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FINANCIAL & MANAGEMENT ACCOUNTING MB0025 Section 1 1 Accounting is a branch of knowledge, concerned with recording classifying analyzing and reporting financial information to _____ regarding the financial performance of organisation. a) Owner b) Bankers c) Creditor d) All
TM a) Error of omission c) Error of principle
b) Error of commission d) None
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2 _____ is the discipline of measuring, communicating and interpreting financial activities and it is widely referred to as language of business a) Accounting b) Record keeping c) Fina Financ nciial man managem agemen entt d) None None
15 _____ error is also called off-setting error a) Compensa nsating er error b) Commission er error c) Omission error d) None
16 The basis for preparing final accounts is the Trial Balance . For Trial Balance, the _____ are the root. a) Ledger balance b) Journal entries c) Scie Scient ntif ific ical ally ly reco record rdin ing g d) Book Book keep keepin ing g
17 Expenses due but not yet paid are known as ______ 3 _____ is a person to whom the business owes some thing. a) O6/ utst stan andi ng exp expen ense sess b) Ins Insta tand ndin ing g expe expens nses es Ph: 011-65439499, 65066565/ Out 7,ding 28013999 a) Debtor b) Creditor c) Debts d) Credit c) Trader d) Stock Holder 18 _____ debts are those debts which are not recovered 4 Institute of Chartered Accountants of India established a) Ou Outstanding de debts b) Unrecovered debts Accounting Standards Board in _____ c) Unaccepted debts d) Bad debts a) 1978 b) 1877 c) 1976 d) 1977 19 There are _____ types of discounts allowed to customers in TM a business. 5 While revenue expenses are charged against profit, capital a) Three b) Two expenses are shown in the balance sheet as _____ c) Four d) Five a) Asset b) Liabilities c) Cash d) None 20 Which one is not a management accounting technique a) Break-ev k-eveen anal nalysis b) Rat Ratiio an analysis 6 _____ is a business activity involving transfer of money or c) Variance analysis d) ABC analysis money’s worth a) Sale b) Transaction 21 Costs incurred in the past is _____ cost c) Cash flow d) None a) Relevant cost b) Sundry cost c) Sunk cost d) None 7 _____ is a book of original entry a) Journal b) Book keeping 22 ‘Every fact that is learned becomes a key to other facts’. c) Both a & b d) None said by:a) E.6/ Y. Yo7, uma28013999 ns b) Genou Ph: 011-65439499, 65066565/ 8 Purchases book is also called _____ c) Y.O Hertz d) None a) Pu Purchases ke keeping b) Cash journal c) Purchases journal d) Any of them 23 Which one is not correct Ratio can be expressed in the following form: 9 What is bills receivable for a _____ is bills payable to the a) As proportion b) As percentage _____ c) As decimal d) As turnover or rate a) Drawee, Drawer b) Creditor, Debtor TMterm c) Drawer, Drawee d) Debtor, Creditor 24 _____ measures the firm’s ability to meet its short obligations. 10 Cash book containing cash and bank columns is known as a) Liquidity Ratio b) Profitability Ratio a) Mult Multii column column cash cash book book b) Doub Double le colum column n cash cash book book c) Leverage Ratio d) Current Ratio c) Debi Debitt or credit credit cash cash book book d) None None 25 Which one is not a current ratio 11 _____ contains accounts of creditors from whom goods are a) Trade debtors b) Bank overdraft purchase on credit c) Marke arketa tabl blee secu securritie itiess d) Cash ash inh inhan and d a) Debtor ’s ledger b) Creditor ’s ledger c) General ledger d) None 26 Liquid Ratio is also known as _____ a) Quick Ratio b) Acid Test Ratio 12 Posting is done from ______ c) Both d) None a) Journal book b) Subsidiary book c) Any of them d) None of them 27 Net profit ratio is also called _____ Ph: 011-65439499, 65066565/ a) Ne6/ t pro7, fit M28013999 argin b) Profit after taxes 13 _____ stands as a bridge between primary and secondary c) Oper Operat atin ing g pro profi fitt mar margi gin n d) Non Nonee books on one hand and final statements of accounts on the other hand 28 STO stand for a) Trial balance b) Ledger a) Sale Saless Tur Turno nove verr Rat Ratio io b) Stoc Stock k Tra Trade de Rati Ratio o c) Journal d) None c) Sale Saless Tak Takeo eove verr Rat Ratio io d) Stoc Stock k Tur Turno nove verr Rat Ratio io
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14 Which of the following is not an error which do not affects trial balance
29 Decrease in _____ is always a source of funds for the
Page No.2 business a) Assets c) Any of them
(ii) All transaction of a business are recorded in terms of money. a) True True b) False False c) False True d) True False
b) Liabilities d) none
30 CFS stand for a) Cash Cash flow low sta state teme ment nt c) Cash flow stock
b) Credi reditt flo flow w sta state teme ment nt d) None
31 _____ also known as ‘Statement Accounting for variations is cash’. a) Cash Cash flow flow stat statem emen entt b) Fund und flow flow state tateme ment nt c) Cash flow stock d) Cash transaction
44 There are two systems of double entry book keeping TM namely _____ a) Cash system & mercantile system b) Cash system & expenses system c) Credit system and debit system d) None
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32 ______ is the total of direct materials cost, direct labour cost and chargeable expenses a) Factory cost b) Prime cost c) Direct cost d) Total cost 33 Which Item is not include in cost sheet : a) Income tax b) Interest on capital c) Share premiumPh: 011-65439499, d) None
45 Accounting trail is the process of identifying the _____ i) Transaction or events (ii) Preparation of vouchers iii) Recording them as journal entries iv) Preparation of ledger accounts a) (i) & (ii) b) (i) (ii) & (iii) c) (ii) (iii) (iv) d) (i) (ii) (iii) & (iv)
65066565/ 6/ 7, 28013999 46 Journal is subdivided into several books of original entry, they are also regarded as _____ a) Primary books or secondary books b) Cash books or money books c) Receive books or payable books d) None
34 Marginal cost is also known ______ a) Variable cost b) Direct cost c) Labour cost d) Primary cost 35 _____ is the volume of activity where the organisation’s revenues and expenses are equal a) CVP b) BEP c) BPE d) CPV
47 Cash purchases are recorded in _____ and credit purchses TM are recorded in _____ a) Cash Cash books, books, cred credit it book book b) Purch Purchase ase book book,, credit credit book book c) Cash book, book, purchase purchase book d) None
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36 The formula to find out the BEP ( in units) is :a) Fixed expenses / Unit contribution margin b) Fixed expenses/ Contribution sales ratio c) Contribution / Expenses d) Expenses / Contribution
48 _____ are the two techniques of preparing trial balance a) Total method & Trial method b) Trial method & Balance method c) Total Total method & Balance me thod d) Trial method & Direct method
37 Which one is not a step in Budgeting control a) Form Formul ulat atio ion n of poli polici cies es b) Prepa Prepara rati tion on of foreca forecast stss c) Prep Prepar arati ation on of bud budge gets ts d) Repo Report rtin ing g the the syst system em 38 Which one is not a limitation of budgeting a) Budget plan Ph: 011-65439499, b) Rigidity c) Replacement d) None
49 (i) In trial method balance when error are located, the y should be rectified (ii) It is a good practice to erase the mistakes and re-write the correct ones a) Fal6/ se Tr7, ue 28013999 b) False False 65066565/ c) True True d) True False
39 Which one is not an essential features of Budgeting Contro a) Forecasting b) Formation of budget committee c) Accounting system d) Feedback process 40 Material cost variance is equals to : a) Standard cost x Actual cost b) Standard cost - Actual cost c) Actual cost - Standard cost d) Standard cost + Actual cost
50 Management Accounting function include a) Planning b) Organizing c) Coordinating d) All 51 (i) Financial Accounting is flexible (ii) Management Accounting is rigid a) True True b) True False c) False False d) False True
TM
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SECTION 2
41 (i) Book keeping inclueds recording, analyzing & communicating. (ii) Book keeping is an adjunct of accounting a) True False b) False True c) True True d) False False
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53 (i) STO is also known as stock velocity (ii) DTO is also known debtors velocity a) True False b) False True 65066565/ c) Fals6/ e Fal7, se 28013999 d) True True
42 (i) Purchase & Sale of goods is called ______ (ii) Goods sold to customers either for c ash or for credit are regarded as _____ a) (i) Sales (ii) Trade b) (i) Trade (ii) Sales c) (i) (i) Tran Transac sactio tion n (ii) (ii) Sales Sales d) (i) (i) Trad Tradee (ii) (ii) Trans Transact action ion 43 (i) Expenses are different from payments.
52 (i) Ratio analysis is a techinque of analysis and interpretation of financial statements (ii) Ratio analysis is one of the most pow erful tools of profitability concepts a) True True b) False False c) True False d) False True
54 (i) Working capital is current assets minus current liabilities (ii) Three common usages of the term “FUND” are cash, working capital & total financial resources a) True True b) False True c) True False d) False False
Page No. 3 55(i) FFS is rigid but CFS is flexible (ii) FFS is concerned with the total provision of funds. CFS is concerned with only cash a) True True b) False False c) True False d) False True 56 All managerial policies & decisions permeate all phases of cost accounting and cost information helps in :(i) Acquiring plant and machinery (ii) Adding or reducing a product (iii) Buying or making parts a) (i) & (ii) b) (i) & (iii) c) (i) (ii) & (iii) d) (ii) & (iii)
(iv) Increase in a liability, followed by increase in proprietor’s equity. (v) Decrease in an asset and corresponding decrease in owner’s equity. a) (i) true (ii) true (iii) false (iv) true (v) true b) (i) true (ii) false (iii) true (iv) true (v) true TM c) (i) true (ii) true (iii) true (iv) false (v) fasle d) (i) true (ii) true (iii) true (iv) false (v) true
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64 Types of journal include :a) Purchases book, sales book, purchases returns book, sales returns book, bills receivable book, bills payable book, cash book and journal proper b) Purchases book, receive book, purchases returns book, 57 Calculate sales in in rupees sales returns book, bills receivable book, bills payable book, Units produced 60,000. selling price pe r unit Rs 15. Profits to cash book and journal proper be earned in Rs 87,500. c) Purchases book, sales book, purchases returns book, sales a) 7,12,000 b) 7,15,500 returns book, bills credit book, bills payable book, cash book and journal proper c) 7,12,500 d) 8,12,000 d) a) Purchases book, sales book, purchases returns book, Ph:or 011-65439499, 65066565/ 7, book, 28013999 58 Calculate MCSR p/v ratio: Marginal cost Rs 24,000. Sales sales6/ returns bills receivalble book, bills payable book, Rs 60,000 cash book and cash transaction book a) 80% b) 40% c) 60% d) 30% 65 Match the column (1) Error of omission 59 The budgets are normally classified according to their (2) Erroe of commission nature. They are (3) Error of principle a) Fixed budget, flexible budget, functional budget (4) Compensating errors TM b) Fixed budget, flexible budget, operational budget (i) _____ occurs when a transaction is completely omitted from c) Functional budget, operational budget, fixed budget the books of accounts. d) Operational budget, flexible budget, fixed budget (ii) If the error of wrong posting, wrong casting, wrong calculation etc. committed in the bo oks of original entry or 60 DR Ltd. has decided to extend its range to include Denim ledger, it is said to be _____ jackets. One jacket requires a standard usage of 3 meters of (iii) While drawing journal entries, often _____ is committed direct material which has been set at a standard price of Rs. and this goes un noticed because it does not affect the total of 2.20 per meter. In the period, 80 jackets were made and 260 trial balance. (iv) It is also called off-setting error meters of material consumed at a cost of Rs. 1.95 per meter. Calculate the direct material total variance. a) 1(i) 2(ii) 3(iii) 4(iv) a) Rs. 21 variance b) Rs. 22 variance b) 1(ii) 2(i) 3(iii) 4(iv) c) Rs. 31 variance d) Rs. 32 variance c) 1(i) 2(iii) 3(ii) 4(iv) d) 1(iv) 2(ii) 3(i) 4(iii) SECTION 2 66 (i) due but not yet paid are known as doubtful Ph: 011-65439499, 65066565/ 6/Expenses 7, 28013999 61 (i) Accounting is an art and science. expenses. (ii) Expenses paid in advance are regarded as prepaid ex(ii) Accounting involves a process of identifying, classifying and recording financial information, expressed in terms of penses. money. (iii) Depreciation is reduction in the value of an asset due to (iii) Accounting is an information system. constant use of the same, which is called wear and tear. (iv) Accounting helps in taking managerial decisions (iv) Bad debts are those debts which are not recovered. If bad a) (i) (ii) & (iv) b) (i) (ii) (iii) & (iv) debts are shown outside the trial balance, which means that TM c) (i) (iii) & (iv) d) (ii) (iii) & (iv) they are identified after the preparation of Trial Balance. (v) Provision for bad debts is a liability to be incurred in future 62 Types of Accounting concepts are:and so it should appear on the liability side of balance sheet. (i) Business separate entity concept, Going concern concept, a) (i) true (ii) true (iii) true (iv) true (v) true Money measurement concept, Non Periodicity concept, b) (i) false (ii) true (iii) true (iv) true (v) true Accrual concept c) (i) false (ii) false (iii) true (iv) true (v) false (ii) Business separate entity concept, Cost & revenue concept, d) (i) true (ii) false (iii) true (iv) true (v) false Money measurement concept, Non Periodicity concept, Accrual concept 67 Special features of Management Accounting are (iii) Business separate entity concept, Going concern concept, (i) Selective in nature (ii) Provides data Money measurement concept, Periodicity concept, Accrual (iii) Future oriented (iv) Ca Cause an and ef effect re relationship concept (v) (v) Adhe Adherrence ence of rule ruless (vi) Econ conomi omic reali ealitty (vii (vii)) Goal Goal cong congrruenc uencee (vi (viii) ii) Qua Quant ntiitat tative ive tec techn hniq ique uess (iv) Business separate entity concept, Going concern concept, Money measurement concept, Cost & revenue concept, (ix) Certainty Ph: 011-65439499, 65066565/ 6/ 7, 28013999 Accrual concept a) (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) b) (i) (ii) (iii) (v) (vi) (vii) (viii) (ix) 63 Effect of Transactions on Accounting Equation c) (i) (ii) (iii) (iv) (vi) (vii) (viii) (i) Increase in one asset with a decrease in another asset. d) (i) (ii) (iv) (v) (vi) (vii) (viii) (ix) (ii) An increase in one asset with an equal amount of increase in liablility. liablility. 68 State true or false (i) The objective of Financial Accounting is to collect informa(iii) An increase in asset with an equiva lent rise in the proprietor’s equity. tion for internal communication and use.
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Page No.4 (ii) It is subjective in nature (iii) It covers entire organization (iv) It lays stress on future (v) It is a legal documents (vi) It is flexible a) (i) true (ii) false (iii) true (iv) true (v) true (vi) true b) (i) true (ii) false (iii) true (iv) false (v) true (vi) false c) (i) false (ii) true (iii) true (iv) false (v) true (vi) false d) (i) false (ii) false (iii) true (iv) false (v) true (vi) false
74 It is observed that one unit of product X requires 3 kgs of material M at Rs. 2 per kg. During January 2008, 200 units of product X were produced consuming 620 kgs of material M, all of which was purchased at Rs. 1.80 per kg. Compute material cost variances. a) Rs. 84 (FAV) b) Rs. 94 (FAV) TM c) Rs. 40 (FAV) d) Rs. 65 (FAV) 75 State true or false (i) Budgetary control deals with costs and revenues. But standard costing restricts only with cost. (ii) Budgetary control targets are based on past actual adjusted to future trends. In Standard costing, standards are based on technical assessment. (iii) Budget are projection of only cost accounts. Standard costs are projection of final accounts. a) (i) True (ii) false (iii) True b) (i) True (ii) True (iii) False c) (i) False (ii) True (iii) False d) (i) True (ii) False (iii) False
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69 The various advantages of ratio analysis are as follows: (i) Ration analysis helps in the financial forecasting and planning activities. (ii) It enables for making strategic decisions (iii) It indicates the trends in the financial solvency of the firm. (iv) It evaluates the overall efficiency of the business entity. (v) It helps in making effective control of the business. (vi) Financial ratios are very helpful in the early and proper diagonsis and financial health of the firm. a) (i) true (ii) true (iii) true (iv) true (v) true (vi) true 011-65439499, b) (i) false (ii) truePh: (iii)true (iv) true (v) true (vi) true 65066565/ 6/ 7, 28013999 c) (i) true (ii) false (iii) true (iv) true (v) true (vi) true d) (i) true (ii) true (iii) false (iv) true (v) true (vi) true ANSWERS 70 The Balance Sheet of DR Ltd is as follows 10,00,000 Assets : Fixed Assets Current Assets 5,00,000 Represented by: Current Liabilities 1,00,000 Reserves and surplus 1,00,000 10% Debentures 2,00,000 6% Preference Share Capital 3,00,000 Equity Share Capital 8,00,000
SECTION 1 1d 2a 7a 8c 13a 14d 19b 20d 25b 26c 31a 32b 37d 38d
3b 9c 15a 21c 27a 33d 39d
4d 10b 16a 22a 28d 34a 40b
5a 11b 17a 23c 29a 35b
6b 12M c T 18d 24d 30a 36a
45d 51c 57c
46a 52c 58c
65a 71b
66b 72c
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Calculate the Debt Ratio and Debt-equity ratio a) Debt Ratio = 1:5, Debt-equity ratio = 1:4 b) Debt Ratio = 1:4, Debt-equity ratio = 1:5 c) Debt Ratio = 1:8, Debt-equity ratio = 1:3 d) Debt Ratio = 1:5, Debt-equity ratio = 1:5
SECTION 2 41b 42b 43a 44a 47c 48c 49d 50d 71 The written down value of a Machinery at the beginning 53d 54a 55d 56c and at close were Rs. 2,00,000 and 1,75,000. An old machine whose written down value was Rs. 12,00 0 was sold for Rs. 59a 6/ 67, 0a 28013999 Ph: 011-65439499, 65066565/
6,5000. Rs. 32,000 depreciation was charged during the current year. Calculate the purchase price. a) 18,000 b) 19,000 c) 19,500 d) 18500
72 State True or False Computation of changes in working capital and funds (i) Increase in a current asset item decreases working capital (ii) Decrease in a current asset item increases working capital (iii) Increase in a current liability item increases working capital (iv) Decrease in a current liability item dec reases working capital. a) (i) True (ii) False (iii) True (iv) True b) (i) False (ii) False (iii) True (iv) True c) (i) False (ii) False (iii) False (iv) False d) (i) True (ii) True (iii) True (iv) True
SECTION 3 61b 62c 67c 68d 73d 74a
63d 69a 75b
64a 70a
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73 Match the column:(1) Fixed budget (2) Flexible budget (3) Functional budget 65066565/ (i) These are also Ph: known011-65439499, as subsidiary budgets. (ii) It is prepared with a view to take into account the periodic changes in the level of activity attained. (iii) It is also known as subsidiary budgets a) 1(i) 2(ii) 3(iii) b) 1(iii) 2(ii) 3(i) c) 1(iii) 2(i) 3(ii) d) None
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