740+ Management Accounting Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Banking and Insurance (BBI) , Bachelor of Commerce (B Com) .

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601.	Cash Flow Statement is based upon
A.	Cash basis of accounting
B.	Accrual basis of accounting
C.	Credit basis of accounting
D.	None of the above
Answer» A. Cash basis of accounting

discuss

602.	As per Accounting Standard-3, Cash Flow is classified into
A.	Operating activities and investing activities
B.	Investing activities and financing activities
C.	Operating activities and financing activities
D.	Operating activities, financing activities and investing activities
Answer» D. Operating activities, financing activities and investing activities

discuss

603.	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
Answer» D. Increase in creditors

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604.	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
Answer» C. Decrease in creditors

discuss

605.	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
Answer» B. Financing activities, investing activities

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606.	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
Answer» A. Operating activities

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607.	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
Answer» C. Both C and B

discuss

608.	Cash outflow on purchases is calculated by
A.	Purchases + Opening Creditors + Opening B/P – Closing Creditors - Closing B/P
B.	Purchases + Opening Creditors - Closing Creditors + Closing B/P
C.	Purchases - Opening Creditors - Opening B/P + Closing Creditors + Closing B/P
D.	None of the above
Answer» A. Purchases + Opening Creditors + Opening B/P – Closing Creditors - Closing B/P

discuss

609.	While preparing Cash Flow Statement, non-cash items and non-operating items are not required to be adjusted under________
A.	Indirect method
B.	Direct method
C.	Both a and b
D.	None of the above
Answer» B. Direct method

discuss

610.	Cash Flow Statement is prepared from
A.	Profit and loss account
B.	Balance Sheet
C.	Additional Information
D.	All of the above
Answer» D. All of the above

discuss

611.	When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as
A.	Accounting ratio
B.	Financial ratio
C.	Costing ratio
D.	None of the above
Answer» A. Accounting ratio

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612.	Profit for the objective of calculating a ratio may be taken as
A.	Profit before tax but after interest
B.	Profit before interest and tax
C.	Profit after interest and tax
D.	All of the above
Answer» D. All of the above

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613.	Which of the following falls under Profitability ratios? (a) General Profitability ratios (b) Overall Profitability ratios (c) Comprehensive Profitability ratios
A.	A and B
B.	A and C
C.	B and C
D.	None of the above
Answer» A. A and B

discuss

614.	Gross Profit ratio is also termed as
A.	Gross Profit Margin
B.	Gross Margin to net sales
C.	Both a and b
D.	All of the above
Answer» C. Both a and b

discuss

615.	Operating ratio is calculated by
A.	(Operating Cost/Gross sales)*100
B.	(Operating Cost/Gross sales)*100
C.	(Operating cost/Net sales)*100
D.	None of the above
Answer» C. (Operating cost/Net sales)*100

discuss

616.	Which of the following is expenses ratio? (a) Administrative expenses ratio (b) Selling and Distribution expenses ratio (c) Factory expenses ratio (d) Finance Expenses ratio
A.	A, B and D
B.	A, C and D
C.	A, B and C
D.	A, B , C, D
Answer» D. A, B , C, D

discuss

617.	Return on equity capital is calculated on basis of:
A.	Funds of equity shareholders
B.	Equity capital only
C.	Either a or b
D.	None of the above
Answer» C. Either a or b

discuss

618.	Turnover ratios are also known as
A.	Activity ratios
B.	Performance ratios
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

discuss

619.	Debtors Turnover ratio is also known as (a) Receivables turnover ratio (b) Debtors velocity (c) Stock velocity (d) Payable turnover ratio
A.	A and B
B.	A and C
C.	B and C
D.	C and D
Answer» A. A and B

discuss

620.	Liquid assets is determined by
A.	Current assets-stock-Prepaid expenses
B.	Current assets +stock+ prepaid expenses
C.	Current assets +Prepaid expenses
D.	None of the above
Answer» A. Current assets-stock-Prepaid expenses

discuss

621.	Comparison of financial statements highlights the trend of the _________ of the business.
A.	Financial position
B.	Performance
C.	Profitability
D.	All of the above
Answer» D. All of the above

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622.	Analysis of any financial Statement comprises
A.	Balance sheet
B.	P&L Account
C.	Trading account
D.	All of the above
Answer» D. All of the above

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623.	Which of the following are techniques, tools or methods of analysis and interpretation of financial statements?
A.	Ratio Analysis
B.	Average Analysis
C.	Trend Analysis
D.	All of the above
Answer» D. All of the above

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624.	Interpretation of accounts is the
A.	Art and science of translating the figures
B.	To know financial strengths and weaknesses of a business
C.	To know the causes for the prevailing performance of business
D.	All of the above
Answer» D. All of the above

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625.	The form of balance sheet is
A.	Vertical
B.	Horizontal
C.	Horizontal and vertical
D.	Horizontal or vertical
Answer» D. Horizontal or vertical

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626.	The term current asset doesn’t cover
A.	Car
B.	Debtors
C.	Stock
D.	Prepaid expenses
Answer» A. Car

discuss

627.	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
Answer» C. Zero base budgeting

discuss

628.	Match the columns (i) Activity Ratio -------------------- i) (Actual hours worked / Budgeted hours) * 100 (ii) Capacity Ratio ------------------ ii) (Standard hours of actual production / Actual hours worked) * 100 (iii) Efficiency Ratio ----------------- iii) (Standard hours for actual output / Budgeted hours) * 100
A.	A-ii, B-iii, C-i
B.	A-i, B-ii, C-iii
C.	A-iii, B-i, C-ii
D.	None of the above
Answer» C. A-iii, B-i, C-ii

discuss

629.	While preparing sales budget, which of the following factors are considered?
A.	Non-operational factors
B.	Environmental factors
C.	Both a and b
D.	None of the above
Answer» B. Environmental factors

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630.	_______ provides an estimate of the capital amount that may be required for buying fixed assets needed for meeting production requirements.
A.	Production budget
B.	Cash budget
C.	Capital expenditure budget
D.	None of the above
Answer» B. Cash budget

discuss

631.	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» C. Cost budget

discuss

632.	_______ is designed after assessment of the volume of output to be produced during budget period.
A.	Cost budget
B.	Sales budget
C.	Production budget
D.	None of the above
Answer» A. Cost budget

discuss

633.	________ is the first step of budgetary system and all other budgets depends on it.
A.	Cost budget
B.	Sales budget
C.	Production budget
D.	None of the above
Answer» B. Sales budget

discuss

634.	_______also known as subsidiary budgets.
A.	Master budget
B.	Functional budget
C.	Cost budget
D.	None of the above
Answer» B. Functional budget

discuss

635.	_________ is stated as a budget which is made to change as per the levels of activity attained.
A.	Fixed budget
B.	Flexible budget
C.	Both a and b
D.	None of the above
Answer» B. Flexible budget

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636.	_______ is prepared for single level of activity and single set of business conditions.
A.	Fixed budget
B.	Flexible budget
C.	Both a and b
D.	None of the above
Answer» A. Fixed budget

discuss

637.	The process of budgeting helps in the control of
A.	Cost of production
B.	Liquidity
C.	Capital Expenditure
D.	All of the above
Answer» D. All of the above

discuss

638.	Which of the following statements are not true about budget, budgeting & budgetary control?
A.	Budgetary control works on the basis of best option
B.	Budget is one of the important mediums of communication
C.	Budgeting develops the quality of objectivity in planning
D.	None of the above
Answer» D. None of the above

discuss

639.	Which of the following statements are true about responsibility accounting?
A.	Responsibility accounting results in inter-departmental conflicts
B.	In responsibility center more focus is paid on products, processes or jobs
C.	No focus is paid on controlling costs
D.	None of the above
Answer» A. Responsibility accounting results in inter-departmental conflicts

discuss

640.	In profit center revenue represents a monetary measure of output emanating from a profit center in a given period irrespective whether
A.	The revenue is realized or not
B.	The output is sold or not
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

discuss

641.	Contribution margin center is also known as
A.	Expense center
B.	Profit center
C.	Investment center
D.	(All of the above
Answer» B. Profit center

discuss

642.	Which of the following is responsibility center?
A.	Expense center
B.	Profit center
C.	Investment center
D.	All of the above
Answer» D. All of the above

discuss

643.	The responsibility centers, for control purposes, may be classified into _____ types.
A.	Five
B.	Three
C.	Four
D.	None of the above
Answer» B. Three

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644.	The area of focus on responsibility center is
A.	Quantum of sales
B.	Quantum of production
C.	Optimum utilization of resources
D.	All of the above
Answer» C. Optimum utilization of resources

discuss

645.	In responsibility cost accounting the costs in focus are
A.	Controllable costs
B.	Uncontrollable costs
C.	Both a and b
D.	None of the above
Answer» A. Controllable costs

discuss

646.	The term standard cost refers to the:
A.	average unit cost of product produced in the previous period
B.	budgeted unit cost of product produced in a particular period
C.	average unit cost of product produced by other companies
D.	average unit cost of product produced in the current period
Answer» B. budgeted unit cost of product produced in a particular period

discuss

647.	The sub-variance of material usage variance, known as Material mix variance is measured as
A.	Total standard cost - Total actual cost
B.	Standard cost of revised standard mix - Standard cost of actual mix
C.	Standard unit price - Actual unit price) * Actual quantity used
D.	Standard quantity - Actual quantity) * Unit standard price
Answer» B. Standard cost of revised standard mix - Standard cost of actual mix

discuss

648.	Volume variance arises when
A.	There is rise in overhead rate per hour
B.	There is decline in overhead rate per hour
C.	There is decrease or increase in actual output compared to the budgeted output
D.	None of the above
Answer» C. There is decrease or increase in actual output compared to the budgeted output

discuss

649.	The corrective actions after the analysis of variances has to be taken by
A.	Cost accountant
B.	Management
C.	Both a and b
D.	None of the above
Answer» B. Management

discuss

650.	Sales margin variance due to sales quantities is measured as
A.	Standard profit - Revised standard profit
B.	Revised standard profit - Budgeted profit
C.	Standard profit + Revised standard profit
D.	Revised standard profit + Budgeted profit
Answer» B. Revised standard profit - Budgeted profit

discuss

740+ Management Accounting Solved MCQs

Cash Flow Statement is based upon

As per Accounting Standard-3, Cash Flow is classified into

Which of the following is not a cash outflow?

Which of the following is not a cash inflow?

When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.

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

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

Cash outflow on purchases is calculated by

While preparing Cash Flow Statement, non-cash items and non-operating items are not required to be adjusted under________

Cash Flow Statement is prepared from

When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

Profit for the objective of calculating a ratio may be taken as

Which of the following falls under Profitability ratios? (a) General Profitability ratios (b) Overall Profitability ratios (c) Comprehensive Profitability ratios

Gross Profit ratio is also termed as

Operating ratio is calculated by

Which of the following is expenses ratio? (a) Administrative expenses ratio (b) Selling and Distribution expenses ratio (c) Factory expenses ratio (d) Finance Expenses ratio

Return on equity capital is calculated on basis of:

Turnover ratios are also known as

Debtors Turnover ratio is also known as (a) Receivables turnover ratio (b) Debtors velocity (c) Stock velocity (d) Payable turnover ratio

Liquid assets is determined by

Comparison of financial statements highlights the trend of the _________ of the business.

Analysis of any financial Statement comprises

Which of the following are techniques, tools or methods of analysis and interpretation of financial statements?

Interpretation of accounts is the

The form of balance sheet is

The term current asset doesn’t cover

A budgeting process which demands each manager to justify his entire budget in detail from beginning is

While preparing sales budget, which of the following factors are considered?

_______ provides an estimate of the capital amount that may be required for buying fixed assets needed for meeting production requirements.

Plant utilization budget and Manufacturing overhead budgets are types of

_______ is designed after assessment of the volume of output to be produced during budget period.

________ is the first step of budgetary system and all other budgets depends on it.

_______also known as subsidiary budgets.

_________ is stated as a budget which is made to change as per the levels of activity attained.

_______ is prepared for single level of activity and single set of business conditions.

The process of budgeting helps in the control of

Which of the following statements are not true about budget, budgeting & budgetary control?

Which of the following statements are true about responsibility accounting?

In profit center revenue represents a monetary measure of output emanating from a profit center in a given period irrespective whether

Contribution margin center is also known as

Which of the following is responsibility center?

The responsibility centers, for control purposes, may be classified into _____ types.

The area of focus on responsibility center is

In responsibility cost accounting the costs in focus are

The term standard cost refers to the:

The sub-variance of material usage variance, known as Material mix variance is measured as

Volume variance arises when

The corrective actions after the analysis of variances has to be taken by

Sales margin variance due to sales quantities is measured as

When a fixed asset is bought as hire purchase, interest element is classified under and loan element is classified under__.

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

Which of the following falls under Profitability ratios?
(a) General Profitability ratios
(b) Overall Profitability ratios
(c) Comprehensive Profitability ratios

Which of the following is expenses ratio?
(a) Administrative expenses ratio
(b) Selling and Distribution expenses ratio
(c) Factory expenses ratio
(d) Finance Expenses ratio

Debtors Turnover ratio is also known as
(a) Receivables turnover ratio
(b) Debtors velocity
(c) Stock velocity
(d) Payable turnover ratio