Profit in incomplete contract in known as notional profit because:

Real profit is ascertain when the contract is complete

There is no such incomplete contract.

The profit is only an approximation.

In some cases, a company might have to pay to dispose of losses in a process. The cost of disposal represents an additional cost to the process. To reflect this in the process account the normal loss is measured at zero but the expected costs of disposal are debited to the process account.

The above statement is incorrect

Which of the following statement is correct with regard to job costing?

Job costing differs from most other types of costing system because each cost unit is a job, and no two jobs are exactly the same. Each job is costed separately.

The expected cost of a job has to be estimated so that a price for the job can be quoted to a customer.

A costing system should also calculate the actual cost of each job that has been carried out to work out the relative profitability of relevant jobs.

What would be the most appropriate way of apportioning depreciation costs acrossdifferent manufacturing departments in a business?

Value of buildings and equipment

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

Costing profit and loss account

Examples of manufacturing where process costing is used include:

Chemicals manufacture, Petroleum refining, the manufacture of liquids

The continuous processing of high volumes of low-cost food items such as tins of peas or beans, or bottles of tomato ketchup.

Process costing provides a system of costing where the following characteristicsoccur. Identify which of the following are correct:

Output is continually produced from the manufacturing process. Materials might be added in full at the start of a process or might be added gradually throughout the process.

There might be losses in the process. Process costing provides a method of measuring and costing incomplete WIP.

When more than one product is output, they might be called joint products or a by-product, depending upon the relative value of the products. Process costing offers methods of costing each of the different products.

Variable overhead is overhead that increases as more production work is done.Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked.

The above statement is incorrect

2081 + Mcqs in Accounting in Finance & Accounting Page 3 McqOptions

101.	In trial balance, which accounts with is/are recorded at the credit side? I)Sales II)Sales return III)Cash IV)Loan
A.	Only I and II
B.	All of these
C.	Only I,II and IV
D.	Only I and IV
Answer» E.

102.	The elements of the accounting equation are
A.	Assets, Liabilities,Capital
B.	Liabilities,Capital
C.	Liabilities
D.	Capital
Answer» B. Liabilities,Capital

103.	2 oct Opening balance=200 units @Rs 15 each, 4 Oct:Purchase=500 units @Rs 10 ,5 Oct Sales=600 units.What will be Closing Inventory value (in Rs) asper LIFO Method?
A.	Rs 1000
B.	Rs 500
C.	Rs 8000
D.	Rs 1500
Answer» E.

104.	Arun is a Book-seller, which item will be goods for hisbusiness ?
A.	Purchase ofComputer
B.	Purchase of Fan
C.	Purchase ofFurniture
D.	Purchase ofStationery
Answer» E.

105.	What are the causes of depreciation?
A.	Wear and Tear
B.	Obsolescence
C.	Expiration oflegal rights
D.	All of theabove
Answer» E.

106.	Machinery purchased on 1 Oct,2016 for 40,000.This machinery was sold on Dec 2017.Calculate the total depreciation charged on machinery till date if co charges 10% as per WDV method if accounts are closed on 31st March every year.
A.	6700
B.	8000
C.	5000
D.	4850
Answer» E.

107.	4 oct Opening balance=500 units @Rs 20 each, 5 Oct:Purchase=1000 units @Rs 15 ,6 Oct Sales=500 units.What will be rate at which the sales unit will bevalued as per weighted avg method?
A.	Rs20
B.	Rs 15
C.	Rs 16.66
D.	17.5
Answer» D. 17.5

108.	refers to the order in which the various assets and liabilities are shown in the Balance Sheet.
A.	Grouping
B.	Order ofpermanence
C.	Marshalling
D.	Order ofliquidity
Answer» D. Order ofliquidity

109.	According to which principle the same accountingmethods should be used each year:
A.	Prudence
B.	Full disclosure
C.	Materiality
D.	Consistency
Answer» E.

110.	Which one is false. I)Capital Expenditure is non recurring in nature and shown in P&L account. II)Revenue expenditure is incurred to conduct day today activities
A.	Both I and II
B.	Only I
C.	Only II
D.	None is false
Answer» C. Only II

111.	Goods destroyed by fire should be credited to
A.	Puchases A/c
B.	Sales A/c
C.	Loss by fire A/c
D.	InsuranceA/c
Answer» B. Sales A/c

112.	The process of transferring the debit and credit items from a journal to their respective account in the ledgeris termed as?
A.	Balancing
B.	Posting
C.	Arithmetic
D.	Entry
Answer» C. Arithmetic

113.	When proprietor withdrew cash from business forpersonal use , it is known as -
A.	Drawings
B.	Investment
C.	Furniture
D.	BillsReceivable
Answer» B. Investment

114.	Trial balance is not a conclusive proof of accuracy due to which errors.I)Error of omission II)Error of Principle III)Error of Commission IV)Compensatory Errors
A.	All I,II,III and IV
B.	Only I,II and III
C.	Only I,II and IV
D.	Only II and III
Answer» B. Only I,II and III

116.	If closing stock is mentioned in trial balance,Where is itshown in Final Accounts?
A.	Credit side of TradingA/c
B.	Asset side ofBalance Sheet
C.	Both A and B
D.	Not shownanywhere
Answer» C. Both A and B

115.	Which is true. I)Fixed installation method is recognised by income tax department. II)The amount of depreciation in WDV method remains same.
A.	Both I and II
B.	None is true
C.	Only II
D.	Only I
Answer» C. Only II

117.	1 oct Opening balance=400 units @Rs 20 each, 3 Oct:Purchase=300 units @Rs 10 ,5 Oct Sales=500 units.What will be total Sales value(in Rs) as per FIFOMethod?
A.	Rs 9000
B.	Rs 15000
C.	Rs 10000
D.	Rs 7500
Answer» B. Rs 15000

118.	When Salary is paid by cheque, which account iscredited.
A.	Cash A/c
B.	Bank A/c
C.	Salary A/c
D.	Personal A/c
Answer» C. Salary A/c

119.	What are the two statements prepared for summarising the transactions?I)Balance SheetII)Journal III)P&L IV)Cash Book
A.	Only I and II
B.	Only I,II and III
C.	Only I,II and IV
D.	Only I and III
Answer» E.

120.	The expenses due but not paid is known as -
A.	Prepaid Expenses
B.	Debtors
C.	Outstanding Expense
D.	Bills Receivable
Answer» D. Bills Receivable

121.	Where do we show Gas and Fuel in final accounts?
A.	Trading A/c
B.	P&L Account
C.	Balance Sheet
D.	Not shownanywhere
Answer» B. P&L Account

122.	Which is correct.I)Dr. the receiver,Cr. the Giver II)Dr. what goes out,Cr. what comes in III)Dr. all Expenses,Cr.All Losses
A.	Only I
B.	Only II and III
C.	ALL I,II and III
D.	Only I and II
Answer» B. Only II and III

123.	Which of the following is not the external user ofaccounting information?
A.	Government
B.	Shareholders
C.	Tax Authorities
D.	Financialinstitutions
Answer» C. Tax Authorities

124.	Where do we show Provision of bad debts in final accounts if given in adjustments? I)Debit side of P&L II)Credit side of P&L III)Deduct from Debtors in BalanceSheet IV)Add to Debtors in Balance Sheet
A.	I and III
B.	II and IV
C.	II and III
D.	I and IV
Answer» B. II and IV

125.	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» E.

Explore topic-wise MCQs in Finance & Accounting.

In trial balance, which accounts with is/are recorded at the credit side? I)Sales II)Sales return III)Cash IV)Loan

The elements of the accounting equation are

2 oct Opening balance=200 units @Rs 15 each, 4 Oct:Purchase=500 units @Rs 10 ,5 Oct Sales=600 units.What will be Closing Inventory value (in Rs) asper LIFO Method?

Arun is a Book-seller, which item will be goods for hisbusiness ?

What are the causes of depreciation?

Machinery purchased on 1 Oct,2016 for 40,000.This machinery was sold on Dec 2017.Calculate the total depreciation charged on machinery till date if co charges 10% as per WDV method if accounts are closed on 31st March every year.

4 oct Opening balance=500 units @Rs 20 each, 5 Oct:Purchase=1000 units @Rs 15 ,6 Oct Sales=500 units.What will be rate at which the sales unit will bevalued as per weighted avg method?

refers to the order in which the various assets and liabilities are shown in the Balance Sheet.

According to which principle the same accountingmethods should be used each year:

Which one is false. I)Capital Expenditure is non recurring in nature and shown in P&L account. II)Revenue expenditure is incurred to conduct day today activities

Goods destroyed by fire should be credited to

The process of transferring the debit and credit items from a journal to their respective account in the ledgeris termed as?

When proprietor withdrew cash from business forpersonal use , it is known as -

Trial balance is not a conclusive proof of accuracy due to which errors.I)Error of omission II)Error of Principle III)Error of Commission IV)Compensatory Errors

Which is true. I)Fixed installation method is recognised by income tax department. II)The amount of depreciation in WDV method remains same.

If closing stock is mentioned in trial balance,Where is itshown in Final Accounts?

1 oct Opening balance=400 units @Rs 20 each, 3 Oct:Purchase=300 units @Rs 10 ,5 Oct Sales=500 units.What will be total Sales value(in Rs) as per FIFOMethod?

When Salary is paid by cheque, which account iscredited.

What are the two statements prepared for summarising the transactions?I)Balance SheetII)Journal III)P&L IV)Cash Book

The expenses due but not paid is known as -

Where do we show Gas and Fuel in final accounts?

Which is correct.I)Dr. the receiver,Cr. the Giver II)Dr. what goes out,Cr. what comes in III)Dr. all Expenses,Cr.All Losses

Which of the following is not the external user ofaccounting information?

Where do we show Provision of bad debts in final accounts if given in adjustments? I)Debit side of P&L II)Credit side of P&L III)Deduct from Debtors in BalanceSheet IV)Add to Debtors in Balance Sheet

Profit in incomplete contract in known as notional profit because:

In some cases, a company might have to pay to dispose of losses in a process. The cost of disposal represents an additional cost to the process. To reflect this in the process account the normal loss is measured at zero but the expected costs of disposal are debited to the process account.

If the amount of production overheads absorbed into product costs is more thanthe actual production overhead expenditure, there is:

Which of the following statement is correct with regard to job costing?

A job is a cost unit which consists of a single order or contract.

What would be the most appropriate way of apportioning depreciation costs acrossdifferent manufacturing departments in a business?

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

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

In process costing each process is treated as a separate………………

The purpose of allocation and apportionment of overheads is to calculate an absorption rate for each production department.

Service costing is also called as:

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

By products are outputs from a joint process that are relatively minor in quantityand/or value.

Examples of manufacturing where process costing is used include:

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

Since a by-product does not have any substantial value, there is no sense in charging it with a share of the common processing costs.

Process costing provides a system of costing where the following characteristicsoccur. Identify which of the following are correct:

Abnormal loss comes with:

Operating cost is the cost incurred for providing:

If it is assumed that all losses in process occur at the end of the process, units ofabnormal loss are costed in exactly the same way in the as units of finished output.

Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.

Variable overhead is overhead that increases as more production work is done.Total variable overhead expenditure therefore depends on the volume of production. Variable overhead is usually calculated as an amount for each direct labour hour worked.

. The cost which is to be incurred even when a business unit is closed is a.

Per kilometer is an example of……………..cost unit used in transport undertakings.

Overheads are usually added to cost units using a predetermined overheadabsorption rate, which is calculated using figures from the budget.

126.	. Production Overheads are costs related to the production process other than direct labour and materials. They are also known as factory overheads since they are incurred inside the factory, other overheads such as selling and administrative overheads are always charged to in the period in which they are incurred
A.	The above statement is true
B.	The above statement is false
C.	none
D.	none
Answer» B. The above statement is false

127.	In some cases, a company might have to pay to dispose of losses in a process. The cost of disposal represents an additional cost to the process. To reflect this in the process account the normal loss is measured at zero but the expected costs of disposal are debited to the process account.
A.	The above statement is incorrect
B.	The above statement is correct
C.	none
D.	none
Answer» C. none

128.	If the amount of production overheads absorbed into product costs is more thanthe actual production overhead expenditure, there is:
A.	Over-absorbed overhead
B.	Under-absorbed overhead
C.	Neither A or B
D.	None
Answer» B. Under-absorbed overhead

129.	Which of the following statement is correct with regard to job costing?
A.	Job costing differs from most other types of costing system because each cost unit is a job, and no two jobs are exactly the same. Each job is costed separately.
B.	The expected cost of a job has to be estimated so that a price for the job can be quoted to a customer.
C.	A costing system should also calculate the actual cost of each job that has been carried out to work out the relative profitability of relevant jobs.
D.	All of the above are correct
Answer» E.

130.	A job is a cost unit which consists of a single order or contract.
A.	True
B.	False
C.	none
D.	none
Answer» B. False

131.	What would be the most appropriate way of apportioning depreciation costs acrossdifferent manufacturing departments in a business?
A.	Floor space
B.	Numbers of personnel
C.	Value of buildings and equipment
D.	Administration costs
Answer» D. Administration costs

132.	If the amount of work certified is less than………of the contract price,then no profitshould be taken to Profit & Loss Account.
A.	20%
B.	25%
C.	33 1/3%
D.	40%
Answer» C. 33 1/3%

133.	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» B. profit and loss account

134.	In process costing each process is treated as a separate………………
A.	Cost Centre
B.	Cost Unit
C.	Cost Structure
D.	Cost Industry
Answer» B. Cost Unit

135.	The purpose of allocation and apportionment of overheads is to calculate an absorption rate for each production department.
A.	False
B.	True
C.	none
D.	none
Answer» B. True