1. Statement of cash flows includes
a) Financing Activities
b) Operating Activities
c) Investing Activities
d) All of the Above
2. In cash flows, when a firm invests in fixed assets and short-term financial investments results in
a) Increased Equity
b) Increased Liabilities
c) Decreased Cash
d) Increased Cash
3. A firm that issues stocks and bonds to raise funds results in
a) Decreases Cash
b) Increases Cash
c) Increases Equity
d) Increases Liabilities
4. The purchase value of assets over its serviceable life is categorised as
a) Appreciated Liabilities
b) Appreciated Assets
c) Depreciation
d) Appreciation
5. The basic financial statements include
a) Statement of Cash Flows
b) Statement of Retained Earnings
c) Balance Sheet and Income Statement
d) None of the Above
6. The statement of cash flow clarifies cash flows according to
a) Operating and Non-operating Flows
b) Inflow and Outflow
c) Investing and Non-operating Flows
d) Operating, Investing, and Financing Activities
7. Cash flow example from a financial activity is
a) Purchase of Fixed Asset
b) Receipt of Dividend on Investment
c) Cash Received from Customers
d) Payment of Dividend
8. Cash flow example from an investing activity is
a) Issue of Debenture
b) Repayment of Long-term Loan
c) Purchase of Raw Materials for Cash
d) Sale of Investment by Non-Financial Enterprise
9. Cash flow example from an operating activity is
a) Purchase of Own Debenture
b) Sale of Fixed Assets
c) Interest Paid on Term-deposits by a Bank
d) Issue of Equity Share Capital
10. Which item comes under financial activities in cash flow?
a) Redemption of Preference Share
b) Issue of Preference Share
c) Interest Paid
d) All of the above
11. As per AS-3, Cash Flow Statement is mandatory for
A) All enterprises
B) Companies listed on a stock exchange
C) Companies with a turnover of more than Rs 50 crores
a) Both A and B
b) Both A and C
c) Both C and B
d) none of the above
12. Listed Enterprises need to prepare Cash Flow Statement only under indirect method.
a) True
b) False
13. In the case of financial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from
a) Operating activities
b) Financing activities
c) Investing activities
d) None of the above
14. In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.
a) Operating activities, financing activities
b) Financing activities, investing activities
c) Investing activities, operating activities
d) None of the above
15. Issue of bonus shares and conversion of debentures into equity are shown as a footnote to the Cash Flow Statement.
a) True
b) False
16. When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.
a) Operating activities, financing activities
b) Financing activities, investing activities
c) Investing activities, operating activities
d) None of the above
17. Which of the following statements are false?
A) Old Furniture written off doesn’t affect cash flow.
B) Cash flow statement is a substitute for cash account.
C) Appropriation of retained earnings is not shown in Cash flow statement.
D) Net cash flow during a period can never be negative.
a) A, B, C
b) C, D, A
c) B, C, D
d) None of the above
18. Which of the following is not a cash inflow?
a) Decrease in debtors
b) Issue of shares
c) Decrease in creditors
d) Sale of fixed assets
19. Which of the following is not a cash outflow?
a) Increase in Prepaid expenses
b) Increase in debtors
c) Increase in stock
d) Increase in creditors
20. Which of the following is a conventional method of ascertaining cost?
a) Absorption costing
b) Full Costing
c) Both a & b
d) None of the above
21. Under absorption costing, profit is ascertained
a) On the basis of difference between sales and total cost
b) By computation as per desired rate of profit on sales or cost
c) Both a and b
d) None of the above
22. While ascertaining gross profit under absorption costing, only that portion of manufacturing overheads is deducted from sales revenue which is associated with the goods sold.
a) True
b) False
23. Under absorption costing among fixed expenses
a) Fixed manufacturing expenses are included in unit cost
b) Fixed non-manufacturing expenses are included in unit cost
c) Both a and b
d) None of the above
24. Absorption costing is used for
a) Solution of separation of costs
b) Price determination on basis of full cost
c) Calculation of gross and net profit
d) All of the above
25. Absorption costs helps in
a) Difference between product cost and period cost
b) Charged of fixed factory overheads on inventory
c) Both a and b
d) None of the above
26. Which of the following statements are true?
A) Absorption costing helps in preparation of fixed budget.
B) Absorption costing is dependent on level of level of output.
C) Absorption costing is very helpful in taking managerial decisions.
D) Absorption costing helps to conform with accrual and matching concept.
a) A and B
b) B and C
c) A and D
d) B and D
27. Fixed expenses decrease per unit with the increases in production and increases per unit with the decrease in production.
a) True
b) False
28. Marginal costs is taken as equal to
a) Prime Cost minus all variable overheads
b) Prime Cost plus all variable overheads
c) Variable overheads
d) None of the above
29. If total cost of 100 units is Rs 5000 and those of 101 units is Rs 5030 then increase of Rs 30 in total cost is
a) Marginal cost
b) Prime cost
c) All variable overheads
d) None of the above
30. Marginal cost is computed as
a) Prime cost + All Variable overheads
b) Direct material + Direct labor + Direct Expenses + All variable overheads
c) Total costs – All fixed overheads
d) All of the above
31. Marginal costing is also known as
a) Direct costing
b) Variable costing
c) Both a and b
d) None of the above
32. Which of the following statements are true?
A. Marginal costing is not an independent system of costing.
B. In marginal costing all elements of cost are divided into fixed and variable components.
C. In marginal costing fixed costs are treated as product cost.
D. Marginal costing is not a technique of cost analysis.
a) A and B
b) B and C
c) A and D
d) B and D
33. While computation of profit in marginal costing
a) Total marginal cost is deducted from total sales revenues
b) Total marginal cost is added to total sales revenues
c) Fixed cost is added to contribution
d) None of the above
34. Which of the following are the assumptions of marginal costing?
A) All the elements of cost can be divided into fixed and variable components.
B) Total fixed cost remains constant at all levels of output.
C) Total variable costs varies in proportion to the volume of output.
D) Per unit selling price remain unchanged at all levels of operating activity.
a) A and B
b) B and C
c) A and D
d) A, B, C and D
35. In two periods total costs amounts to Rs 50000 and Rs 40000 against production of 20000 and 15000 units respectively. Determine marginal cost per unit and fixed cost.
a) Rs 10 and Rs 8000
b) Rs 4 and Rs 5000
c) Rs 2 and Rs 10,000
d) None of the above
36. Under High and Low Point method, the output at two different levels is compared with the amount of __________ incurred at these two points.
a) Total fixed costs
b) Total costs
c) Both a and b
d) None of the above
37. Given Maximum value of production and minimum value of production is 10,000 and 5000 units respectively. Maximum total cost is Rs 25,000 and minimum total cost is Rs 15,000. Determine total fixed cost and per unit marginal cost.
a) Rs 2 per unit, Rs 5,000
b) Rs 5 per unit, Rs 2000
c) Rs 10 per unit, Rs 10,000
d) None of the above
38. Under method of least squares, a linear equation is developed in the form of ______ wherein Y is total cost, a=fixed cost, b= marginal cost and X is output.
a) Y=a+bX
b) Y=a-bX
c) Y=a*bX
d) None of the above
39. In Analytical method of calculating marginal costing, it is determined on the basis of past records.
a) True
b) False
40. Theory of contribution is the excess of sales over variable costs.
a) True
b) False
41. Which of the following statements related to Contribution Analysis are ture?
a) If contribution is zero, there is loss equal to fixed costs
b) If contribution is negative, loss is less than fixed costs
c) If contribution is positive and more than fixed cost there will be profit
d) All of the above
42. When contribution is negative but less than fixed cost,
a) There is loss equal to fixed costs
b) There is loss more than fixed costs
c) There will be loss less than fixed costs
d) All of above are false
43. When contribution is positive but equal to fixed cost,
a) There is loss equal to fixed costs
b) There is loss more than fixed costs
c) There will be loss less than fixed costs
d) There will be neither profit not loss
44. Opportunities to achieve further growth within current businesses are:
a) Intensive Opportunities
b) Integrative Opportunities
c) Diversification Opportunities
d) None of the above
45. Absorption costing is also known as
a) Historical costing
b) Total costing
c) Both a and b
d) None of the above
46. Given production is 1,00,000 units, fixed costs is Rs 2,00,000 Selling price is Rs 10 per unit and variable cost is Rs 6 per unit. Determine profit using technique of marginal costing.
a) Rs 2,00,000
b) Rs 8,00,000
c) Rs 6,00,000
d) None of the above
47. Which of the following statements are true?
a) In absorption costing, cost is divided into three major parts while in marginal costing cost is divided into two main parts
b) In absorption costing period is important and in marginal costing product is important
c) Both a and b
d) None of the above
48. Under absorption costing, managerial decisions are based on
a) Profit
b) Contribution
c) Profit volume ratio
d) None of the above
49. In context of net operating profit, which of the following statements are true?
a) If all costs are variable, the amount of profit obtained in marginal costing and absorption costing will be same
b) If the volume of sales and output is equal in a period, profit will be same in absorption costing and marginal costing
c) Both a and b
d) None of the above
50. If sales is less than production and there is no opening stock, it suggests there is closing stock. In such a scenario, profit under marginal costing will be less than the one shown by absorption costing.
a) True
b) False
51. In the calculation of return on shareholders investments the referred investment deals with
a) All reserves
b) Preference and equity capital only
c) All appropriations
d) All of the above
52. Which of the following is an advantage of standard costing?
a) Measuring efficiency
b) Facilitates cost control
c) Determination of variance
d) All of the above
53. The assets of a business can be classified as
a) Only fixed assets
b) Only current assets
c) Fixed and current assets
d) None of the above
54. Which of the following is the test of the long term liquidity of a business?
a) Interest coverage ratio
b) Stock turnover ratio
c) Operating ratio
d) Current ratio
55. The term management accounting was first coined in
a) 1960
b) 1950
c) 1945
d) 1955
56. Management accounting is
A) Subjective
B) Objective
a) Only A
b) Only B
c) Both A and B
d) None of the above
57. The use of management accounting is
a) Legally obligatory
b) Compulsory
c) Optional
d) Compulsory to some and optional to others
58. The management accounting can be stated an extension of
A) Cost Accounting
B) Financial Accounting
C) Responsibility Accounting
a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C
59. Which of the following is true about management accounting?
A) Management accounting is associated with presentation of accounting data.
B) Management accounting is extremely sensitive to investors needs.
a) Only A
b) Only B
c) Both A and B
d) None of the above
60. Management accounting assists the management
a) Only in control
b) Only in direction
c) Only in planning
d) In planning, direction and control
61. Which of the following are tools of management accounting?
A) Decision accounting
B) Standard costing
C) Budgetary control
D) Human Resources Accounting
a) A, B and D
b) A, C and D
c) A, B and C
d) A, B, C, D
62. Management accounting is related with
a) The problem of choice making
b) Recording of transactions
c) Cause and effect relationships
a) A and B
b) A and C
c) B and C
d) All are false
63. Management accountancy is a structure for
a) Costing
b) Accounting
c) Decision making
d) Management
64. Who coined the concept of management accounting?
a) R.N Anthony
b) James H. Bliss
c) J. Batty
d) American Accounting
65. Management accounting deals with
a) Quantitative information
b) Qualitative information
c) Both a and b
d) None of the above
66. Management accounting highlights staff relationship with top management as well as other personnel.
a) True
b) False
67. The definition of Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.
a) Ango-American Council on Productivity
b) AICPA
c) Robert N. Anthony
d) All of the above
68. The second term for Horizontal Analysis is
a) Dynamic Analysis
b) Inter-firm Analysis
c) Time-series Analysis
d) All of the above
69. Vertical analysis is also known as
a) Static analysis
b) Structural analysis
c) Cross-sectional analysis
d) All of the above
70. The assessment of financial statements by a shareholder is an example of
a) Vertical Analysis
b) Horizontal Analysis
c) Internal Analysis
d) External Analysis