Accounts Exam Sem1 (Final)

1. Which of the following equation represents breakeven point?

o Sales revenue = Total cost — Variable cost
o Total sales revenue = variable cost
o Profit = fixed cost
o Contribution = Fixed cost

2. For a financial institution interest paid and interest and dividends received are classified as _____cash flows.
o Investing
o Operating
o Financing
o Non Operating

3. Tibu company / Trevor Company expects sales of Product W to be 60,000 units in April, 75,000 units in May,
and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to
40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there
were 30,000 units of Product W in the ending inventory. Given this information, Trevor Company's production
of Product W for the month of April should be:
o 60,000 units.
o 65,000 units.
o 75,000 units.
o 66,000 units.

4. Assumptions regarding the VCP (Volume cost Profit) graph are

o Costs can be bifurcated into variable and fixed components
o Fixed costs will remain constant during the relevant volume range" of graph
o Variable cost per unit remain constant for units manufactured
o All of these
5. The costs of a single process, or a series of processes that simultaneously produce two or more products of
significant sales value Is
o Joint cost
o Separable
o Additional
o None of Above

6. ............ is not charged on items included in Capital Work-in-Progress

o Depreciation
o Obligation
o Inventory
o Liability

7. ..................... companies earn interest from Investments, and therefore, for them, interest income is not revenue
o Financial
o Non-financial
o Fund raising
 o Private

8. The term 'Financial Statement' covers

o Profit & Loss Statement
o Balance sheet and Profit & Loss Statement appropriation account
o Profit & Loss Statement and Balance sheet
o None of these

9. if a company revalue its assets, its net worth

o Will decrease
o Will remain same
o Will improve
o Will be positively affected

10. Printers Ltd. uses activity-based costing for its products which includes laser printers and ink-jet printers.
The total estimated overhead cost for the parts administration activity pool was Rs 12.00,000 and the
expected activity was 4000 part types. If laser printer requires 2400 part types. the amount of overhead
allocated to them for parts administration would be:
o Rs 12,00 .000
o Rs 6,00,000
o Rs 4.80,000
o Rs 7,20,000

11. .......... is a proxy for pre-tax cash operating margin

o EBIT
o EBITDA
o ROIC
o ROE

12. .......................... Analysis is used for trend analysis.

o Vertical
o Diagonal
o Ratio
o Horizontal

13. Quick ratio is also called

o Acid test ratio
o Cash-to-current asset ratio
o Cash-to-current liabilities ratio
o Current ratio
14. ............... refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, the
asset.
o Control of an asset
o Transaction price
o Performance obligation
o Standalone selling price

15. ln two-stage system, whether traditional or ABC. will first allocate costs to:
o Products or services and then allocates costs to departments or activities
o The cost driver and then allocates costs to the cost hierarchy
o A product line and then allocates costs to the department
o Departments or activities and then allocates costs to products or services

16. Based on the following information for Shine Ltd, answer the given questions
Cost of a Machine rs.200000
Estimated lìfe 10 years
Scrap value rs 6000
Factory operation hours in a week 48
Machine breakdown time 15%
Electricity used by machinery is 10 units/ hr rs.60p/unit

1. Calculate Depreciation rate per hour?

o Rs 8.01 per hour
o Rs 9.43 per hour
o Rs 5.61 per hour
o Rs 6.60 per hour

2. Calculate Machine hour rate?

o Rs 14 per hour
o Rs 11.61 per hour
o Rs 12.60 per hour
o Rs 18 per hour

3. Calculate Electricity consumption rate per hour?

o Rs 6 per hour
o Rs 10 per hour
o 60 paise per hour
o Rs 60 per hour
 4. Calculate the Depreciation on Machine?
o Rs 20,000 p.a
o Rs 14.000 p.a
o Rs 19.400 p.a
o Rs 10,000 p.a.

17. Reorganise balance sheet of a company shows, equity' 100lakhs and net financial assets at ·30 lakhs. The net
operating assets (also called, invested capital) at the balance sheet date was · .
o 60 lakh
o 71 lakh
o 70 lakh
o 61 lakh

18. Many manufacturers make more than one type of product and the relative proportion of each product sold in
the aggregate sales Is known as the
o Profit-mix
o Volume-mix
o Sales-mix
o Relative-mix

19. if an accounting firm certifies a company's financial statements. it should have ·········· to make the firm's
financial situation look better than it is.
o Motivation
o A financial Incentive
o No financial incentive
o An ethical Intention

20. The overheads are absorbed into different products under activity costing system
o Using level of activity used ln producing the cost unit
o Using departmental overhead rate
o Both of these
o None ofthese

21. An asset is classified as a _______ asset if its value is not determinable in a fixed amount of cash.
o Non-current asset
o Current
o Non-monetary
o Monetary

22. All those costs which affect the decision are known as:
 o Irrelevant cost
o Relevant cost
o Committed cost
o Sunk Cost

23. A capacity in which the normal working hours of a machine or worker or employee are considered is known
as__ ?
o Practical capacity
o Theoretical capacity
o Cost of unused capacity
o None of the above
24. Fixed costs are fixed for a relevant range of volume for a given
o Budget period
o Lean period
o Production period
o All of these

25. A company manufactures a single product for which cost and selling price data are as follows:
Selling price per unit - Rs. 6
Variable cost per unit - Rs. 4
Fixed cost for a period - Rs. 20,000
Budgeted sales for a period - 15.000 units
The margin of safety is:
o 15000 units
o 10000 unils
o 5000 units
o 2000 units

26. Income from 'after sales services’ to customers should be included in

o Revenue
o Other operating income
o Net profit
o Other income

27. The Activity Based Costing (ABC) system has advantages, _

o lt does not under cost complex low-volume products and over cost high-volume simple
products,
o lt may result in improved cost control
o lt doesn't distort the costing of diverse products, produced by a firm
o All of these
28. The following is true about activity-based costing
o lt is a two-stage cost allocation system that allocates costs to activities and then to products
based on their use of the activities.
o Under this both direct costs and Indirect costs are absorbed into products using predetermined
departmental rates.
o Under this standard cost system Is used.
o Under this budgeted costs are used.

29. Annual requirement is 100000 units; Unit price · 5, order cost • 20 per order. Carrying cost • 1 per unit and
lead lime Is 2 week. The Economic order quantity would be
o 1000 units
o 2000 units
o 800 units
o 10000 units

30. Current tax asset is classified as

o Monetary asset
o Current asset
o Non-current asset
o Non-monetary asset

31. Interest received, dividends received are an example of. _

o Revenue
o Other Operating Income
o Other Income
o Profit

32. _____ are the only self-generated intangible assets allowed to be recognized in financial statements by GAAP

o Patents
o Copy-rights
o Goodwill
o Software’s

33. Ethics and Integrity Standards are based on the following, except:

o Honesty
o Impartiality
o Objectivity
o There are no clear roles and responsibilities in the group
34. The purchase of Jan, Feb & March Is Rs 10,000, Rs 12,000 and Rs 15,000. Payment to supplier is done 50% in
the month of purchase and 50% in next month. Calculate the cash payment for the month of Feb

o Rs 13,500
o Rs 11,000
o Rs 12,000
o Rs 10,000
35. Which report gives a review on the profitability of a business
 Statement of changes in equity
 Cash flow statement
 Balance sheet
 Income statement

36. Costs that consist of both fixed costs and variable costs are known as
 Mixed costs
 Non- committed
 Discretionary
 None of Above

37. lt is a separate performance obligation

 Assurance warranty
 Service warranty
 Both of the above
 None ofthese

38. The fixed manufacturing cost can be carried forward to next period as part of inventory cost in which of the
following costing system?
 Marginal Costing
 Variable Costing
 Unit Costing
 Full Costing

39. The tax expense in the statement of profit and loss is ·40,00,000. Current tax liability at the beginning and at
the end of the year was '2,00.000 and 3.00,000 respectively. Cash outflow during the year on account of
income tax payment was· ..

o 4000000
o 4200000
o 4300000
o 3900000

40. For Cash Ltd. estimated sales for April, May, June, July, August are Rs 46,000, Rs 48,000, Rs 28,000, Rs 44,000
and Rs 30,000. ln case 50% of sales are realized in the next month and balance in the next of next month,
determine cash collection from sales in June & July.

o Rs 47,000 & Rs 38,000

o Rs 38.000 & Rs 36,000
o Rs 14,000 & Rs 22,000
o Rs 24,000 & Rs 14,000

41. The difference between total sales and total variable costs is called as
o Operating profit
o Net profit
o The gross margin
o The contribution margin

42. P&L statement is also known as

 o Statement of operations
o Statement of income
o Statement of earnings
o All of these

43. The following is included in overheads

o Indirect material
o Indirect labour
o Indirect expenses
o All of these

44. Relevant costs are costs which would change as a result of the
o Acceptance
o Concurrence
o Decision
o Rejection

45. When break even point is 2000 units, selling pñ ce per unit is Rs. 14 and variable cost is Rs.8, find out fixed
cost?

o Rs.12,000
o Rs.8,000
o RsS.000
o Rs 16,000

46. ____ is the traditional method of income determination which includes all manufacturing costs i.e., variable
and fixed expenses.

o Absorption Costing
o Variable Costing
o Fixed Costing
o Process Costing

47. Financial assistance to companies which invest in pollution control equipment is an example of ...........•...........•...

o Government grant
o NGO grant
o Personal fund
o Non-government grant

48. ______are the expenses related to business activity but are disproportionate in amount or occur infrequently

o Extraordinary Items
o Non Operating Expenses
o Operating Expenses
o Exceptional items

49. When production is less than units sold then the income under absorption costing will be in comparison to
income under variable costing

o Higher
o Lower
o Same
o Difference of production and sales unit doesn't affects profits

50. The P/v ratio of a company is 40% and margin of safety is 20%. If present sales is Rs. 20,00.000 then Break
Even Point in Rs. will be _

o Rs 4.00,000
 o Rs 12.00,000
o Rs 8.00,000
o Rs 16,00,000

51. When a department or product line is dropped, the common fixed costs which had been allocated to that
department

o Are eliminated
o Become variable costs
o Are allocated to the remaining departments or product lines
o Become sunk costs

52. Cash flows arising from the purchase and sale of dealing or trading securities are classified as for a brokerage
firm

o Non-operating activities
o Investing activities
o Financing activities
o Operating activities

53. When corporations seek to hide their true financial situation, the pressure to engage in ............ bookkeeping
techniques falls on their Accountants

o Transparent
o Unethical
o Illegal
o Unethical and illegal

54. Costs that tend to vary in direct proportion or in a one-to-one relationship to changes in production activity.
sales activity or some other measure of volume within relevant range for a given budget period are referred
to as

o Fixed cost
o Production cost
o Variable costs
o None of Above

55. ____ is an example of non-cash expense

o Interest
o Depreciation
o patent
o tax

56. From total income, when CoGS, Admin and Selling & Distribution expenses are deducted, resulting profit Is
known as

o EBITDA
o EBIT
o EBT
o PAT

57. Buy back of shares is an _____ of fund.

o Source
o Application
o investment
o Transaction

58. The basis of absorption of factory overheads is:

 o Units of production
o Direct materials cost
o Machine Hour Rate
o All of these

59. FOR ABC Ltd. annual rent of factory is Rs 12,00,000 and units produced in the current year are 1.00,000. The
overhead absorption rate is Rs 10 per unit. Calculate the under absorption in this case?
o Rs 10 lacs
o Rs 12 lacs
o Rs 2 lacs
o Rs 1 lac

60. Following information is available of Prime Ltd. for year ended March 2020 Fixed cost Rs. 8,00,000 Variable
cost Rs. 20 per unit Selling price Rs. 30 per unit Output level 2,00,000 units, Closing Stock 50,000 units What
will be amount of profit earned during lhe year using the marginal costing technique?

o Rs 12,00,000
o Rs 7,00,000
o Rs 20,00,000
o Rs 9.00,000

61. Flexible budget estimates costs at several levels of

o Task
o Activity
o Work
o None of these

62. Flexible budgets, as a tool of planning and control, are superior to fixed budgets. The major weaknesses of
fixed budgets are their inability to:

o Show the potential variability of various estimates used ln the preparation of-the budget
o Indicate the range within which costs doesn't change
o Indicate the range within which costs change
o None of these

63. Master budget is the overall budget for the entire

o Organisation
o Structure
o Expenses
o None of these

64. Vertical analysis requires preparation of ______ financial statements.

o Comparative
o Cash flow
o Common-size
o Non-current

65. The principle underlying the variable costing ls that the fixed manufactuñ ng overheads are _
o Non-lnventoriable costs
o Period cost
o to be deducted in lhe year in which they are incurred
o All of these

66. For an organization involved in construcion of diverse types of housing like HIG, MIG and LIG houses, which
of the following costing system is appropriate for absorption of overheads?
o Activity Based Costing
o Absorption Costing
o Traditional Costing
o Variable Costing
67. Which of the following would not cause the break-even point to change'?
o Sales price increases
o Fixed cost decreases
o Variable costs per unit increases
o Sales volume decreases

68. Sunk costs are ____Costs

o Non-committed cost
o Committed cost
o Preferable cost
o Avoidable cost

69. The accounting statement of cash flows reports a firm’s cash flow segmented into what.....
o Operating, investing, and financing
o Investing, operating and financing
o Financing, operating, and investing
o Financing, investing and operating

70. _____are not recognised in the balance sheet, as they do not need the.......
o Financial liabilities
o Borrowings
o Current liabilities
o Contingent liabilities

71. Earnings per share (Eps) is calculated based on ________

o Net profit
o Profit from earning
o Comprehensive income
o Other comprehensive income

72. The closing inventory, if any, under variable costing is valued at____?
o All variable cost per unit
o Variable manufacturing cost per unit
o Variable and fixed manufacturing cost per unit
o Variable and fixed cost per unit

73. Research and Development and Advertisement Expenses in the profit and loss statement are
 Non –discretionary expenses
 Depreciation
 Discretionary Expenses
 Cost of Sales

74. Only ____ fixed costs are reckoned in sale or further process type of decision making
 Non-incremental
 Incremental
 Absorption
 None of these

75. Recourses that are limited in quantity are called as

 Key lender
 Contributor
 Key factors
 Key limiters

76. Code of ethics for accounting professionals is based on:

 Integrity
 Objectivity
 Confidentiality
 All of these
77. Opportunity costs represent the ____forgone by not choosing the
 Loss
 Benefit
 Both
 None of above

78. Cash receipt received from the sales fixed assets are registered underthe head of
 Other activities
 Investing activities
 Financing activities
 Operating activities

79. Current ratio is 4:1 net working capital is 30,000. Find the amount of current assets
 10000
 40000
 24000
 6000

80. Current assets are also known as

 Cash
 Assets
 Invested capital
 Working capital

81. Gain on sale of investment property should be disclosed in the statement of profit and loss as_______
 Other income
 Exceptional item
 Net income
 Items of expenses

82. ________ are the assets which the management excepts to convert into cash within 12 months after the
 Non-current assets
 Deferred assets
 Current asses
 Intangible assets

83. Selling and distribution charges are incurred for marketing of products, dispatching goods........
 Advertisement Expenses costs of preparing tenders travelling expenses----
 Warehouse charges, packing and loading charges and carriage ...
 All of these
 None of these

84. __________ attached with the balance sheet forms a part of the financial statement
 Agendas
 Schedules or notes to accounts
 Acts
 Rules

85. There is no complication of over-absorption of factory