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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Management Accounting Set 20

Q1 | The objectives of Cash Flow Statement are (i) Analysis of cash position(ii) Short-term cash planning(iii) Evaluation of liquidity(iv) Comparison of operating Performance
  • Both A and B
  • Both A and C
  • Both B and D
  • A, B, C, D
Q2 | Cash Flow Statement is based upon
  • Cash basis of accounting
  • Accrual basis of accounting
  • Credit basis of accounting
  • None of the above
Q3 | As per Accounting Standard-3, Cash Flow is classified into
  • Operating activities and investing activities
  • Investing activities and financing activities
  • Operating activities and financing activities
  • Operating activities, financing activities and investing activities
Q4 | Which of the following is not a cash outflow?
  • Increase in Prepaid expenses
  • Increase in debtors
  • Increase in stock
  • Increase in creditors
Q5 | Which of the following is not a cash inflow?
  • Decrease in debtors
  • Issue of shares
  • Decrease in creditors
  • Sale of fixed assets
Q6 | When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.
  • Operating activities, financing activities
  • Financing activities, investing activities
  • Investing activities, operating activities
  • None of the above
Q7 | 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
  • Operating activities
  • Financing activities
  • Investing activities
  • None of the above
Q8 | 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
  • Both A and B
  • Both A and C
  • Both C and B
  • None of the above
Q9 | Cash outflow on purchases is calculated by
  • Purchases + Opening Creditors + Opening B/P – Closing Creditors - Closing B/P
  • Purchases + Opening Creditors - Closing Creditors + Closing B/P
  • Purchases - Opening Creditors - Opening B/P + Closing Creditors + Closing B/P
  • None of the above
Q10 | While preparing Cash Flow Statement, non-cash items and non-operating items are not required to be adjusted under________
  • Indirect method
  • Direct method
  • Both a and b
  • None of the above
Q11 | Cash Flow Statement is prepared from
  • Profit and loss account
  • Balance Sheet
  • Additional Information
  • All of the above
Q12 | When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as
  • Accounting ratio
  • Financial ratio
  • Costing ratio
  • None of the above
Q13 | Profit for the objective of calculating a ratio may be taken as
  • Profit before tax but after interest
  • Profit before interest and tax
  • Profit after interest and tax
  • All of the above
Q14 | Which of the following falls under Profitability ratios?(a) General Profitability ratios(b) Overall Profitability ratios(c) Comprehensive Profitability ratios
  • A and B
  • A and C
  • B and C
  • None of the above
Q15 | Gross Profit ratio is also termed as
  • Gross Profit Margin
  • Gross Margin to net sales
  • Both a and b
  • All of the above
Q16 | Operating ratio is calculated by
  • (Operating Cost/Gross sales)*100
  • (Operating Cost/Gross sales)*100
  • (Operating cost/Net sales)*100
  • None of the above
Q17 | 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, B and D
  • A, C and D
  • A, B and C
  • A, B , C, D
Q18 | Return on equity capital is calculated on basis of:
  • Funds of equity shareholders
  • Equity capital only
  • Either a or b
  • None of the above
Q19 | Turnover ratios are also known as
  • Activity ratios
  • Performance ratios
  • Both a and b
  • None of the above
Q20 | Debtors Turnover ratio is also known as(a) Receivables turnover ratio(b) Debtors velocity(c) Stock velocity(d) Payable turnover ratio
  • A and B
  • A and C
  • B and C
  • C and D
Q21 | Liquid assets is determined by
  • Current assets-stock-Prepaid expenses
  • Current assets +stock+ prepaid expenses
  • Current assets +Prepaid expenses
  • None of the above
Q22 | Comparison of financial statements highlights the trend of the _________ of the business.
  • Financial position
  • Performance
  • Profitability
  • All of the above
Q23 | Analysis of any financial Statement comprises
  • Balance sheet
  • P&L Account
  • Trading account
  • All of the above
Q24 | Which of the following are techniques, tools or methods of analysis and interpretation of financial statements?
  • Ratio Analysis
  • Average Analysis
  • Trend Analysis
  • All of the above
Q25 | Interpretation of accounts is the
  • Art and science of translating the figures
  • To know financial strengths and weaknesses of a business
  • To know the causes for the prevailing performance of business
  • All of the above