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Dept of MBA M.I.E.T Engineering College, Trichy

BA- 7102 Accounting For Management

UNIT-1
1. What is trial balance?
o Trial balance is the list of ledger a/c
o It contains the debit and credit aspects of accounting particulars
o The all the business firms were using trial balance.
2. What is inflation accounting?
o Accounting which is used to record as a built-in mechanism
o All economic events it terms of current cost.
3. Define management accounting.
According to N.Anthony “management accounting is concerned with accounting
information that is useful for management”
4. Define trial balance.
Trial Balance can be defined as “as a list of all balances standing on the Ledger
Accounts and Cash Book of a concern at any given time”.
5. Define Subsidiary books.
It is the book of contain the credit aspects of purchase, sales contains
 purchase book,
 sales book,
 purchase return book&
 sales return book
6. Define deprecation.
Deprecation is the diminution in the value of asset due to were and tear or due to just
passage of time. In actual practice, both of these factors operate.
7. Define responsibility accounting.
Responsibility accounting is a method of accounting in which costs are identifies with
persons assumed to be capable of controlling them, rather than with or functions.
8. What are the limitations of human resource accounting?
Human resources can’t be legally owned they can’t be shown as asset at par.
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

9. What do u mean by “True and fair view”?

True and fair view can be obtained only if annual accounts are prepared in a defined
manner as laid down by various accounting standards and in conformity with the GAAP.
True and fair does not means confirming to the forms prescribed by the Act.
10. Write the Concept of inflation account?
“Inflation Accounting is a system for accounting which uses to record, as a Built-in-
mechanism, all economic events in terms of current.

UNIT-2
11. What is a Forfeited share?
The Cancellation of shares by the company on account of the making due in payment
of call money.
12. What are the limitations of accounting?
 Historical data
 price fluctuation
 cost control
 Evaluation of policies not possible.
13. What is pro-rata allotment?
It means favorable allotment that is the excess application money adjusted for
allotment. Under such circumstances it is not possible for the company to satisfy the
demands of all the applications. It rejects some application altogether allot in full on some
application and makes a pro rata allotment on some other applications.
14. What is Alteration of share capital?
Alteration of share capital is proposal to deal with only those aspects of alteration of
share capital which is not required approval of the court. Alteration of share capital has been
discussed under section 94, 95 & 97 of the Indian Companies Act 1956.
15. Explain Accrual concept.
The modern accounts prefer accrual system.
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

Under accrual system revenues are recognized and accounted for when it is earned and not
when it is received. By the same way cost are recognized when they are incurred and not
when paid.
16. What is accounting concepts?
Accounting concepts are used to recording accounting transactions.
17. Differentiate Management A/c Vs financial A/c?
Management A/c Financial A/c
Binding of any one of the monetary Binding of all over the monetary aspects in
function in a firm in the view to formulating a business firm, in order to know the
policies and plan financial position
It deals with the projection of data for the It is mainly concentrate with the historical
future data
Audit for management accounting is not Audit for management accounting is
necessary necessary

18. What are the merits of the straight line method of deprecation?
Once the deprecation amount is valuated means that should formulate forever.
Calculating the deprecation value is not necessary for every year.
19. Difference between deprecation and amortization?
Deprecation means gradual decreasing in the face value of an asset
Amortization refers to the process of decreasing or accounting for an amount
approver the period of time.
20. What is interim dividend?
It is a division of profit. A dividend paid during a financial year between two
annual general meetings
21. List the Advantages of double entry system of book-keeping.
It enables the trader to keep a complete and systematic and accurate record of all
business transactions.
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

 It enables a businessman to know at anytime how much profit he has earned or how much
loss he has suffered in a particular period.
 The account books will reveal the amount due by customers.
 The Balance sheet can be prepared with assets on the right side and liabilities on the left-
side.
22. Write the nature of financial statement.
According to the American Institute of Certified Public Accounts, ”financial statements
reflect a combination of recorded facts, accounting principles and personal judgments.
23. Explain the alteration of share capital.
Alteration of share capital is proposal to deal with only those aspects of
alteration of share capital which is not required approval of the court.
24. Explain the internal reconstruction.
Internal reconstruction and capital reduction means the same. Internal reconstruction
the existing company has to be liquidated new company this involves many formalities and
therefore is a vague affair.

UNIT-3
25. What is fund flow statement?
It is an accounting statement preparing by compiling the 2 years particulars of
accounting particular. In order to indicate the source and applications of funds.
26. Define fund flow statement.
The funds flow statement is report on the movement of funds or working capital.
It explains how working capital is raised and used during an accounting period.
27. What is ratio analysis?
The numerical relation between the two numbers.
28. What is realization concept?
According to Kohler, the realization concept is, “a concept which gives accounting
recognition to an exchange transaction, such as sale of goods or service only when inflows or
outflow of cash equivalent result”
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

According to the principles of realization concept, revenue is treated as earned at the

time when it is realized.
29. What is Cash Flow Analysis?
According to the Institute of Cost and Works Accountants of India
(AICWAI), a Cash Flow Statement is a statement setting out the flow of cash under distinct
heads of sources of funds and their utilization to determine the requirements of cash during
the given period and to prepare for its adequate provision.

UNIT-4
30. What is variance?
The part of variance accounting which related to the analysis into constituent part of
variance between planned and actual performance
31. What is cost sheet?
It is an accounting sheet used to predict the prime cost, cost of production and
cost of goods sales and find the profit
32. Difference between prime and conversion cost
Prime cost is finding by the following way
Opening stock ***
(+) purchases ***
(-) closing stock ***
(+) direct material
Direct lab ***
____
Prime cost ****
33. How do you determent unit cost in a process costing system?
Process costing is a method of costing used to find out the cost of a product at each
stage or process of production. By applying (total closing balance / total no., of units)
34. Define cost account.
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

According to the Institute of Management Accountants, USA, “Cost accounting is the

system.
35. What is job costing?
Job costing is a method of ascertaining costs of an individual job or work order
separately. Each job is treated as a cost unit for which costs are accumulated. Job costing is
useful in industries, which manufacture a variety of products according t the specifications of
customers.
36. Define budget.
It is also defined as, “a blue print of a projected plan of action of a business for a
definite period of time”.
37. What is transfer price?
Modern days most of the materials not only for their production process to
produce to produce finished goods, but also to fulfill the industrial demands many firms
through the supply of work in progress.
38. What is budgetary control?
Applied to system of management and accounting control by which all operations
and output are forecasted far ahead as possible and actual results when known are compared
with the budget estimates.
39. Define target costing.
Target costing is a price method used by firms. Maximum amount of cost that can
be incurred on a product and with in the final can still earn the required profit margin from
the product at a particular selling price.
40. What is flexible budget?
A flexible budget as a budget which by recognizing the difference in attitude
between fixed and variable cost in relation to fluctuations in output.
41. What is costing?
I.C.M.A London had defines costing as “the technique and process of ascertaining
cost”. As a technique costing is the body of principles and rules for determining the cost.
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

As it explains the procedure for ascertaining costs. The technique and process to be used
depends upon the nature of industry, types of production and method of production.

42. What is budgetary control?

Budgetary control is applied to a system of management and accounting control by
which all operations and output are forecasted as far ahead as possible and actual result
when known are compared with budget estimates.
43. Define Allocation of overheads.
Allocate for the standard cost of overhead allowed for the actual output achieved and
the actual overhead cost incurred.
UNIT-5

44. What is marginal cost?

Marginal costing is one of the most useful techniques available to the management.
It guides the management in pricing, decision-making and assessment of profitability. It
reveals the inter-relationship between costs, volume of sales and profit.
45. What is active based costing?
“Activity based costing has its genesis in the increasing importance of indirect
costs in the manufacturing operation. The direct processing costs, which are easier to
handle, are being relegated to the background with each passing day due to automation. In
this changing scenario where indirect costs outweigh the direct processing costs in many a
situations, one cannot be content with rough and ready methods of yester years in dealing
with the indirect costs.”
46. What is job order costing system?
It is a system developed only for attaining the cost control and performance
through the available source of cost information of the specific jobs.
47. What is master budget?
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Dept of MBA M.I.E.T Engineering College, Trichy
BA- 7102 Accounting For Management

A summary of the budget schedules in capsule from made for the purpose of presenting,
in one report, the highlight of the budget forecast.
48. List the various pricing inventory methods.
 First in First out (FIFO)
 Last in Last out (LIFO)
 Highest in First out (HIFO)
 Simple average price
 Weighted average price
 Base stock
49. What is meant by postulates?
In simple words accounting transaction are recorded on certain assumptions
such as going concern, stable value of money, profit accrual etc., Accounting always take
some facts as accepted or postulates.
50. What do you mean by internally generated computer software?
Internally generated computer software for internal use in developed or
modified internally by the company solely.
51. What is computer in accounting environment?
Making accounting transaction using accounting package like tally, it have
the integrated accounting principles in its.
52. Under what condition should a firm buy parts from outsiders rather than
manufacturing it?
Some of the raw materials are expensive while comparing with the other’s
manufacturers, in that situation the firm can advisable to buy the parts from outsiders where
the parts (materials) are low cost.