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- Management Accounting Test Questions - Set 4
MCQs 1: Which of the following statements are true?
A) Cash flow reveals only the inflow of cash.
B) Cash flow reveals only the outflow of cash.
C) Cash flow is a substitute for income statement.
D) Cash flow statement is not a replacement of funds flow statement.
MCQs 2: Cash flow statement is based upon _________ while Funds Flow Statement recognizes _______.
Cash basis of accounting, accrual basis of accounting
Accrual basis of accounting, cash basis of accounting
Both are based on cash basis of accounting
None of the above
MCQs 3: Statement of changes in working capital is prepared separately in
MCQs 4: Absorption costing is used for
Price determination on basis of full cost
Solution of separation of costs
Calculation of gross and net profit
All of the above
MCQs 5: Absorption costs help in
Difference between product cost and period cost
Charged of fixed factory overheads on inventory
Both a and b
None of the above
MCQs 6: Which of the following statements are true?
A) Absorption costing helps in preparation of fixed budget.
B) Absorption costing is dependent on level of level of output.
C) Absorption costing is very helpful in taking managerial decisions.
D) Absorption costing helps to conform with accrual and matching concept.
MCQs 7: If the management decides to manufacture a product it in own factory, the focus should be on
MCQs 8: If there are large fluctuations in demand, the component should be
Purchased from outside
Made in factory
Should be made in factory in peak season
Should be made in factory in off season
MCQs 9: Pertaining to the differential cost systems, which of the following statements are true?
A) Differential cost plus differential income shows net loss or net income
B) Differential cost is ascertained by comparing total costs of each alternative.
C) Differential cost related to differential investments is calculated every time.
MCQs 10: The term marginal cost can be used as a substitute of variable cost while measuring Contribution.
MCQs 11: Determine total as well as per unit contribution if Sales is Rs 40,000, Sales in units is 4,000 and variable cost is Rs 30,000.
MCQs 12: Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%.
MCQs 13: Determine Contribution if Fixed cost is Rs 40,000 and profit is Rs 30,000.
MCQs 14: Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.
MCQs 15: Standard costs are useful in
Establishing budgets
Supporting cost reduction measures
Simplifying cost procedures and expediting cost reports
All of the above
MCQs 16: Which of the following statements are not true?
A) Standard costs are of forward nature while historical costs are actual in nature.
B) Historical costs are useful for control purposes while standard costs are not.
C) Standard cost is an important tool for measurement of operational efficiency while historical costs are not related to operational efficiency.
D) Standard costs are not reasonably attainable ideal costs.
MCQs 17: Historical costs have no managerial use because
They are made available to management too early to correct inefficiencies
They provide motivation to employees to achieve their objectives
They provide yardstick to ascertain the operational efficiency
They cannot become the basis of budgeting and planning
MCQs 18: According to George R. Terry, _________ may be described as a process of finding out what is being done and comparing actual results with the corresponding budget data in order to approve accomplishment.
MCQs 19: Budget, Budgeting and Budgetary control are one and same thing.
MCQs 20: Which of the following statements are true about budget, budgeting & budgetary control?
Budgetary control is a wider concept whereas Budget and budgeting are narrower concepts
If there is budgeting or budget, it is not necessary that there should be budgetary control also
If there is budgetary control, budgeting and budget are must
All of the above
MCQs 21: Outstanding expenses and reserve for doubtful debts are shown in cash budget.
MCQs 22: The receipts from cash sales, advance from customers, collection from debtors and bills receivable are
Receipts from Non-business operations
Receipts from business operations
Receipts from capital transactions
None of the above
MCQs 23: In _________ actual performance can easily be compared due to availability of budgets at different levels of activity.
MCQs 24: Which of the following statements are true flexible budget?
On the basis of fixed budget, marginal analysis can be obtained
Flexible budget is important for cost reduction and cost control
Fixed budgetary system is more flexible than flexible budgetary system
None of the above
MCQs 25: Material cost variances is measured as
Total standard cost - Total actual cost
Standard cost of revised standard mix - Standard cost of actual mix
(Standard unit price - Actual unit price) * Actual quantity used
(Standard quantity - Actual quantity) * Unit standard price
MCQs 26: Standard quality must relate to actual output.
MCQs 27: The formula to calculate material price variance is
Total standard cost - Total actual cost
Standard cost of revised standard mix - Standard cost of actual mix
(Standard unit price - Actual unit price) * Actual quantity used
(Standard quantity - Actual quantity) * Unit standard price
MCQs 28: Management auditing is a part of statutory auditing.
MCQs 29: In responsibility accounting, responsibilities of various groups or individuals are identified in terms of
MCQs 30: Which of the following are not covered in managerial reporting?
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