(Home) ES-412 FINANCIAL MANAGEMENT & COST ACCOUNTING (Mark Correct) 1. Which of the following is not a function of financial management? Recruiting new staff for different departments of the firm Liquidity decision Raising funds Distribution of returns earned
2. Why are capital budgeting decisions so important? Capital expenditures involve nominal amount of cash outlays Capital expenditure decisions are reversible at nominal costs Capital expenditure decisions involve huge cash outlays and are irreversible Capital expenditure decisions are short term in nature
3. Which of the following is a source of long term capital? Equity Insurance fixed deposits Gold loan
4. A major goal of financial management is one of the following. Which one? Profit maximization EPS maximization Maximizing the shareholders' wealth Market share maximization
5. Profit maximization involves Increasing output with increasing input Efficient use of resources for maximizing output for same input Increasing inputs Employing more resources to ensure the task is completed without hassles
6. The difference between the present value of the benefits and the present value of costs is known as? Net Profit Value Net Purchase Value Net Present Value Net Cost Value
7. Which of the following is not a drawback of profit maximization? It assumes presence of perfect competition It ignores risks involved It ignores the time value of money It makes the precise meaning of profit very clear
8. Which of the following officers do not fall under the treasurer? Cash manager Credit Manager Tax Manager Portfolio manager
9. The system where reports are prepared when the sales takes place is known as? Accrual system Cash flow system Sales system Past cash and sales system
10. Which of the following is not a function of the financial manager? To evaluate a decision regarding purchase of a long term equipment To decide optimum dividend policy To decide for HR training schedules for the year To interfere in decisions regarding working capital
11. Following is not a function of accounting Meeting legal requirements of pollution control authorities Protection and safe guarding business assets To ascertain the results of operations i.e. Profit or Loss Helps in Rational Decision Making
12. Creditors use the firm's accounting reports to Asses the firm's ability to regularly pay interest on borrowed capital Asses the firm's ability to repay the borrowed capital Asses the firm's current financial position Verify the arithmetical accuracy of various accounts
13. The following class of people do not use the accounting information of a firm Investors Researchers Press None of these
14. The following information regarding an asset of a firm cannot be obtained from its accounting department The acquisition date of the asset The title of ownership of the asset The type of asset i.e fixed asset or current asset The required qualification of a operator to operate the asset efficiently.
15. The management uses accounting information for the following purpose To evaluate the financial position of the firm To evaluate the firm's current year performance None of these To take decision regarding sale budget , etc. Only A and B
16. The following type of accounting is primarily used for decision making by the managers Management accounting Cost accounting Financial accounting Financial accounting based on Mercantile system
17. Following type of accounting is required to meet the legal requirements Cost accounting Financial accounting Management accounting Both Financial and cost accounting
18. Following type of accounting is/are used for internal accounting Financial and cost accounting Cost and management accounting Financial and Management accounting Management accounting only
19. Cost accounting information may not be used for Cost control Internal make-or-buy decisions Cost ascertaining Meeting the legal requirements of the firm
20. Banks, creditors, investors make use of Financial accounting reports of the firm Management accounting reports of the firm Cost accounting reports of the firm Both financial and management accounting reports of the firm
21. The amounts of various items which represent either income or expenses of the firm is called Real Account Personal Account Bank account Nominal Account
22. Which of the account is nominal account? Bhavesh Account Salary Account Machinery Account Furniture Account
23. From below which is true in dual entry system? Total liabilities = Total assets Total liabilities > Total assets Total liabilities < Total assets Avg. liabilities = Avg. assets
24. Which voucher is used to record all the details of particular transaction whenever the payment is made by a firm Payment voucher Money receipt Journal voucher Simple voucher
25. Making debit entry in Shyam's a/c means Making an entry on the left hand side of shyam's a/c Making a correction to any previous entry in shyam's a/c Making an entry on the right hand side of shyam's a/c Making an entry on either side of shyam's a/c, provided the entry is arithmetically correct
26. In a Journal transactions are recorded In the order of decreasing amounts In the chronological order According to the nature of transaction In any order but the entry should follow the principles of double entry book keeping
27. The person who owe money to the company, in return of, the benefits received by them are called Debtors Creditors Liabilities Owners
28. Goods taken for the personal use of the owner are debited to Drawings Account Purchase Account Proprietor Account Capital Account
29. The amount brought in by the proprietor while starting the business should credited to Cash Account Drawings Account Capital Account Bank Account
30. Page No. of various ledger accounts are represented in journal by JF LF R.No. V.No
31. Which account is to be credited in the transaction 'Rent paid by cheque' Rent Account Cash Account Bank Account Sales Account
32. In recording the transaction-Cash purchase of furniture form Modern furniture, which a/c is credited? Furniture a/c Modern furniture a/c Cash a/c Both cash and furniture account
33. In recording the transaction-Cash wages paid to Mr. Sagar' Mr. Sagar's account is credited Wages account is credited Mr. Sagar's account is debited Wages account is debited
34. Rent paid to the landlord should be debited to Landlords Account Rent Account Cash Account Bank Account
35. In a journal entry the amount debited May be equal to the amount credited May be greater than the amount credited Is equal to the amount credited May or may not be equal to the amount credited-depending upon the nature of transaction
36. Debiting a ledger Account means Reducing the balance in the given Account Recording the entry on the left side of T Account Closing the given Account Recording the entry on the right side of T Account
37. The entry 'By sales a/c' may appear on Debit side of insurance Account Debit side of cash Account Debit side of bank Account Credit side of bank Account
38. The entry on the debit side of an Account is prefixed by To Debit to Being debited To or By
39. If in a cash Account debit balance is 40,000 and credit balance is 30,000 than the balancing figure is shown on Debit side as 'By balance C/d Rs.10,000' Debit side as 'To balance C/d Rs.10,000' Credit side as 'To balance C/d Rs.10,000' Credit side as 'By balance C/d Rs.10,000'
40. In transaction 'Rent paid by cash to Mr. Shyam' Two account are affected One account is affected Three account are affected Rent account is not affected
41. Cash purchases are entered in purchase book? True False May be Never
42. If a company given 2% discount to its customer for payment before due date, such a discount is Cash discount Trade discount Sale discount @10% Good customer discount
43. Following is not true in case of a Petty cash book Petty cashier should be given the money only for the actual petty payment made by him. Petty-cashier can receive money for petty-expenses only from the main cashier. It is not necessary to file all the vouchers in proper order. No disbursement should be made to the petty cashier without proper authorization
44. If cheque is received but not deposited in the bank on same day then It is entered in the bank column It is kept in the custody of cashier without any record. It is entered in the cash column It can be entered in the bank column but with the next day's date.
45. Following is not true for a contra transaction It includes cash deposited in bank It includes all cash transaction affecting the bank account. It includes cash withdrawn from bank It includes all banking transactions.
46. Cash purchases cannot be entered in purchase book False True Never Sometimes
47. Which of the following book should be used to record the purchase of a car for the company on credit. Cash book Journal Purchase book Bills receivable book
48. Sales book is used to record Cash sales to M/s ABC ltd. Cash sales to Mr. Shyam Credit sales of goods from finished goods inventory Credit sales of furniture to M/s ABC ltd.
49. Entries made in the purchase book are posted to which side of the supplier's account? Credit side Debit side Either side Not posted to supplier's account
50. Sales book records Cash sales of goods Credit sales of goods Credit sale of plant and machinery Both credit and cash sales of goods
51. Sales return book records sales return from customer of credit sales sales return from customers of cash sales Sales return from both cash and credit sales customers. none of the above
52. Bills receivable book contains information regarding Bills of cash sales Bills of both cash and credit sales Bills of credit sales none of the above
53. Entry of accrued income is considered as which type of entry? Compound entry Transfer entry Rectification entry Adjustment entry
54. Transactions for which any special book is not maintained are -- recorded in the journal proper recorded next year not recorded can be recorded in any book maintained by the firm
55. If goods are returned to the supplier then following is also prepared and sent to the supplier. Credit note Debit note Credit letter Promissory note
56. The summary of various debit and credit balances of various accounts is known as Trading Account Trial Balance Journal Book Profit and Loss Account
57. If 3.963 is written as 39.63, what kind of error would it be? Transplacement error Transposition error Transplant error Transport error
58. The account created to remove the difference that sometimes crops up in a trial balance is known as? Mystery account Query Account Suspense account Remedy Account
59. Which of the following is not a limitation of the trial balance? It is unable to disclose the errors of Omission It is unable to disclose errors due to wrong recording of transaction. It is unable to disclose compensating error It is unable to disclose arithmetical error
60. Following is not true for a trial balance It indicates the arithmetical accuracy of accounts It cannot be regarded as the basis for preparation of final accounts ie.P & L account and balance sheet. It has two columns debit and credit. No account should be ignored while preparing the trial balance
61. Bank reconciliation statement is prepared to know the correctness between Petty cash book and pass book balance Cash book and petty cash book balance Pass book, cash book and petty cash book balance Pass book and cash book balance
62. If there is a difference between the pass book and the cash book, we can predict that? It is common to happen Entries in the pass book have not been missed Entries in either of the book have been missed Entries in the cash book have been missed
63. A bank reconciliation statement is prepared by Creditors A bank A firm Debtors
64. The advantages of preparing a trial balance is not one of the following. Which one? Can detect any errior that can then be rectified Proves the arithmetic accuracy of accounting entries made in the ledger Proves that the company has good accounting personnel Summarizes result of all transactions
65. The account created to tally the balance in the credit and debit columns is known as CID account FBI account Thriller account Suspense account
66. Which of the following is not a capital expenditure? Cost of patents Cost of plant and machinery Cost of packaging materials Preliminary expenses
67. Which of the following is not true for a capital expenditure? Capital expenditure improves or adds to the profit earning capacity of the firm Capital expenditure provides for more than a year The cost of installation in case of a plant and machinery is not a capital expenditure The cost of installation in case of a plant and machinery is also a capital expenditure
68. Revenue expenditures are not ______________ Charged to the profit and loss account of the current year Expenditures like rent, wages, taxes, etc Expenses like repairs, depreciation, etc Shown on balance sheet
69. Which of the following items or expenses are not generally debited in the trading account? Manufacturing wages Opening stock of finished goods Freight inwards Freight outwards
70. Which of the following is not a cause of depreciation? Exhaustion Obsolesce Shifting position of machinery to a lower cadre or floor Non-use
71. Which of the following reveals gross profit? Manufacturing account Balance sheet Trading account Profit and loss account
72. The opening and closing stock does not comprise of which of the following items? Stock of raw material Stock of office stationary Stock of semi-finished goods Stock of finished goods
73. The valuation of the stock is done on what basis? Cost of purchase or market cost whichever is highest Cost of purchase Market cost at present Cost of purchase or market price whichever is lower
74. Direct expenses do not include which of the following? Wages Carriage Manager's salary Freight
75. Which of the following is not an advantage of the trading account? The various items of trading can be known separately. Trading account can be studied for multiple years and not on a year by year basis Over stocking or under stocking can be known The result of trading can be known separately.
76. Which of the following is a liability for the firm? Reserve and surplus Fixed assets Investments Losses
77. What does the profit and loss account of the firm show? Profit incurred by the firm Loss incurred by the firm Profit or loss whatever may have been incurred by the firm Profit or loss as incurred by the firm, compared to that of other firms in the same sector
78. The first section of the revenue account is known as? Profit and loss account Revenue Account ' I Business Account Trading Account
79. The balance from which account is transferred to the capital account? Trading account Profit and loss account Proprietor's account Sales Account
80. Which of the following is not debited in the profit and loss account? Distribution account Administrative expenses Depreciation of assets Creditors
81. Which of the following is not a type of assets? Fixed Assets Variable assets Current assets Factious assets
82. Which of the following is a type of liabilities? Contingent liabilities Variable liabilities Factious liabilities Liquid liabilities
83. Which of the following are recorded in the balance sheet? Real and Nominal Nominal and Persona Real and Personal Only Nominal
84. Which of the following assets is the least liquid? Cash Bank Gold House
85. The balance sheet of a firm indicates? The gross profit earned during the last two years Various revenue expenditures Financial position of the firm Profit margin of the firm
86. A financial statement is a Formal record of the financial activities of a business Formal record of the financial activities of a person, or other entity, A financial statement is the summaries of monetary data about an enterprise. None of these
87. Balance sheet referred to as statement Of financial position or condition, reports on a company's assets, Of financial position or condition, reports on a company's assets, liabilities, and ownership equity at a given point in time; The balance sheet provides the user with data about available resources as well as the claims to those resources; All of these
88. The income statement provides the user Reports on a company's income and expenses, Reports on a company's income and expenses and profit, Profits over a period of time, Profit & Loss account provide information on the operation of the enterprise.
89. Analysis of financial statement means finding out the current position of the company through All of these Ratio analysis, Fund flow analysis, Sale and the various expenses incurred during the processing state,
90. Purpose of financial statements by business entities are To provide information about the financial position, Reported assets, liabilities, equity and income Performance and changes in financial position of an enterprise, Reported assets, liabilities, equity, income and expenses ,
91. Profit Margin is the Net sales to net income Gross sales to income Net income to sales Gross incomes to sales
92. Assets Turnover Ratio is the Sales to total assets Sales to average total assets, Average sales to average total assets, Average sales to total assets,
93. Capital structure ratio is the Total stock holders' equity to total liabilities Total liabilities to stock holders' equity, Long term debt to share holders equity plus long term debt Long term debt to share holders equity
94. A liquidity ratio measures a company's ability All of these Is the company's current liabilities Is the company's current assets Is to pay its bills,
95. Acid test ratio is the The cash ratio Ratio to the cash asset Net assets to current liabilities Current assets minus current inventory,
96. Working capital management is mainly concerned with Management of the firm's capital assets Inventory management The financing and management of the firm's current assets The placement of the firm's debt and equity issues
97. The time value of money plays an important role in which of the following All of these Determining the true rate of return on an investment Understanding the composition of a mortgage payment Understanding the effective rate on a business loan
98. Net income to sales is Gross sales to income Net sales to net income Profit Margin Gross incomes to sales
99. Assets Turnover Ratio is the Sales to total assets Average sales to average total assets, Sales to average total assets, Average sales to total assets,
100. Capital structure ratio is the Total stock holders' equity to total liabilities Total liabilities to stock holders' equity, Long term debt to share holders equity plus long term debt Long term debt to share holders equity
101. Profitability ratios measure The debt position of the firm in light of its assets and earning power The firm's ability to pay off short term obligations as they are due The ability of the firm to earn an adequate return on sales, total assets, and invested capital The speed at which the firm is turning over its assets
102. To the banker/creditor, the most important ratio group is Debt utilization Liquidity Profitability Asset utilization
103. Activity ratios measure Company sales per another asset account, Most common are accounts receivable, inventory, and total assets, The efficiency of the company in using its resources, Companies invest heavily in accounts receivable or inventory
104. Accounts receivable is the total amount of money Due to a company for products or services sold on an open credit account, How quickly a company collects what is owed to it, Is the ratio of total credit sales to accounts receivable, Is the ratio of accounts receivable to total credit sales
105. The inventory turnover ratio is the Total annual sales to inventory cost, Total annual costs of goods sold to all kinds of inventory cost, Inventory cost to annual sales All kind of annual sales with total inventory cost
106. Profitability ratio is Profit margin, Return on assets , Return on equity, All of these
107. The profitability ratios are used To measure how well a business is performing in terms of profit, Considered to be the basic bank financial ratios, The profitability ratios give the various scales to measure the success of the firm, All of these
108. Gross Profit Margin is the The value of gross profit earned by the company , The value of gross profit earned by the company over sale, Total sales minus cost of sold goods, Gross income minus total cost
109. Return on Equity is the Return on equity is the ratio of shareholders equity with net income Return on equity is the ratio of net Income with shareholder equity Return on equity is the ratio of shareholders equity with gross income Return on equity is the ratio of gross Income with shareholder equity
110. Return on Assets is the The assets of the firm are used most effectively Ratio of net income to total assets Ratio of gross income to assets Ratio of gross assets to total income
111. A company's prospects does not depend on Factors of market demand, Technological developments, Human capital & government regulation, Union activity & price of raw materials
112. Limitation of ratio analysis Difficult to classify for comparison purposes as they are diversified, Choices of accounting methods, Financial data is not adjusted, All of these
113. Ratios analysis should be judged As tentative, Should be viewed as an end, Should be viewed as a starting point, As a basis for judgment about the future
114. Financial statement analysis has its limitations The comparability of financial data between companies, Need to relook beyond ratios analysis, Provide valuable clues about the financial health of an organization, None of these
115. Operating leverage may be defined as The degree to which debt is used in financing the firm The difference between price and variable costs The extent to which capital assets and fixed costs are utilized The difference between fixed costs and the contribution margin
116. The benefit-cost analysis of the projects is worked out Considering the market prices at the time the project is proposed to be taken up Considering the current prices at the time the project is proposed to be taken up Considering the constant prices at the time the project is proposed to be taken up All of these
117. The economic analysis of agricultural projects depends on On constant prices, Current prices, border prices , None of these
118. The benefit-cost analysis of the projects is worked out Considering the market is operated in perfect marketing situations Market is protected through various Governmental measures The project is not going to be operated in perfect marketing situations The costs and values of the inputs and outputs of the projects at the international exchange rates
119. Market price of goods and services often do not provide a reliable guide to the costs and returns of the projects because Because prices reflect the relative scarcity value of various goods and services Market is protected through various Governmental measures There will be scarcity of foreign exchange Border rates excluding the effects of domestic tariff, subsidies etc
120. The traded commodities included Capital-intensive works Require imported machinery and material Goods and services include works, which require skilled labourers and locally manufactured material None of these
121. A rupee is More worthy today Less opportunity cost today More worthy in future Less worthy in future
122. Opportunity cost of capital is the Loss of interest rate today Gain of interest rate tomorrow Present value of present sum Future value of present sum
123. Compounding is the sum of Interest is added to the principal Interest is added to the principal at the end of each time period The interest is added to the principal at the end of each time period which, in turn, earns interest None of these
124. Which is not prominent in the undiscounted measures Average annual proceeds of rupee outlay Payback period Ranking by inspection Profitability Index
125. In the discounted measures which is not important Payback period, Proceeds per rupee of outlay, Net Present Worth (NPW), Internal Rate of Return (IRR)
126. In financial analysis the cash flow is the Is the net incremental benefit of the project Annual Present Worth of the project Gross Present Worth of the project Includes both return of capital and return to capital
127. Discounted cash flows are The weighted by discount rate, The best estimates to decide on the worth of the project Will give the present worth of the benefits The present worth of the costs is subtracted
128. The annual stream of gross benefits of the project is the The amount of capital invested Input costs are deducted The return of capital and return on capital All of these
129. In accounting, the term cash flows is the The sum of cash flows of projects plus depreciation allowance Is the net incremental benefit of the project Includes both return of capital and return to capital Gross Present Worth of the project
130. In financial analysis Some of the inputs must be shadow prices Some of the inputs must be at market prices Some of the inputs must be included taxes and subsidies Some of the inputs must pay before arriving at the recovered capital
131. Major role of investment Changing aggregate demand Leads to capital accumulation Affecting short-run output All of these
132. Investment depends upon The revenues that will be generated by the state Sensitive to the business cycle Borrowed capital All of these
133. Durable goods includes The cost of capital The interest rate of the borrowed capital The taxes that firms pay on their incomes. None of these
134. Investment decisions depend on The demand for the output produced by the new investment, The interest rates and taxes that influence the costs of the investment, Business expectations about the state of the economy All of these
135. Internal Rate of Return (IRR) is the The time value of money is accounted Actual rate of return from the different projects Marginal efficiency of capital It is the discount rate at which the present values of the net cash flows are just equal to zero
136. Following is not true about payback period It is based on time value of money It aims at recovering the initial outlay of the project It is easy to calculate It does not require a discount rate for calculation
137. Following is a disadvantage of payback period Ease of calculation Focus on the recovery of initial outlay Simple to understand It ignores the cashflows beyond the payback period
138. Following is not true regarding accounting rate of return It does not give any guidance as to what should be the ideal ARR. It is easy to calculate because accounting data is readily available It is based on accounting profit It is based on cash flows
139. Identify the correct statement Payback period is a discounted cash flow technique ARR is a discounted cash flow technique According to payback period, a project which has low payback period should be preferred. Both ARR and payback period are non-discounted cashflow techniques
140. Following is not true for ARR ARR is calculated by dividing Average Profit after tax by Average book value of investment There is no ideal value of ARR It is based on accounting information There is a ideal value for ARR which can be used to decide whether to accept or reject a project.
141. If a firm employs only equity capital, then Its cost is equal to the cost of equity capital It does not have any cost of capital Its cost of capital is lower than cost of debt capital Its cost of capital is always less than equity capital
142. Cost of capital is Rate of return of a firm Cost of any one source of finance viz. debt or equity or preference shares Never used in capital budgeting decisions. The minimum return a firm must earn in order to remain profitable.
143. Cost of capital is defined as Cost of solving all hurdles facing a firm Cost of long term bank borrowings Cost of preference shares and term loans The weighted average cost of all sources of capital of a firm
144. Calculation of the cost of capital involves Each and every source of capital used by the firm Proportion of each and every source of capital used by the firm Only A Both A & B
145. Working capital can also be classified Variable working capital Permanent or fixed working capital The part of capital which is permanently locked up All of these
146. The investment in current assets is of A permanent nature Flexible nature investment required to maintain The minimum stock of raw materials
147. Work-in progress requires minimum cash balance for the payment of wages, salaries current expenditure throughout the year the permanent fixed working capital Reserve margin or cushion working capital.
148. Regular working capital is needed To keep up the circulation of the capital from cash To inventories to receivables and again to cash Minimum bank balance to discount all bills All of these
149. Reserve Margin is the excess Over the needs of regular working capital less than the needs of regular working capital Reserve for contingencies that may arise at any time. The contingencies which include as experiments with new products
150. Which of the following is not a department for controlling the labour cost? Personnel department Purchase department Industrial engineering department Cost department
151. Which of the following is a method to compute the labour turnover? Substitution method labour turnover Slag method labour turnover Separate method labour turnover Liabilities method labour turnover
152. What is the importance of idle time in the working of an organization? It is necessary to motivate any worker It is given only to good and punctual workers It increases the overall productivity and efficiency of the production department. It decreases the overall productivity and efficiency of the production department.
153. The reward for labour is known as ____________ Remuneration Incentives Incomes Labourives
154. Which of the following is not a type of overhead? Selling overheads Distribution overheads Administration overheads Factory overheads None of these
155. Which of the following method uses oldest costs first for accounting purposes irrespective of actual material flows? LIFO method FIFO method LILO method Weighted Average method
156. A principle feature of the LIFO method is Costs are not related to current price levels Profit and loss is made by adopting this method Pattern of cash flow does not coincide with actual material flow patter Results in unrealized profit due to inflationary trends
157. Which of the following method cannot be used in a job order industry? LIFO method Weighted average method FIFO method Base Stock method
158. The best method for use in Process industries is: Weighted Average method First-In-First-Out Method Last-In-Last-Out Method None of these
159. The closing stock in all methods is calculated on the basis of: Cost market price cost or market price whichever is lower price of the highest tender quoted
160. Salary of gatekeeper of a administrative building is a kind of Factory overheads Office and administrative overheads Distribution Overheads Selling overheads
161. Which of the following is not an element of cost? Labor Entrepreneur Material Expenses
162. The sum total of direct costs, factory overheads and office overheads is known as? Cost of sales Factory cost Cost of production Prime cost
163. Advertising is an indirect expense. Which of the following is a direct expense? Rent of the factory premises` Electricity bill in the printing press for bills Insurance of the building Rent of an equipment hired for a specific task in production
164. The salary of the managing director of a company will be in each of the following categories? Direct labor Direct expenses Indirect expenses Indirect Labor
165. 'A unit of quality of product, services of time (or a combination of these) in relation to which costs may be ascertained or expressed' is known as - Production Unit Income Unit Cost Unit Operation Unit
166. What is the behavior of fixed costs and variable costs in relation to the number of units produced? Fixed cost increases with number of units produced while variable cost decreases Fixed cost remains constant anyhow while variable cost increases with number of units produced Fixed cost decreases with number of units produced while variable cost remains constant anyhow Fixed cost and variable cost either increase or decrease together in proportion with number of units produced or they show no change at all, depending on the institution
167. The computation of historical costs is known as? Cost historing Cost ascertainment Cost determination Cost decision
168. What would be the difference between revenue expenditure and capital expenditure? Revenue expenditure gives the return in the current accounting year itself while capital expenditure gives a return not only for this accounting year but for more than one accounting years in the future too. Revenue expenditure gives a return not only for this accounting year but for more than one accounting years in the future too where as capital expenditure gives the return in the current accounting year itself Revenue expenditure gives revenue while capital expenditure gives capital Revenue expenditure gives immediate or long term returns but capital expenditure gives no returns at all.
169. When two or more products produced from a common production process or element-material labor or overhead or any combination of these of or so locked together that one can not be produced without producing the other(s), the cost thus incurred, that has then to be split up, is called as? Combined cost Joint Cost Opportunity Cost Multiple product cost
170. Overhead comprises of - Total direct cost Total material cost Total fixed costs Total indirect costs
171. Following is not a technique of costing Marginal costing Absorption costing Standard costing Operation costing
172. Cost accounting is not used for Determining the selling price of a product External reporting Internal reporting Taking decisions of making or buying
173. Determination of cost at each step to determine the final cost of the finished product is knows as? Departmental costing Operational costing Step-by-step costing Job costing
174. Which of the following terms is not a part of the definition of cost accounting? Recording Calculating Classifying Summarizing
175. An ideal code should be Complex and elaborate Commonly used by all Simple, compact, unique but easy to understand and record Rigid and strict, no flexibility required
176. Which of the following is not a system of codification? Arbitrary system Brisch System Random number system Mnemonic system
177. The 10-digit numerical codification system, based on the logic of the source of supply is known as? Arbitrary System Brisch System Numeric System Kodak System
178. Which of the following is a National Standardization body for India BIS NTH ASTM BS
179. If a food product is being exported, then apart from the standards of the companies involved, which other standard would have to be considered in most cases? ASTM PFA BIS Codex Alimentarius Commission
180. By good store management which of the following is not achieved? Optimal Space Utilization Timely Ordering of material by monitoring the inventory Ease of physical movement Greater yield of production
181. Which of the following is not a document maintained in the stores? GRN GTN MRN MTN
182. Which of the following is not the responsibility of a Storekeeper? Promptly prepare 'stores received note 'and circulate a copy to concerned departments. To keep a track of inventory levels and place purchase requisitions when re-order levels of various items are reached. To provide for adequate and proper storage facilities as per the requirement of various items. To make the cost statement of the goods present in the store and make the assets, liabilities and other financial statements accordingly
183. The quantitative record in chronological order for all items and materials in the store, maintained by a storekeeper is known as? Store Ledger Material records Bin Card Trash Card
184. Ice cream was being manufactured, and the department urgently required a few bags of skim milk powder. However, this was not currently available in the stock at the store. But, it was available with the milk processing section of the dairy and did not currently require it. The bags of the powder were transferred on request to the ice cream section. Which document should have been issued or made? Material Transfer Note Material Receipt Note Store requisition Departmental transfer memo
185. Which of the following is NOT the function of the purchase department? Payment of the materials. Purchasing petrol for the scooter that the officers use to come to office Receiving inspection Searching selecting a supplier
186. Which of the following is NOT a step of the purchase procedure? Purchase requisition Searching for a supplier and vetting him Writing off the cheque for the payment to the supplier Placing the order and following it up
187. Which of the following suppliers is most suitable to be selected by an organization for carrying out regular purchases? An ethical supplier who will provide the required quantity in 10 days An efficient supplier who will provide no more than 500 units (below required amount) within 5 days but is in the neighboring state A supplier in the same city, who will provide the goods after reminding him 10 times A supplier who will carry out the order with all formalities in time and ethically, but the quality of goods has to be assured after every purchase
188. Which of the following is not mentioned in the material or goods inspection form? Inspector's name and sign Goods receipt number Purchase order number Cheque number for payment
189. In case of a discrepancy between the purchaser and the seller's invoices, what should it be compared against? Purchase order and goods receipt note Purchase requisition Store requisition Accounting records
190. Class A inventory items have inventory cost of 65-70% of total inventory 25-30% of total inventory 8-10% of total inventory 40-50% of total inventory
191. Which class of inventory items have maximum number of inventory items A B C B and C have same number of items
192. The cost involved in preparation of purchase order falls under? Ordering cost Carrying cost Shortage cost Purchase Cost
193. While calculating the EOQ, which of the following is ignored? Ordering cost Holding cost Purchase cost Shortage cost
194. The classification done on the basis of availability of materials is known as? SDE classification FSN classification HML classification VED classification
195. Which of the following is not true about EOQ? It specifies the order quantity that minimizes the inventory cost It uses only two costs-ordering cost and holding cost It requires ordering, holding and shortage costs to be known Shortage costs are ignored.
196. At EOQ, Ordering cost is equal to the holding cost Ordering cost is minimum Holding cost is minimum Shortage cost is minimum
197. Which of the following is not true about HOLDING COST? It is also called carrying cost It includes cost of spoilage, pilferage, etc It can be determined using the equation H = iP It is expressed per unit
198. If the monthly demand of an item is 100 units, and the order size is 60 units, then the number of orders during a year will be? 2 20 1.5 1
199. Find the incorrect equation to determine the EOQ from the following. Q2 = 2DS/H Q2 = 2DS/iP Q = (2DS/iP)1/2 Q = (2Di/SP)1/2
200. Which of the following is not included inventory? stock of spare parts stock of finished goods existing plant & machinery any stock of semi finished goods
201. Goal of inventory management is to avoid situation of excessively high & excessively low inventory. to increase inventory to decrease inventory to avoid inventory
202. Following is not a holding cost Rent of warehouse Cost of obsolescence cost of spoilage & pilferage transportation cost
203. As the order quantity increases holding cost increases ordering cost increases no effect on holding cost holding cost increases but ordering cost decreases.
204. Opportunity cost of capital blocked in inventory is referred to as purchase cost. ordering cost carrying cost shortage cost
205. To obtain the Breakeven point in Amount ( ie Rs.) , the total fixed cost is divided by Fixed cost per unit Profit /volume ratio Contribution margin per unit Variable cost per unit
206. Following is not true Variable cost per unit is constant The fixed cost per unit decreases with increase in production The total fixed cost is constant for a period The fixed cost per unit increases with increase in production
207. Contribution is equal to Number of units sold minus number of units purchased Total sales revenue minus Variable cost per unit Selling price per unit minus total cost Selling price per unit minus variable cost per unit
208. Breakeven point is the point at which Sales revenue line intersects the total cost line Sales revenue line intersects the fixed cost line Sales revenue line intersects the variable cost line B or C
209. In A CVP graph following is not true Sales revenue line originates from the origin Fixed cost line is parallel to x axis Fixed cost line is parallel to y axis X axis represents the number of units
210. The angle formed the break even point at which The angle indicates rate at which profits are being made The sales line cuts the cost line A small angle indicates that variable costs form a major part of cost of production Large angle of incidence is an indication that profits are being made at a high rate
211. Margin of safety indicates A large angle of incidence with a high, the most favorable position of a business and even the existence of monopoly conditions. The amount by which the actual volume of sales exceeds those at the breakeven point All of the above A low margin usually indicates high fixed costs
212. A break even chart does not take in to consideration Labour employed in the production process Managerial decisions on the basis of break even chart may not be reliable All of the above. Capital employed which is a very important factor in taking managerial decisions
213. The assumptions under break even analysis consist of All costs can be separated in to fixed and variable costs Fixed costs remain constant at every level Variable cost fluctuates per unit of output Selling price will remain constant
214. In the break even analysis All of the above The Inventory at the beginning and at the end of the accounting period are not significant Product mix will remain unchanged Cost and revenue depend only on volume and not on any other factor
215. CVP analysis is an extension of More relevant where the proposed changes in the level of activity are relatively large More irrelevant where the proposed changes in the level of activity are relatively small More relevant where the proposed changes in the level of activity are relatively small Marginal costing
216. Cost volume profit analysis depends on/ to Depend on certain minimum expenditure on fixed charges Depend on the price Depends on demand Measure variations of cost with volume
217. CVP analysis is useful to the finance manager because All of the above It can ascertain the cost, sales-and profits at different levels of activity It is helpful in setting up flexible budgets, It helps in forecasting the profit,
218. The financial performance evaluation needs It helps in determining the amount of overhead cost It helps to study the effect of different price structures on cost and profits It helps in formulating price policy For cost control,
219. The term 'break even analysis' is interpreted as The point at which costs become equal to the revenue It implies that no loss is suffered The level of sales volume at which there is neither profit nor loss The level of activity where total cost equals total selling price
220. Profit planning is necessarily a part of operations planning because All of the above It involves the prediction of most aspects of a firm's operations It is the basis of capital expenditure & pricing It is the basis of planning cash,
221. Current assets exclude Finished goods Overhead costs Working-in-progress Stock of materials
222. Profits may not be a source of working capital as All overheads are assumed to be variable Presence of depreciation element in overheads will lower the working capital requirement Profits are to be adjusted for dividend payments Profits are to be adjusted for income-tax
223. Total investments in current assets All of the above Work in progress Finished goods Cash in hand or in bank
224. Total estimate of current liabilities None of the above Sundry Debtors Sundry Creditors Lag in payment of expenses
225. The motive behind holding Cash for the purpose of investing in stock market when the prices have fallen too much , is All of the above Transaction Precautionary Speculative
226. Increasing the credit period for customers would Both A & C Increase investment in debtors Increase sales Decrease sales
227. Credit standards involves All of the above Decisions regarding identifying good borrowers and bad borrowers in terms of repayment Decision regarding assessment of the financial position of a borrower Decisions regarding offering or not offering credit to a customer
228. Following is not true Level of debtors is unaffected by the credit policy of the firm Level of debtors is affected by the credit policy of the firm Debtors is a current asset Cash is a current asset
229. Cash management does not involve Estimation of payments for the wages , salaries etc Estimation of payment to the creditors Estimation of collection from the debtors Estimation of cash sales None of the above
230. Operating efficiency of management depends on Eliminating the pressure on working capital Ensure the efficient utilization of resources Control the rise in prices, The determinant of the working capital
231. Net profit margin contributes Witten-off accumulated expenses and losses Cash available for use at the end of the period Towards the working capital pool Adjusting non-cash items
232. The financial manager must do tax planning in order to The financial manager must do tax planning in order to avail all the benefits and incentives. Taxes must be paid out of profits. Tax liability is unavoidable If the tax liability increases, it will impose an additional strain on working capital.
233. The depreciation policy affect on All of the above The depreciation is an indirect way of retaining profits and preserving the firm's working capital position. Net profits will be less if higher depreciation, Higher the amount of depreciation lowers the tax liability,
234. The forecast for working capital requirements can be made only after estimating the All of the above Sundry Debtors & Creditors Cash and Bank Balance Inventories
235. Variable Working Capital changes All of the above Required for financing the special operations Required to meet the seasonal liquidity of the business With the increase or decrease in the volume of business
236. The distinction between fixed and variable working capital is All of the above Variable needs can be financed out of short-term borrowings from the bank Fixed working capital should be raised in the same way as fixed capital is procured. In raising the funds for an enterprise.
237. Inventories and book debts requires All of the above The proportion of current assets to total assets measures the relative requirements of working capital of various industries Necessary to invest proportionately large amounts in working capital To maintain a sufficient amount of cash
238. Seasonal fluctuations Will be more expensive during slack periods All of the above Affect working capital requirements Create production problems for the firm
239. When the firm has to sustain without adequate production- and sales Quick disposal during the peak season. Accumulation of inventories during the off season To utilize its resources to the fullest extent. A firm may follow a policy of steady production,