Chapter: Contract Costing
1.

The loss incurred on an incomplete contract is transferred to …………….account.

A. Costing profit and loss account
B. profit and loss account
C. trading account
D. deferred to next year.
Answer» A. Costing profit and loss account
2.

When the completion stage of the contract is more than half, the profit to be credited to Profit and Loss account will be equal to…………..

A. 1/3rd of Notional Profit x cash received Work certified
B. ½ of Notional Profit x cash received Work certified
C. 2/3rd of Notional profit x cash received Work certified
D. full Notional Profit.
Answer» C. 2/3rd of Notional profit x cash received Work certified
3.

If the amount of work certified is less than………of the contract price,then no profit should be taken to Profit & Loss Account.

A. 20%
B. 25%
C. 33 1/3%
D. 40%
Answer» B. 25%
4.

Contract costing is not used in one of the following industries.

A. Ship building
B. Civil Construction
C. Automobiles
D. Construction of Bridges
Answer» C. Automobiles
5.

The sum of value of work certified and uncertified appearing in the Contract Account is called ……………..

A. Work done.
B. Work in Process
C. Work Completed
D. Work in Progress
Answer» D. Work in Progress
6.

Total costs incur in a production process, is divided by total number of output units to calculate the

A. unit costs
B. cost of direct material
C. cost of direct labour
D. cost of indirect labour
Answer» A. unit costs
7.

If beginning work in process equivalent units are 2500 units, work done in current period equivalent units are 3800 units and ending work in process equivalent units are 5000, then complete equivalent units in current period are

A. 1500 units
B. 1300 units
C. 1500 units
D. 1800 units
Answer» B. 1300 units
8.

WIP in contract means:

A. Work certified
B. Work certified and work uncertified
C. Cash received
D. None of these
Answer» B. Work certified and work uncertified
9.

Profit remaining as reserve is :

A. Transfer to p/L
B. Deducted from WIP
C. Not taken into account.
D. Deducted from cost of the contract.
Answer» C. Not taken into account.
10.

Profit in incomplete contract in known as notional profit because:

A. It is not real profits
B. Real profit is ascertain when the contract is complete
C. There is no such incomplete contract.
D. The profit is only an approximation.
Answer» D. The profit is only an approximation.
11.

The contract undertaken are completed away from the ………………premises.

A. Contractors
B. Contractee
C. Party
D. Builder
Answer» A. Contractors
12.

A contract is generally of ………………..duration.

A. Long
B. Small
C. Average
D. Very Small
Answer» A. Long
13.

Escalation clause is generally included in case of …………..contract agreement .

A. Variable Cost
B. Fixed Cost
C. Fixed Price
D. Variable Price
Answer» C. Fixed Price
14.

Cost -plus- contract are undertaken for production of ……………….products.

A. SSI
B. Small
C. Low value
D. Highly specialized
Answer» D. Highly specialized
15.

Retention money serves as a ………with the contractee.

A. Security
B. Balance
C. Profit
D. Loss
Answer» A. Security
16.

When cash ratio is …….. retention money is 13%.

A. 50%
B. 87%
C. 78%
D. 99%
Answer» B. 87%
17.

Work certified in a subsequent year is always ……………… than that the in preceding year.

A. Greater
B. Less
C. Equal
D. Greater than Equal to
Answer» A. Greater
18.

Cost of defective materials should be……………………to costing P/L account and……………….to contract account.

A. Debited, Credited
B. Credited, Debited
C. Charged, record
D. Record, Apply
Answer» A. Debited, Credited
19.

Escalation Clause aims at safeguarding the interest of the ……………….against unforeseen rise in cost.

A. Contractor.
B. Contractee
C. Builder
D. Party
Answer» A. Contractor.
20.

Sub contract cost is always to be treated as ……………….to the contract.

A. Indirect charge
B. Direct charge
C. Income
D. Revenue
Answer» A. Indirect charge
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