Management Accounting MCQ Questions and Answers Part – 1
Management Accounting MCQ Questions and Answers Part – 2
Management Accounting MCQ Questions and Answers Part – 3
51. Operating costs include the cost of goods sold and _____.
A. purchases
B. sales
C. gross profit
D. other operating expenses
ANSWER: D
52. In common size income statement analysis, which is taken as 100 percent?
A. sales
B. cost of goods sold
C. purchases
D. total assets
ANSWER: A
53. Profit on sale of fixed assets is __________.
A. non-trading income.
B. operating income.
C. non-trading gains.
D. long term gain.
ANSWER: A
54. In fund flow statement, issue of shares is ________.
A. sources of funds.
B. applications of funds.
C. sources of cash.
D. applications of cash.
ANSWER: A
55. In funds flow statement, funds from operations is _________.
A. applications of funds.
B. sources of cash.
C. applications of cash.
D. sources of funds.
ANSWER: D
56. In funds flow statement, increase in working capital is ________.
A. applications of funds.
B. sources of cash.
C. applications of cash.
D. sources of funds.
ANSWER: A
57. In funds flow statement, decrease in working capital is _________.
A. applications of funds.
B. sources of cash.
C. applications of cash.
D. sources of funds.
ANSWER: D
58. A cash flow statement is a statement which portrays the changes in the cash position between _______.
A. two accounting periods.
B. three accounting periods.
C. four accounting periods.
D. five accounting periods.
ANSWER: A
59. The term ‘cash’ in the context of cash flow analysis includes the ‘cash balance’ and the __________.
A. working capital.
B. bank balance.
C. capital.
D. fixed assets.
ANSWER: B
60. Cash flow analysis is based on the ______.
A. capital.
B. fixed assets.
C. cash concept of funds.
D. working capital.
ANSWER: C
61. In cash flow statement, issue of shares is _______
A. cash from financing activities
B. cash from operating activities
C. cash from investment activities
D. none of the above
ANSWER: A
62. In the cash flow statement, sale of fixed assets is ________.
A. cash from financing activities
B. cash from operating activities
C. cash from investment activities
D. none of the above
ANSWER: C
63. In fund flow statement, Increase in debtors is ___________.
A. cash from financing activities
B. cash from operating activities
C. cash from investment activities
D. none of the above
ANSWER: B
64. Decrease in current liabilities is ___________.
A. cash raised from operating activity
B. cash raised from financing activity
C. cash raised form investment activities
D. none of the above
ANSWER: A
65. Increase in current assets is _______.
A. cash used i9n operating activities
B. cash used in financing activity
C. cash used in investment activities
D. none of the above
ANSWER: A
66. The basic function of management accounting is _________.
A. to record business transaction
B. to interpret the financial data
C. to classify the accounts
D. to assists management in performing their functions
ANSWER: D
67. Management accounting involves
A. preparation of financial statements
B. analysis and interpretation of data
C. recording of business transaction
D. none
ANSWER: B
68. Management accounting provides services to management in performing
A. all management functions
B. coordinating functions
C. controlling functions
D. HRD functions
ANSWER: A
69. Which one is the main reason for the introduction og management accounting?
A. limitation of financial accounting
B. limitations of cost accounting
C. limitations of HRD accounting
D. Limitations of inflation accounting
ANSWER: A
70. When the analysis is done by external people, it is known as
A. internal analysis
B. external analysis
C. vertical analysis
D. horizontal analysis
ANSWER: B
71. Which one of the following is not a tool of financial analysis?
A. Trend percentages
B. common size statement analysis
C. comparative financial analysis
D. budgeting
ANSWER: D
72. The statement which shows the net result of business is
A. income statement
B. balance sheet
C. fund flow statement
D. cash flow statement
ANSWER: A
73. The statement which shows the financial position of the business is
A. income statement
B. balance sheet
C. fund flow statement
D. cash flow statement
ANSWER: B
74. The statement which shows the movement of funds between two periods of the business is
A. income statement
B. balance sheet
C. fund flow statement
D. cash flow statement
ANSWER: C
75. Comparative statement analysis sheet is
A. vertical analysis
B. horizontal analysis
C. either vertical or horizontal analysis
D. neither vertical nor horizontal analysis
ANSWER: B
76. The term fixed assets include
A. cash
B. marketable investment
C. plant
D. debtors
ANSWER: C
77. The term fixed assets does not include
A. plant
B. machinery
C. land
D. stock
ANSWER: D
78. For the purpose of analysis the liabilities are grouped into _____ categories.
A. three
B. two
C. four
D. five
ANSWER: A
79. A low capital gearing ratio indicates _______.
A. undercapitalization.
B. overcapitalization.
C. borrowed capital.
D. long term funds.
ANSWER: B
80. Low turnover of stock ratio indicates ________.
A. solvency position.
B. monopoly situation.
C. overinvestment in inventory.
D. liquidity position.
ANSWER: C
81. Which one of the following would not be classified as manufacturing overhead?
A. Indirect labour
B. Direct materials
C. Insurance on factory building
D. Indirect materials
ANSWER: B
82. The difference between actual and planned results is referred to as a(n):
A. variance.
B. exception
C. budget.
D. life cycle.
ANSWER: A
83. Which tools of management accounting is useful for check the solvency of the company?
A. Budgetary Control
B. MIS
C. Decision Accounting
D. Analysis of Financial Statements
ANSWER: D
84. Which is the advantage of management accounting?
A. To simplify the financial statements
B. To make financial statements
C. To combine two or more financial statements for making consolidated financial statement
D. To Spit many years financial statements in yearly financial statements.
ANSWER: A
85. Formula for Calculating Cash from Operations
A. Net Profit + non-cash and non -operating items which are debited in profit and loss account – Cash and
Operating items which are credited in profit and loss account
B. Cash sales – ( Cash purchase + Cash operating expenses )
C. Cash Sales – Credit Purchase – Non Cash and Non-operating expenses.
D. Credit Sales – Cash purchase – cash operating expenses
ANSWER: A
86. Adjusted profit and loss a/c is prepared to know __________.
A. funds from operation
B. inflows of funds from financing activities
C. outflows of funds from financing activities
D. changes in working capital
ANSWER: A
87. In fund flow statement, redemption of preference capital is
A. source of funds
B. source of cash
C. application of funds
D. application of cash
ANSWER: D
88. In working capital calculation, when the cost of goods sold is Rs. 1,50,000 p.a and finished goods are in stock for 15 days, the amounts to be invested in finished goods is
A. 6250
B. 7500
C. 12500
D. 75000
ANSWER: A
89. Which one of the following is not a method to find working capital requirement?
A. percent of sales method
B. working capital components method
C. operating cycle method
D. physical method
ANSWER: D
90. Which one is the long term solvency ratio?
A. current ratio
B. net profit ratio
C. debt-equity ratio
D. debtors turnover ratio
ANSWER: C
91. Production cost under marginal costing includes _________.
A. prime cost only.
B. prime cost and fixed overhead.
C. prime cost and variable overhead.
D. prime cost, variable overhead and fixed overhead.
ANSWER: C
92. Marginal cost considers only the _________ for reporting to management.
A. variable cost
B. fixed cost
C. standard cost
D. production cost
ANSWER: A
93. One of the primary differences between marginal costing and absorption costing regarding the treatment of __________.
A. prime cost.
B. fixed overheads.
C. variable overheads.
D. direct materials.
ANSWER: C
94. Absorption costing differs from marginal costing is the ________.
A. fact that standard costs can be used with absorption costing but not with marginal costing.
B. amount of costs assigned to individual units of products.
C. kind of activities for which each can be used.
D. amount of fixed costs that will be incurred.
ANSWER: B
95. Contribution margin is also known as ________.
A. marginal income.
B. gross profit.
C. net profit.
D. net loss.
ANSWER: A
96. Period costs are ___________.
A. overhead costs.
B. prime cost.
C. variable cost.
D. fixed costs.
ANSWER: D
97. Contribution margin is equal to ________.
A. fixed cost – loss.
B. profit + variable cost.
C. sales – fixed cost-profit.
D. sales – profit.
ANSWER: A
98. P/V Ratio is an indicator of ________.
A. the rate at which goods are sold.
B. the volume of sales.
C. the volume of profit.
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D. the rate of profit.
ANSWER: D
99. Margin of Safety is the difference between _______.
A. planned sales and planned profit.
B. actual sales and break-even sales.
C. planned sales and actual sales.
D. planned sales and planned expenses.
ANSWER: B
100. An increase in variable costs _______.
A. increases p/v ratio.
B. increases the profit.
C. reduces contribution.
D. increase margin of safety.
ANSWER: C
