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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Management Accounting Set 6

Q1 | The subdivision of responsibility centre is -
  • Expense centre
  • Profit centre
  • Investment centre
  • All of the above
Q2 | The accounting department in an organization is -
  • Investment centre
  • Expense centre
  • Profit centre
  • All of the above
Q3 | What is the main advantage of responsibility accounting ?
  • Improves performance
  • It fixes responsibility
  • Helpful in decision making
  • All of the above
Q4 | The responsibility accounting is a system by which the responsibility is assigned to theconcerned persons -
  • To increase sales
  • To control cash
  • To increase production
  • All of the above
Q5 | The contribution of accounting department in an organization -
  • Cannot be measured in monetary terms
  • Can be measured in monetary terms
  • May or may not be measured in monetary terms
  • None of the above
Q6 | According to responsibility accounting, the entire organization is divided into various -
  • Business centre
  • Profit centre
  • Responsibility centre
  • None of the above
Q7 | It may not be ______ to measure exactly the output of service departments in anorganization.
  • Feasible
  • Necessary
  • Either (a) or (b)
  • None of these
Q8 | Internal transfer of process at profit _________ of the company.
  • Will not increase the asset
  • Will increase the asset
  • Can’t say
  • Inadequate information
Q9 | The success of budgetary control system depends upon the willing cooperation of ….…
  • Shareholders
  • Management
  • Creditors
  • All the functional areas of management
Q10 | A key factor is one which restricts ……
  • The volume of production
  • The volume of sales
  • The volume of purchase
  • All of the above
Q11 | The classification of fixed and variable cost is useful for the preparation of ……
  • Master budget
  • Flexible budget
  • Cash budget
  • Capital budget
Q12 | In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’sprice is below the firm’s own ___________.
  • Fixed Cost
  • Variable Cost
  • Total Cost
  • Prime Cost
Q13 | __________ is a detailed budget of cash receipts and cash expenditure incorporatingboth revenue and capital items.
  • Cash Budget
  • Capital Expenditure Budget
  • Sales Budget
  • Overhead Budget
Q14 | Sunk costs are __________.
  • Relevant for decision making
  • Not relevant for decision making
  • Cost to be incurred in future
  • Future costs
Q15 | Abnormal cost is the cost ___________.
  • Cost normally incurred at a given level of output
  • Cost not normally incurred at a given level of output
  • Cost which is charged to customer
  • Cost which is included in the cost of the product
Q16 | Responsibility Centre can be categorised into ___________.
  • Cost Centres only
  • Profit Centres only
  • Investment Centres only
  • All of the above
Q17 | A profit centre is a centre ___________.
  • Where the manager has the responsibility of generating and maximising profits
  • Which is concerned with earning an adequate Return on Investment
  • Both (a) and (b)
  • Which manages cost
Q18 | Management Accounting is and financial accounting differ in that managementaccounting information is prepared –
  • Following prescribed rules
  • Using whatever methods the company finds beneficial
  • For shareholders
  • To summarize the whole company with little detail
Q19 | Purpose of Management Accounting is to –
  • Past orientation
  • Help banks make decisions
  • Help managers make decisions
  • Help investors make decisions
Q20 | Management Accounting is the branch of accounting concerned with reporting to –
  • Internal Managers
  • Shareholders
  • The Government
  • Bankers
Q21 | Which of the following does NOT describe management accounting?
  • Evaluation of segments or products within the firm
  • Emphasis on the future
  • Externally focused
  • Detailed information
Q22 | Management accounting reports are prepared
  • To meet the needs of decision makers within the firm
  • Whenever shareholders request them
  • According to guidelines prepared by the shares and Financial Services Authority
  • According to financial accounting standards
Q23 | Management accounting is primarily concerned with -
  • Providing investors with useful information for valuing securities.
  • Providing creditors information on the status of their loans.
  • Providing managers with relevant information to help achieve organizational goals.
  • Providing the relevant taxation authorities with information to determine the amount
Q24 | Which matters are taken into consideration while preparing production budget ?
  • The estimate of the number of units to be produced during the budget period.
  • Estimate of number of units to be sold.
  • Policy regarding the wage fixation for labourers.
  • Policy regarding the selection of suppliers from whom materials would be purchased.
Q25 | Which of the following matter is to be taken into account which preparing MaterialPurchase Budget ?
  • The supplier from whom materials are to be purchased.
  • The procedure of storing and preserving materials after they are received.
  • The prices at which receipts and issues of materials are to be recorded in stores ledger.
  • The maximum and minimum quantities of materials to be purchased.