Ram's capital is Rs.50,000/- and Laxman's capital is Rs.80,000/-. If interest on capital is to be provided @ 10% p.a, what will be amount of capital of each of the partners as on 31st March, 2004, assuming there were no additions during this period? Also, state the treatment of this item in the Profit and loss account. Correct Answer: Ram's capital Rs.55,000/-, Laxman's capital Rs.88,000/-, Interest on capital should be debited to the Profit and loss account Select The Blank Non-trading income is disclosed on the credit side of ________ account. Correct Answer: Profit and loss Select The Blank In the adjustment entry passed for closing stock, the ________ account should be credited. Correct Answer: Trading Multiple Choice Single Answer Goods kept in the godown were destroyed by fire on 18th June, 2004. The cost of such goods was Rs.18,950/-. The goods were not insured. Find the amount which should be debited to the profitability statement. Correct Answer: Rs.18,950/Multiple Choice Single Answer While preparing the bank reconciliation statement as on 31st March, 2004 you find the following discrepancy: 'a cheque of Rs.3,700/- received and deposited in bank on 27th March, 2004 was entered credited in the pass book on 3rd April, 2004.' In this background, which of the following statement holds true as on 31st March, 2004? Correct Answer: Balance as per pass book < Balance as per bank book True/False Bank reconciliation statement is a systematic presentation of errors made by the accountant. Correct Answer: False Select The Blank The stores department is a ________ department. Correct Answer: Service Select The Blank The ________ is responsible for material losses while in storage. Correct Answer: Store-keeper Select The Blank The ________ is a perpetual inventory record. Correct Answer: Bin card Multiple Choice Single Answer A written request sent to a supplier for specified goods at an agreed upon price is often called as: Correct Answer: Purchase order Multiple Choice Single Answer Selecting an appropriate method of valuation of inventory is important because: Correct Answer: It influences the figure of gross profit

True/False Re-order level for materials is determined considering maximum consumption and maximum delivery period. Correct Answer: True True/False Under some circumstances, it may be advisable to sell at prices equal to or below the marginal cost ignoring fixed cost. Correct Answer: True Multiple Choice Single Answer Which variance is used to analyze the effect of change in the quantity of output from a given mix of inputs? Correct Answer: Materials yield variance Multiple Choice Multiple Answer Double Entry Accounting System__________________ Correct Answer: Every business transactions have two elements, When business receives something, it has to pay something, Every debit has a corresponding credit True/False Sundry creditors transfer to asset side. Correct Answer: False Multiple Choice Single Answer The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 deducted as depreciation. Calculate the percentage Correct Answer: 17% True/False A bank reconciliation statement is prepared on a particular date. Correct Answer: True Multiple Choice Multiple Answer When bank balance as per bank book is considered then following to be added. Correct Answer: Cheque issued but not presented, direct deposit by customer, wrong credits given by bank True/False As soon as the suspense account balance is wiped out, it may be assumed that all mistakes have been corrected. Correct Answer: False True/False Credit sale of Rs. 5000 to Bobby should be entered in the purchase book. Correct Answer: False Multiple Choice Multiple Answer Manufacturing process involves study of Correct Answer: Designing the product, The quantity and quality, Material used Multiple Choice Multiple Answer LAST IN FIRST OUT (LIFO) Correct Answer: The price of the latest available lot is considered first, If that lot is exhausted, the price of the 10% prior to that is considered, Physical issue of the material may not be made out of the said lot Multiple Choice Multiple Answer The Bin card and stores ledges do not match due to the following reasons: Correct Answer: Arithmetical errors in calculating, Non- posting a certain document, Posting a wrong Bin card True/False Flux method is important method of wage payment. Correct Answer: False Multiple Choice Single Answer If production overheads to be absorbed are Rs. 50000/- and labor hours worked are 100000 then the labor hour rate will Correct Answer: Re. 0.50 per labor hour. Multiple Choice Multiple Answer Limitations of marginal costing are Correct Answer: difficult for classification as fixed cost and variable cost, does not provide any standard for the evaluation of performance, it is useful technique only in the short run. True/False Material Mix Variance occurs where only one raw material is required Correct Answer: False Multiple Choice Multiple Answer In Cash budget, Non operating cash inflow includes Correct Answer: Receipt of loan/borrowings, Issue of shares, Sale of fixed assets Multiple Choice Multiple Answer In Cash budget, Non-Operating cash outflow includes various kinds of over heads

Correct Answer: Loan installments, Taxes, Purchase of fixed assets. Multiple Choice Single Answer During a month opening stock is 5,000 kg, closing stock is 6,000 kg and production is 21,000 kg, what is the quantity of Correct Answer: 20,000 kg Select The Blank The ideal standards are generally ________ in nature and the variances always shows ________ trends Correct Answer: theoretical Correct Answer: unfavorable True/False Maintenance Department is a service cost centre. Correct Answer: True Multiple Choice Multiple Answer The data for XYZ Ltd. is as follows: Fixed assets Rs.60,000/-; total cost Rs.105,000/-; working capital is equal to 25% of the sales value. The company expects 25% return on capital employed. Capital employed is equal to fixed assets plus working capital. Select the correct answers: Correct Answer: Sales Rs.128,000/-, Return on capital employed, Working capital Rs.32,000/Select The Blank If the owner brings in personal calculator for office use, ________ account should be credited. Correct Answer: Capital Multiple Choice Single Answer A firm employs ten workers at an hourly rate of Rs.20/-. They worked for 40 hours each and completed the job for which standard time was 48 hours for each worker. Calculate labor cost for the job under the Rowan Plan. Correct Answer: Rs.9,333.33 Multiple Choice Multiple Answer Features of material usage variance are: Correct Answer: Measures the difference between the quantity of materials actually used and that should have been used, Considers standard price X actual quantity, Considers standard price X standard quantity True/False Treating capital receipt as revenue income is an example of errors of commission. Correct Answer: False Multiple Choice Single Answer Two competing companies Hero Ltd. and Zero Ltd. sell the same type of product in the market. Their forecasted profit and loss accounts for the year ending December 2003 are as follows: Hero Ltd.: Sales Rs.500,000/-; Variable cost Rs.400,000/-; fixed costs Rs.50,000/-. Zero Ltd.:Sales Rs.500,000/-; Variable cost Rs.300,000/-; fixed costs Rs.150,000/-. Correct Answer: Hero Ltd. Select The Blank Crane expenses should be apportioned on the basis of ________. Correct Answer: Number of hours crane worked in the department True/False Suspense account is closed automatically after rectification of all the errors. Correct Answer: True Select The Blank Generally all the liabilities will have ________balance. Correct Answer: Credit Multiple Choice Single Answer Loan @ 12% p.a. of Rs.50,000/- was taken on 1st March, 2004. Find the interest expenditure on 31st March, 2004. Correct Answer: Rs.500/Select The Blank The sales forecast (quantity) should be compared with the ________ to find out whether it is possible for the firm to handle this level of sales. Correct Answer: Production capacity Multiple Choice Multiple Answer You are using petrol as one of the raw materials. Daily you purchase 1,000 litres of petrol at Rs.28.50 per ltire. 5% of it generally gets lost due to spillage and evaporation. On a particular hot and dry day, the issue of petrol from 1,000 litres drum was as follows: To job X 200 litres; job Y 400 litres and job Z 320 litres. After these issues the drum was empty. Calculate per litre charge for use of petrol, quantum of loss and total quantum of petrol used for jobs X,Y and Z. Correct Answer: Loss due to spillage and evaporation - 30 litres, Rate of charge per litre of petrol - Rs.30/Select The Blank The column which refers to the page number of the ledger is known as ________.

Correct Answer: Ledger folio Multiple Choice Single Answer The direct material useage budget and direct material purchase budget differ because of which of the following: Correct Answer: A planned change in the level of material stock Select The Blank Discount received from the creditor has been entered in the creditor's account but discount has not been credited; what type of error is this ________ Correct Answer: Omission of posting an amount in the ledger Multiple Choice Single Answer Which of the following operations would normally be carried out first when preparing a master budget? Correct Answer: Determining the budget period Select The Blank Interest on capital is an allowable expenditure for parntership firms, as per the provisions of the ________. Correct Answer: Income Tax Act, 1961 Multiple Choice Single Answer Mixers Ltd. is engaged in producing a standard mix using 60kg of chemical X and 40 kg of chemical Y. The standard loss of production is 30%. The standard price of X is Rs.5/- per kg.and of Y Rs.10/- per kg. The actual mix and yield were as follows: X - 80 kg @ Rs.4.50 per kg; Y - 70 kg @ Rs.8/- per kg. Actual yield - 115 kg.Compute material yield variance. Correct Answer: Rs.100/- (Favorable) Multiple Choice Multiple Answer The net profit before certain adjustments was Rs.95,040/-. After giving due effects to the adjustments, the revised net profit (after considering the adjustments) is Rs.78,560/-. Select the adjustments which might brought this change. Correct Answer: Accrued commission income of-Rs.32,960/- was not entered in the books, Rent for the month of March was payable and yet to be recorded Rs.19,280/-, Repairs expenditure to the extent of Rs.30,160/- was wrongly transferred to Machinery account Multiple Choice Multiple Answer While preparing sales budget the following factors must be considered: Correct Answer: The number and types of products sold by the organisation, Whether the organisation's market share is increasing or decreasing?, Details of seasonal fluctuations in sales True/False Budgetary control system provides a basis for establishment of the incentive systems. Correct Answer: True Select The Blank A low margin of safety indicates ________ fixed overheads. Correct Answer: higher Select The Blank Category A items, as per ABC analysis, represent ________ % of the total number of items in inventory. Correct Answer: less than 10 Multiple Choice Single Answer The gross profit transferred from the trading account is Rs.98,999/-. The expenses debited to the profit and loss account are salary Rs.12,000/-; advertisement expenses Rs.18,000/-; printing and stationery Rs.5,500/- and managing director's incentive Rs.28,000/-. It was noted that no entry was made for salary of one month which was due but not yet paid. Find the net profit of the company. Correct Answer: Rs.34,408.09 True/False Credit balances in all the Personal & Real accounts appear on asset side. Correct Answer: False Select The Blank A complete list of all material required, with quantities, for a particular job is given in the ________. Correct Answer: Bill of material Multiple Choice Single Answer The budget manual must contain statement regarding: Correct Answer: Objectives of the orgainsation Multiple Choice Single Answer Annual subscription paid by bank to the Chamber of Commerce on 31/03/04, as per the standing instructions, and advise sent thereafter, may lead to: Correct Answer: Balance as per bank book > Balance as per pass book Select The Blank Entry for dishonour of cheque appears only in the pass book, this entry should be ________ in the bank book.

Correct Answer: Passed True/False A pre-determined factory overhead rate holds up product costing. Correct Answer: False Multiple Choice Single Answer Rent of Rs.7,500/- for the month of April was received in March. Which account should be credited in the books of accounts for making an entry for receipt of the said amount? Correct Answer: Rent received in advance account True/False Real Accounts may also consist the accounts of some intangible assets like Goodwill Account Correct Answer: True True/False The rate at which the depreciation is to be calculated are also specified in the Income Tax Act 1961. Correct Answer: True Multiple Choice Single Answer A proprietor purchase goods worth Rs. 5500 & cash account credited to Rs. 5000 rectification of the suspense accounted debited to Rs Correct Answer: 500 True/False A bill of Rs. 500 for old furniture sold to Raj, was entered in the sales day book Correct Answer: False True/False Abnormal cost indicates that cost which is normally incurred at a certain level of output under normal circumstances. Correct Answer: False Multiple Choice Multiple Answer Indirect Expenses includes Correct Answer: Rent, Telephone expenses, Insurance True/False Material cost is the first and probably the most important element of cost. Correct Answer: True Multiple Choice Multiple Answer Under stocking may have following consequences Correct Answer: Payment for idle time to workers, Production hold ups resulting into disturbed delivery schedule, Eleventh hour purchase Multiple Choice Multiple Answer Goods received note or goods received report is prepared in following copies Correct Answer: One copy to Purchase department, One copy to Accounts department, One copy to Costing department Multiple Choice Multiple Answer Valuation of material uses the following methods Correct Answer: FIFO and LIFO, Average price method, Market price True/False If the organisation follows the policy of considering predetermined overhead absorption rates, it may face the problem of under or over absorption of overheads if the actual overheads to be absorbed o Correct Answer: True True/False Fixed cost is the cost that varies in direct proportion with the level of activity or volume of operations. Correct Answer: False Multiple Choice Multiple Answer Budgetory Control deals with Correct Answer: Establishment of budgets, Comparison of budgeted results with actuals, Computation of variance. True/False The analysis of overhead variances is different and the most complex task. Correct Answer: True True/False Standard costing and Marginal Costing are the best possible tools available to the management for cost control Correct Answer: False Multiple Choice Multiple Answer Current standards includes Correct Answer: Expected standards, Normal standards, Ideal standards

Multiple Choice Single Answer In case of industries where capital investment is very high, budget should be prepared for a Correct Answer: Longer period Select The Blank ________ and ________ are examples of semi- variable overheads. Correct Answer: Maintenance cost Correct Answer: electricity Multiple Choice Multiple Answer The different purposes served by standard costing technique are: Correct Answer: Cost control, Cost awareness, Performance appraisal Multiple Choice Single Answer If a predetermined overhead rate is not employed an the volume of production is increased over the level planned, the cost per unit would be expected to: Correct Answer: Decrease for fixed costs and remain unchanged for variable costs Select The Blank The variance which measures the difference between what is paid for a given quantity of materials and what should have been paid for, is known as ________ variance. Correct Answer: Direct material cost True/False Deferred revenue expenditure written off account is a real account. Correct Answer: False Multiple Choice Single Answer The cost of fixed asset is Rs. 1,00,000. Rs. 17,000 is charged as depreciation. Calculate the rate of depreciation. Correct Answer: 0.17 Select The Blank The cost-volume-profit analysis basically highlights the effect of changes in sales volume on the profit of the company, in the ________. Correct Answer: short run Select The Blank The expenses relating to maintenance and creation of demand for the product should be included in the ________budget Correct Answer: Selling expenses Multiple Choice Multiple Answer When bank balance as per bank book is considered for preparing bank reconciliation statement, then following items need to be added: Correct Answer: Cheques issued but not presented, Direct deposit made by customer, Wrong credits given by bank Select The Blank If the standard contribution is less than the actual contribution, then ________ variance arises. Correct Answer: Favorable Multiple Choice Single Answer As a part of the data presented in support of a proposal to increase the production of clock radios, the sales manager of Wittman Electronics reported the total additional cost required for the proposed increased production level. The increase in total cost is known as: Correct Answer: Incremental cost Multiple Choice Multiple Answer Financial Accounting ______________ Correct Answer: Designed to supply information for internal/ external uses, Deals with the transaction during specific period, It is compulsory True/False Depreciation can be defined as a permanent, continuous and gradual reduction in the book value of a fixed asset. Correct Answer: True True/False Penalty paid for delay in payment to creditors represents uncontrollable cost. Correct Answer: False Select The Blank ________ Accounting assists the management in establishing the plans to attain the economic objectives and take proper decisions for the attainment of its objectives. Correct Answer: Management Select The Blank Depreciation charged on office furniture on straight line basis is an example of ________.

Correct Answer: Administration overheads Multiple Choice Multiple Answer Purchased goods worth Rs.6,450/- on 10th March, 2004. However the goods were delivered directly to the plant situated at Nagar and hence this transaction was not recorded in the purchase book, which is maintained at the corporate office. Analyse the impact of this transaction. Correct Answer: The gross profit will increase by Rs.6,450/True/False While passing the journal entry, it is of utmost importance to ensure that the total of amount debited is equal to the total of the amount credited. Correct Answer: True True/False The cost of abnormal time may be recovered by inflating the hourly labor rate. Correct Answer: True Multiple Choice Single Answer ABC Ltd. is planning to sell 200,000 units of product B. The fixed costs are Rs.400,000/- and the variable costs are 60% of the selling price. In order to realize a profit of Rs.100,000/-, the selling price per unit would have to be: Correct Answer:Rs.6.25 Multiple Choice Single Answer The total production cost for making 20,000 units was Rs.21,000/- and the total production cost for making 50,000 units was Rs.34,000/-. Once production exceeds 25,000 units, additional fixed costs of Rs.4,000/- are incurred. The full production cost per unit of making 30,000 units is: Correct Answer:Re.0.98 Multiple Choice Multiple Answer In which of the following situations, the flexible budget should be preferred? Correct Answer: Sales are too difficult to predict, Supply level of input cannot be predicted, Varying levels of production True/False Amortization of goodwill should be considered while preparing cash budget. Correct Answer: False Multiple Choice Single Answer A' started business with cash Rs. 5,000/-, building Rs. 5,000/-, furniture Rs. 2,000/-. What is the total amount of capital? Correct Answer: Rs. 12,000 Select The Blank ________ authorizes the production department to issue requisition for materials. Correct Answer: Bill of material Select The Blank The variance that attempts to ascertain the effect of change in sales volume on the difference between actual and budgeted contribution is known as ________ variance. Correct Answer: Sales margin volume Multiple Choice Multiple Answer From the following, select current assets:Correct Answer: Sundry debtors, Stock, Pre paid expenses True/False Sales estimate given in the sales budget is a mere guess. Correct Answer: False Select The Blank The final result disclosed by trading account is the ________ profit earned by the organization. Correct Answer: Gross Multiple Choice Single Answer Which of the following is most likely to be an allocated production overhead cost to the finishing cost centre? Correct Answer: Salary of the finishing center's manager Multiple Choice Multiple Answer The features of multiplicity of key factors are as follows:Correct Answer: More than one key factors, Refers to a complex situation, Can be resolved by using linear programming technique Multiple Choice Single Answer Determine re-order level from the following: Maximum daily consumption - 200 units; maximum delivery period - 12 days; average daily consumption - 150 units and average delivery period - 8 days. Correct Answer: 2,400 units