Download I B.Com (PA) 218A - MANAGMENT ACCOUNTING

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Dr.G.R.Damodaran College of Science
(Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Reaccredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified
CRISL rated 'A' (TN) for MBA and MIB Programmes
I B.Com PA [2016 - 2019]
Semester II
Core: Management Accounting - 218A
Multiple Choice Questions.
1. Cost accounting is
A. an instrument of management control
B. not needed if prices are beyond the control of the firm
C. nothing more than a detailed analysis of expenditure
D. useful only in such organizations which have profit as the aim
ANSWER: A
2. The main purpose of cost accounting is to
A. maximize profits
B. helps in inventory valuation
C. provide information to management for decision - making
D. aid in the fixation of the selling price
ANSWER: C
3. The term 'cost' refers to
A. the present value of future benefits
B. the value of the sacrifice made to acquire goods or services
C. an asset that has given benefit and is now expired
D. the price of products sold or services rendered
ANSWER: B
4. Cost accounting differs from financial accounting in respect of
A. reporting of cost
B. ascertaining cost
C. control of cost
D. recording cost
ANSWER: C
5. The principal factor to be considered in designing a costing system includes
A. company organization structure
B. nature of business
C. manufacturing process
D. all of the above
ANSWER: D
6. An important feature of a cost centre is that
A. it must be one specific location only
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B. it has clearly defined boundaries
C. it uses only monetary information
D. it must be an area of the business through which product pass
ANSWER: B
7. Which one of the following is the most important tool in cost planning?
A. Budgeting
B. Cost unit
C. Cost statement
D. Direct cost
ANSWER: A
8. Job costing is applied in
A. textile mills
B. printing press
C. paper mills
D. chemical works
ANSWER: B
9. Fixed cost per unit increases when
A. production volume decreases
B. production volume increases
C. variable cost per unit increases
D. variable cost per unit decreases
ANSWER: A
10. Which of the following is a cost behaviour - oriented approach to production costing?
A. job order costing
B. process costing
C. marginal costing
D. absorption costing
ANSWER: C
11. Which one of the following constitutes the cost of sales?
A. Works cost + Administration overheads
B. Cost of production + Selling and distribution overheads
C. Prime cost + works overheads
D. Work cost + Selling and distribution overheads
ANSWER: B
12. Cluster sampling, stratified sampling and systematic sampling are types of
A. Direct sampling
B. Indirect sampling
C. Random sampling
D. Non - random sampling
ANSWER: C
13. Type of sampling in which each element of population has equally likely chance of occurrence in a
random sample is classified as
A. Regular and Irregular sampling
B. Error free sampling
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C. Inertia sampling
D. Simple random sampling
ANSWER: A
14. Quota sampling, judgment sampling and convenience sampling are classified as types of
A. Random sampling
B. Non - random sampling
C. Direct sampling
D. Indirect sampling
ANSWER: B
15. -------------- is a set of elements taken from a larger population according to certain rules
A. Sample
B. Population
C. Statistics
D. Element
ANSWER: A
16. Which of the following sampling methods is the best way to select a group of people for a study if you
are interested in making statements about the larger population?
A. Convenience sampling
B. Quota sampling
C. Purposive sampling
D. Random sampling
ANSWER: D
17. The process of drawing a sample from a population is known as
A. Sampling
B. Census
C. Survey Research
D. None of the above
ANSWER: A
18. The type of sampling in which each member of the population selected for the sample is returned to the
population before the next member is selected is called
A. Sampling without replacement
B. Sampling with replacement
C. Simple random sampling
D. Systematic sampling
ANSWER: B
19. Which of the following would usually require the smallest sample size because of its efficiency?
A. One stage cluster sampling
B. Simple random sampling
C. Two stage cluster sampling
D. Quota sampling
ANSWER: B
20. Direct Material is a
A. Selling and distribution cost
B. Administration cost
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C. Manufacturing cost
D. Any of the above
ANSWER: C
21. A written request to a supplier for specified goods at an agreed upon price is called a
A. Receiving report
B. Purchase order
C. Material requisition form
D. Purchase requisition
ANSWER: B
22. A purchase requisition is prepared by
A. Store keeper
B. Supplier
C. Foreman
D. Purchase manager
ANSWER: A
23. The storekeeper should initiate a purchase requisition when stock reaches
A. Average stock level
B. Minimum stock level
C. Maximum stock level
D. Re-order level
ANSWER: D
24. Economic Order Quantity is computed so that
A. The cost of materials are least
B. The ordering and stock-out costs are least
C. The ordering and carrying costs are least
D. The ordering and back ordering costs are least
ANSWER: C
25. In which of the following methods of pricing, costs lag behind the current economic values?
A. LIFO
B. Weighted average price
C. FIFO
D. Replacement price
ANSWER: C
26. If the raw material prices are suffering from inflation, which of the following methods of valuing stocks
will give the lowest gross profit?
A. FIFO
B. LIFO
C. Simple average
D. Replacement cost
ANSWER: B
27. Which of the following material losses should be transferred to costing profit and loss account?
A. Loss due to breaking the bulk
B. Loss by evaporation
C. Loss due to improper storage of materials
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D. All of these
ANSWER: C
28. Direct labour means
A. Labour which can be conveniently associated with a particular cost unit
B. Labour which completes the work manually
C. Permanent labour in the production department
D. Labour which is recruited directly and not through contractors
ANSWER: A
29. Labour productivity is measured by comparing
A. Total output with the total man hours
B. Actual time with standard time
C. Added value for the product with total wage cost
D. All of the above
ANSWER: D
30. Wage sheet is prepared by
A. Cost accounting department
B. Payroll department
C. Personnel department
D. Time - keeping department
ANSWER: B
31. The time wage system
A. Satisfies trade unions
B. Increases cost of production
C. Benefits the less efficient workers
D. None of the above
ANSWER: C
32. The straight piece rate system
A. Is opposed by trade unions
B. Recognises individual efficiency
C. Benefits the employer
D. None of the above
ANSWER: B
33. Differential piece rate systems
A. Are complicated
B. Are discriminatory
C. Pay workers in proportion to their efficiency
D. None of the above
ANSWER: C
34. Which of the following incentive methods of wage payment should be used for indirect workers?
A. Gantt's task and bonus plan
B. Rowan plan
C. Taylor's differential piece rate system
D. None of the above
ANSWER: C
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35. The Halsey plan
A. Is intended to improve the quality of work
B. Pays higher bonus at higher levels of efficiency
C. Divides the benefit of time saved equally between the employer and the employee
D. None of the above
ANSWER: C
36. The Rowan plan
A. Is the best for efficient workers
B. Pays lower bonus that that of Halsey beyond 50% saving in time
C. Pays increased bonus at an increasing rate as the efficiency
D. None of the above
ANSWER: B
37. In which of the following incentive plans of wage payment, wages on time basis are not guaranteed?
A. Gantt's task and bonus system
B. Halsey plan
C. Rowan plan
D. Taylor's differential piece rate system
ANSWER: D
38. Which of the following is a service department?
A. Finishing department
B. Refining department
C. Receiving department
D. Machining department
ANSWER: C
39. Absorption means
A. Charging of overheads to cost centres or cost units
B. Charging the overheads to cost units
C. Charging of overheads to cost centres
D. None of the above
ANSWER: B
40. Number of workers employed is used as a basis for the apportionment of
A. Personnel department expenses
B. Canteen expenses
C. Time office costs
D. Any of these
ANSWER: D
41. Information regarding depreciation is obtained from
A. Plant register
B. Invoice
C. Cash book
D. Stores requisition
ANSWER: A
42. The most suitable cost system where the products differ in type or materials and work performed is
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A. Process costing
B. Job costing
C. Operating costing
D. None of these
ANSWER: B
43. Job costing is used in
A. Brick making
B. Cycle manufacturing
C. Repair shops
D. Road repairs
ANSWER: B
44. In job costing system, costs are accumulated
A. By specific job
B. On a monthly basis
C. By kind of material used
D. By department or process
ANSWER: A
45. A job order cost sheet normally does not contain which of the following?
A. Direct materials
B. Direct labour
C. Actual factory overheads
D. Applied factory overheads
ANSWER: C
46. Tyres and tubes manufacturing company adopts
A. Batch costing
B. Job costing
C. Output costing
D. Contract costing
ANSWER: A
47. Classification and accumulation of costs by fixed and variable cost is of special importance in
A. Output costing
B. Process costing
C. Operating costing
D. Batch costing
ANSWER: C
48. The TamilNadu Transport Corporation must use
A. Job costing
B. Contract costing
C. Process costing
D. Operating costing
ANSWER: D
49. Cinema houses must adopt
A. Contract costing
B. Operating costing
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C. Batch costing
D. Job costing
ANSWER: B
50. Marginal cost is
A. Prime cost
B. Variable cost
C. Works cost
D. Cost of production
ANSWER: B
51. Absorption costing takes into account
A. Total cost
B. Fixed cost
C. Variable cost
D. Works cost
ANSWER: A
52. Contribution is
A. Excess of sales over total cost
B. Excess of cost of sales over sales
C. Excess of sales over fixed cost
D. Excess of sales over variable cost
ANSWER: D
53. P/V ratio is
A. Price volume ratio
B. Price variance ratio
C. Contribution to sales ratio
D. Total cost to sales ratio
ANSWER: C
54. Break even point is
A. Sales at which profit is high
B. Sales at which there is loss
C. Sales at which there is no profit or loss
D. None of the above
ANSWER: C
55. Margin of safety is
A. Sales at which there is profit
B. Sales at which there is loss
C. Sales in excess of BEP
D. None of the above
ANSWER: C
56. Break even chart is a chart of
A. Sales
B. Total cost
C. Profit
D. Sales and Total cost
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ANSWER: D
57. A key factor is
A. Budget factor
B. Limiting factor
C. Cost factor
D. None of these
ANSWER: B
58. Angle of Incidence is
A. Angle between sales and fixed cost lines
B. Angle between sales and variable cost lines
C. Angle between sales and total cost lines
D. None of the above
ANSWER: C
59. Budgeting is
A. A Technique
B. A method of costing
C. Maintaining ledger accounts
D. None of the above
ANSWER: A
60. Consumption of raw material is based on
A. Production
B. Sales
C. Cash
D. Market
ANSWER: A
61. A flexible budget is
A. Budget for different capacity levels
B. Budget for different departments
C. Budget for receipts and payments
D. None of the above
ANSWER: A
62. Control ratios are calculated for
A. Comparison of actual performance with budgets
B. Planning of activities
C. Financial performance measurement
D. None of the above
ANSWER: A
63. Sales budget is
A. Budget of output to be sold
B. Budget for selling expenses
C. Budget of revenue and expenses
D. A list of incentives to salesmen
ANSWER: A
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64. Purchase budget refers to
A. Purchase of fixed assets
B. Purchase of raw materials
C. Purchase of advertising and distribution materials
D. Purchase of office supplies
ANSWER: C
65. A production budget is based on
A. Cash budget
B. Overheads budget
C. Sales budget
D. Purchase budget
ANSWER: C
66. A master budget is
A. Budget for assets and liabilities
B. Budget of Profit or Loss
C. Budget for managerial remuneration
D. Budget for operations of the entire organization
ANSWER: D
67. Performance budget is
A. Laying down of objectives
B. Measurement of output in relation to input
C. Flexible budgeting
D. Fixed budget
ANSWER: B
68. Zero base budgeting refers to
A. Short term and Long term budgeting
B. Performance reporting
C. Responsibility accounting
D. Justification of every item in the budget afresh
ANSWER: D
69. Capital Budgeting deals with
A. Working capital
B. Long term investments
C. Short term investments
D. None of the above
ANSWER: B
70. Payback period is ascertained on the basis of
A. Cash flows before depreciation and tax
B. Cash flows after depreciation and tax
C. Cash flow after tax before depreciation
D. None of the above
ANSWER: C
71. Accounting rate of return is calculated with the help of
A. Income before depreciation and tax
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B. Income after depreciation before tax
C. Income after depreciation and tax
D. None of the above
ANSWER: C
72. Net Present Value is the difference between
A. Cash received and paid
B. Investment and Income
C. Present value of cash inflows and outflows
D. None of the above
ANSWER: C
73. IRR is the rate of return at which
A. NPV is nil
B. NPV is positive
C. NPV is negative
D. None of the above
ANSWER: A
74. Capital budgeting decides investment in ------- term projects
A. Short
B. Medium
C. Long
D. Short - Medium
ANSWER: C
75. Standard costing is a
A. Method of costing
B. Technique for cost reduction
C. Cost control technique
D. None of the above
ANSWER: C
76. Variance analysis involves
A. Dividing variance according to causes
B. Fixing responsibility for loss
C. Identifying gains in working
D. None of the above
ANSWER: A
77. Material Price Variance is loss or gain
A. Due to using more or less material
B. Due to wastage of material
C. Due to payment of higher or lower price than what is specified
D. None of the above
ANSWER: C
78. Usually standards are set up on the basis of
A. Past performance
B. Ideal performance
C. Normal performance
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D. Attainable high performance
ANSWER: D
79. Standard Hour represents
A. Time taken by workers for production
B. Expected number of hours the factory should work
C. Output of different kinds expressed in terms of hours
D. None of the above
ANSWER: C
80. Standard costing involves
A. Setting of budgeted costs
B. Determination of standard cost
C. Fixation of estimated cost
D. None of these
ANSWER: B
81. Standard costing can be used along with
A. Marginal costing
B. Absorption costing
C. Job and Process costing
D. All of the above
ANSWER: C
82. The cost of a product as determined under standard costing is
A. Predetermined cost
B. Direct cost
C. Fixed cost
D. Historical cost
ANSWER: A
83. Standard cost are useful in all of the following, except
A. Costing inventories
B. Establishing records
C. Speeding up preparation of operating reports
D. Reducing cost
ANSWER: B
84. The type of standard that is best suited from cost control point of view
A. Basic standard
B. Normal standard
C. Expected standard
D. Theoretical standard
ANSWER: C
85. Which one of the following standards can be attained under the most favourable conditions possible?
A. Basic standard
B. Normal standard
C. Expected standard
D. Theoretical standard
ANSWER: D
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86. The difference between actual cost and standard cost is known as
A. Loss
B. Profit
C. Differential cost
D. Variance
ANSWER: D
87. Material cost variance is due to
A. Change in material mix
B. Change in price of material
C. Change in quantity used
D. All of the above
ANSWER: D
88. Material mix variance is a sub variance of
A. Material yield variance
B. Material quantity variance
C. Material price variance
D. Material cost variance
ANSWER: B
89. Labour rate variance is due to
A. Poor working conditions
B. Defective material
C. Overtime allowance
D. None of these
ANSWER: C
90. Idle time variance is a sub variance of
A. Labour efficiency variance
B. Labour rate variance
C. Labour cost variance
D. Labour mix variance
ANSWER: A
91. Difference between budgeted fixed overheads and actual fixed overheads is known as
A. Fixed overhead volume variance
B. Fixed overhead budget variance
C. Fixed overhead expenditure variance
D. both B & C
ANSWER: D
92. Production cost under marginal costing includes
A. Prime cost only
B. Prime cost and Fixed overhead
C. Prime cost and Variable overhead
D. Prime cost, Variable overhead and Fixed overhead
ANSWER: C
93. One of the primary differences between marginal costing and absorption costing is regarding the
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treatment of
A. Prime cost
B. Fixed overheads
C. Variable overheads
D. Direct materials
ANSWER: B
94. Absorption costing differs from marginal costing is the
A. fact that standard costs can be used with absorption costing but not with marginal costing
B. Amount of costs assigned to individual units of products
C. Kind of activities for which each can be used
D. Amount of fixed costs that will be incurred
ANSWER: B
95. Contribution margin is also known as
A. Marginal income
B. Gross profit
C. Net profit
D. None of these
ANSWER: A
96. Period costs are
A. Overhead costs
B. Prime cost
C. Variable cost
D. Fixed costs
ANSWER: D
97. Contribution margin is equal to
A. Fixed cost - Loss
B. Profit + Variable cost
C. Sales - Fixed Cost - Profit
D. None of these
ANSWER: A
98. P/V ration is an indicator of
A. The rate at which goods are sold
B. The volume of sales
C. The volume of profit
D. The rate of profit
ANSWER: D
99. Margin of safety is the difference between
A. Planned sales and planned profit
B. Actual sales and Break even sales
C. Planned sales and actual sales
D. None of the above
ANSWER: B
100. An increase in variable costs
A. Increases P/V ratio
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B. Increases the profit
C. Reduces contribution
D. None of the above
ANSWER: C
101. An increase in selling price
A. Increases the break even point
B. Decreases the break even point
C. Does not affect the break even point
D. None of the above
ANSWER: B
102. Break even point is calculated by the formula
A. Marginal cost/Standard cost * Sales
B. Fixed / Marginal contribution * sales
C. Fixed cost / Total cost * Sales
D. None of the above
ANSWER: B
103. A large margin of safety includes
A. Over production
B. Over capitalization
C. The soundness of the business
D. None of the above
ANSWER: C
104. The budget is
A. A post - mortem analysis
B. A substitute of management
C. An aid to management
D. None of these
ANSWER: C
105. One of the most important tools of cost planning is
A. Budget
B. Direct cost
C. Unit cost
D. Cost sheet
ANSWER: A
106. Sales budget is a
A. Functional budget
B. Expenditure budget
C. Master budget
D. Flexible budget
ANSWER: A
107. Which of the following is usually a long - term budget?
A. Fixed budget
B. Cash budget
C. Sales budget
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D. Capital expenditure budget
ANSWER: D
108. The fixed - variable cost classification has a special significance in the preparation of
A. Capital budget
B. Cash budget
C. Master budget
D. Flexible budget
ANSWER: D
109. The budget which is prepared first of all is
A. Master budget
B. Cash budget
C. Budget for key factor
D. None of these
ANSWER: C
110. Preparing budget figures for different levels of activity within a range under flexible budgeting is
A. Formula method
B. Multi activity method
C. Budget cost allowance method
D. None of these
ANSWER: B
111. What type of budget is designed to take into account forecast change in costs, prices, etc?
A. Master budget
B. Rolling budget
C. Flexible budget
D. Functional budget
ANSWER: B
112. Operation budgets normally cover a period of
A. One to ten years
B. One to two years
C. One to five years
D. One year or less
ANSWER: D
113. Survey is a process of ------------ of data
A. Classification
B. Collection
C. Tabulation
D. None of the above
ANSWER: B
114. The data collected for the first time is called as
A. Primary data
B. Secondary data
C. Elementary data
D. All of the above
ANSWER: A
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115. The data that have already been collected is called as
A. Primary data
B. Secondary Data
C. Constant data
D. Elementary data
ANSWER: B
116. -------------- of data are suitable for the purpose of investigation
A. Adequacy
B. Suitability
C. Reliability
D. None of these
ANSWER: A
117. ---------------- of data can be tested
A. Suitability
B. Adequacy
C. Reliability
D. None of these
ANSWER: C
118. ---------- are create interest in the mind of the readers
A. Tables
B. Diagrams
C. Charts
D. None of these
ANSWER: B
119. ------------- bar diagram can be drawn either or horizontal vertical bars
A. Multiple
B. Simple
C. Sub - divided
D. None of the above
ANSWER: B
120. ---------------- Diagram ranks high in understanding
A. Circle
B. Square
C. Rectangular
D. Pie
ANSWER: D
121. Pie diagram is called as -------------- diagram
A. Square
B. Circle
C. Angular
D. All of the above
ANSWER: C
122. Component graph also known as --------------- graph
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A. Band
B. Range
C. Net balance
D. None of the above
ANSWER: A
123. ---------- determines median, quartiles, percentiles
A. Ogives
B. Frequency curve
C. Histograms
D. Silhouette
ANSWER: A
124. ----------------- population is the number of observations can be counted
A. Infinite
B. Finite
C. Real
D. None of the above
ANSWER: B
125. ------------ population is the member of observations cannot be measured
A. Finite
B. Infinite
C. Real
D. All of the above
ANSWER: B
126. The universe containing persons is known as ----------- population
A. Real
B. Finite
C. Infinite
D. None of the above
ANSWER: A
127. Theoretical population is also known as ------------- universe
A. Existent
B. Hypothetical
C. Null
D. None of the above
ANSWER: B
128. --------------- is possible to intensive study
A. Sample method
B. Census method
C. Discretion method
D. All of the above
ANSWER: B
129. Analysis which is used to find out an unknown variable from the known variable is
A. Regression
B. Correlation
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C. Skewness
D. None of the above
ANSWER: A
130. The known variable which is used to estimate an unknown variable is called
A. Independent variable
B. Dependent variable
C. Regression
D. None of the above
ANSWER: B
131. The unknown variable which is used to be predicted is called
A. Explained variable
B. Explanatory variable
C. Independent variable
D. None of the above
ANSWER: C
132. When the regression lines are expressed in an algebra terms it is known as
A. Regression equation
B. Regression analysis
C. Correlation
D. None of the above
ANSWER: A
133. Standard error of regression is also called as
A. Standard error of estimate
B. Standard error
C. Standard error of determination
D. All of the above
ANSWER: A
134. Index number is a measure by studying the relationship between
A. Two variable
B. Three variable
C. Three variable
D. Three or more variable
ANSWER: A
135. An index number which is used for measuring the changes of prices of commodities over a period of
time is
A. Price Index number
B. Value Index number
C. Quantity Index number
D. Quality Index number
ANSWER: A
136. Historically the first index was constructed in
A. 1864
B. 1774
C. 1764
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D. 1788
ANSWER: C
137. ----------------- method is the easiest method for calculating seasonal variations
A. Simple averages method
B. Ratio to trend method
C. Link relative method
D. All of the above
ANSWER: A
138. ------------- method is an improvement over the method of simple average method
A. Link relative method
B. Ratio to moving average method
C. Ratio to trend method
D. None of the above
ANSWER: C
139. -----------method is also known as the percentage of moving average method
A. Ratio to trend method
B. Ratio to moving average method
C. Link relative method
D. None of the above
ANSWER: B
140. -------------- method requires complex mathematical calculations
A. Simple average method
B. Ratio to trend method
C. Ratio to moving average method
D. None of the above
ANSWER: B
141. -------------- method is the most difficult one among the methods of measuring seasonal variation
A. Link relatives method
B. Simple average method
C. Ratio to trend method
D. None of the above
ANSWER: A
142. Minimal rate of return that shareholders demands from firm is classified as
A. Cost of capital
B. Cost of marketing
C. Cost of share issuance
D. Economic earnings
ANSWER: A
143. Statistical model which is used to identify benefits and expenses related to human resource activities is
classified as
A. Utility analysis
B. Investment analysis
C. Cost benefit analysis
D. both a and c
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ANSWER: D
144. Operating profit held with firm after deducting cost of capital is classified as
A. benefits added into salaries
B. investments added
C. capitals added
D. economic value added
ANSWER: D
145. Operating cost for new system is added into implementation cost and is then divided by gains by
improvements in productivity is called
A. economic value added
B. analysis of benefits
C. return on investment
D. return on public offering
ANSWER: C
146. Which best describes the process of benchmarking?
A. Comparison of actual performance with budget
B. Comparison of the costs of one product with another
C. Comparison of direct competitors performance
D. Comparison of the performance on one operation or business with another
ANSWER: D
147. In which of the four perspectives of a balanced scorecard would Return on Capital Employed be likely
to appear?
A. Financial
B. Customer
C. Internal processes
D. Learning and growth
ANSWER: A
148. In which of the four perspectives of a balanced scorecard is the objective reduce staff turnover most
likely to be?
A. Financial
B. Customer
C. Internal processes
D. Learning and growth
ANSWER: D
149. What is strategy mapping in the balanced score
A. Identifying casual links between the four perspectives
B. Mapping the business processes
C. Setting the mission
D. Agreeing the strategy with the director of the business
ANSWER: A
150. Which costing system is often used to calculate customer profitability?
A. Absorption costing
B. Marginal costing
C. Activity based costing
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D. Variable costing
ANSWER: C
Staff Name
Jayanthi.M.
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