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.

271. Pension fund and insurance obligation is an example of

1. Annuities
2. Perpetuity
3. Consol
4. Securities

Correct answer: (A)
Annuities

272. Carrying cost always calculate on

1. Inventory cost
2. Ordering cost
3. Purchase cost
4. EOQ

Correct answer: (C)
Purchase cost

273. Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totalling Rs.1, 500 would you prefer? The cash flows are listed in order for Year 1, Year 2, and Year 3 respectively.

1. Rs.700; Rs.500 and Rs.300
2. Rs.300; Rs.500 and Rs.700
3. Rs.500; Rs.500 and Rs.500
4. Any of the above, since they each sum to Rs.1,500

Correct answer: (A)
Rs.700; Rs.500 and Rs.300

274. The higher the Future Value (FV) of the payment, the higher will be the:

1. Discount rate
2. Present value
3. Liquidity
4. Cost of borrowing

Correct answer: (B)
Present value

275. In the Balance Sheet of a firm, the Total Debt-to-Equity Ratio is 2:1.The amount of Long Term and Short Term Sources are Rs.12 billion. What is the amount of owner’s Net Worth of the firm?

1. Rs.18 billion
2. Rs.6 billion
3. Rs.4 billion
4. Rs.2 billion

Correct answer: (B)
Rs.6 billion

276. Which group of ratios shows the extent to which the firm is financed with debt?

1. Liquidity ratios
2. Debt ratios
3. Coverage ratios
4. Profitability ratios

Correct answer: (B)
Debt ratios

277. Income statement comes under the category of

1. Point in time statement
2. Period statement
3. Flow statement
4. Both b & c

Correct answer: (D)
Both b & c

278. If you have to judge a project from its NPV, you will select the one with the ______________

1. Lowest NPV
2. Highest NPV
3. NPV cannot judge the project
4. Information is not enough

Correct answer: (B)
Highest NPV

279. In the Balance Sheet amount of total Assets is Rs.10 million, Current Liabilities Rs.5 million and Owner Equity are Rs.2 million. What is the Long term Debt-to-Equity Ratio?

1. 1 : 1
2. 1.5 : 1
3. 2 : 1
4. None of the above

Correct answer: (B)
1.5 : 1

280. Financing decision determines

1. Current asset
2. Fix asset
3. Equity
4. Mix of finance

Correct answer: (D)
Mix of finance