Managerial Accounting MCQ Set-15

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-15

206. Profit from sale of assets is example for–

1. Revenue Profit
2. Capital Profit
3. Loss
4. None of these

Correct answer: (B)
Capital Profit

207. Book keeping is mainly concerned with

1. Recording of financial data relating to business operation
2. Designing the systems in recording classifying,summarizing the recorded data
3. Interpreting the data for internal and external users

Correct answer: (A)
Recording of financial data relating to business operation

208. The convention of conservatism when applied to the balance sheet result in.

1. Understand the asset
2. Understand the liabilities
3. Overstatement of capital
4. None of these

Correct answer: (A)
Understand the asset

209. The amount brought in by the proprietor in the business should be credited to

1. Cash a/c
2. Capital a/c
3. Drawing a/c
4. Bank a/c

Correct answer: (B)
Capital a/c

210. The return of goods by the customer should be debited to

1. Customer a/c
2. Sales return a/c
3. Goods a/c
4. Purchase return a/c

Correct answer: (B)
Sales return a/c

211. sales made by Mahesh for cash should be debited to

1. Cash a/c
2. Mahesh a/c
3. Sales a/c
4. Sales return a/c

Correct answer: (A)
Cash a/c

212. The rent paid to land lord to be credited to

1. Land lord a/c
2. Rent a/c
3. Cash a/c
4. Tenant a/c

Correct answer: (C)
Cash a/c

213. Which of the following statements are false?

1. All liability is a debt for your business
2. Debtor are a asset for business
3. The accounting equation shows how much of your assets belong to the owner, and how much belong to people outside business
4. None of the above

Correct answer: (D)
None of the above

214. A business has the following items in it:
     Land Rs.1,000,000
     Machinery Rs.20,000
     Cash Rs.10,000
     Debt Rs.0
     Owner’s equity?

     What is the valve of owner’s equity?

1. Rs.1020000
2. Rs.1010000
3. Rs.1030000
4. None of the above

Correct answer: (C)
Rs.1030000

215. A business has the following items in it:
     Owners’ equity Rs.6,00, 000.
     Liabilities Rs.14,00,000.
     What is the value of Assets ______________

     What is the valve of owner’sequity?

1. 600,000
2. 1,400,000
3. 2,000,000
4. None of these

Correct answer: (C)
2,000,000

216. A business has the following items in it:
     Land Rs.1, 500,000
     Machinery Rs.80, 000
     Cash Rs.20, 000
     Owners equity Rs.900, 000
     Loan Rs.500, 000
     Creditors?

1. Rs.200, 000
2. Rs.700, 000
3. Rs.800, 000
4. Rs1, 100,000

Correct answer: (A)
Rs.200, 000

217. A business has following items in it Land?
     Vehicles Rs.600,000
     Debtors Rs. 1,20,000
     Cash Rs.30,000
     Owners’Equity Rs.1,000,000
     Loan 5,00,000
     Creditors Rs.50,000

     What is the value of the land ______________

1. 1,000,000
2. 1,550,000
3. 800,000
4. None of these

Correct answer: (C)
800,000

218. XYZ ltd.has provided the following information about its balance sheet:
     Cash Rs.100
     Accounts Receivable Rs.500
     Stock holder equity Rs.700
     Accounts Payable Rs.200
     Bank Loan Rs.1,000

     Based on the information provided, how much are XYZ ltd.Total liabilities?

1. Rs.200
2. Rs.1900
3. Rs.1200
4. Rs.1700

Correct answer: (B)
s.1900

219. Contingent liabilities should be recorded in the accounts when:

1. It is probable that the future event will occur.
2. The amount of the liability can be reasonably estimated.
3. Both (a) and (b).
4. Either (a) or (b).

Correct answer: (C)
Both (a) and (b).

220. Accounting concepts are based on

1. Certain assumptions
2. Certain facts and figures
3. Certain accounting records
4. Practice experience

Correct answer: (B)
Certain facts and figures

KEY TAKEAWAYS Managerial Accounting MCQ set-15

Managerial Accounting MCQ Set-14

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-14

191. The main object of cost accounting is:

1. To record day to day transactions of the business
2. To reveal managerial efficiency
3. To ascertain true cost of products and services
4. To determine tender price

Correct answer: (C)
To ascertain true cost of products and services

192. The nature of financial accounting is

1. Historical
2. Forward looking
3. Analytical
4. Social

Correct answer: (A)
Historical

193. An accounting that deals with the accounting and reporting of information to management regarding the detail information is

1. Financial accounting
2. Management accounting
3. Cost accounting
4. Real Accounting

Correct answer: (B)
Management accounting

194. Bad debt amount should be credited to

1. Debtors account
2. Bad debts account
3. Sales account
4. Creditors account

Correct answer: (A)
Debtors account

195. Management accounting concentrates on ______________

1. Opening books of account
2. Preparation of financial statements
3. Control of business activities
4. None of these

Correct answer: (C)
Control of business activities

196. Which of the following is not an internal user of management information?

1. Creditor
2. Department manager
3. Controller
4. Treasurer

Correct answer: (A)
Creditor

197. Double entry system is used in which type of accounting

1. Cost
2. Financial
3. Management
4. All

Correct answer: (B)
Financial

198. Which type of asset class includes those assets which have only definite use and become valueless when the yield is over?

1. Fixed asset
2. Current asset
3. Fictitious asset
4. Wasting asset

Correct answer: (D)
Wasting asset

199. Cost accounting is applied to:

1. Public undertakings only
2. Large business enterprise only
3. Small business concerns only
4. Manufacturing and service concern

Correct answer: (D)
Manufacturing and service concern

200. Reserve for doubtful debts appearing in the trial balance should be:

1. credited to P & L a/c
2. Shown as liability side in balance sheet
3. Reduced from related asset in the balance sheet
4. Both a and b
5. Both a and c

Correct answer: (E)
Both a and c

201. Under which concept it is assumed that the enterprises has neither the intention nor the necessity of liquidation or of curtailing materiality the scale of operation

1. Revenue realization concept
2. Matching cost concept
3. Going concern concept
4. None of these

Correct answer: (C)
Going concern concept

202. Bookkeeping is an ______________ of correctly recording of business transition.

1. Art and Science
2. Art
3. Science
4. Art or Science

Correct answer: (B)
Art

203. Journal Entries are known as book of ______________ Entry.

1. Original
2. Duplicate
3. Personal
4. Nominal

Correct answer: (A)
Original

204. Fixed assets and current assets are categorized as per concept of:

1. Separate entity
2. Going concern
3. Consistency
4. Time period

Correct answer: (B)
Going concern

205. The allocation of owner’s private expenses to his/her business violates which of the following?

1. Accrual concept
2. Matching concept
3. Separate business entity concept
4. Consistency concept

Correct answer: (C)
Separate business entity concept

KEY TAKEAWAYS Managerial Accounting MCQ set-14

Managerial Accounting MCQ Set-13

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-13

176. Lubricants, used regularly in a production process, are classified as

1. Miscellaneous expense
2. Direct materials
3. Indirect materials
4. Immaterial items

Correct answer: (C)
Indirect materials

177. Manufacturing costs are also known as product costs. Which of the following best describes those costs which are considered to be manufacturing costs?

1. Direct materials, direct labor, and factory overhead.
2. Direct materials and direct labor only.
3. Direct materials, direct labor, factory overhead, and administrative overhead.
4. Direct labor and factory overhead.

Correct answer: (C)
Direct materials, direct labor, factory overhead, and administrative overhead.

178. Accounting principles are ______________ which are adopted by the accountant universally while recording accounting transaction.

1. Rules of action or conduct
2. Which u can change as per accountant
3. Which keep changing every year
4. None of these

Correct answer: (C)
Rules of action or conduct

179. Showing purchased office equipments in financial statements is the application of which accounting concept?

1. Historical cost convention
2. Materiality
3. Prudence
4. Matching concept

Correct answer: (B)
Materiality

180. Which of the following should not be called sales?

1. Good sold on credit
2. Office fixtures sold
3. Sale of item previously included in purchase
4. Good sold for cash

Correct answer: (A & B)
Good sold on credit & Office fixtures sold

181. Material concept tell about

1. Disclosure of loss
2. Disclosure of profit
3. Disclosure of all information which are important for investor
4. Disclosure of all information which are important for management

Correct answer: (C)
Disclosure of all information which are important for investor

182. Using “lower of cost and net realisable value(Market Value)” for the purpose of inventory valuation is the implementation of which of the following concepts?

1. The going concern concept
2. The separate entity concept
3. The prudence concept
4. Matching concept

Correct answer: (C)
The prudence concept

183. Which financial statement represents the accounting equation ASSETS = LIABILITIES + OWNER’S EQUITY

1. Income Statement
2. Cash Flow Statement
3. Balance Sheet
4. Fund Flow Statement

Correct answer: (C)
Balance Sheet

184. Cost accounting aims at ascertain ______________ of product

1. Cost
2. Net profit
3. Gross profit
4. Selling price

Correct answer: (A)
Cost

185. The purpose of financial accounts is reporting to

1. Management only
2. Government only
3. Investor only
4. All of these

Correct answer: (D)
All of these

186. Financial accounting use data

1. Projected data
2. External data only
3. Historic data
4. Manager data only

Correct answer: (C)
Historic data

187. What comes in is to be debited, what goes out is to be credited.

1. Rules of Personal
2. Rules of Real
3. Rules of Nominal
4. All of these

Correct answer: (C)
Rules of Nominal

188. Payment of salary is recorded by:

1. Debiting salary a/c; crediting cash a/c
2. Debiting cash a/c; crediting salary a/c
3. Debiting employee a/c; crediting cash a/c
4. Debiting employee a/c; crediting salary a/c

Correct answer: (A)
Debiting salary a/c; crediting cash a/c

189. Amortization of intangible Asset Such as Goodwill which has indefinite life is an example of accounting concept

1. Conservatism Concept
2. Continuity Concept
3. Realisation Concept
4. Measurement Concept

Correct answer: (A)
Conservatism Concept

190. ______________ cost refers to those cost which have already been incurred and cannot be altered by any decision in the future.

1. Opportunity cost
2. Sunk Cost
3. Incremental cost
4. Decremental cost

Correct answer: (B)
Sunk Cost

KEY TAKEAWAYS Managerial Accounting MCQ set-13

Managerial Accounting MCQ Set-12

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-12

166. A company’s telephone bill consisting of a Rs.200 monthly base amount, plus long distance charges, would be classified as a:

1. Variable cost
2. Committed fixed cost
3. Direct cost
4. Semi variable cost

Correct answer: (D)
Semi variable cost

167. The practice of appending notes regarding contingent liabilities in accounting statement is pursuant of

1. Convention of consistency
2. Money measurement concept
3. Convention of conservatism
4. Convention of disclosure

Correct answer: (C)
Convention of conservatism

168. In manufacturing a product, prime costs are:

1. Raw materials and manufacturing overhead
2. Indirect materials and manufacturing overhead
3. Indirect labour and manufacturing overhead
4. Direct materials and direct labour

Correct answer: (D)
Direct materials and direct labour

169. Because of automation, which component of product cost is declining?

1. Direct labour
2. Direct materials
3. Manufacturing overhead
4. Advertising

Correct answer: (A)
Direct labour

170. Salary paid to factory manager is an item of:

1. Prime Cost
2. Factory Overhead
3. Selling overhead
4. Office overhead

Correct answer: (B)
Factory Overhead

171. Calculate the prime cost from the following information:
     Direct material purchased: Rs. 1,00,000
     Direct material consumed: Rs. 90,000
     Direct labour: Rs. 60,000
     Direct expenses: Rs. 20,000
     Manufacturing overheads: Rs. 30,000

1. Rs. 1,80,000
2. Rs. 2,00,000
3. Rs. 1,70,000
4. Rs. 2,10,000

Correct answer: (C)
Rs. 1,70,000

172. Aggregate of cost of goods sold and selling and distribution overheads is known as:

1. Total Cost
2. Office Cost
3. Cost of sales
4. Selling overhead

Correct answer: (A)
Total Cost

173. Cost accounting information can be used for:

1. Budget control and evaluation.
2. Determining standard costs and variances.
3. Pricing and inventory valuation decisions.
4. All of these

Correct answer: (D)
All of these

174. Which one of the following would not be classified as manufacturing overhead?

1. Indirect labour
2. Direct materials
3. Insurance on factory building
4. Indirect materials

Correct answer: (B)
Direct materials

175. A manufacturing process requires small amounts of glue. The glue used in the process is classified as

1. A prime cost
2. An indirect material
3. A direct material
4. Miscellaneous expense

Correct answer: (B)
An indirect material

KEY TAKEAWAYS Managerial Accounting MCQ set-12

Managerial Accounting MCQ Set-11

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-11

156. Which of the following would not be included on a balance sheet?

1. Accounts payable
2. Accounts receivable
3. Sales
4. Cash

Correct answer: (C)
Sales

157. Contingent liabilities should be recorded in the accounts when:

1. It is probable that the future event will occur.
2. The amount of the liability can be reasonably estimated.
3. Both (a) and (b).
4. Either (a) or (b).

Correct answer: (C)
Both (a) and (b).

158. The cost concept records the figures at

1. Market values
2. Actual amount paid
3. Actual amount or market values whichever is less.
4. MRP maximum retail price

Correct answer: (B)
Actual amount paid

159. Financial statements are:

1. Estimates of facets
2. Anticipated facts
3. Recorded facts

Correct answer: (C)
Recorded facts

160. The term Management Accounting was first used in

1. 1910
2. 1939
3. 1950
4. 1960

Correct answer: (C)
1950

161. Which does not comes under the head of asset:

1. Fixed asset
2. Investment
3. Current asset
4. Owners equity

Correct answer: (D)
Owners equity

162. The word accounting can be classified in to:

1. Financial accounting and management accounting
2. Financial accounting and cost accounting
3. Financial accounting, management accounting and cost accounting
4. Cannot be classified

Correct answer: (C)
Financial accounting, management accounting and cost accounting

163. The work of a book keeper is ______________ in nature.

1. Analytical
2. Clerical
3. Executive
4. Non – executive

Correct answer: (B)
Clerical

164. 206. Which of the following is true for: – “In accounts recording is done of_ _ _ _ _”

1. only financial transaction
2. only non- financial transaction
3. Both
4. Personal transaction of Proprietor

Correct answer: (A)
only financial transaction

165. Salary is one of the ______________ expenses

1. Capital
2. Revenue
3. Direct
4. Non – cash

Correct answer: (B)
Revenue

KEY TAKEAWAYS Managerial Accounting MCQ set-11

Managerial Accounting MCQ Set-9

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-9

126. According to which concept business is treated as a unit apart from owner

1. Dual concept
2. Divider concept
3. Entity concept
4. Landlord concept

Correct answer: (C)
Entity concept

127. Variable cost per unit

1. Remains fixed
2. Fluctuates with volume of production
3. Varies in consideration with the volume of sales
4. None of the above

Correct answer: (B)
Fluctuates with volume of production

128. Making the provision for doubtful debts and discount on debtors in anticipation of actual bad debts and discount is an example for which concept

1. Conservatism concept
2. Continuity concept
3. Realization concept
4. All of these

Correct answer: (A)
Conservatism concept

129. liabilities in balance sheet include the following items

1. Long term loan
2. Short term loan
3. Owner’s fund
4. All of these

Correct answer: (D)
All of these

130. Net profit is calculated in

1. Trading a/c
2. Balancesheet
3. Profit & loss a/c
4. Trial balance.

Correct answer: (C)
Profit & loss a/c

131. The going concern concept assumes that

1. The entity continue running for foreseeable future
2. The entity continue running until the end of accounting period
3. The entity will close its operating in 10 years
4. The entity can’t be liquidated

Correct answer: (A)
The entity continue running for foreseeable future

132. Accounting principles are divided into two types. These are ______________

1. Accounting Concepts
2. Accounting Conventions
3. Accounting Standards
4. Accounting Concepts &Accounting Conventions

Correct answer: (D)
Accounting Concepts &Accounting Conventions

133. Which expenses is a Capital Nature?

1. Depreciation
2. Wages
3. Salary
4. Stationary

Correct answer: (A)
Depreciation

134. The basic function of financial accounting is to

1. Record all business transaction
2. Interpret financial data
3. Assist the management in performing function effectively

Correct answer: (B)
Interpret financial data

135. Accounting principles are generally based on

1. Practicability
2. Subjectivity
3. Convenience in recording
4. None of these

Correct answer: (A)
Practicability

136. According to the money measurement concept the following will be recorded in the books of accounts of the business

1. Health of the managing director of the company
2. Quality of company goods
3. Value of plant and machinery
4. Health of labour in factory

Correct answer: (C)
Value of plant and machinery

137. In case of a debt becoming bad, the amount should be credited to

1. Debtors Accounts
2. Bad debts a/c
3. Sales a/c

Correct answer: (A)
Debtors Accounts

138. Accountant should follow the same principles of accounting continuously is as per which accounting convention

1. Convention of conservatism
2. Convention of full disclosure
3. Convention of consistency
4. None of these

Correct answer: (C)
Convention of consistency

139. A system in which accounting entries are made on the basis of amounts having become due for payment or receipt is called

1. Cash concept
2. Accrual concept
3. Matching concept
4. On-going concept

Correct answer: (B)
Accrual concept

140. Debit all expenses and losses Credit all gains and income.

1. Real a/c
2. Personal a/c
3. Nominal a/c
4. None of these

Correct answer: (C)
Nominal a/c

KEY TAKEAWAYS Managerial Accounting MCQ set-9

Managerial Accounting MCQ Set-8

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-8

111. ______________ is a person or item for which cost may be ascertained.

1. Cost unit
2. Cost centre
3. Cost object
4. Cost estimation

Correct answer: (B)
Cost centre

112. Which of the following is not a fixed asset?

1. Building
2. Bank Balance
3. Plant Patents
4. Goodwill

Correct answer: (B)
Bank Balance

113. According to which concept business is treated as a unit apart from owner

1. Dual concept
2. Divider concept
3. Entity concept
4. Landlord concept

Correct answer: (C)
Entity concept

114. The reduction in the value of the fixed assets which can arise due to time factor is

1. Discount
2. Depreciation
3. Reduction
4. None of the above

Correct answer: (b)
Depreciation

115. Which of the following should not be called sales?

1. Good sold on credit
2. Office fixtures sold
3. Sale of item previously included in purchase
4. Good sold for cash

Correct answer: (B)
Office fixtures sold

116. Which of the following is not regarded as the fundamental accounting concept?

1. The going concern concept
2. The separate entity concept
3. The prudence (conservatism) concept
4. Correction concept

Correct answer: (D)
Correction concept

117. Outstanding salaries are shown as:

1. Added to Salaries while preparing P & La/c
2. Shown in liability side of Balance sheet under current Liability
3. (a) &(b) above
4. None of the above

Correct answer: (C)
(a) &(b) above

118. Marginal costing is concerned with:

1. Fixed cost
2. Variable cost
3. Semi variable cost
4. None of the above

Correct answer: (B)
Variable cost

119. Which of the following account balance will be shown on debit side of Trial Balance?

1. Outstanding expenses
2. Cash a/c
3. Short term loan
4. creditors

Correct answer: (D)
creditors

120. Cash Purchases:

1. Increases assets
2. Results in no change in the total assets
3. Decreases assets
4. Increases liability

Correct answer: (C)
Decreases assets

121. The practice of appending notes regarding contingent liabilities in accounting statements is in pursuance to:

1. Convention of consistency
2. Money measurement concept
3. Convention of conservatism
4. Convention of disclosure

Correct answer: (D)
Convention of disclosure

122. Sales are equal to:

1. Cost of goods sold + gross profit
2. Cost of goods sold – gross profit
3. Gross profit- Cost of goods sold
4. None of the above

Correct answer: (B)
Cost of goods sold + gross profit

123. Identify which is wrong rule

1. Nominal account- debit all expenses & losses
2. Real account- credit what comes in
3. Nominal account- credit all incomes & gains
4. Personal account- debit the receiver

Correct answer: (B)
Real account- credit what comes in

124. The work of factory employees that can be physically associated with converting raw material into finished goods is classified as-

1. Manufacturing overhead
2. Indirect materials
3. Indirect labour
4. Direct labour

Correct answer: (D)
Direct labour

125. ______________ cost will still be incurred although a plant is shut down temporarily.

1. Cost of raw material
2. Advertising
3. Depreciation
4. Carriage

Correct answer: (D)
Depreciation

KEY TAKEAWAYS Managerial Accounting MCQ set-8

Managerial Accounting MCQ Set-7

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-7

91. The basic concepts related to p& l a/c are:

1. Realization Concept
2. Matching Concept
3. Cost Concept
4. Both a and b above

Correct answer: (D)
Both a and b above

92. All those to whom business owes money are:

1. Debtors
2. Investors
3. Creditors
4. Shareholders

Correct answer: (C)
Creditors

93. All direct & indirect expenses related to business are charged:

1. Profit and loss account
2. Trading account
3. Trading account Profit and Loss account
4. Directly to Balance sheet

Correct answer: (C)
Trading account Profit and Loss account

94. If loan have been guaranteed by managers and directors is called as

1. Loan
2. Unsecured Loan
3. Secured Loan
4. Advance by Manager & director

Correct answer: (C)
Secured Loan

95. Opening stock + ______________ + Direct Expenses (Carriage on Raw material)-Closing Stock = ______________

1. Sales, Purchases
2. Sales, Sales return
3. Purchases, Cost of goods produced
4. Purchases, Cost of goods sold

Correct answer: (C)
Purchases, Cost of goods produced

96. Carriage outward is charged to

1. Debit side Profit & Loss a/c
2. Debit side Trading a/c
3. Credit side of Profit & Loss a/c
4. Credit side of trading a/c

Correct answer: (A)
Debit side Profit & Loss a/c

97. Credit balance of profit & loss a/c shown on

1. Asset side of balance sheet
2. Liability side of balance sheet
3. Not shown in balance sheet
4. Half on asset side and half on liability side

Correct answer: (B)
Liability side of balance sheet

98. Outstanding expenses are charged to

1. Asset side of balance sheet
2. Liability side of balance sheet
3. Not charged to balance sheet
4. None of these

Correct answer: (B)
Liability side of balance sheet

99. Which of the following is a liability?

1. Loan from Mr.Y
2. loan to Mr.y
3. Both (a) (b)
4. None of these

Correct answer: (A)
Loan from Mr.Y

100. The revenue recognition principal dictates that all types of incomes should be recorded or recognized when

1. Cash is received
2. At the end of accounting period
3. When they are earned
4. When interest is paid

Correct answer: (C)
When they are earned

101. Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

1. Fiscal year
2. Calendar year
3. Accounting period
4. Accrual period

Correct answer: (C)
Accounting period

102. If the total assets of the company amount to Rs 1,50,000 and owner’s equity is Rs 70,000,the amount of liabilities will be

1. Rs 70,000
2. Rs 80,000
3. Rs 90,000
4. Rs 1,00,000

Correct answer: (B)
Rs 80,000

103. The system of recording transaction based on dual aspect concept is called

1. Double account system
2. Double entry system
3. Single entry system
4. None of these

Correct answer: (B)
Double entry system

104. The convention of conservatism is applicable

1. In providing for discount on creditors
2. In making provision for bad doubtful debts
3. Providing depreciation
4. None of these

Correct answer: (B)
In making provision for bad doubtful debts

105. Rules of action or conduct adopted by the accountants universally while recording accounting transaction

1. Accounting convention
2. Accounting concepts
3. Accounting principles
4. None of these

Correct answer: (C)
Accounting principles

106. Which of the following items would not fall under the definition of an asset?

1. Land
2. Machine
3. Cash
4. Milk

Correct answer: (D)
Owner Equity

107. Basic assumptions or conditions upon which the science of accounting is based.

1. Accounting convention
2. Accounting concepts
3. Accounting principles
4. None of these.

Correct answer: (B)
Accounting concepts

108. Which of the following is time span into which the total life of a business is divided for the purpose of preparing financial statements?

1. Fiscal year
2. Calendar year
3. Accounting period
4. Accrual period

Correct answer: (C)
Accounting period

109. The system of recording based on dual aspect concept is called:

1. Double account system
2. Double entry system
3. Single entry system
4. All the above

Correct answer: (B)
Double entry system

110. Preliminary expenses are recorded in ______________

1. Equity and liabilities-Liability side of B/S
2. Current liabilities- Liability side of B/S
3. Fixed assets- Asset side of B/S
4. Asset side of B/S

Correct answer: (D)
Asset side of B/S

KEY TAKEAWAYS Managerial Accounting MCQ set-8

Managerial Accounting MCQ Set-6

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-6

76. Cost accounting information can be used for:

1. Budget control and evaluation.
2. Determining standard costs and variances.
3. Pricing and inventory valuation decisions.
4. All of these

Correct answer: (D)
All of these

77. Current liability does not include

1. Sundry creditors
2. Acceptances
3. Unclaimed dividend
4. Short term investment

Correct answer: (D)
Short term investment

78. The term Management Accounting was first used in

1. 1910
2. 1939
3. 1950
4. 1960

Correct answer: (C)
1950

79. ______________ system records only actual cash receipts and payments

1. Cash basis
2. Accrual basis
3. Mercantile basis
4. Single entry basis

Correct answer: (A)
Cash basis

80. Aggregate of direct costs is known as:

1. Direct material costs
2. Direct Wages
3. Direct Expenses
4. Prime Cost

Correct answer: (D)
Prime Cost

81. Sunk costs are:

1. relevant for decision making
2. Not relevant for decision making
3. cost to be incurred in future
4. future costs

Correct answer: (B)
Not relevant for decision making

82. Information about an item is ______________ if its omission or misstatement might influence the financial decision of the users taken on the basis of that information

1. Concrete
2. Complete
3. Immaterial
4. Material

Correct answer: (D)
Material

83. Proposed dividends” is shown in the Balance Sheet of a company under the head:

1. Provisions
2. Reserves and Surplus
3. Current Liabilities
4. Other Liabilities

Correct answer: (A)
Provisions

84. Authorized capital, also known as

1. ominal capital
2. Paid up capital
3. Issues capital
4. None of these

Correct answer: (A)
Nominal capital

85. Trade Payables are recorded in ______________

1. Asset side of B/S
2. Liability side of B/S
3. P & L a/c
4. None of the above

Correct answer: (B)
Liability side of B/S

86. Cost accounting emerged mainly on account of:

1. Statutory requirements
2. Competition in the market
3. Labour unrest
4. Limitations of financial accounting

Correct answer: (D)
Limitations of financial accounting

87. Rent paid to landlord should be credited to

1. Landlords account
2. Rent account
3. Cash account
4. Expense account

Correct answer: (C)
Cash account

88. The primary objective of management accounting is

1. Prepare final a/c
2. Provide management complete and true information
3. Both (a) & (b)
4. None of these

Correct answer: (B)
Provide management complete and true information

89. Cost of goods sold= opening stock+ net purchases+ expenses on Purchases – sales Which part of formula is wrong?

1. opening stock
2. net purchases
3. expenses on Purchases
4. sales

Correct answer: (D)
sales

90. Interest on drawings is:

1. Expenditure for the business
2. Cost for the business
3. Gain for the business
4. None of the above

Correct answer: (C)
Gain for the business

KEY TAKEAWAYS Managerial Accounting MCQ set-6