Management Accounting

2 of 8 sets

Chapter: working capital

101. ___________ is required to meet special exigencies such as launching of

extensive marketing campaigns for conducting research.
A. seasonal working capital
B. special working capital
C. reserve working capital
D. regular working capital
Answer:B

102. The statement of changes in financial positiono

m
. c prepared to determine only the
e
sources and uses of working capital between two dates of balance sheet is known as
t
__________.
a
A. cash flow statement
B. memorandum balance sheet
q M
c
C. fund flow statement
M
D. profit and loss account
Answer:C

103. What are the aspects of working capital management?

A. inventory management
B. receivable management
C. cash management
D. all of the above
Answer:D

104. _________ function includes a firm’s attempts to balance cash inflows and
outflows.
A. finance
B. liquidity
C. investment
 D. dividend
Answer:B

105. Firms which are capital intensive rely on _________.

A. equity
B. short term debt
C. debt
D. retained earnings
Answer:C

106. Hirer is entitled to claim ___________.

A. depreciation
B. salvage value
C. hp payments
D. none of above
Answer:A

107. Which of the following is not an advantages of trade credit?

A. easy availability
B. flexibility
C. informality
D. buyout financing
Answer:D

108. Which of the following are theories for dividend relevance?

A. walter’s model
B. mm approach
C. game theory
D. market value theory
Answer:A

109. What is not a form of dividend?

A. cash dividends
B. bonus shares(stock dividend)
C. share split

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 D. split reverse
Answer:D

110. The percentage of earnings paid as dividends is called __________.

A. dividend policy
B. payout ration
C. cash dividends
D. reverse split
Answer:B

111. What are the various methods of estimating cash?

A. receipts and payment method
B. adjusted profit & loss method
C. balance sheet method
D. all of the above
Answer:D

112. The art of managing, within the acceptable level of risk, the consolidated
funds optimally and profitably is called _________.
A. integrated treasury
B. treasury management
C. merchant banking
D. none of the above
Answer:B

113. What are the different types of underlying assets?

A. stocks
B. bonds
C. currency
D. stock indices
Answer:D

114. What are people who buy or sell in the market to make profits called?
A. hedgers
B. speculators
C. arbitrageurs

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 D. none of the above
Answer:B

115. Which of the following is a technique that helps the exporter to sell the
receivables to any bank or financial institution without recourse?
A. forfeiting
B. leading & lagging
C. derivatives
D. netting
Answer:A

116. Money market financial services not include:

A. bill discounting
B. merchant banking
C. leasing
D. securitization
Answer:B

117. Factoring involves:

A. providing short term loan
B. providing long term loan
C. financing of export receivables
D. management of receivables of borrower
Answer:D

118. The tools of treasury management does not include:

A. foreign exchange management
B. cash management
C. receivable management
D. risk management
Answer:D

119. Under which type of bank borrowing can a borrower obtain credit from a
bank against its bills?
A. letter of credit
B. cash

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 C. purchase or discounting of bills
D. working capital loan
Answer:C

120. The factors that affect dividend policy are:

A. tax consideration
B. privatization
C. foreign investment
D. working cash flow
Answer:A

121. To financial analysts, "working capital" means the same thing as __________.
A. total assets
B. fixed assets
C. current assets
D. current assets minus current liabilities.
Answer:C

122. Which of the following would be consistent with an aggressive approach to

financing working capital?
A. financing short-term needs with short-term funds.
B. financing permanent inventory buildup with long-term debt.
C. financing seasonal needs with short-term funds.
D. financing some long-term needs with short-term funds.
Answer:D

123. Which of the following would be consistent with a conservative approach to

financing working capital?
A. financing short-term needs with short-term funds.
B. financing short-term needs with long-term debt.
C. financing seasonal needs with short-term funds.
D. financing some long-term needs with short-term funds.
Answer:B

124. -Which of the following would be consistent with a hedging (maturity

matching) approach to financing working capital?

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 A. financing short-term needs with short-term funds.
B. financing short-term needs with long-term debt.
C. financing seasonal needs with long-term funds.
D. financing some long-term needs with short-term funds.
Answer:A

125. The amount of current assets that varies with seasonal requirements is
referred to as __________ working capital.
A. permanent
B. net
C. temporary
D. gross
Answer:C

Chapter: Budgetary Control

126. A budget is a plan of action expressed in…

A. financial terms
B. non?financial terms
C. both
D. subjective matter
Answer:C

127. Budget is prepared for a…

A. indefinite period
B. definite period
C. period of one year
D. six months
Answer:B

128. A budget is tool which helps the management in planning and control of…
A. all business activities
B. production activities
C. purchase activities
D. sales activities
Answer:A

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129. Budgetary control system acts as a friend, philosopher and guide to the…
A. management
B. share holders
C. creditors
D. employees
Answer:A

130. Budgetary control system defines the objectives and policies of the…
A. production department
B. finance department
C. marketing department
D. all
Answer:D

131. Budgetary control facilitates easy introduction of the…

A. marginal costing
B. ratio analysis
C. standard costing
D. subjective matter
Answer:C

132. Budgetary control helps the management in…

A. obtaining bank credit
B. issue of shares
C. getting grants from government
D. all of these
Answer:A

133. Budgetary control system helps the management to eliminate…

A. undercapitalization
B. overcapitalization
C. both
D. subjective matter
Answer:C

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134. Budgetary control provides a basis for…
A. bonus shares
B. rights shares
C. remuneration plans
D. none
Answer:C

135. Budgetary control helps to introduce a suitable incentive and remuneration

based on…
A. changes in government policies
B. inflationary conditions
C. both
D. none
Answer:B

136. Budgetary control __________ replace management in decision?making.

A. can
B. cannot
C. sometimes
D. inadequate data
Answer:B

137. The success of budgetary control system depends upon the willing cooperation
of…
A. shareholders
B. management
C. creditors
D. all the functional areas of management
Answer:D

138. Recording of actual performance is….

A. an advantage of budgetary control
B. a step in budgetary control
C. a limitation of budgetary control
D. none

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Answer:B

139. Revision of budgets is…

A. unnecessary
B. can’t determine
C. necessary
D. inadequate data
Answer:C

140. Frequent revision of budgets will…

A. affects its reliability
B. increase the accuracy
C. both
D. subjective matter
Answer:A

141. Usually the production budget is stated in terms of…

A. money
B. quantity
C. both
D. none
Answer:C

142. Budget period is the…

A. period of budget committee
B. period of budget centres
C. period for which a budget is prepared
D. period of budget officer
Answer:C

143. Budget period depends upon…

A. the type of budget
B. the nature of business
C. the length of trade cycles
D. all of these

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Answer:D

144. A key factor is one which restricts…

A. the volume of production
B. the volume of sales
C. the volume of purchase
D. all of the above
Answer:A

145. Plant utilization budget and Manufacturing overhead budgets are types of.
A. production budget
B. sales budget
C. cost budget
D. none of the above
Answer:A

146. R&D budget and Capital expenditure budget are examples of

A. short-term budget
B. current budget
C. long-term budget
D. none of the above
Answer:C

147. The scare factors is also known as

A. key factor
B. abnormal factor
C. linking factor
D. none of the above
Answer:A

148. A budgeting process which demands each manager to justify his entire budget
in detail from beginning is
A. functional budget
B. master budget
C. zero base budgeting
D. none of the above

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Answer:C

149. Budgetary control system facilitates centralized control with…

A. decentralized activity
B. centralized activity
C. both
D. none
Answer:C

150. Fixed assets are Rs 5,00,000 , Current assets are Rs 3,00,000, Current
liabilities are Rs 1,00,000. There is no investment. Capital employed will be :
A. rs 8,00,000
B. rs 7,00,000
C. rs 9,00,000
D. rs 6,00,000
Answer:B

151. Current liabilities include creditors Rs 2,00,000, Bills payable Rs 1,00,00

Expenses payable Rs 50,000 Bank Overdraft Rs 2,00,000. Quick liabilites will be :
A. rs 3,50,000
B. rs 3,00,000
C. rs 2,50,000
D. rs 2,00,000
Answer:A

152. Fixed assets include premises Rs 10,00,000, Machinery Rs 5,00,000 Furniture

Rs 2,00,000 Vehicles Rs 3,00,000 Live stock Rs 1,00,000 Goodwill Rs 2,00,000,
Patents & Copy rights Rs 1,50,000, Underwriting commission Rs 50,000 Fixed
tangible immovable asset will be :
A. rs 10,00,000
B. rs 20,00,000
C. rs 3,00,000
D. rs1,50,000
Answer:A

153. Kumar Ltd. reported net sales Rs 9,00,000, Rs 9,90,000 and Rs 10,80,000 in
the year 2013, 2014 and 2015. If 2013 is the base year what is the trend % for

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2015?
A. 1.2
B. 0.75
C. 0.8
D. 0.9
Answer:A

154. Total current assets are Rs 30,000, Rs 54,000 and Rs 66,000 in 2013, 2014 and
2015 respectively. If 2013 is the base year what is the % increase from 2013 to
2015?
A. 1.2
B. 1.25
C. 0.6
D. 0.5
Answer:A

155. Cost of goods sold for a company is Rs 30,00,000, Rs 24,00,000 and Rs

18,00,000 for 2015, 2014 and 2013 respectively. If 2013 is the base year the
percentage increase in cost of goods sold from 2013 to 2015 is
A. 0.6667
B. 0.7
C. 0.5
D. 0.45
Answer:A

156. Gauri Ltd has a debt equity of 3:2 and total assets turnover is 2. If NP ratio is
10%. The ROE is
A. 0.4
B. 0.5
C. 0.35
D. 0.2
Answer:B

157. ABC Ltd has total assets turnover ratio and total assets to Net worth are 1.75
and 2 respectively. If NP ratio is 10% the ROE will be :
A. 0.2
B. 0.35

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 C. 0.4
D. 0.6
Answer:B

158. Current Assets are Rs 5,00,000 and Current liabilities are Rs 2,00,000. The
Current ratio is
A. 1.5
B. 1.75
C. 2.5
D. 3.20,
Answer:C

159. WIP is Rs 14,000, COGS is Rs 1,50,000, 360 days in a year WIP Turnover
period is :
A. 30 days
B. 40 days
C. 34 days
D. 45 days
Answer:C

160. S Ltd has a plan to produce 52,000 units for the year 2020-21 selling price is
Rs 1,000 per unit. Credit allowed to customers is 8 weeks. One year consists of 52
weeks. The debtors value is
A. rs 40,00,000
B. rs 80,00,000
C. rs 70,00,000
D. rs 60,00,000
Answer:B

161. K Ltd has decided to produce and sell 5,000 units during the year 2020-21.
S.P. is Rs 200 per unit. 70% of sales will be on credit and credit period wil be 6
weeks. One year consists of 50 weeks. The debtors will be :
A. rs 70,000
B. rs 80,000
C. rs 84,000
D. rs 95,000

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Answer:C

162. In Management accounting,emphasis and focus should be

A. future oriented
B. past oriented
C. communication oriented
D. bank oriented
Answer:A

163. What are the characteristics of management accounting?

A. Decision Making
B. Internal Use
C. Optional
D. All of the above
Answer:D

164. The management accounting can be stated an extension of

I)Cost Accounting
II)Financial Accounting
A. Only I
B. Only II
C. Both I and II
D. None of the Above
Answer:C

165. Management accounting assists the management

A. Only in control
B. Only in decision making
C. Only in planning
D. In planning, decision making and control
Answer:D

166. Which of the following is not the limitation of Management Accounting?

I)Developing Stage
II)Resistance from Staff
III)Lack of wide knowledge
IV)Decision Making

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 A. Only I,II,III
B. Both I & IV
C. Only IV
D. Only I
Answer:C

167. Data in management accounting is derived from

A. Cost Accounting
B. Financial Accounting
C. Other Sources
D. All of the above
Answer:D

168. Financial accounting is the art of

I)Classifying
II)Interpreting
III)Recording
IV)Summarizing .
Write Correct sequence.
A. III,IV,II,I
B. III,I,IV,II
C. III,I,II,IV
D. III,IV,I,II
Answer:B

169. Which statement is true.

I)Cost records are compulsory in all industries.
II)Management accounting records are compulsory by law.
A. Both are False
B. Only II
C. Both I and II
D. Only I
Answer:A

170. Which technique used for figures of two or more periods are placed side by
side to facilitate easy and meaningful comparisons?
A. Comparative Statements

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 B. Common size Statements
C. Trend
D. None
Answer:A

171. Total Assets in 2018 10 lac(Negative );in 2019 15 Lac (Positive).What is the
Percentage change?
A. 150%
B. 100%
C. 250%
D. 50%
Answer:C

172. What is treated as the base in common size P& L statement.

A. RFO
B. Other Incomes
C. Total Income
D. Profit before tax
Answer:A

173. Working capital=45,000 ,Total Debt=1,00,000 , LT debt=70,000, what is value

of Current assets?
A. 30000
B. 15000
C. 25000
D. 75000
Answer:D

174. If Inventory turnover ratio=5 times,what is avg age if inventory?

A. 73 days
B. 80 days
C. 70 days
D. 69 days
Answer:A

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175. What is formula of Capital employed?
I)Shareholder's Funds+Non Current Liabilities
II)Total Assets-Current Liabilities
III)Non Current Assets-Working capital
IV)Total Assets-Total Liabilities
A. Only III and IV
B. Only I,II and III
C. All I,II,III,IV
D. Only I and II
Answer:D

176. Which items are added in Current year profit to get Net profit before tax.
I)Interim dividend
II)Provision for tax
III)Refund of tax
IV)Transfer to reserves
A. All
B. Only III
C. Only II and IV
D. Only I,II and IV
Answer:D

177. Which are financing activities?

I)Issue of shares
II)Interest Paid
III)Dividend paid
IV)Redemption of debentures
A. All
B. Only I,II and IV
C. Only I and IV
D. Only I,III and IV
Answer:B

178. Which of the following is not the objective of budgetary control?

I)Control
II)Danger of rigidity
III)Motivation
IV)Based on estimates

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 A. Only II
B. Only II and IV
C. Only II,III and IV
D. All I,II,III and IV
Answer:B

179. Which of the following is the limitation of Zero based budgeting.

I)Resist new ideas
II)Control on expenditure
III)Requires proper training
IV)Conflicts
A. All
B. Only I and IV
C. Only III and IV
D. Only I,III and IV
Answer:D

180. The fixed administration expenses are Rs 50,000 at 10,000 units of

production.What will be the per unit fixed cost at 8000 units?
A. Rs 5 per unit
B. Rs 8.33
C. Rs 6.25 per unit
D. Rs 10
Answer:C

181. Labour Efficiency Variance is the sum total of

I)Labour Mix variance
II)Labour Cost Variance
III)Idle time Variance
IV)Labour yield variance
A. Only I and IV
B. All
C. Only II and III
D. Only I,III and IV
Answer:D

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182. Total Actual material is 1250 Kg.The Standard qty of Material A=800Kg and
B=400Kg.What is the revised Std qty of A and B respectively.
A. 825kg,425Kg
B. 950Kg,300Kg
C. 833Kg,417Kg
D. 750Kg,500Kg
Answer:C

183. AQ=2500Kg ,SP=Rs 2.5,SQ=2400Kg,AP=Rs 3 .Calculate Material Cost

variance.
A. 1500 F
B. 1500 A
C. 950 F
D. 950 A
Answer:B

184. BE point=40,000 ,Fixed Cost=15,000.Calculate P/V ratio.

A. 3.75%
B. 0.38%
C. 26.66%
D. 37.50%
Answer:D

185. Calculate Break Even Point in units if Fixed cost is 15,000 ,SP=15 and VC=12
A. 1000 units
B. 1250 units
C. 1500 units
D. 5000 units
Answer:D

186. Calculate Profit if Mos=40%,P/v ratio=50% and Actual Sales=10,00,000.

A. 900000
B. 500000
C. 200000
D. 400000

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Answer:C

187. Variable cost ratio =80% and Mos=40%.Calculate P/V ratio and BEP(in
Percentage) respectively.
A. 60%,60%
B. 20%,60%
C. 60%,20%
D. 20%,20%
Answer:B

188. At Break even point,Contribution is equal to .

A. Profit
B. Variable Cost
C. Fixed Cost
D. Selling Price
Answer:C

189. Which statement is true.I)Fixed budget assumes Changing business

conditions. II)Flexible budget is prepared for only one level of activity.
A. None is true
B. Both are true
C. Only I
D. Only II
Answer:A

190. Fixed cost=8000,Profit=5600 .Calculate Contribution.

A. 8000
B. 2400
C. 13600
D. 5600
Answer:C

191. The wages due from Mar 20 ,Apr 20 and May 20 are Rs8000,Rs9000 and Rs
10,000 respectively.There is delay in payment of wages of 2 months.What will be
the wages paid in May
A. Rs 9000

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 B. Rs 8000
C. Rs 10000
D. Rs 27000
Answer:B

192. Type of accounting which specialises in providing information about detailed

cost of products?
A. Cost Accounting
B. Management Accounting
C. Financial Management
D. Financial Accounting
Answer:A

193. What is included in scope of management accounting?

I)Internal Control
II)Budgeting
III)Reporting to management
IV)Office Services
A. Only II,III,IV
B. ALL I,II,III,IV
C. Only II and IV
D. Only I,II,IV
Answer:B

194. Which of the following is the basis of difference between Financial and
Management Accounting?
A. Publication and Audit
B. Periodic v/s Continuos reporting
C. Statutory Requirements
D. All of the above
Answer:D

195. What are the objectives of Cost accounting?I)Cost Ascertainment II)Cost

Control
A. Only I
B. Both I & II
C. Only II

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 D. None of the Above
Answer:B

196. The status of management accountant is at what level as compared to cost

accountant?
A. Lower
B. Equal
C. Higher
D. No status at all
Answer:C

197. Which statement is true.I)Financial accounts are prepared according to

Accounting Standards. II)Management Accounting reports are also prepared
according to accounting standard.
A. Only II
B. Both I and II
C. Only I
D. None is true
Answer:C

198. What indicate the relationship of different items of a financial statement with
some common item by expressing each item as a percentage of the common item.
A. Comparative Statements
B. Ratio
C. Common size Statements
D. None of the Above
Answer:C

199. Which is not the limitation of financial analysis?

I)Effect of personal Bias
II)Identify Trend
III)Judge Efficiency
IV)Different accounting policies
A. Only I
B. Only II and III
C. Only II , III and IV
D. Only I and IV

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Answer:B

200. Given inventory of 24,000, other current assets of 12,000 and current liabilities
of 20,000, the acid test (quick ratio) will be:
A. 1.8 :1
B. 0.6 :1
C. 1.2:1
D. 1.6 :1
Answer:B

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