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MCQs 1: The management accounting can be stated an extension of

A) Cost Accounting
B) Financial Accounting
C) Responsibility Accounting

Both A and B Both A and C Both B and C A, B, C
Answer Explanation

MCQs 2: Which of the following statements are true about Horizontal Analysis?

A) It does not examine the periodical trend.
B) It is useful for long-term analysis.
C) It is useful for long –term planning.

Both A and B Both A and C Both B and C A, B, C
Answer Explanation

MCQs 3: Which of the following statements are true?

A) Comparative financial statement is an example of horizontal analysis.
B) Trend Analysis is an example of vertical analysis.
C) Cash flow analysis is an example of horizontal analysis.

Both A and B Both A and C Both B and C A, B, C
Answer Explanation

MCQs 4: Present value tables for annuity cannot be straight away applied to varied stream of cash flows.

True False
Answer Explanation

MCQs 5: Heterogeneous cash flows can be made comparable by

Discounting technique Compounding technique Either a or b None of the above
Answer Explanation

MCQs 6: General Profitability ratios are based on

Investments Sales Both A & B None of the above
Answer Explanation

MCQs 7: Gross Profit ratio is also termed as

Gross Profit Margin Gross Margin to net sales Both a and b All of the above
Answer Explanation

MCQs 8: While calculating Gross Profit ratio,

Closing stock is deducted from cost of goods sold Closing stock is added to cost of goods sold Closing stock is ignored None of the above
Answer Explanation

MCQs 9: Which of the following are current assets?

A) Fixed investments
B) Trade Payables
C) Short-term loans and advances
D) Furniture

Only A Only B Only C A, B, C and D
Answer Explanation

MCQs 10: Which of the following are Non-current assets?

Land, Building and Plant Leasehold property Computer software All of the above
Answer Explanation

MCQs 11: Cash Flow Statement studies causes of change in working capital.

True False
Answer Explanation

MCQs 12: _________ reconciles the opening cash balance with the closing cash balance of a given period on the basis of net decrease or increase in cash during that period.

Cash Flow Statement Funds Flow Statement Both a and b None of the above
Answer Explanation

MCQs 13: Which of the following statements are true?

A) Cash flow statement is more useful for short term cash planning.
B) Funds Flow statement is more useful in planning medium term and long term financing.
C) Cash Flow statement discloses the position of liquidity in a better way.

Only A Only B Only C A, B and C
Answer Explanation

MCQs 14: Fixed expenses decrease per unit with the increases in production and increases per unit with the decrease in production.

True False
Answer Explanation

MCQs 15: Marginal costs is taken as equal to

Prime Cost plus all variable overheads Prime Cost minus all variable overheads Variable overheads None of the above
Answer Explanation

MCQs 16: If total cost of 100 units is Rs 5000 and those of 101 units is Rs 5030 then increase of Rs 30 in total cost is

Marginal cost Prime cost All variable overheads None of the above
Answer Explanation

MCQs 17: A box manufacturer discovers that while it costs Rs 6.25 per unit to make a component T the same is available in the market at Rs 5.75 each. There is reliability of regular supply. The breakdown of costs is materials is Rs 2.75 per unit, Labor is Rs 1.75 per unit, Other variable expenses is Rs 0.50 and depreciation and other fixed costs is Rs 1.25. Will you make or buy?

Buy the product Make the product Either a or b None of the above
Answer Explanation

MCQs 18: In marginal costing, profitability of each product is measured on the basis of its

Cost Profit Contribution None of the above
Answer Explanation

MCQs 19: Which of the following statements are true about differential cost?

Differential cost is also known as relevant cost Differential costs are estimated future costs Differential costs include only those costs which change as a result of the decision making being considered All of the above
Answer Explanation

MCQs 20: Contribution and profit both are same concepts.

True False
Answer Explanation

MCQs 21: Which of the following statements are true about contribution?

Contribution doesn’t include fixed cost whereas profit includes fixed cost Contribution is not based on the concept of marginal cost Contribution above breakeven point becomes profit All of the above
Answer Explanation

MCQs 22: Profit-Volume ratio is also known as

Contribution ratio Contribution/Sales ratio Marginal Income percentage All of the above
Answer Explanation

MCQs 23: Which of the following statements are true about P/V ratio?

P/V Ratio can never be used to measure break-even point Higher the P/V ratio less will be the profit and vice versa Concept of P/V ratio is also used to determine profit at a given volume of sales All of the above
Answer Explanation

MCQs 24: The P/V ratio can be improved by

Decreasing the selling price per unit Increasing variable cost Changing the sales mix None of the above
Answer Explanation

MCQs 25: Standard costs are better than historical costs because

Determination of standard costs is economical in terms of money as well as time They facilitate delegation of responsibility They help in timely action against extravagances All of the above
Answer Explanation

MCQs 26: Which of the following statements are true about Estimated Costs and Standard Costs?

Standard costs are based on scientific analysis and engineering studies while estimated costs are based on historical Standard cost emphasis is on ‘what cost will be’ while estimated costs emphasis is on ‘What cost should be’ Standard costs are more frequently revised compared to estimated costs Estimated costs are more stable than standard costs
Answer Explanation

MCQs 27: Which of the following statements are true about Standard Costs and Budgetary Control System?

Both are the important techniques of management control Under both the techniques targets are decided beforehand Both are based on presumption that cost is controllable All of the above
Answer Explanation

MCQs 28: Which of the following statements are true about budget, budgeting & budgetary control?

Budgeting is business estimates for future periods Budget is the process of preparing business estimates Budgetary control is the means to achieve performance on the basis of budget None of the above
Answer Explanation

MCQs 29: Budgetary control is used to make cost accounting systematic and reliable.

True False
Answer Explanation

MCQs 30: Which of the following statements are not true about budget, budgeting & budgetary control?

Budgetary control works on the basis of best option Budget is one of the important mediums of communication Budgeting develops the quality of objectivity in planning None of the above
Answer Explanation

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