Multiple Choice Questions on  MCQ on Cost Accounting

21-Idle capacity of plant refers to the difference between

(A) Practical capacity and normal capacity

(B) Practical Capacity and capacity based on sales expectancy

(C) Maximum capacity and practical capacity

(D) Maximum capacity and actual capacity

ANSWERS: (B) Practical Capacity and capacity based on sales expectancy

22-Administration overheads are recovered as a percentage of

(A) Works cost

(B) Prime cost

(C) Direct materials

(D) Direct wages

ANSWERS: (A) Works cost

23-Overheads are also known as ___ cost.

(A) Direct

(B) Indirect

(C) Prime

(D) Sunk

ANSWERS: (B) Indirect

24-Point out which one of the following is not considered as purely financial income?

(A) Rent receivable

(B) Discounts on bonds, debentures etc.

(C) Transfer fees received

(D) Income tax refund

ANSWERS: (B) Discounts on bonds, debentures etc.

25-The term ‘cost’ refers to

(A) An asset that has given benefit and is now expired

(B) The value of the sacrifice made to acquire goods or services

(C) Present value of future benefits

(D) The price of products sold or services rendered

ANSWERS: (C) Present value of future benefits

26-When there is loss on an incomplete contract, the transfer for Profit and Loss account is

(A) Proportionable loss to work certified

(B) Proportionate loss to cash received to work certified

(C) Full amount of the loss

(D) Half amount of the loss

ANSWERS: (C) Full amount of the loss

27-Under valuation of closing stock in cost accounts

(A) Decreases costing profit

(B) Increases costing profit

(C) Decreases financial accounts profit

(D) Increases financial accounts profit

ANSWERS: (A) Decreases costing profit

28-Donations and charities paid shown in the financial accounts is

(A) Appropriation of profit

(B) Financial charge

(C) Fictitious Asset

(D) Financial Income

ANSWERS: (A) Appropriation of profit

29-Works overheads on incomplete jobs at the end of the period are transferred to which account?

(A) Works overhead control account

(B) Works overhead suspense account

(C) Work in progress ledger control account

(D) Stores ledger account

ANSWERS: (B) Works overhead suspense account

30-Reconciliation is usually done between

(A) Gross profit and net profit

(B) Previous year’s profit and Current year’s profit

(C) Costing profit and Financial accounts profit

(D) Current year profit with next year provisions

ANSWERS: (C) Costing profit and Financial accounts profit