Management Accounting Set 2

Bachelor of Business Administration (BBA),

Bachelor of Banking and Insurance (BBI),

Bachelor of Commerce (B Com)

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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Management Accounting Set 2

Q1 | Liquidity ratios are expressed in
  • pure ratio form
  • percentage
  • rate or time
  • none of the above
Answer: pure ratio form
Q2 | Working capital turnover ratio can be determined by :
  • ( gross profit / working capital )
  • ( cost of goods sold / net sales )
  • ( cost of goods sold / working capital)
  • none of the above
Answer: ( gross profit / working capital )
Q3 | Determine Working capital turnover ratio if, Current asset is Rs 1,50,000,current liability is Rs 1,00,000 & cost of goods sold is Rs 3,00,000.
  • 5 times
  • 6 times
  • 3 times
  • 1.5 times
Answer: 6 times
Q4 | The ratio analysis is helpful to management in taking several decisions, but asa mechanical substitute for judgement and thinking, it is worse than useless.
  • TRUE
  • FALSE
  • may be false
  • both a and b
Answer: TRUE
Q5 | Profit for the objective of calculating a ratio may be taken as
  • profit before tax but after interest
  • profit before interest &tax
  • profit after interest & tax
  • all the above
Answer: all the above
Q6 | If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is
  • 24%
  • 416%
  • 60%
  • none of the above
Answer: 24%
Q7 | General profitability ratios are based on
  • investment
  • sales
  • a & b
  • none of the above
Answer: sales
Q8 | The ratios which reveal the final result of the managerial policies andperformance is .
  • turnover ratios.
  • profitability ratios.
  • short term solvency ratio.
  • long term solvency ratio.
Answer: profitability ratios.
Q9 | Return on investment is a .
  • turnover ratios.
  • short term solvency ratio.
  • profitability ratios.
  • long term solvency ratio.
Answer: profitability ratios.
Q10 | Net profit ratio is a .
  • turnover ratio.
  • long term solvency ratio.
  • short term solvency ratio
  • profitability ratio.
Answer: profitability ratio.
Q11 | Stock turnover ratio is a .
  • turnover ratio.
  • profitability ratio.
  • short term solvency ratio.
  • long term solvency ratio.
Answer: turnover ratio.
Q12 | Current ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: short-term solvency ratio.
Q13 | Proprietary ratio is a .
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: long-term solvency ratio.
Q14 | Fixed assets ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: long-term solvency ratio.
Q15 | Fixed assets turnover ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: turnover ratio.
Q16 | The ratio which measures the profit in relation to capital employed is known as
  • return on investment.
  • gross profit ratio.
  • operating ratio.
  • operating profit ratio.
Answer: return on investment.
Q17 | The ratio which determines the profitability from the shareholder’s point ofview is .
  • return on investment.
  • gross profit ratio.
  • return on shareholders funds.
  • operating profit ratio.
Answer: return on shareholders funds.
Q18 | Return on equity is also called
  • return on investment.
  • gross profit ratio.
  • return on shareholders funds.
  • return on net worth.
Answer: return on net worth.
Q19 | Preliminary expenses is an example of
  • fixed assets.
  • current assets.
  • fictitious assets.
  • current liabilities.
Answer: fictitious assets.
Q20 | Prepaid expenses is an example of .
  • fixed assets.
  • current assets.
  • fictitious assets.
  • current liabilities.
Answer: current assets.
Q21 | The ratio which is calculated to measure the productivity of total assets is
  • return on equity.
  • return on share holders funds.
  • return on total assets.
  • return on equity share holders’ funds.
Answer: return on total assets.
Q22 | The ratio which shows the proportion of profits retained in the business out ofthe current year’s profits is
  • retained earnings ratio.
  • pay out ratio
  • earnings per share.
  • price earnings ratio.
Answer: retained earnings ratio.
Q23 | The ratio which indicates earnings per share reflected by the market price is .
  • retained earnings ratio.
  • pay out ratio.
  • earnings per share.
  • price earnings ratio.
Answer: price earnings ratio.
Q24 | The ratio establishes the relationship between profit before interest and taxand fixed interest charges is .
  • interest cover ratio.
  • fixed dividend cover ratio.
  • debt service coverage ratio.
  • dividend yield ratio.
Answer: interest cover ratio.
Q25 | The ratio shows the preference dividend as a proportion of profit available forshareholders is
  • interest cover ratio.
  • fixed dividend cover ratio.
  • debt service coverage ratio.
  • dividend yield ratio.
Answer: fixed dividend cover ratio.
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