Managerial Accounting MCQ Set-18

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.

261. ______________ are analysts who use information concerning current and prospective profitability of firms to assess the firm’s fair market value.

1. Credit analysts
2. Fundamental analysts
3. Systems analysts
4. Technical analysts

Correct answer: (B)
Fundamental analysts

262. Those liabilities which arise only on the happening of some event are called

1. Current liabilities
2. Outstanding liabilities
3. Deferred liabilities
4. Contingent liabilities

Correct answer: (D)
Contingent liabilities

263. There are ______________ types of financial statements analysis

1. 1
2. 2
3. 3
4. 4

Correct answer: (C)
3

264. ______________ tells us after how much time period the amount of money will become double.

1. Real interest rate
2. Nominal interest rate
3. Rule of 72
4. Time value of money

Correct answer: (C)
Rule of 72

265. Horizontal analysis is also called

1. Ratio change analysis
2. Common size analysis
3. Trend analysis
4. Ratio analysis

Correct answer: (C)
Trend analysis

266. Interest paid (earned) on only the original principal borrowed (lent) is often referred to as ______________.

1. Compound interest
2. Simple interest
3. Present value
4. Future value

Correct answer: (B)
Simple interest

267. If gross profit is Rs 5,000 and the net profit is 25% of the gross profit the expenses must be

1. Rs 3,750
2. Rs 1,250
3. Rs 4,150
4. Rs 6,250

Correct answer: (A)
Rs 3,750

268. What are the earnings per share (EPS) for a company that earned Rs.100, 000 last year in after-tax profits, has 200,000 common shares outstanding and Rs.1.2 million in retained earning at the year end?

1. Rs.1.00
2. Rs. 6.00
3. Rs. 0.50
4. Rs. 6.50

Correct answer: (C)
Rs. 0.50

269. Which of the following affects the price of the bond?

1. Market interest rate
2. Required rate of return
3. Interest rate risk
4. All of the given options

Correct answer: (D)
All of the given options

270. Which of the following statements is most correct?

1. One of the ways in which firms can mitigate or reduce agency problems between bondholders and stockholders is by increasing the amount of debt in the capital structure.
2. Managerial compensation can be structured to reduce agency problems between stockholders and managers.
3. All of above statements are incorrect
4. All of the statements above are correct

Correct answer: (B)
Managerial compensation can be structured to reduce agency problems between stockholders and managers.