93 + Mcqs in Management Accounting Page 1 McqOptions

1.	Analysis of any fi cial Statement comprises
A.	Balance sheet
B.	P&L Account
C.	Trading account
D.	All of the above
Answer» E.

Discussion

2.	Which of the following statements are true?A) Common-size balance sheet shows relative value of the various items.B) In the common size income statement, each product is represented as a percentage of the net sales figure.C) Common size income statements represent the various elements as a percentage of the gross profit.
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C
Answer» B. Both A and C

Discussion

3.	Which of the following statements are true?A) External analysis depends entirely on issued fi cial statements.B) Interpretation and analysis both are different.C) Fi cial analysis covers interpretation.
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C
Answer» E.

Discussion

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

Discussion

5.	Which of the following is expenses ratio?A) Administrative expenses ratioB) Selling and Distribution expenses ratioC) Factory expenses ratioD) Fi ce Expenses ratio
A.	A, B and D
B.	A, C and D
C.	A, B and C
D.	A, B, C, D
Answer» E.

Discussion

6.	Which of the following are sources of funds?A) Issue of bonus shares B) Issue of shares against the purchase of fixed assetsC) Conversion of debentures into sharesD) Conversion of loans into shares
A.	A and C
B.	A and D
C.	A, B, C and D
D.	None of the above
Answer» E.

Discussion

7.	Which of the following are added to net profit after tax and extraordinary items to reach to net profit before tax and extraordinary items?A) Provision for tax made during the yearB) Proposed dividend made during the yearC) Interim dividendD) Transfer to General reserves and other reserves
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C and D
Answer» E.

Discussion

8.	Which of the following are cash flow from investing activities? A) Interest receivedB) Dividend receivedC) Sale of fixed assetsD) Purchase of fixed assets
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C and D
Answer» E.

Discussion

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

Discussion

10.	The term Fi cial Statement covers
A.	Profit & Loss Statement
B.	Balance sheet and Profit & Loss Statement appropriation account
C.	Profit & Loss Statement and Balance sheet
D.	None of the above
Answer» D. None of the above

Discussion

11.	Which of the following are cash flow from fi cing activities?A) Interest receivedB) Dividend receivedC) Interest paidD) Dividend paid
A.	Both A and B
B.	Both A and C
C.	Both C and D
D.	A, B, C and D
Answer» D. A, B, C and D

Discussion

12.	ABC Company plans a sale of 96,000 units of TV product line in the first fiscal quarter, 1,20,000 TV units in second quarter, and 1,32,000 units and 1,50,000 units in third and fourth quarter, and 1,56,000 units in the first quarter of next year. Given that at the beginning of first fiscal quarter, the company has 16,000 units in stock. Also, at the end of each quarter, ABC Company wants to maintain an inventory equal to one-sixth of the sales for the next fiscal quarter.Determine units to be manufactured in first and second quarter of the year.
A.	10,00,000 and 1,35,000
B.	10,00,000 and 1,22,000
C.	Insufficient data
D.	None of the above
Answer» C. Insufficient data

Discussion

13.	Liquid ratio is also known as a) Quick ratio b) Acid test ratioc) Working capital ratiod) Stock turnover ratio
A.	A and B
B.	A and C
C.	B and C
D.	C and D
Answer» B. A and C

Discussion

14.	Which of the following rules stands true while preparation of Schedule of changes in working capital?A) An increase in current assets increases working capital. B) An increase in current assets decreases working capital.C) An increase in current liabilities decreases working capital.D) An increase in current liabilities increases working capital.
A.	A and C
B.	A and D
C.	B and D
D.	A, B, C and D
Answer» B. A and D

Discussion

15.	State which of them are true? A) When ratios of previous years are compared with current years, they are called trend ratios. B) Trend percentages and trend ratios are used in static analysis. C) Reliability of fi cial analysis depends upon the reliability of fi cial data.
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C
Answer» E.

Discussion

16.	Comparison of fi cial statements highlights the trend of the _________ of the business.
A.	Fi cial position
B.	Performance
C.	Profitability
D.	All of the above
Answer» E.

Discussion

17.	Material sub usage variance is calculated when A) When quantity of wastage is not givenB) When quality of output is not givenC) When price of wastage is not givenD) When total cost of output is not given
A.	A and B
B.	B and C
C.	C and A
D.	D and B
Answer» B. B and C

Discussion

18.	The term current asset doesn t cover
A.	Car
B.	Debtors
C.	Stock
D.	Prepaid expenses
Answer» B. Debtors

Discussion

19.	Stock velocity establishes a relationship between
A.	Cost of goods sold in a given period and the average amount of inventory held during that period
B.	Cost of goods sold in a given period and the average amount of stock held during that period
C.	Both a and b
D.	None of the above
Answer» D. None of the above

Discussion

20.	P&L statement is also known as
A.	Statement of operations
B.	Statement of income
C.	Statement of earnings
D.	All of the above
Answer» C. Statement of earnings

Discussion

21.	Fi cing activities bring changes in
A.	Size and composition of owner s equities
B.	Borrowing of the enterprise
C.	Both a and b
D.	None of the above
Answer» D. None of the above

Discussion

22.	Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.
A.	Rs 54,000
B.	Rs 60,000
C.	Rs 1,62,000
D.	None of the above
Answer» B. Rs 60,000

Discussion

23.	Which of the following is true about fi cial statements?A) Fi cial statement gives a summary of accounts.B) Fi cial statements can be stated as recorded facts.
A.	Only A
B.	Only B
C.	Both A and B
D.	None of the above
Answer» D. None of the above

Discussion

24.	Debtors Turnover ratio is also known asA) Receivables turnover ratioB) 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» B. A and C

Discussion

25.	As per AS-3, Cash Flow Statement is mandatory for A) All enterprisesB) Companies listed on a stock exchangeC) 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» D. None of the above

Discussion

26.	The various aspects of a price policy areA) Normal price B) Minimum price C) Depression priceD) Special price including dumping
A.	Both A and B
B.	Both B and C
C.	Both C and D
D.	None of the above
Answer» E.

Discussion

27.	Higher the ratio, the more favorable it is, doesn t stand true for
A.	Operating ratio
B.	Liquidity ratio
C.	Net profit ratio
D.	Stock turnover ratio
Answer» B. Liquidity ratio

Discussion

28.	Fi cial management mainly focuses on
A.	Efficient management of every business
B.	Brand dimension
C.	Arrangement of funds
D.	All elements of acquiring and using means of fi cial resources for fi cial activities
Answer» E.

Discussion

29.	Which of the following statements are true? A) Fi cial statements are only interim report. B) Fi cial statements are also known as annual records.C) Fi cial statements are historic.
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C
Answer» D. A, B, C

Discussion

30.	The definition Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.
A.	Ango-American Council on Productivity
B.	AICPA
C.	Robert N. Anthony
D.	All of the above
Answer» B. AICPA

Discussion

31.	Which of the following statements are false about management accounting?A) Management accounting is concerned with historical events.B) Management accounting is related only with such instances which can be expressed in monetary terms.C) Management accounting is a part of Fi cial Management.D) Management accounting information can be disclosed to outsiders.
A.	A, B and D
B.	A, C and D
C.	A, B and C
D.	A, B, C, D
Answer» B. A, C and D

Discussion

32.	Management accounting is related withA) The problem of choice makingB) Recording of transactionsC) Cause and effect relationships
A.	A and B
B.	B and C
C.	A and C
D.	None of the above
Answer» D. None of the above

Discussion

33.	Which of the following are tools of management accounting?A) Decision accounting B) Standard costing C) Budgetary control D) Human Resources Accounting
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

Discussion

34.	Fi ce Function comprises
A.	Safe custody of funds only
B.	Expenditure of funds only
C.	Procurement of fi ce only
D.	Procurement & effective use of funds
Answer» E.

Discussion

35.	Fi cial management process deals with
A.	Investments
B.	Fi cing decisions
C.	Both a and b
D.	None of the above
Answer» C. Both a and b

Discussion

36.	The only feasible purpose of fi cial management is
A.	Wealth Maximization
B.	Sales Maximization
C.	Profit Maximization
D.	Assets maximization
Answer» B. Sales Maximization

Discussion

37.	Management accounting isA) SubjectiveB) Objective
A.	Only A
B.	Only B
C.	Both A and B
D.	None of the above
Answer» B. Only B

Discussion

38.	The assessment of fi cial statements by a shareholder is an example of
A.	Vertical Analysis
B.	Horizontal Analysis
C.	Internal Analysis
D.	External Analysis
Answer» E.

Discussion

39.	Which of the following statements are true about Ratio Analysis?A) Ratio analysis is useful in fi cial analysis.B) Ratio analysis is helpful in communication and coordination.C) Ratio Analysis is not helpful in identifying weak spots of the business. D) Ratio Analysis is helpful in fi cial planning and forecasting.
A.	A, B and D
B.	A, C and D
C.	A, B and C
D.	A, B, C, D
Answer» B. A, C and D

Discussion

40.	Which of the following are examples of Funds Flow Statement?A) Collection of debtors B) Shares issued for cashC) Shares issued against the purchase of machineryD) Shares issued for property
A.	A and B
B.	A and C
C.	A and D
D.	A, B, C and D
Answer» B. A and C

Discussion

41.	For year 2013 Equity Share Capital is Rs 3,00,000 Preference Share Capital is 1,00,000 10% debentures is 2,00,000 and Share premium is 30,000. For year 2014 Equity Share Capital is Rs 4,00,000 Preference Share Capital is 60,000 10% debentures is 1,00,000 and Share premium is 40,000. Also given, Dividend paid on shares Rs 15,000 and Interest paid on debentures Rs 20,000.Determine net cash flow from fi cing activities.
A.	Cash inflow of Rs 65,000
B.	Cash outflow of Rs 65,000
C.	Cash inflow of Rs 56,000
D.	Cash outflow of Rs 56,000
Answer» C. Cash inflow of Rs 56,000

Discussion

42.	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» E.

Discussion

43.	Which of the following statements are false?A) Old Furniture written off doesn t affect cash flow.B) Cash flow statement is a substitute for cash account.C) Appropriation of retained earnings is not shown in Cash flow statement. D) Net cash flow during a period can never be negative.
A.	A, B, C
B.	B, C, D
C.	C, D, A
D.	None of the above
Answer» C. C, D, A

Discussion

44.	Which of the following statement is true?A) If the amount of good will increases during current year, the difference is treated as purchase of goodwill. B) If the amount of good will decreases during current year, It will treated as written off.
A.	Only A
B.	Only B
C.	Both A and B
D.	None of the above
Answer» D. None of the above

Discussion

45.	In the case of fi cial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from
A.	Operating activities
B.	Fi cing activities
C.	Investing activities
D.	None of the above
Answer» B. Fi cing activities

Discussion

46.	Which of the following statements are true about movement of funds?A) Funds flow in a transaction between current assets and fixed assets. B) Funds flow in a transaction between current asset and capital.C) Funds flow in a transaction between fixed assets and current liabilities.D) Funds flow in a transaction between current liabilities and capital.
A.	A and B
B.	A and C
C.	A and D
D.	A, B, C and D
Answer» E.

Discussion

47.	In cash flow statement, the item of interest is shown inA) Operating ActivitiesB) Fi cing Activities C) Investing Activities
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	A, B, C
Answer» D. A, B, C

Discussion

48.	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» B. Accrual basis of accounting

Discussion

49.	Which of the following statements are false?A) Cash Flow Statement is helpful in the formation of policies.B) Cash Flow Statement is useful for external analysis.C) Cash Flow Statement is helpful in estimating future cash flow.
A.	Both A and B
B.	Both A and C
C.	Both B and C
D.	None of the above
Answer» E.

Discussion

50.	Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000.What is break-even point?
A.	500 units
B.	1,000 units
C.	1,250 units
D.	None of the above
Answer» D. None of the above

Discussion

Explore topic-wise MCQs in Fi ce (MCQ) Questions and answers.

Analysis of any fi cial Statement comprises

Which of the following statements are true?A) External analysis depends entirely on issued fi cial statements.B) Interpretation and analysis both are different.C) Fi cial analysis covers interpretation.

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

Which of the following is expenses ratio?A) Administrative expenses ratioB) Selling and Distribution expenses ratioC) Factory expenses ratioD) Fi ce Expenses ratio

Which of the following are sources of funds?A) Issue of bonus shares B) Issue of shares against the purchase of fixed assetsC) Conversion of debentures into sharesD) Conversion of loans into shares

Which of the following are added to net profit after tax and extraordinary items to reach to net profit before tax and extraordinary items?A) Provision for tax made during the yearB) Proposed dividend made during the yearC) Interim dividendD) Transfer to General reserves and other reserves

Which of the following are cash flow from investing activities? A) Interest receivedB) Dividend receivedC) Sale of fixed assetsD) Purchase of fixed assets

Interpretation of accounts is the

The term Fi cial Statement covers

Which of the following are cash flow from fi cing activities?A) Interest receivedB) Dividend receivedC) Interest paidD) Dividend paid

Liquid ratio is also known as a) Quick ratio b) Acid test ratioc) Working capital ratiod) Stock turnover ratio

State which of them are true? A) When ratios of previous years are compared with current years, they are called trend ratios. B) Trend percentages and trend ratios are used in static analysis. C) Reliability of fi cial analysis depends upon the reliability of fi cial data.

Comparison of fi cial statements highlights the trend of the _________ of the business.

Material sub usage variance is calculated when A) When quantity of wastage is not givenB) When quality of output is not givenC) When price of wastage is not givenD) When total cost of output is not given

The term current asset doesn t cover

Stock velocity establishes a relationship between

P&L statement is also known as

Fi cing activities bring changes in

Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.

Which of the following is true about fi cial statements?A) Fi cial statement gives a summary of accounts.B) Fi cial statements can be stated as recorded facts.

Debtors Turnover ratio is also known asA) Receivables turnover ratioB) Debtors velocity C) Stock velocity D) Payable turnover ratio

As per AS-3, Cash Flow Statement is mandatory for A) All enterprisesB) Companies listed on a stock exchangeC) Companies with a turnover of more than Rs 50 crores

The various aspects of a price policy areA) Normal price B) Minimum price C) Depression priceD) Special price including dumping

Higher the ratio, the more favorable it is, doesn t stand true for

Fi cial management mainly focuses on

Which of the following statements are true? A) Fi cial statements are only interim report. B) Fi cial statements are also known as annual records.C) Fi cial statements are historic.

The definition Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.

Management accounting is related withA) The problem of choice makingB) Recording of transactionsC) Cause and effect relationships

Which of the following are tools of management accounting?A) Decision accounting B) Standard costing C) Budgetary control D) Human Resources Accounting

Fi ce Function comprises

Fi cial management process deals with

The only feasible purpose of fi cial management is

Management accounting isA) SubjectiveB) Objective

The assessment of fi cial statements by a shareholder is an example of

Which of the following are examples of Funds Flow Statement?A) Collection of debtors B) Shares issued for cashC) Shares issued against the purchase of machineryD) Shares issued for property

Which of the following is not a cash outflow?

Which of the following statements are false?A) Old Furniture written off doesn t affect cash flow.B) Cash flow statement is a substitute for cash account.C) Appropriation of retained earnings is not shown in Cash flow statement. D) Net cash flow during a period can never be negative.

Which of the following statement is true?A) If the amount of good will increases during current year, the difference is treated as purchase of goodwill. B) If the amount of good will decreases during current year, It will treated as written off.

In the case of fi cial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from

In cash flow statement, the item of interest is shown inA) Operating ActivitiesB) Fi cing Activities C) Investing Activities

Cash Flow Statement is based upon

Which of the following statements are false?A) Cash Flow Statement is helpful in the formation of policies.B) Cash Flow Statement is useful for external analysis.C) Cash Flow Statement is helpful in estimating future cash flow.

Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000.What is break-even point?