Accounting for Managers: MBA 102

MCQ-Multiple choice Questions

Group-A

1… ................ is concerned with recording transactions and preparingfinancial

reports for the external and internal users of accounting.
(a)managementAccounting (b)Financial
accounting (c)Costaccounting (d)All ofthese

2. The Branch of accounting concerned with collection, determining and controlling

cost of products and services iscalled………………
(a) managementAccounting (b)Financial
accounting (c)Costaccounting (d)All ofthese

3……………is concerned with providing information to management for taking managerial

decisions.
(a)managementAccounting (b)Financial
accounting (c)Costaccounting (d)All ofthese

4……………….is the art of recording, classifying and summarizing in a significant

manner and in terms of money, transactions and events, which are in part, at least of
financial character and interpreting the results thereof.
(a)management Accounting (b)Financial Accounting (c)Costaccounting
d)All ofthese

5. Which among the following do not belong to the category of Accounting?

(a)managementAccounting (b)Financialaccounting
(c)Costaccounting (d)None ofthese

6. The objective of financial accounting is to findout…………………..

(a) Profitability and financial position (b)Liquidity
(c)Solvency
(d)None

7… ..................... journal is used to record credit sale ofgoods

(a)SalesJournal (b) CashBook
(c)PurchaseJournal (d)None ofthese

8.The ................. Management is mainly concerned with the policydecisions.

(a) Top (b)Middle (c)Bottom (d)All ofthese
9.The Prime function of accounting is to………………………..
(b) record economicdata
(c) Provide the informational basis foraction
(c)classify and record businesstransactions
(d) attainnon economic goals

10. The basic function of Management Accounting is to……………………….

(a) record all businesstransactions
(b)interpret the financialdata
(c)assist the management in performing its functionseffectively
(d)none ofthese

11. Management accounting provides invaluable services to Managementin

performing…………..
(a) Allmanagementfunctions (b)Co-ordination functions
(c)Controllingfunctions (d)none ofthese

12. Accounting designed to serve parties external to theoperating

responsibility of the firm is termedas…………….
(a) ManagementAccounting (b)Financial Accounting
(c)Costaccounting (d)None ofthese

13. Cost Accounting and ManagementAccounting are ..............................................innature.

(a) complementary (b)contradictory
(c)Different (d)Similar

14. Management accountinghasa .............................. scope than costaccounting.

(a) Wider (b)Narrow (c)No (d)None ofthese

16… ................. is the amount of expenditure [actual or notional] incurred onor

attributable to a given thing.
a)Expenses . (b)costing (c)cost (d)None 17… is the

technique and process of ascertainingcosts

(a)Cost (b)Costing
(c)Costaccounting (d) None ofthese

18… ........... is the process of accounting for cost which includes theapplication
of cost control methods and ascertainment of profitability ofactivities (a)Cost
(b)Costing
(c)Costaccounting (d) None ofthese

19. Which among the following is not a management accountingtechnique?

(a)Standardcosting (b) marginalcosting
(c)Projectappraisal (d)None
20… ........... Accounting is concerned with historicaldata
(a)costAccounting (b)ManagementAccounting
(c)FinancialAccounting (d)None

Group-B

21……………..is the process of identifying the financial strengths and weakness of the
firm by properly establishing relationship between the items of balance sheet and
Profit and LossAccount
(a)FinancialStatements (b)financialAnalysis
(c)TrendAnalysis (d)All ofthese

22… ................ explains what has happened to a business unit as a resultof

operations between two balance sheet dates.
(a)Incomestatement (b)Profit and LossAccount
(c)Bothofthese (d)None

23. The analysis done by investors , credit agencies , government agenciesand other
creditors who have no access to the internal records of a company is known
as……………..
(a) Internalanalysis (b)Horizontalanalysis
(c)Externalanalysis (d) None ofthese

24. Theanalysisdonebypersonswhohaveaccesstothebooksofaccountand other

information related to the business is termedas……………
(a) Internalanalysis (b)Horizontalanalysis
(c)Externalanalysis (d) None ofthese

25. In ........................... type of analysis , financial statements for a numberof

years are reviewed and analyzed.
(a) Internalanalysis (b)Horizontalanalysis
(c)Externalanalysis (d) None ofthese

26……………..type of analysis is based on the data from year to year rather than
on one date, and also termed as dynamic analysis.
(a)Internalanalysis (b)Horizontalanalysis
(c)Externalanalysis (d) None ofthese

27… ............. analysis is useful in comparing performance of severalcompanies

in the same group, or division or department of the same company.
(a)Verticalanalysis (b) Horizontalanalysis
(c)Externalanalysis (d) None ofthese

28… ....................... are prepared so as to provide time perspective tothe

 consideration of various elements of financial position embodied in such
statements.
(a)Comparativestatements (b) common sizestatements
(c) Bothofthese (d)none

29… ..................... are the statements, in which figures reported are convertedinto
percentages to some common base.
(a)Comparativestatements (b) common sizestatements
(c) Bothofthese (d)none

30. The term fixed assetsincludes

(a) Stockintrade (b)furniture
(c)Paymentsinadvance (d)all ofthese

31. The following is a recordedfact

(a) Market valueofinvestment (b) Debtors
(c)Replacementcost (d)None

32. The term current assets does notinclude

(a) Paymentinadvance (b) BillsReceivable
(c) Long termdeferredcharges (d) none ofthese

33. In case of a limited company, the term financial statementsincludes………

(a) Profit and LossAccount
(b) Profit and Loss Account, Profit and Loss appropriation account and
Balancesheet
(c)Balance sheet
(d)None

34. Assets and liabilities in a Balance sheet may be arranged in the order of…..
(a) Liquidity (b)Permanence
(c)Bothofthese (d) none ofthese

35. Income statementmatchesthe ................................... incurred in the accountingyear

(a) revenueandcosts (b)Incomes andexpenses
(c) Bothofthese (d) none ofthese

36… ............... are statements of financial position at differentperiods

a)comparativestatements (b) common sizestatements
(c) Bothofthese (d)none

37. An increase in current asset accompanied by the increase incurrent

liabilities of the same amountwill…………………
(a) improve Short term financial position
(b)not improve short term financialposition
(c)improve long term financial position
 (d)none ofthese

38. Which among the following is an example for horizontal analysis?

(a) comparative balance sheet
(b)comparative income
statement (c)common
sizestatements
(d) a& b
39. If the Gross sales of a concern is Rs.200000 and sales return is20000, Gross
profit is 150000.cost of goods soldis……………………..
(a)150000 (b)30000 (c)50000 (d)None ofthese

40. Given opening stock is Rs.20000, Direct expenses 10000, Closingstock

5000.Cost of goods sold is……………………
(a)25000 (b)35000 (c)15000 (d)20000

41. Ratio of Net sales to Net working capital is a………………………..

(a) Working capitalturnoverratio (b) Profitabilityratio
(c)Liquidityratio (d) none ofthese

42. Observing changes in financial analysis across the years is……………

(a)Verticalanalysis (b) Horizontalanalysis
(c) Interfirmcomparison (d) none ofthese

43. Ratio of net profit before interest and tax to sales is……………….
(a) Operatingprofitratio (b)operatingratio
(c)capitalgearing (d) solvencyratio

44. The statistical yardstick that provides a measure of relationshipbetween two

accounting figures is ……………………
(a)Currentratio (b) The accountingratio
(c) inputoutputratio (d) none ofthese

45… ..................... is a statement which lists all the sources of fundsand

applicationsoffundstakenplaceinabusinessduringaparticularperiod
(a)Fundflowstatement (b)Cash flowstatement
(c)anyofthese (d) none ofthese

46. The overall net increase or decrease in working capital is found outby
preparing…………………
(a) Fund flow
statement (b)Cash
flowstatement
(c) statement showing changes in workingcapital
(d) none ofthese
47. Which one of the following is a source of fund?
 (a) Issue of shares in consideration of machinerypurchased
(b) issue of bonusshares
(c) issue of rightshares
(d) issue of shares forcash

48. Which among the following is a sources of fund?

(a)sale proceeds of fixedassets
(b) sale proceeds of long terminvestments
(c) non operatingincomes
(d) all ofthese

49. Which among the following is an application of fund?

(a)Purchase of long terminvestments
(b) redemption of preference shares
(c)redemption of debentures
(d)all of these

50… ................ is only internal source offunds

(a)Fundfromoperations (b) Netprofit
(c) bothofthese (d)none ofthese

51. Which among the following do not result in the flow of fund /
(a)Depreciation offixedassets (b) Goodwill
writtenoff
(c) transfer togeneralreserve (d) all ofthese

52. Fund flow refers tochangesin -------------------------- capital

(a) Fixed (b)working (c) bothofthese (d) none ofthese

53. Net profit earned plus non working capital expenses is equal to…………..
(a) Fund providedbyoperations (b) use offunds
(c)sinkingfund (d) none ofthese

54… ..................... refers to firms investment in currentassets.

(a)Workingcapital (b) Gross workingcapital
(c) Networkingcapital (d) All ofthese

55…................... means excess of current assets over currentliabilities.

(a)Workingcapital (b) Gross workingcapital
(c) Networkingcapital (d) All ofthese

56… ..................... means cash and other assets which are expected to be soldor
consumed during the normal operating cycle ofbusiness.
(a)Liquidassets
(b)Quickasset
s
 (c)Cashequivalents (d)Currentassets

57. Which among the following asset is excluded from current assets?
(a) Loosetools (b)Accounts
receivable (c)short term investments with bank (d)finishedgoods
58. Which transaction results in flow of funds?
(a)transaction involve only fixedassets
(b) transaction involve only currentassets
(c) All ofthese
(d) None ofthese

59. There will be flow of funds, if a transactioninvolves………………..

(a) current assets and fixedassets
(b) current assets andcapital
(c) current assets and fixedliabilities
(d) All ofthese

60. The flow of funds occurs when a transaction changes on the one handa non
current account and on the other hand a…………..
(a)currentasset (b) currentliability
(c) aorb (d) none ofthese

61…………….assets are those which in the ordinary course of business can be

converted into cash within a short period of time.
(a)Current (b) noncurrent
(c) bothofthese (d) none ofthese

62…........... liabilities are those which are intended to be paid in theordinary

course of business within a short period.
a)Current (b)noncurrent (c) bothofthese (d) none ofthese

63. Goods purchased for cash. This transactioninvolves…………..

a) flowoffund (b) no flow offund
(c) bothofthese (d) none ofthese

64. Which among the following transaction involves no flow of fund?

(a)Redemption ofdebentures
(b) purchase of fixedassets
(c) issue of debentures forcash
(d) conversion of debentures intoshares.

65. Which among the following transaction involves flow of fund ? (a)Cash
paidtocreditors (b)Payment of
BillsPayable
(c) Raising of shorttermloans (d)Raising of Long termloans
66. Whilepreparing .......................... statement, both capital and revenue itemsare
considered.
(a) Fundflowstatement (b)Incomestatement
(c)Bothofthese (d)none ofthese

67… ................... is a tool of management for financial analysis and helpsin

making decisions.
(a)Fundflowstatement (b)Balancesheet
(c)Incomestatement (d)None ofthese

68…………statement shows changes in financial position and hence dynamic in

nature
(a)Fundflowstatement (b)Balancesheet
(c)Incomestatement (d)None ofthese

69. Increase in Accounts payable when compared to previous year resultsin

…………….of working capital
(a) Increase (b)decrease
(c)Nochange (d)None ofthese

70. Decrease in Working capital constitutes…………………

(a)sourceoffund (b)application of
funds (c)neither sourcenorapplication (d)none ofthese

71… ................. is the dividend paid to the members of a company duringa

financial year before the finalization of annual accounts.
(a)Bonus (b)Final dividend (c)Interim dividend (d)None ofthese

72. Fund lost in operationsrepresent………………..

(a) Inflowoffunds (b)outflow of
funds (c)neither inflownoroutflow (d) none
ofthese

73. Which of the following results in Increase of working capital ? (a)Increase

incurrentassets (b)decrease in current
assets (c)Increase incurrentliabilities (d)all ofthese

74. Which among the following results in decrease of working capital ?

(a)Increase incurrentliabilities (b) Increase in current
assets (c)decrease incurrentliabilities (d) none ofthese

75. According to SEBI requirements Cash flow statement is prepared by

categorizing cash flows into operating,investingand
......................................................................................................................... act
ivities
 (a) financing (b)routine (c)longterm (d) none ofthese

76. Cash flow statement is a statement which describes inflows and outflows of…… (a)cash
(b)cash and cashequivalents
(c)workingcapital (d)all ofthese

77. Cash, according to cash flow statement comprises of……………

(a) liquid cash
only (b)cash
inhand
(c)cash in hand and demand deposits with banks
(d)none of these

78… ........ are short term , highly liquid investments that are readilyconvertible
into known amounts of cash and which are subject to an insignificant risk of changes
in value.
(a)cashequivalents (b)Short terminvestments
(c)Marketablesecurities (d)all ofthese

79. Flow of cash is said to have taken place when any transactions makes changes in
theamountof ............................................... before happening of thetransactions.
(a) cash (b)cashequivalents
(c)bothofthese (d)none ofthese

80. Which among the following are examples of cash flow from operating activities?
(a) cash receipts from saleofgoods (b)cash receipts
fromroyalties (c)cash paymentstosuppliers (d)all ofthese

81. Which among the following is not an example of cash flow fromoperating
activities?
(a) cash payments of insurancepremiums
(b)cash payments of incometaxes
(c) cash payments toemployees
(d) cash receipts from disposal of fixedassets

Group C
82. The essence of marginal costingisthat ......................................... cost is consideredon
the whole as separate.
(a) Fixed (b)variable (c)bothofthese (d)none ofthese

83… ............. cost represents the amount of any given volume of output bywhich
aggregate costs are changed if the volume of output is increased by oneunit.
(a)variablecost (b)marginalcost (c)fixedcost (d)none
ofthese
84… Is the increase or decrease in total cost which results from producing
or selling additional or fewer units of a product or from a change in the method of
production or distribution such as the use of improved machinery, addition or
exclusion of a product or territory or selection of an additional sales channel.
(a)variable cost (b)marginal cost (c)fixed cost (d)none of these

85…………cost is defined as the aggregate of variable costs or prime costs plus

variable overheads.
(a)variablecost (b)marginalcost (c)fixedcost (d)none ofthese

86. Marginal costingisa ............................... ofcosting

(a) system (b)method (c)technique (d)all ofthese

87.Under marginal costing, Costs are regarded as costs of theproducts.

(a)variable costs (b)fixed costs (c)both of these (d)none ofthese

88.Under marginal costing, …………… costs are treated as period costs and charged to
profit and loss account for the period for which they are incurred
(a)variable costs (b)fixed costs (c)both of these (d)none ofthese

89.Under marginal costing, stocks of finished goods and work-in-process are

valuedat ............................. costsonly
(a)variablecosts (b)fixedcosts (c)marginalcost (d)none ofthese

90… ....................... is the excess of sales over marginal cost ofsales

(a)profit (b)margin (c)loss (d)contribution

91………………..cost remains constant per unit of output irrespective of the level of

output and thus fluctuates directly in proportion to changes in the volume of output
(a)variable costs (b)fixed costs (c)marginal cost (d)none of these

92…………..costs are the increase or decrease in total cost that result from producing
additional or fewer units or from the adoption of an alternative course of action.
(a)variable costs (b)fixed costs (c)marginal cost (d)differential cost

93. Marginal cost and differential cost are the same when ……..costs do not change with
change inoutput
(a) variablecosts (b)fixed costs
(c)semivariablecost (d)none ofthese

94………………is the practice of charging all costs, both variable and fixed, to operations,
processes, or products
(a)marginalcosting (b)absorptioncosting
(c)differentialcosting (d)none ofthese

95. In absorption costing, managerial decision making is based upon…………..

 (a) profit (b)contribution (c)costs (d)none ofthese

96. Given sales = 150000, Fixed costs = 30000, Profit = 40000.The variable
costis………….
(a)110000 (b)80000 (c)120000 (d)10000

97. The Profit/Volume ratio or marginal ratio expresses the relation of…………
to sales.
(a) Profit (b)marginalcost (c)contribution (d)none ofthese

98. Which of the following measures helps to increase the P/V Ratio?
(a)increasing the selling price perunit
(b)reducing the variable or marginal cost
(c)changing the sales mixture
(d)all of these

99. Given sales = 100000, Profit = 10000 , variable cost = 70%.Thesales required to earn
a profit of Rs.40000 is………………………
(a)1500000 (b)100000 (c)200000 (d)none ofthese

100. Marginal costisthe ...................... cost of producing an additional unit ofoutput

(a) variable (b)fixed (c)semivariable (d)none ofthese

ANSWER KEY

1.B 2.C 3.A 4.A 5.B 6.D 7.A

8.A 9.A 10.C 11.C 12.A 13.B 14.A
15.A 16.C 17.C 18.C 19.D 20.C 21.B
22.C 23.C 24.A 25.B 26.B 27.A 28.A
29.B 30.B 31.B 32.C 33.B 34.C 35.C
36.A 37.B 38.D 39.B 40.A 41.A 42.B
43.A 44.B 45.A 46.C 47.D 48.D 49.D
50.A 51.D 52.B 53.A 54.B 55.C 56.D
57.A 58.D 59.D 60.C 61.A 62.A 63.B
64.D 65.D 66.A 67.A 68.A 69.B 70.A
71.C 72.B 73.A 74.A 75.A 76.B 77.C
78.A 79.C 80.D 81.D 82.A 83.B 84.B
85.B 86.C 87.A 88.B 89.C 90.D 91 .A
92.D 93.B 94.B 95.A 96.B 97.C 98.D
99.C 100.A