SECTION A Answer: D) Cash budget

CHAPTER 10
9.During which stage of company development is funding
1. What is the primary purpose of financial accounting? usually met by the founders' personal savings?
A) To estimate the company's market value A) Seed stage
B) To present a "fair and true" view of a business's financial B) Formation stage
position C) Pre-company stage
C) To determine the company's total assets D) Established stage
D) To calculate the company's intangible assets Answer: C) Pre-company stage
Answer: B
10.What factor is considered crucial when controlling a
2.Which equation represents the balance sheet? budget?
A) Assets = Liabilities + Owner's equity A) Long-term accuracy
B) Assets = Revenue - Expenses B) Flexibility of budget
C) Profit = Revenue - Costs C) Speed of feedback
D) Revenue = Direct Expenses + Indirect Expenses D) Strictness in budget allocation
Answer: A Answer: C) Speed of feedback

3. What does the profit and loss statement measure? CHAPTER 11

A) The total liabilities of the company
B) The increase in stock value 1. A Traditional Technique of Cost Accounting that have a
C) The company’s revenues, costs, and expenses over a primary purpose of helping the management in decision
period making. It only considers cost incurred by the product.
D) The amount of tax due for the company a)MARGINAL COSTING
Answer: C b)Standard Costing
c)Total Absorption Costing
4.How does inflation impact inventory value? d)Partial Absorption Costing
A) It decreases the inventory value.
B) It has no effect on inventory value. 2.The value of a resource used up when carrying out the task
C) It increases the value, leading to higher profits. that is being costed
D) It reduces the replacement cost of inventory. a)Amount
Answer: C b)COST
c)Price
5.Which of the following is NOT a type of financial d)Overhead
statement?
A) Balance sheet 3.Which of the following is not a key principle of costing?
B) Profit and loss statement a)No Cost Shifting
C) Statement of cash flows b)Actual Cost
D) Source and application of fund statement c)SHIFTING COURSES
Answer: C d)Accuracy

6. What is the primary purpose of investment ratios? 4.Which is a General Classification of Cost.
A) To guide managers in running the company a)Product Cost
B) To provide a financial statement of future plans b)Coscos
C) To assist investors in evaluating the company c)Sinsin
D) To control budgets within an organization d)DIRECT COST
Answer: C) To assist investors in evaluating the company
5.A method in valuation of stock that uses the earliest
7.What does the capitalization ratio represent? purchase price first, moving sequentially to newer prices as
A) The amount each ordinary share has earned earlier stock is depleted.
B) The proportion of different types of shares in company
capital a)FIFO
C) The company’s total assets b)Latest In, Latest Out
D) The company’s future financial plan c)First In, First Out
Answer: B) The proportion of different types of shares in d)First Out, Last In
company capital
ANSWERS
8.What type of budget is used to manage the liquidity of a 1.A
company? 2.B
A) Revenue budget 3.C
B) Expense budget 4.D
C) Headcount budget 5.A
D) Cash budget
 -The projects where the benefits & outcomes cannot be
1.What is a variance? measured.Ex: Heath, Education, Defense

a) Difference between the standard cost and actual cost PAYBACK PERIOD
b) Output in standard hours -is a measure of the time taken for the investment to
c) When selling and distribution cost differ from planned generate enough return to pay back the original investment.
d) Actual margin and budgeted margin
PAYBACK METHOD
2.OSH stands for: -is widely used because of its simplicity. Generally it is a
useful method for eliminating projects that have an unduly
a) Occupational Safety and Health long payback period, say over five years, and then using other
b) Output in standard hours methods to choose between the shortlisted projects.
c) Operating Supply Hub
d) Occupational Standards for Health INVESTMENT IN MACHINERY
-This is usually needed to increase production capacity or to
3.When does selling and distribution variances arise? make the manufacturing process more efficient, so reducing
costs.
a) When selling and distribution costs differ from planned
b) When sales targets are met exactly as projected INVESTMENT IN R&D
c) When actual labor hours match standard hours -usually develop a new product to meet a market need or to
d) When production costs decrease hold market share against competetive pressure.

4.Sale Variance is the difference between ___ and ___. PRODUCT AND SERVICE RELATED
-such as marketing, advertising and promotion.
a) Expected sales revenue and actual sales revenue
b) Actual margin and budgeted margin STRATEGIC ACTIVITIES
c) Projected profit and gross profit -such as buying-in a product rather than developing one.
d) Variable cost and fixed cost
It is calculated as the average
5.Marginal costing's primary use is in _____. return over the life of the project as a percentage of the total
investment over a period.
a) Decision making (Answer: Average Rate of Return)
b) Setting long-term asset values
c) Determining selling price only Known as the discounting rate
d) Calculating capital investment (Answer: Factor r)

ANSWER A method of DCF, wherein all the outgoings and receipts are
1.A converted back to the original year and compared.
2.B
3.A SECTION B
4.B CHAPTER 10
5.A
1.It indicates how effectively a business can convert sales into
CHAPTER 12 profits, reflecting its overall
financial health and operational efficiency.
INVESTMENT a. Profit Margin
-It is a risky business. since relatively large sums of money will b. Accounting Ratios
be committed over several years by these decisions, and the c. Profitability
benefits expected may not materialize at the end of that d. Return on Equity
time.
2. Are financial metrics used to evaluate a company's
THE RANKING PROCESS performance and financial health.
-The aim of project selection procedures is to introduce an a. Profitability
element of objectivity so that personal prejudice and bias are b. Return on Equity
avoided. c. Profit Margin
d. Accounting Ratios
QUANTIFIABLE
-The projects in which quantitative assessment of benefits 3. Is a financial statement of the future plans and intentions
can be made and can be measured. of an organization.
Ex: Power generation, Mineral development a. Budget
b. Controls
NON-QUANTIFIABLE c. Profitability
d. Accounting Ratios
 C. Control Through Costing
4. Are required on budgets to check whether these financial D. LIFO
plans are being achieved and to 5. Assumes the most recently purchased goods are the first
take corrective action, if necessary. ones sold
a. Controls A. FIFO
b. Budget B. LIFO
c. Accounting Ratios C. Actual Costs
d. Profitability D. Marginal Costing
6. Focuses on variable costs, helping managers understand
5. The company is now well established and is going through the impact of changes in production
a period of growth. volume.
a. Established Stage A. Actual Costs
b. Sustained Growth B. Standard Costing
c. Formation Stage C. Marginal Costing
d. Seed Stage D. LIFO
7. Establishes predetermined cost estimates to identify and
1. Accounting practices within a company are generally analyze variances from actual costs.
categorized into two main groups, what are A. Standard Costing
those groups? B. FIFO
FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING C. Variances
2. It is primarily concerned with the recording, summarizing, D. Allocation Bases
and reporting of historical financial 8. Assigns all fixed and variable costs to products, providing a
data. comprehensive view of profitability
FINANCIAL ACCOUNTING A. Actual Costs
3. Unlike financial accounting, ____________________ is B. Total Absorption Costing
oriented towards internal stakeholders, C. FIFO
such as company management. It involves analyzing financial D. Standard Costing
data to assist in decision-making 9. Is a management accounting approach that uses cost data
processes within the organization. to plan, direct, and control business
MANAGEMENT ACCOUNTING operations
4. It means that when uncertainty exists, the statements A. Control Through Costing
should prioritize caution. This involves B. FIFO
recognizing only certain revenues while accounting for all C. Marginal Costing
expected losses, even if their exact D. Standard Costing
amounts are unknown. 10. The average cost of all units, including those in beginning
PRUDENCE inventory.
5. It is the rate at which the general level of prices for goods A. Control Through Costing
and services rises, eroding purchasing B. LIFO
power. C. FIFO
INFLATION D. Weighted Average

CHAPTER 11 1)It is a key tool used in management accounting to evaluate

the difference between planned and actual costs in an
1. It is the estimated costs based on efficient operations organization's operations.
A. LIFO
B. Control Through Costing a.Selling Variance
C. Predetermined Standard Costs b.Distribution Variance
D. Standard Costing c.Variance Analysis
2. It is the differences between actual and standard costs d.Absorption Costing
A. Variances
B. FIFO 2)Type of key variance in the control process where there is
C. Marginal Costing difference between the actual cost of materials used in
D. Actual Costs production and the standard cost expected.
3. Criteria used to distribute indirect costs, such as direct
labor hours or machine hours a.Variance Analysis
A. LIFO b.Direct Labour Variance
B. Control Through Costing c.Overhead Variance
C. Marginal Costing d.Direct Material Variance
D. Allocation Bases
4. Overhead expenses that cannot be directly traced to a 3)This variance helps businesses assess how effectively they
specific product or department are managing their selling and distribution expenses, which
A. Indirect Costs are key components of overall operational costs.
B. Standard Costing
a.Selling & Distribution Variance 10)This variance focuses on the costs directly related to
b.Marginal Costing selling activities, such as sales commissions, promotional
c.Overhead Variance campaigns, and sales force management.
d.Sales Variance
a.Distribution Variance
4)Type of key variance in the control process where there is b.Sales Variance
difference between the actual cost of materials used in c.Selling Variance
production and the standard cost expected. d.Overhead Variance

a.Direct Material Variance

b.Overhead Variance
Variance CHAPTER 12
d.D ees Vaba I
1. What does the Average Rate of Return (ARR) method
5)This variance measure the difference between actual and calculate?
budgeted sales, revealing how well a company meets its sales o A) Ratio of total return to initial cost
targets. o B) Average return as a percentage of total investment
o C) Present value of future cash flows
a.Overhead Analysis o D) Total revenue after payback period
b.Direct Labour Variance Answer: B) Average return as a percentage of total
c.Sales Variance investment
d.Direct Material Variance 2. Which of the following is an advantage of the Payback
Period method?
6)Type of key variance in the control process where there is o A) Considers time value of money
difference between the actual labor cost incurred and the o B) Accounts for future cash flows after payback
standard labor cost that was expected for a given level of o C) Simple and easy to understand
production. o D) Provides a percentage return
Answer: C) Simple and easy to understand
a.Distribution Variance 3. The Net Present Value (NPV) method is used to:
b.Direct Labour Variance o A) Calculate the average annual return
c.Selling Variance o B) Compare the project's income and outgoings at current
d.Overhead Variance value
o C) Determine the period to recover investment
7)It both fixed and variable costs are allocated to products, o D) Rank projects by profitability
meaning Answer: B) Compare the project's income and outgoings at
each unit of production bears a share of fixed costs. current value
4. What is the main goal of the Internal Rate of Return (IRR)
a.Marginal Costing method?
b.Variance Analysis o A) Calculate present value of investments
c.Sales Variance o B) Determine rate at which NPV equals zero
d.Absorption Costing o C) Find quickest payback period
o D) Maximize average annual return
8)This considers only variable costs for decision-making, Answer: B) Determine rate at which NPV equals zero
making it a more flexible tool for short-term decision-making 5. Which appraisal method does not consider the time value
and cost control. of money?
o A) NPV
a.Marginal Costing o B) IRR
b.Variance Analysis o C) ARR
c.Sales Variance o D) DCF
d.Absorption Costing Answer: C) ARR
6. What is a primary characteristic of financial investment
9)This variance analyzes the efficiency of the logistics and decisions?
distribution o A) Minimal initial investment required
systems. o B) Immediate cash inflow expected
o C) Large initial investment with uncertain future benefits
a.Selling Variance o D) Low-risk with guaranteed returns
Answer: C) Large initial investment with uncertain future
b.Distribution Variance benefits
c.Variance Analysis 7. In which scenario is the Payback Period method
d.Direct Material Variance particularly useful?
o A) Long-term projects with consistent cash flow
o B) Projects with short payback and high liquidity needs
o C) Projects with high return after the payback period
o D) Low-risk, low-return projects
Answer: B) Projects with short payback and high liquidity It can increase the value of stocks, leading to larger profits
needs but also increasing tax and replacement costs.
8. What does the Discounted Cash Flow (DCF) method Answer: Inflation
primarily account for?
o A) Future income growth 1. A financial statement of the future plans and intentions of
o B) Total sales revenue an organization. It also represents its future predictions on
o C) Time value of money financial matters and is a plan of action.
o D) Average rate of return -Budget
Answer: C) Time value of money
9. Which investment type focuses on increasing production 2. It required on budgets to check whether these financial
capacity? plans are being achieved and to take corrective action, if
o A) Research and Development necessary. -Control
o B) Product and Service Activities
o C) Strategic Activities 3. This is clearly very important to manage, in order to
o D) Plant and Machinery maintain the overall liquidity of the company. Revenue
Answer: D) Plant and Machinery budget. Examples are sales and profit.
10. What is the purpose of ranking projects in investment -Cash budget.
decisions?
o A) To determine the fastest payback period 4. Examples are sales and profit.
o B) To maximize subjective decision-making -Revenue budget.
o C) To structure decision-making and reduce bias
o D) To prioritize R&D investment over other types 5. Examples are travel, small tools, training, materials and
Answer: C) To structure decision-making and reduce bias subscriptions to professional bodies.
-Expense budget.
SECTION C 6. This measures the number of people and their costs.
CHAPTER 10 -Headcount budget.
It is a crucial aspect of a company's operations, presenting
financial information in a clear and concise manner for 7. It usually used; that is, salaries of the staff concerned plus
comparison and evaluation. compensations such as National Insurance and company
Answer: Accounting pension contributions, plus a portion of overheads. -Loaded
labour rates
They are responsible for ensuring the financial interests of all
parties involved. 8. This can cover a wide spectrum of items, from heavy
Answer: Accountants machinery used in manufacturing to a computer or test
equipment used within an R&D.
It is a financial statement that reflects a company's assets -Capital budget
and liabilities.
Answer: Balance sheet 9. The source and application of funds statement, described
earlier, provides a statement of where the funds are coming
This are non-negotiable assets, such as loans and mortgages. from and how they are being used.
Answer: Long-term Liabilities -Obtaining Finance

A short-term obligations that must be met within the coming 10. When raising funds it is often necessary to place a value
year. on the company. If the company is quoted on the stock
Answer: Short-term Liabilities market then this provides a guide for its share price.
-Valuing A Company
It is often revalued at intervals of three to ten years to show
the company's real worth and prevent takeover by predators.
Answer: Property CHAPTER 11

This account includes revenue from sales, consultancy and MATCHING TYPE
services, and expenses such as discounts and returns. Direction: Write the letter of the correct answer on the space
Answer: Profit and Loss Account provided.

It is a method used to gradually remove the cost of an asset ______1. In this method all the costs, direct
from the company's financial records. and indirect, associated with the product are
Answer: Depreciation absorbed into the units.
_____2. ______ is made up of two main
It is an optional requirement in financial statements, ingredients, amount and price.
indicating how a company's operations are financed and _____3. ______________ relate only to those
financial resources are used. items that are associated closely with the
Answer: Source and application of funds statement product being made or costed and are not
shared with any other product. I. Multiple Choice
______4. This method uses the initial 1. Variance that cannot be computed within the middle of a
standard price calculated for the material as project/activity?
the price for all subsequent withdrawals. a) Variance in price
_____5. In the _____________ pricing system b) Variance in volume
of store valuation, the average price of the c) Profit variance
store contents at the time of issue is used d) Direct Labour Variance
to cost the job.
______6. This method of stock valuation the 2. Which of these falls under the variance of price?
earliest purchase price is used to determine a) Facility Utilization
the value of the material being withdrawn b) Overhead Expenditure
from stores, until all the stock at this level is c) Quantity Sold
used up, and then the next purchase price is d) Total Hours Worked.
used.
______7. Applies to a product that built a 3. What is the mathematical equation of Sales and
batch basis, usually to a specific order, so Distribution Variance?
that each job has a clearly defined cost a) “Variance = (Actual Cost – Units Sold) * Standard Cost per
associated with it. Unit”
______8. The primary purpose of this b) “Variance = (Units Sold + Standard Cost per Unit) * Actual
method is to help in management decision Cost ”
making. The method considers only those c) “Variance = Actual Cost – (Units Sold * Standard Cost per
terms of costs that are incurred exclusively Unit)”
by the product, overhands are not d) “Variance = (Actual Cost – Units Sold) / Standard Cost per
considered. Unit”
______9. Two basic methods for costing a
product or service. 4. What is the Sales Variance?
______10. This is usually the best all-round a) Difference between actual margin, and expected margin of
method for overhead allocation, since it sales.
relates directly to the number of people b) Ratio of actual margin to margin of sales
used in the manufacture of products and it c) Summation of margin of sales and actual margin
is these people who are the prime cause of d) Percentage of margin of sales to actual margin
overheads. (The fourth method in the
allocation of overheads.) 5. What point in the chart is the Break Even Point?
a) When the sales intersect with the cost.
CHOICES: b) When the sales is below the costs
A. FIFO c) When the sales is above the costs
B. ALLOCATION OF OVERHEADS d) When the sales is parallel to the costs
C. HISTORICAL COSTING & STANDARD
COSTING II. Categorization
D. COST
E. LABOUR COSTS Categorize the following if they’re under Direct Labour
F. JOB COSTING Variance (DLV), Direct material variance (DMV),
G. DIRECT COSTS Overhead Variance (OV), or Selling and Distribution Variance
H. STANDARD PRICE METHOD (SDV).
I. LABOUR HOURS
J. WEIGHTED AVERAGE ________ 1. Efficiency Variance
K. MARGINAL COSTING ________ 2. Usage Variance
L. TOTAL ABSORPTION COSTING ________ 3. Expenditure Variance
M. REPLACEMENT PRICE METHOD & ________ 4. Rate Variance
STANDARD PRICE METHOD ________ 5. Variable Overhead Variance
________ 6. Volume Variance
ANSWER KEY: ________ 7. Fixed Overhead Variance
1.L ________ 8. Price Variance
2.D ________ 9. Capacity Variance
3.G ________ 10. Efficiency Variance
4.H
5.J I & II ANSWER KEY
6.A 1.D
7.F 2.B
8.K 3.C
9.C 4.A
10.I 5.A
1. DLV or OV
2. DMV
3. OV
4. DLV
5. OV
6. OV
7. OV
8. DMV
9. OV
10.DLV or OV