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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Management Accounting Set 7

Q1 | Which of the following matter is relevant with cash receipts and disbursement method ofpreparing Cash Budget ?
  • While determining the cash payments, it is necessary to estimate the credit sales.
  • While estimating cash receipts, it is not necessary to estimate the figure of credit sales.
  • Debtors Ratio is used to estimate the timings when cash collections would be obtained from credit sales.
  • While estimating the total amount of cash payment for purchases, it is necessary to decide from which suppliers materials are to be purchased.
Q2 | Budget period depends upon -
  • The type of budget
  • The nature of business
  • The length of trade cycles
  • All of the above
Q3 | Usually the production budget is stated in terms of -
  • Money
  • Quantity
  • Both (a) and (b)
  • None
Q4 | Recording of actual performance is -
  • An advantage of budgetary control
  • A step in budgetary control
  • A limitation of budgetary control
  • None of the above
Q5 | Budgetary control system helps the management to eliminate -
  • Undercapitalization
  • Overcapitalization
  • Both (a) and (b)
  • None
Q6 | Budgetary control facilitates easy introduction of the -
  • Marginal costing
  • Ratio analysis
  • Standard costing
  • Subjective matter
Q7 | Budgetary control system acts as a friend, philosopher and guide to the -
  • Management
  • Share holders
  • Creditors
  • Employees
Q8 | Budgetary control system defines the objectives and policies of the -
  • Production department
  • Finance department
  • Marketing department
  • Subjective matter
Q9 | A budget is tool which helps the management in planning and control of -
  • All business activities
  • Production activities
  • Purchase activities
  • Sales activities
Q10 | In responsibility centre, the output is called as -
  • Revenue
  • Cost
  • Both (a) and (b)
  • None
Q11 | If the responsibility centre gets more revenue from output, then it is called -
  • Investment centre
  • Cost centre
  • Profit centre
  • Expense centre
Q12 | Cost Unit is defined as -
  • Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed
  • A location, person or an item of equipment or a group of these for which costs are ascertained and used for cost control.
  • Centres having the responsibility of generating and maximising profits
  • Centres concerned with earning an adequate return on investment
Q13 | Fixed cost is a cost -
  • Which changes in total in proportion to changes in output
  • Which is partly fixed and partly variable in relation to output
  • Which do not change in total during a given period despise changes in output
  • Which remains same for each unit of output
Q14 | Uncontrollable costs are the costs which be influenced by the action of a specified member of an undertaking. -
  • can not
  • can
  • may or may not
  • must
Q15 | Element/s of Cost of a product are -
  • Material only
  • Labour only
  • Expenses only
  • Material, Labour and expenses
Q16 | Overhead refers to -
  • Direct or Prime Cost
  • All Indirect costs
  • Only Factory indirect costs
  • Only indirect expenses
Q17 | Which of the following is not a method of cost absorption?
  • Percentage of direct material cost
  • Machine hour rate
  • Labour hour rate
  • Repeated distribution method
Q18 | A Local Authority is preparing cash Budget for its refuse disposal department. Which ofthe following items would not be included in the cash budget?
  • Capital cost of a new collection vehicle
  • Depreciation of the machinery
  • Operatives wages
  • Fuel for the collection Vehicles
Q19 | Which of the following characteristics does NOT pertain to management accounting?
  • Provides information and estimates about future activity
  • Generates specific-purpose financial statements and reports
  • Provides financial and operating data multidisciplinary in scope
  • Has externally imposed standards
Q20 | A budget which is prepared in a manner so as to give the budgeted cost for any level ofactivity is known as -
  • Master budget
  • Zero base budget
  • Functional budget
  • Flexible budget
Q21 | ___________ is a summary of all functional budgets in a capsule form.
  • Functional Budget
  • Master Budget
  • Long Period Budget
  • Flexible Budget
Q22 | When the sales increase from Rs. 40,000 to Rs. 60,000 and profit increases by Rs. 5,000,the P/V ratio is -
  • 20%
  • 30%
  • 25%
  • 40%
Q23 | From following which is not a principle of good reporting ?
  • Simplicity
  • Accountability
  • Promptness
  • Accuracy
Q24 | From day to day operation which report is prepare ?
  • Routine
  • Special
  • Investigative
  • External
Q25 | Any special event happen into the business then which report is prepared ?
  • Routine
  • Special
  • External
  • Control