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This set of Strategic Cost Accounting Multiple Choice Questions & Answers (MCQs) focuses on Strategic Cost Accounting Set 3
Q1 | Which of the following characteristics is relevant to process costing but not to job order costing?
- Averaging process
- Identifiable batches of production
- Equivalent units
- Use of standard cost
Q2 | Which of the following types of spoilage should not affect the recorded cost of inventories
- Normal spoilage
- Standard spoilage
- Abnormal spoilage
- Seasonal spoilage
Q3 | A section of the cost of production report which shows the physical flow of units through various producing departments is usually labeled as
- Schedule of physical flow
- Quantity schedule
- Equivalent units of production
- Cost to be accounted for
Q4 | What does FIFO mean?
- Finished stock In Finished stock out
- Fabrications Inward Fabrications Outward
- Final Input Final Output
- First In First Out
Q5 | Regardless of how long it takes to produce and sell inventory, inventory is alwaysconsidered to be a?
- Current asset
- Current liability
- Long-term asset
- Stockholder's equity
Q6 | The latest cost of inventories is changed to production but the old prices are changed to inventories on hand?
- Average
- LIFO
- FIFO
- Perpetual
Q7 | An increase in inventories indicates that?
- More merchandise was purchased then the amount sold to customer
- Less merchandise was purchased then sold to the customer
- Not all purchases were cash
- Cash payments were more than purchases on account
Q8 | Which type of inventory system is updated inventory system?
- Periodic inventory system
- Contingency inventory system
- LIFO
- Perpetual inventory system
Q9 | What is the principal criterion used to distinguish between tangible assets andinventories?
- The physical substance of the asset
- The acquisition cost of the asset
- The nature of the company’s activity, which determines the purpose for which the asset is held
- The moment in the accounting period when the asset is acquired
Q10 | Which of the following method is suitable for calculating the cost of inventorywhen actual costs of individual units of merchandise can be determined from the accounting records?
- FIFO Method
- LIFO Method
- Specific Identification Method
- Average Method
Q11 | The inventories are recorded at the latest price but the production cost is changedold cost price?
- FIFO
- Average
- Both A & B
- None
Q12 | Which one of the following methods for inventory valuation may be misleading when the units are identical?
- FIFO Method
- LIFO Method
- Specific Identification Method
- None
Q13 | During September, Khan had sales of 148,000, which made a gross profit of 40,000. Purchases amounted to 100,000 and opening inventory was 34,000. The value of closing inventory was?
- Rs. 24,000
- Rs. 26,000
- Rs. 42,000
- Rs. 54,000
Q14 | Which type of inventory system requires updating the inventory balance at the endof the accounting period?
- Periodic inventory system
- LIFO
- Perpetual inventory system
- FIFO
Q15 | In LIFO method of inventory valuation?
- Issue of stocks to production is at latest price
- Closing stock is at latest price
- Both (a) & (b)
- Neither (a) nor (b)
Q16 | The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be?
- FIFO
- LIFO
- Weighted average
- None of these
Q17 | Inventory does not include?
- Materials used in the production of goods to be sold
- Assets intended to be sold in the normal course of business
- Equipment used in the manufacturing are sold
- Assets currently in production for normal sales
Q18 | Net Purchases equal the invoice amount and?
- Plus freight-in, plus discounts
- Less purchase returns, plus purchase allowances
- Plus freight-in, less purchase discounts
- Plus discounts, less purchase returns
Q19 | In FIFO method of inventory valuation?
- Closing stock is at latest price
- Issue of stocks to production is at earliest price
- Both (a) & (b)
- Neither (a) nor (b)
Q20 | The average inventory costing method which results in a changed unit inventorycost after each successive purchase?
- Weighted average
- Moving average
- Specific cost
- Simple average
Q21 | The specific cost identification inventory cost flow method has all of the following characteristics except?
- It identifies the cost of each physical item available for sale with either the ending inventory or cost of goods sold
- It relates cost flow to the specific flow of physical goods
- It is especially applicable when small and inexpensive items are handled in large quantities
- It requires individual identification of items some device like tags or serial numbers
Q22 | Sales revenues are usually considered earned when?
- Cash is received from credit sales
- An order is received
- Goods have been transferred from the seller to the buyer
- Adjusting entries are made
Q23 | A retail firm would normally use an inventory account titled?
- Finished Goods Inventory
- Merchandise Inventory
- Goods in Process Inventory
- Raw Materials Inventory
Q24 | Which one of the following does not describe a type of transfer pricing?
- Target based
- Cost based
- Negotiated
- Administered
Q25 | Systematic evaluation of the trade-offs between product functionality and product cost whilestill satisfying customer needs is the definition of
- Activity based management
- Theory of constraints
- Total quality management
- Value engineering