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Accounting, Banking and Finance MCQs

Cost & Management Accounting

Quiz # 4, MCQs

NOTE: Attempt all Questions to see the Result at the bottom of this page.

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1)

A forecast set of final accounts is also known as:
- A) Cash budget
- B) Capital budget
- C) Master budget
- D) Sales budget
Right Answer is the option "C". Different types of budgets are prepared for different purposes e.g. Sales. Budget, Production Budget. Administrative Expense Budget, Raw material Budget, etc. All these sectional budgets are afterwards integrated into a master budget- which represents an overall plan of the organization

2)

Increased cost of production due to high labor turnover is a result of which of the following factor?
- A) Interruption of production
- B) Coordination between new and old employee to produce more
- C) Increased production due to newly motivated employees
- D) Decrease losses as new employees will be more concerned towards output
Right Answer is the option "A"

3)

Net Income before Interest and tax is also called:
- A) Operating Income/Profit
- B) Gross Profit
- C) Marginal Income
- D) Other Income
Right Answer is the option "A"

4)

_______ is future cost that effects the current management decision.
- A) Sunk Cost
- B) Standard Cost
- C) Relevant Cost
- D) Irrelevant Cost
Right Answer is the option "C". Relevant cost is which changes with a change in decision. These are future costs that effect the current management decision

5)

“Taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future” is an easy explanation of:
- A) Overstocking
- B) Under stocking
- C) Replenishment of stock
- D) Acquisition of stock
Right Answer is the option "C". Replenishment of stock therefore implies as ‘taking steps for the fresh purchase of those stocks which have been exhausted and for which requisitions are to be honored in future’.

6)

Which of the following would be considered to be an investment centre?
- A) Managers have control over marketing
- B) Management have a sales team
- C) Management have a sales team and are given a credit control function
- D) Managers can purchase capital assets and are given a credit control function
Right Answer is the option "D". An investment centre is a segment or a profit centre where the manager has significant degree of control over his/her division’s investment policies

7)

In cost Accounting, abnormal loss is charged to:
- A) Factory overhead control account
- B) Work in process account
- C) Income Statement
- D) Entire production
Right Answer is the option "B"

8)

Direct material opening inventory plus net purchases is called
- A) Material consumed
- B) Material available for use
- C) Total material purchsed
- D) Material ending inventory
Right Answer is the option "B". Opening inventory + Net Purchases = Material available for use

9)

Opportunity cost is an example of which of the following?
- A) Sunk Cost
- B) Irrelevant Cost
- C) Relevant Cost
- D) Period Cost
Right Answer is the option "C"

10)

__________ system applies when standardized goods are produced under a series of inter-connected operations.
- A) Process costing
- B) Job order costing
- C) Standard costing
- D) Indirect costing
Right Answer is the option "A"