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MCQs 1: The formula to estimate Labour Mix variance is

Total standard labour cost of actual output - Total actual cost of actual output (Standard rate per hour - Actual rate per hour) * Actual Hours (Revised standard time - Actual time) * Standard rate Abnormal idle hours * Standard hourly rate
Answer Explanation

MCQs 2: Idle hours are not deducted in

Labour efficiency variance Labour rate variance Both a and b None of the above
Answer Explanation

MCQs 3: The formula to estimate overhead cost variances is

Actual output * Standard overhead rate + actual variable overhead Actual output * Standard overhead rate per unit - actual overhead cost Actual output * Standard overhead rate per unit * actual overhead cost None of the above
Answer Explanation

MCQs 4: In a control report of Department X, it is mentioned as indirect materials are Rs 1,000, Indirect labour Rs 900, Overtime Charges Rs 100, Depreciation on equipment Rs 500, Allocated factory overhead (38% of factory space) Rs 4300, Allocated overhead of repair shop is Rs 1200. Determine total costs treating department X as a responsibility center.

Rs 3200 Rs 2200 Rs 1200 None of the above
Answer Explanation

MCQs 5: In a company Department A recorded losses in the first half of the current year. The sale of department is Rs 90,000 and uncontrollable costs are Rs 91,000, Advice the management whether its operations should be continued or terminated.

Continued Terminated Insufficient information None of the above
Answer Explanation

MCQs 6: _________ is a monthly profit and loss account, wherein the actual results of the concerned month are compared with the budgeted figures of that month.

Master summary control report Subsidiary summary control report Interim summary control report None of the above
Answer Explanation

MCQs 7: __________ conveys detailed summary pertaining to various activities of the organization.

Master summary control report Subsidiary summary control report Interim summary control report None of the above
Answer Explanation

MCQs 8: The definition ‘Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.’

Ango-American Council on Productivity AICPA Robert N. Anthony All of the above
Answer Explanation

MCQs 9: Agency cost consists of

Binding Monitoring Opportunity and structure cost All of the above
Answer Explanation

MCQs 10: Finance Function comprises

Safe custody of funds only Expenditure of funds only Procurement of finance only Procurement & effective use of funds
Answer Explanation

MCQs 11: The objective of wealth maximization takes into account

Amount of returns expected Timing of anticipated returns Risk associated with uncertainty of returns All of the above
Answer Explanation

MCQs 12: Financial management mainly focuses on

Efficient management of every business Brand dimension Arrangement of funds All elements of acquiring and using means of financial resources for financial activities
Answer Explanation

MCQs 13: Liquid assets is determined by

Current assets – stock - Prepaid expenses Current assets + stock + prepaid expenses Current assets + Prepaid expenses None of the above
Answer Explanation

MCQs 14: Which of the following is not included in current assets?

Debtors Stock Cash at bank Cash in hand
Answer Explanation

MCQs 15: Higher the ratio, the more favorable it is, doesn’t stand true for

Operating ratio Liquidity ratio Net profit ratio Stock turnover ratio
Answer Explanation

MCQs 16: The most precise test of liquidity is

Quick ratio Current ratio Absolute Liquid ratio None of the above
Answer Explanation

MCQs 17: Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.

Rs 54,000 Rs 60,000 Rs 1,62,000 None of the above
Answer Explanation

MCQs 18: Collection of debtors

Decreases current ratio Increases current ratio Has no effect on current ratio None of the above
Answer Explanation

MCQs 19: Provision of taxation is treated as

As a current liability As an appropriation of profits Either a or b None of the above
Answer Explanation

MCQs 20: As per accounting standard AS3, provision for taxation should be treated as

As a current liability As an appropriation of profits Either a or b None of the above
Answer Explanation

MCQs 21: Which of the following statement is true?

A) If the amount of good will increases during current year, the difference is treated as purchase of goodwill.
B) If the amount of good will decreases during current year, It will treated as written off.

Only A Only B Both A and B None of the above
Answer Explanation

MCQs 22: The opening and closing balance of general reserves are Rs 10,000 and Rs 9,000, respectively. It is stated in addition information that a loss of Rs 1000 has been written off in general reserves. In such a case, decline in reserve and loss on investment will be adjusted in P&L account.

True False
Answer Explanation

MCQs 23: Which of the following statements are false?

A) Old Furniture written off doesn’t affect cash flow.
B) Cash flow statement is a substitute for cash account.
C) Appropriation of retained earnings is not shown in Cash flow statement.
D) Net cash flow during a period can never be negative.

A, B, C B, C, D C, D, A None of the above
Answer Explanation

MCQs 24: Which of the following is not a cash inflow?

Decrease in debtors Issue of shares Decrease in creditors Sale of fixed assets
Answer Explanation

MCQs 25: Which of the following is not a cash outflow?

Increase in Prepaid expenses Increase in debtors Increase in stock Increase in creditors
Answer Explanation

MCQs 26: While preparing Marginal cost and Contribution Statement, if any factor of production is key factor then ________ should be expressed in terms of per unit of Key factor.

Profit Sales Contribution None of the above
Answer Explanation

MCQs 27: Which of the following principles should be followed while making a decision to drop a product/line?

Product yielding lowest contribution should be given top priority in production programme A product line should be dropped, if it yields positive contribution If any factor is key factor, the product/line should be dropped, which gives maximum contribution per unit of key factor None of the above
Answer Explanation

MCQs 28: Rahul has an amount of Rs 3,00,000 which is invested in a business. He desires 15% return on his fund. It is known from the past cost data analysis that fixed costs are Rs 1,50,000 per annum and variable costs of operation are 60% of sales. Determine sales volume to get 15% return. Also tell shut down point of the business, if he would spend Rs 50,000 even if business has to be closed.

Rs 2,50,000 and Rs 4,00,000 Rs 2,50,000 and Rs 4,87,500 Rs 4,87,500 and Rs 2,50,000 Rs 4,00,000 and Rs 2,00,000
Answer Explanation

MCQs 29: A facility, the installed capacity of which is 1,00,000 units, has budgeted 70% level of activity as Materials Rs 1,05,000, Wages Rs 1,40,000 Variable overheads Rs 70,000 and Fixed overheads Rs 20,000. Production is now proposed at 80,000 units. Determine Marginal cost p.u., Differential cost, and Differential cost p.u.

Rs 2, Rs 20,000, Rs 4.5 Rs 4.5, Rs 45,000, Rs 4.5 Rs 5, Rs 50,000, Rs 5 None of the above
Answer Explanation

MCQs 30: As per Cash flow method Increase in current liabilities and decrease in current assets are

Deducted from opening balance of cash Added to opening balance of cash Not included in cash budget None of the above
Answer Explanation

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