Accounting for Management

1 of 2 sets

1. …………….is concerned with recording transactions and preparing financial

reports for the external and internal users of accounting.
A. management accounting
B. financial accounting
C. cost accounting
D. all of these
Answer:B

2. The Branch of accounting concerned with collection, determining and

m
controlling cost of products and services is called………………
o
A. management accounting
. c
B. financial accounting
te
C. cost accounting
a
D. all of these

q M
Answer:C
c
M providing information to management for taking
3. ……………is concerned with
managerial decisions.
A. management accounting
B. financial accounting
C. cost accounting
D. all of these
Answer:A

4. The father of Double Entry system is………………

A. luca pacioli
B. lopus patricia
C. lukas christian
D. none of these
Answer:A
5. ……………….is the art of recording, classifying and summarizing in a
significant manner and in terms of money, transactions and events, which are in
part, at least of financial character and interpreting the results there of.
A. management accounting
B. accounting
C. cost accounting
D. all of these
Answer:B

6. Which among the following do not belong to the category of Accounting ?

A. management accounting
B. financial accounting
C. cost accounting
D. none of these
Answer:D

7. The objective of financial accounting is to find out…………………..

A. profitability and financial position
B. liquidity
C. solvency
D. none
Answer:A

8. ……………….journal is used to record credit sale of goods

A. sales journal
B. cash book
C. purchase journal
D. none of these
Answer:A

9. The ………….Management is mainly concerned with the policy decisions.

A. top
B. middle
C. bottom
D. all of these

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Answer:A

10. The Prime function of accounting is to ………………………..

A. record economic data
B. provide the informational basis for action
C. classify and record business transactions
D. attain non economic goals
Answer:C

11. The basic function of Management Accounting is to ……………………….

A. record all business transactions
B. interpret the financial data
C. assist the management in performing its functions effectively
D. none of these
Answer:C

12. Management accounting provides invaluable services to Management in

performing…………..
A. all management functions
B. co-ordination functions
C. controlling functions
D. none of these
Answer:A

13. Accounting designed to serve parties external to the operating responsibility of

the firm is termed as…………….
A. management accounting
B. financial accounting
C. cost accounting
D. none of these
Answer:B

14. Cost Accounting and Management Accounting are ……………….. in nature.

A. complementary
B. contradictory
C. different

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 D. similar
Answer:A

15. Management accounting has a ……….. scope than cost accounting.

A. wider
B. narrow
C. no
D. none of these
Answer:A

16. …………….is the amount of expenditure [actual or notional] incurred on or

attributable to a given thing.
A. expenses
B. costing
C. cost
D. none of these
Answer:C

17. ………………..is the technique and process of ascertaining costs

A. cost
B. costing
C. cost accounting
D. none of these
Answer:C

18. ………..is the process of accounting for cost which includes the application of
cost control methods and ascertainment of profitability of activities
A. cost
B. costing
C. cost accounting
D. none of these
Answer:C

19. Which among the following is not a management accounting technique?

A. standard costing
B. marginal costing

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 C. project appraisal
D. none
Answer:D

20. ………..Accounting is concerned with historical data

A. cost accounting
B. management accounting
C. financial accounting
D. none
Answer:C

21. ……………..is the process of identifying the financial strengths and weakness
of the firm by properly establishing relationship between the items of balance sheet
and Profit and Loss Account
A. financial statements
B. financial analysis
C. trend analysis
D. all of these
Answer:B

22. ……………explains what has happened to a business unit as a result of

operations between two balance sheet dates.
A. income statement
B. profit and loss account
C. both of these
D. none
Answer:C

23. The analysis done by investors , credit agencies , government agencies and
other creditors who have no access to the internal records of a company is known
as ……………..
A. internal analysis
B. horizontal analysis
C. external analysis
D. none of these
Answer:C

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24. The analysis done by persons who have access to the books of account and
other information related to the business is termed as……………
A. internal analysis
B. horizontal analysis
C. external analysis
D. none of these
Answer:A

25. In ………………..type of analysis , financial statements for a number of years

are reviewed and analyzed.
A. internal analysis
B. horizontal analysis
C. external analysis
D. none of these
Answer:B

26. ……………..type of analysis is based on the data from year to year rather than
on one date, and also termed as dynamic analysis.
A. internal analysis
B. horizontal analysis
C. external analysis
D. none of these
Answer:B

27. ………….analysis is useful in comparing performance of several companies in

the same group, or division or department of the same company.
A. vertical analysis
B. horizontal analysis
C. external analysis
D. none of these
Answer:A

28. ………………. are prepared so as to provide time perspective to the

consideration of various elements of financial position embodied in such
statements.
A. comparative statements
B. common size statements

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 C. both of these
D. none
Answer:A

29. ……………….are the statements, in which figures reported are converted into
percentages to some common base.
A. comparative statements
B. common size statements
C. both of these
D. none
Answer:B

30. The term fixed assets includes

A. stock in trade
B. furniture
C. payments in advance
D. all of these
Answer:B

31. The following is a recorded fact

A. market value of investment
B. debtors
C. replacement cost
D. none
Answer:B

32. The term current assets does not include

A. payment in advance
B. bills receivable
C. long term deferred charges
D. none of these
Answer:C

33. In case of a limited company, the term financial statements includes………

A. profit and loss account
B. profit and loss account, profit and loss appropriation account and balance sheet

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 C. balance sheet
D. none
Answer:B

34. Assets and liabilities in a Balance sheet may be arranged in the order of …..
A. liquidity
B. permanence
C. both of these
D. none of these
Answer:C

35. Income statement matches the …………… incurred in the accounting year
A. revenue and costs
B. incomes and expenses
C. both of these
D. none of these
Answer:C

36. …………..are statements of financial position at different periods

A. comparative statements
B. common size statements
C. both of these
D. none
Answer:A

37. An increase in current asset accompanied by the increase in current liabilities

of the same amount will…………………
A. improve short term financial position
B. not improve short term financial position
C. improve long term financial position
D. none of these
Answer:B

38. Which among the following is an example for horizontal analysis ?

A. comparative balance sheet
B. comparative income statement

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 C. common size statements
D. a & b
Answer:D

39. If the Gross sales of a concern is Rs.200000 and sales return is 20000, Gross
profit is 150000.cost of goods sold is……………………..
A. 150000
B. 30000
C. 50000
D. none of these
Answer:B

40. Given opening stock is Rs.20000, Direct expenses 10000, Closing stock
5000.Cost of goods sold is ……………………
A. 25000
B. 35000
C. 15000
D. 20000
Answer:A

41. Ratio of Net sales to Net working capital is a ………………………..

A. working capital turnover ratio
B. profitability ratio
C. liquidity ratio
D. none of these
Answer:A

42. Observing changes in financial analysis across the years is ……………

A. vertical analysis
B. horizontal analysis
C. inter firm comparison
D. none of these
Answer:B

43. Ratio of net profit before interest and tax to sales is ……………….
A. operating profit ratio

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 B. operating ratio
C. capital gearing
D. solvency ratio
Answer:A

44. The statistical yardstick that provides a measure of relationship between two
accounting figures is ……………………
A. current ratio
B. the accounting ratio
C. input output ratio
D. none of these
Answer:B

45. ……………….is a statement which lists all the sources of funds and
applications of funds taken place in a business during a particular period
A. fund flow statement
B. cash flow statement
C. any of these
D. none of these
Answer:A

46. The overall net increase or decrease in working capital is found out by
preparing…………………
A. fund flow statement
B. cash flow statement
C. statement showing changes in working capital
D. none of these
Answer:C

47. Which one of the following is a source of fund ?

A. issue of shares in consideration of machinery purchased
B. issue of bonus shares
C. issue of right shares
D. issue of shares for cash
Answer:D

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48. Which among the following is a sources of fund ?
A. sale proceeds of fixed assets
B. sale proceeds of long term investments
C. non operating incomes
D. all of these
Answer:D

49. Which among the following is an application of fund ?

A. purchase of long term investments
B. redemption of preference shares
C. redemption of debentures
D. all of these
Answer:D

50. ……………is only internal source of funds

A. fund from operations
B. net profit
C. both of these
D. none of these
Answer:A

51. Which among the following do not result in the flow of fund /
A. depreciation of fixed assets
B. goodwill written off
C. transfer to general reserve
D. all of these
Answer:D

52. Fund flow refers to changes in ------------- capital

A. fixed
B. working
C. both of these
D. none of these
Answer:B

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53. Net profit earned plus non working capital expenses is equal to …………..
A. fund provided by operations
B. use of funds
C. sinking fund
D. none of these
Answer:A

54. ……………….refers to firms investment in current assets.

A. working capital
B. gross working capital
C. net working capital
D. all of these
Answer:B

55. ……………..means excess of current assets over current liabilities.

A. working capital
B. gross working capital
C. net working capital
D. all of these
Answer:C

56. ……………….means cash and other assets which are expected to be sold or
consumed during the normal operating cycle of business.
A. liquid assets
B. quick assets
C. cash equivalents
D. current assets
Answer:D

57. Which among the following asset is excluded from current assets ?
A. loose tools
B. accounts receivable
C. short term investments with bank
D. finished goods
Answer:A

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58. Which transaction results in flow of funds ?
A. transaction involve only fixed assets
B. transaction involve only current assets
C. all of these
D. none of these
Answer:D

59. There will be flow of funds, if a transaction involves………………..

A. current assets and fixed assets
B. current assets and capital
C. current assets and fixed liabilities
D. all of these
Answer:D

60. The flow of funds occurs when a transaction changes on the one hand a non
current account and on the other hand a …………..
A. current asset
B. current liability
C. a or b
D. none of these
Answer:C

61. …………….assets are those which in the ordinary course of business can be
converted into cash within a short period of time.
A. current
B. non current
C. both of these
D. none of these
Answer:A

62. ………..liabilities are those which are intended to be paid in the ordinary
course of business within a short period.
A. current
B. non current
C. both of these
D. none of these

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Answer:A

63. Goods purchased for cash. This transaction involves…………..

A. flow of fund
B. no flow of fund
C. both of these
D. none of these
Answer:B

64. Which among the following transaction involves no flow of fund ?

A. redemption of debentures
B. purchase of fixed assets
C. issue of debentures for cash
D. conversion of debentures into shares.
Answer:D

65. Which among the following transaction involves flow of fund ?

A. cash paid to creditors
B. payment of bills payable
C. raising of short term loans
D. raising of long term loans
Answer:D

66. While preparing ……………statement, both capital and revenue items are
considered.
A. fund flow statement
B. income statement
C. both of these
D. none of these
Answer:A

67. ……………..is a tool of management for financial analysis and helps in making
decisions.
A. fund flow statement
B. balance sheet
C. income statement

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 D. none of these
Answer:A

68. …………statement shows changes in financial position and hence dynamic in

nature
A. fund flow statement
B. balance sheet
C. income statement
D. none of these
Answer:A

69. Increase in Accounts payable when compared to previous year results in

…………….of working capital
A. increase
B. decrease
C. no change
D. none of these
Answer:B

70. Decrease in Working capital constitutes …………………

A. source of fund
B. application of funds
C. neither source nor application
D. none of these
Answer:A

71. …………….is the dividend paid to the members of a company during a

financial year before the finalization of annual accounts.
A. bonus
B. final dividend
C. interim dividend
D. none of these
Answer:C

72. Fund lost in operations represent………………..

A. inflow of funds

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 B. outflow of funds
C. neither inflow nor outflow
D. none of these
Answer:B

73. Which of the following results in Increase of working capital ?

A. increase in current assets
B. decrease in current assets
C. increase in current liabilities
D. all of these
Answer:A

74. Which among the following results in decrease of working capital ?

A. increase in current liabilities
B. increase in current assets
C. decrease in current liabilities
D. none of these
Answer:A

75. According to SEBI requirements Cash flow statement is prepared by

categorizing cash flows into operating, investing and …………..activities
A. financing
B. routine
C. long term
D. none of these
Answer:A

76. Cash flow statement is a statement which describes inflows and outflows of……
A. cash
B. cash and cash equivalents
C. working capital
D. all of these
Answer:B

77. Cash, according to cash flow statement comprises of ……………

A. liquid cash only

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 B. cash in hand
C. cash in hand and demand deposits with banks
D. none of these
Answer:C

78. ………are short term , highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of
changes in value.
A. cash equivalents
B. short term investments
C. marketable securities
D. all of these
Answer:A

79. Flow of cash is said to have taken place when any transactions makes changes
in the amount of ………….before happening of the transactions.
A. cash
B. cash equivalents
C. both of these
D. none of these
Answer:C

80. Which among the following are examples of cash flow from operating activities
?
A. cash receipts from sale of goods
B. cash receipts from royalties
C. cash payments to suppliers
D. all of these
Answer:D

81. Which among the following is not an example of cash flow from operating
activities ?
A. cash payments of insurance premiums
B. cash payments of income taxes
C. cash payments to employees
D. cash receipts from disposal of fixed assets

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Answer:D

82. The essence of marginal costing is that ……………… cost is considered on the
whole as separate.
A. fixed
B. variable
C. both of these
D. none of these
Answer:A

83. ………….cost represents the amount of any given volume of output by which
aggregate costs are changed if the volume of output is increased by one unit.
A. variable cost
B. marginal cost
C. fixed cost
D. none of these
Answer:B

84. ………. Is the increase or decrease in total cost which results from producing or
selling additional or fewer units of a product or from a change in the method of
production or distribution such as the use of improved machinery, addition or
exclusion of a product or territory or selection of an additional sales channel.
A. variable cost
B. marginal cost
C. fixed cost
D. none of these
Answer:B

85. …………cost is defined as the aggregate of variable costs or prime costs plus
variable overheads.
A. variable cost
B. marginal cost
C. fixed cost
D. none of these
Answer:B

86. Marginal costing is a …………… of costing

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 A. system
B. method
C. technique
D. all of these
Answer:C

87. Under marginal costing, ……… Costs are regarded as costs of the products.
A. variable costs
B. fixed costs
C. both of these
D. none of these
Answer:A

88. Under marginal costing, …………… costs are treated as period costs and
charged to profit and loss account for the period for which they are incurred
A. variable costs
B. fixed costs
C. both of these
D. none of these
Answer:B

89. Under marginal costing, stocks of finished goods and work-in-process are
valued at …………….. costs only
A. variable costs
B. fixed costs
C. marginal cost
D. none of these
Answer:C

90. ………………..is the excess of sales over marginal cost of sales

A. profit
B. margin
C. loss
D. contribution
Answer:D

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91. ………………..cost remains constant per unit of output irrespective of the level
of output and thus fluctuates directly in proportion to changes in the volume of
output
A. variable costs
B. fixed costs
C. marginal cost
D. none of these
Answer:A

92. …………..costs are the increase or decrease in total cost that result from
producing additional or fewer units or from the adoption of an alternative course
of action.
A. variable costs
B. fixed costs
C. marginal cost
D. differential cost
Answer:D

93. Marginal cost and differential cost are the same when ……..costs do not change
with change in output
A. variable costs
B. fixed costs
C. semi variable cost
D. none of these
Answer:B

94. ………………is the practice of charging all costs, both variable and fixed, to
operations, processes, or products
A. marginal costing
B. absorption costing
C. differential costing
D. none of these
Answer:B

95. In absorption costing, managerial decision making is based upon …………..

A. profit
B. contribution

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 C. costs
D. none of these
Answer:A

96. Given sales = 150000, Fixed costs = 30000, Profit = 40000.The variable cost
is………….
A. 110000
B. 80000
C. 120000
D. 10000
Answer:B

97. The Profit/Volume ratio or marginal ratio expresses the relation of ………… to
sales.
A. profit
B. marginal cost
C. contribution
D. none of these
Answer:C

98. Which of the following measures helps to increase the P/V Ratio ?
A. increasing the selling price per unit
B. reducing the variable or marginal cost
C. changing the sales mixture
D. all of these
Answer:D

99. Given sales = 100000, Profit = 10000 , variable cost = 70%.The sales required to
earn a profit of Rs.40000 is ………………………
A. 1500000
B. 100000
C. 200000
D. none of these
Answer:C

100. Marginal cost is the ……….cost of producing an additional unit of output

A. variable

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 B. fixed
C. semi variable
D. none of these
Answer:A

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