Unit: 1

1) Accounting is one of the _____ management systems.

a)
b)
c)
d)

Newest
Oldest
Latest
preferred

2) According to AICPAs definition in 1941, Accounting is a/an ___.

a)
b)
c)
d)

Art
Science
Both (a) & (b)
None

3) According to AAAs definition in 1966, Accounting is a ___.

a)
b)
c)
d)

Structure
Process
Science
art

4) ___________ is the science and art of recording business transactions.

a)
b)
c)
d)

Accounting
Journalizing
book-keeping
classifying

5) _______ transactions and events in the 1st step in accounting process

a)
b)
c)
d)

Identifying
Classifying
Journalizing
book-keeping

6) The book in which transactions are 1st recorded is called ____.

a)
b)
c)
d)

Journal
Ledger
Statement
subsidiary book

7) For _____ transactions of similar nature, a separate book called ____ is maintained.

a)
b)
c)
d)

recording, ledger
maintaining, journal
classifying, journal
classifying, ledger

8) Process of transferring transactions from journal to ledger is called ____

a) Export b) posting c) journalizing d) maintenance
9) Fixed assets are shown in the B/s at historical cost less _____.
a) Accumulated provision for Tax b) expenses c) additions d) accumulated
depreciation
10) Getting higher credit rating is a motto behind _____.
a) Auditing b) preparing balance sheet c) raising investment d) window dressing
11). __________ is the ability of a firm to satisfy its short-term obligations as they
become due for payment.
a. Liquidity
Currency

b. Solvency

c. Activity

d.

12) Which step explains the importance of all the data in a manner that the end
users of financial statements can make a meaningful judgment about the financial
position and profitability of the business?
a. Identification

b. Summarising

c. Analysing

d. Interpreting

13)____________ can be measured in terms of money, goodwill or patent rights.

a. Intangible accounts
accounts

b. Assets

b. Income

d. Tangible

14) Rectification entries are recorded in _________________ If the errors such as

wrong posting, wrong casting, wrong calculation etc., are committed in the books of
original entry or ledger.
a. General journal
d. control

b. Suspense account

c. Trading Account

Unit2
31) Business purchases fixed assets on the basis of ______ concept.2
a) Conservatism b) money measurement c) going concern d) historical cost
32) Interest payable in Jan is Rs. 40,000, paid in Feb , will be recorded in Jan on
basis of ___ concept.
a) Accrual b) receipt c) matching cost d) money measurement
33) Anticipate no profits but provide for all anticipated losses is which concepts
rule?
a) Prudence b) money measurement c) going concern d) historical cost
34) ____ has 2 components: Accounting Concepts and Accounting Conventions.
a) IAS b) IFRS c) GAAP d) ASB
35) Business purchases fixed assets on the basis of ______ concept.
a) Conservatism b) money measurement c) going concern d) historical cost
36) Interest payable in Jan is Rs. 40,000, paid in Feb , will be recorded in Jan on
basis of ___ concept.2
a) Accrual b) receipt c) matching cost d) money measurement
37) anticipate no profits but provide for all anticipated losses is which concepts
rule?2
a) Prudence b) money measurement c) going concern d) historical cost
38) Purchase account is a ____ account
a) Personal b) real c) nominal d) representative personal
39)______ = Assets Liabilities
a) Debts b) proprietors equity c) Profit d) loss
40).______________ facilitates more disclosure of financial information that is beyond
the statutory limits.
a. Change in accounting policies
c. Accounting concepts

b. Accounting conventions
d. Accounting standards

41. ___________ is also called outstanding income.

a. Outstanding expenses

b. Prepaid expenses

c. Income received in advance

d. Accrued income

42. What is the significance when we say that the C/S ratio may also be used for
determining the desired volume of output for a specified amount of profit?
a. Measure of profitability

b. Product mix decision

c. Profit planning

d. Intra-firm comparison

43. What do you call the reduction granted by a supplier to a customer on the
amount of bill due, considering payment within the credit period?
a. Trade discount

b. Amount

c. Cash discount

d. Goodwill

44. Which function of management accounting needs various departments to be

consulted and is responsible for policy decisions?
a. Forecasting

b. Planning

c. Co-ordination

d. controlling

Unit: 3
61) Capital is a ____ for the business; Drawings are a/an _____ to the business.
a) Liability, expense b)asset, liability c)income, expenditure d) equity, asset
62) _______ are the real owners of the company.
a) Creditors b) debtors c) equity shareholders d) owners
63) Components of _____ are share capital, share premium and retained earnings.
a) Capital b) equity c) funds d) preference shares
64) Narration, a brief explanation of a journal entry, that starts with the word ____.
a) To b) By c) Being d) Thus
65) Debit what comes in; Credit what goes out is a rule for ____ account.
a) Personal b) real c) nominal d) representative personal

66) Drawings are a ____ account.3

a) Personal b) real c) nominal d) representative personal
67) Journal entries are to be passed in a ___ order.3
a)systematic b) random c) classified d) chronological
68).The book in which the transactions are first recorded is called a _____________.
a. Ledger

b. Balance sheet

c. Journal

d. Posting

Unit: 4
91) Purchased furniture worth Rs.10000. Which account will be debited?
a) Purchase b) assets c) cash d) furniture
92) Outstanding expenses is a _____ account.
a) Personal b) real c) nominal d) representative personal
93) Transactions not appearing in any subsidiary books are entered into ___.
a) Balance sheet b) P&L Account c) Journal Proper d) Cash book
94) ____ does not appear in books of accounts.
a) Cash discount b) trade discount c) both (a) & (b) d) none of the above
95) Cash discount is granted on ___ price.
a) actual b) catalogue c) invoice d) discounted
96) Bill of exchange is ___ by the maker.
a) prepared b) signed c) received d) issued
97)_____ appears on both sides of the cash book.
a) Contra entry b) compound entry c) adjustment entry d) original entry
98) Petty cash book is maintained under ___ system.
a) Secret b) routine c) impress d) authorized
99) Sales made to Mr. A of Rs.10, 000 is credited to Mr. As account. Mr. As account
will be ____ with ____.

a) Credited, Rs. 5000 b) debited, Rs.10000 c) debited, Rs.20000 d) credited,

Rs.20000

Unit: 5
121)______ is the source document to prepare final accounts.
a) P&L account b) Trading account c) Journal d) trial balance
122) Error of commission is ___ in the trial balance.
a) Disclosed b) not disclosed c) either (a) or (b) d) uncertain
102) Errors of ____ omission are not disclosed in the trial balance.
a) Partial b) complete c) both a & b d) none
123) Expenses incurred in construction of fixed assets are debited to ____ account.
a) Expenses b) liability c) fixed assets d) miscellaneous expenses
124) P&L account shows ____ effect and Trading account shows ___ effect.
a) Net, gross b) gross, net c) surplus, deficit d) operating, trading
125) First item debited to trading account is ____.
a) Purchases b) COGS c) opening stock d) Gross loss
126) Balance sheet shows financial position on the ___ day of the year.
a) First b) last c) each d) any
127) Depreciation is a ___ in value of asset.
a) Increase b) change c) reduction d) manipulation
128) Closing stock is a ___.
a) Liability b) inventory c) purchase d) asset
129) Final accounts are termed so as they are prepared at the ___ of the accounting
period.
a) Beginning b) between c) end d) chronologically
130) When total revenue is ___ than total expenses, there is profit.
a) More b) less c) equal d) lower

131) The expenses related to core operations of the business are called ___
expenses.
a) Trading b) indirect c) core d) direct
132) ____ is the excess of direct expenses over direct incomes.
a) gross profit b) net profit c) gross loss d) net loss

Unit: 6
151) Entries of transactions that are passed after drafting the trial balance relating
to current year are called ___.6
a) Contra entries b) compound entries c) journal entries d) adjustment entries
152)_____ expenses of current year should be added to the relevant expense.6
a) Outstanding b) advance c) prepaid d) accrued
153) ____ income is also called outstanding income.
a) Pre received b) accrued c) prepaid d) none of the above
154) Under ___ analysis, base year data is taken as 100.
a) Comparative b) vertical c) trend d) index numbers
155) In common size balance sheet, total of ____ is converted into 100.
a) Balance sheet b) income statement c) capital d) assets

Unit: 7

181)_____ ratios reflect the short term solvency of the firm.7

a) Solvency b) integrated c) liquidity d) profitability
182) When Current ratio is 2.5, and working capital is Rs. 1, 80,000; Current assets
= ___.
a) 100,000 b) 200,000 c) 300,000 d) 150,000
183) ____ is the most rigorous test of firms liquidity position.
a) Liquidity ratio b) quick ratio c) current ratio d) cash ratio

Unit: 8
211) Acid test ratio excludes ____.
a) Cash
d) debt

b) inventory

c) securities

212) Ideal current ratio is___.

a) 1:1 b) 1:2 c) 1 d) 2:1
213) ___ reflects the relative claims of creditors and shareholders against assets of
the firm.
a) debt-asset ratio
b) debt-equity ratio
d) debt services coverage ratio

c) proprietor ratio

2) More than ___ proprietary ratio means lesser dependence on external sources
a) 50%

b) 25%

c) 60%

d) 75%

215) ____ shows the mix of finance employed in the firm.8

a) Capital gearing ratio b) interest coverage ratio c) debt-asset ratio d) ROCE
216) Dividend coverage ratio measures ability of form to pay dividend on ___
shares.
a) Equity b) Preference c) both d) bonus
217) COGS = Opening stock + ______ - Closing stock
a) Purchase b) Net Purchase c) Sales d) Wage
218) ROCE = ____ / Capital employed X 100

a) EBT b) PAT c) PBDAT d) EBIT

219) Gross profit = Net Sales - ____
a) Sales returns b) COGS c) closing stock d) Purchases
220) Debtors turnover ratio is expressed in ___.
a) Percentage b) days c) times d) months
221) ___ indicates the efficiency with which the firm uses its assets to generate
sales.
a) debt-asset ratio b) assets turnover ratio c) assets-sales ratio d) fixed assets
ratio
222) Credit sales = 3,65,000; Debtors = 50,000 and B/R = 2,000. Debtors turnover
ratio = ____.
a) 7.02 b) 6.80 c) 7.20 d) 5
223) ___ shows how the earning power of a company is affected by various
component parts.
a) Ratios b) financial statements c) Financial analysis d) Du Pont chart
224) Gross working capital refers to firms investment in current assets.
a) True b) false c) cant say d) either (a) or (b
225) P&L account ___ balance is a non-current asset.
a) Debit b) credit c) equal d) either (a) or (b
226) Advance from dealers is ___.
a) Current asset b) current liability c) non-current asset d) non-current liability
227) Transactions involving current asset and capital is an example of ___ of funds.
a) Non-flow b) increase c) flow d) decrease

Unit: 9
241) Payment of dividend is a ___ of funds.
a) application b) source c) flow d) non-flow
242) All ___ incomes and expenses appear in the adjusted P&L account to ascertain
funds from operations.
a) Operating b) non-operating c) capital d) day-to-d243) ___ is credited to the
adjusted P&L account.
a) Loss on sale of asset b) depreciation c) profit on sale of asset d) increase in
working capital
244) ____ is an application of fund.
a) Issue of shares b) raising term loans c) Removal of assets d) buy back of
shares
245) Fund flow analysis is ___ based.
a) Cash b) payment c) accrual d) analysis

Unit: 10
271) Cash flow statement is discussed under ___.
a) AS 2 b) AS 3 c) AS 4 d) AS 1
272) ____ are short term, highly liquid investments.
a) Cash equivalents b) cash c) super quick assets d) liquid assets
273) Payment of income tax is a ____ activity.
a) Operating b) investing c) financing d) none of the above
274) Cash receipts from futures contracts and swap contracts is a ___ activity.
a) Operating b) investing c) financing d) none of the above
275) ___ paid is a financing activity.
a) Salaries b) income tax c) dividend d) loan

276) Any decrease in current assets between two periods should be ___
a) Added back b) deducted c) no effect d) carried to Balance sheet.

Unit: 11
301) Production of tablets is an example of ___ costing
a) Contract b) batch c) composite d) unit costing
302) Civil contractors use ___ method of costing.
a) Contract b) batch c) composite d) unit costing
303) ____ costing is used as nature of product is complex.
a) Contract b) batch c) composite d) unit costing
304) Service industries implement ___ costing.
a) Unit b) operating c) operation d) both (b) and (c)
305) ____ is a section of the business to which costs are charged.
a) Department b) cost unit c) cost centre d) cost
306) ___ overhead is the cost of indirect materials, indirect labor and indirect
expenses.
a) Variable b) indirect c) direct d) factory
307) ___ labour includes foremen, cleaners and maintenance men.
a) Standard b) indirect c) direct d) factory
308) ____ are also called standby costs or period costs.
a) Fixed costs b) variable costs c) actual costs d) historical costs
309) Discretionary costs are also called ___ costs
a) Capacity b) step c) programmed d) committed
310) Depreciation on plant and machinery is a ___ cost.
a) Non-cash b) Managed c) fixed d) committed
311) Product cost is composed of ___ elements.
a) 1

b) 2

c) 3

d) 4

Unit: 12
331) If the plant has a book value of Rs. 20 lakhs and scrap value is Rs. 50000, sunk
cost is Rs.___.
a)20,50,000 b) 19,50,000 c)20,00,000 d)50,000
332) under marginal costing, variable costs are charged against ___, and fixed
expenses against ___
a) Operations, profit b) profit, operations c) operations, not included d) not
included, profit
333) Fixed cost = ___ if sales = rs.200,000; variable cost = rs.40000 and profit = rs.
30000
a) 310,000 b) 130,000 c) 160,000 d) 10,000
334) MCSR = ___ when VC=24,000 and sales = 60,000
a) 50% b) 40% c) 60% d) 61.83%
335) PV ratio can be improved by ___.
a) Reducing sales b) increasing selling price c) stabilizing variable costs d)
extending credit period
336) At ____ point, the company breaks even.
a) Only profit b) only loss c) no profit, no loss d) only profit, no loss
337) FC = 8000; profit = 2000; BEP sales = 40,000; Actual sales = ?
a) 30,000 b) 50,000 d) 42,000 d) 38,000
338) difference between Actual sales and BEP sales is ___.
a) Break even point b) desired profit c) contribution d) margin of safety

Unit: 13

361) ___ are irrelevant in decision making.

a) Sunk b) opportunity c) avoidable d) marginal
362) Make or buy decisions arises with a company having ____ production capacity.
a) Alternative b) unused c) overused d) useful
363) CIMA means ___.
a) Cost Institute of management audit b) Critical institution for management aids
c) Certified Institution of Managing Anger d) Chartered Institute of
management accounting

Unit: 14
391)Objectives of budgetary control are ___
a) Standardizing & decentralizing b) forecasting & co-ordination c) show off d)
haphazard use of money
392) Fixing the goals and targets is a ___ of budgetary control.
a) De-merit b) merit c) use d) both (a) & (b)
393) ____ are the foundation of budgets.
a) Policies b) system c) forecast d) budget committee
394) ___ budget includes sales budget and production budget.
a) Functional b) fixed c) flexible d) master
395) Cash budget is a ___ budget.
a) Flexible b) functional c) short-term d) medium term
396) popularly, the flexible budget is adopted for ____ budget.
a) Variable expenses b) semi-fixed costs c) total cost d) production cost
397) ___ budgeting is a method of budgeting where all activities are revalued each
time budget is set.

a) Zero based b) Long term c) master d) fixed

Unit: 15
421) ___ cost is a cost which is calculated from managements standards
a) Marginal b) operating c) standard d) actual
422) the difference between standards and actual is called___.
a) Standard deviation b) variance c) deviation d) break-even
423) primary objective of standard costing is ___.
a) Cost control b) co-ordination c) reporting d) measuring
424) ___

standards make the employees cost conscious.

a) Expected b) historical c) normal d) perfect

425) __

_ standards are next to ideal standards.

a) Expected b) historical c) normal d) perfect

426) the scope of budgetary control is ___.
a) Wide b) narrow c) limited d) either (a) or (b)
427) when actual cost is less than standards, it is ____, otherwise ____.
a) Unfavorable, unfavorable b) unfavorable, favorable c) favorable, unfavorable
d) favorable, favorable
428) ___ = (SQ-AQ) SP
a) MPV

15

b) MUV

c) MMV

429) SQ= 10 KGs; SP=rs.2; AQ= 12 KGs. MUV=?

d) MYV

a) 4

b) 5

c) -4

d) -5

430) MYV is a ___ variance.

a)
b)
c)
d)

Input
Output
combination
usage

431) ___ arises only when different types of workers are employed in manufacturing.
a)
b)
c)
d)

Labor efficiency variance

Labor rate variance
Labor mix variance
Labor yield variance

432) LYV = (Actual ___ - standard ___) X standard cost per unit.
a)
b)
c)
d)

Output, output
price, price
output, price
price, output

FIN. MGMT MCQS

1. The book in which the transactions are first recorded is called a _____________.
a. Ledger
b. Balance sheet
c. Journal
d. Posting
2. Accounting measures the _________ performance of an enterprise.
a. Financial
b. Annual
c. Functional
d. Growth
3. ______________ facilitates more disclosure of financial information that is beyond the
statutory limits.
a. Change in accounting policies
b. Accounting conventions
c. Accounting concepts

d. Accounting standards
4. In a double entry book keeping system, an account which is the receiver of benefit, is
also called as __________.
a. Outgoing aspect
b. Incoming aspect
c. Profits
d. Giving aspect
5. The bill of exchange drawn by the creditor becomes a valid document after it is signed by
the
______.
a. Owner
b. Partners of the firm
c. Debtor
d. Bank
6. If the trial balance does not tally, the accountant has to proceed with spotting errors. For
this
purpose a temporary account called ____________ is opened.
a. Subsidiary Account
b. Profit & Loss Account
c. Suspense account
d. Ledger Account
7. ___________ is also called outstanding income.
a. Outstanding expenses
b. Prepaid expenses
c. Income received in advance
d. Accrued income
8. The future of a company is a result of the __________ today by the management.
a. Decisions taken
b. Goals planned
c. Strategies made
d. Roles defined
9. __________ is the ability of a firm to satisfy its short-term obligations as they become due
for
payment.
a. Liquidity

b. Solvency
c. Activity
d. Currency
10. Which of the following is a cash outflow for the firm?
a. Repaying of mortgage loans.
b. Loss on sale of fixed assets.
c. Creation of reserves for bad debts.
d. Amortisation of goodwill.
11. A location, an equipment, a person or a group of these, for which costs can be charged
are
known as ________________.
a. Cost centre
b. Profit centre
c. Resources
d. Liabilities
12. What is the significance when we say that the C/S ratio may also be used for
determining the
desired volume of output for a specified amount of profit?
a. Measure of profitability
b. Product mix decision
c. Profit planning
d. Intra-firm comparison
13. In which method of budgeting all activities are revaluated each time a budget is set?
a. Flexible Budgeting
b. Zero Based Budgeting
c. Short-term Budgeting
d. Medium-term Budgeting
14. ________________ a system which seeks to control the cost of each unit or batch by
determining
The cost in advance.
a. Marginal costing
b. Uniform costing
c. Standard costing
d. Full costing

15. What do you call the reduction granted by a supplier to a customer on the amount of bill
due,
considering payment within the credit period?
a. Trade discount
b. Amount
c. Cash discount
d. Goodwill
16. ________________ is a resource legally owned by the enterprise as a result of past events
and
from which future economic benefits are expected to flow to the enterprise.
a. Capital
b. Share
c. Asset
d. Fixed asset
17. Which step explains the importance of all the data in a manner that the end users of
financial
statements can make a meaningful judgment about the financial position and profitability of
the
business?
a. Identification
b. Summarising
c. Analysing
d. Interpreting
18.________________ is required to help comparison of financial data from one period to
another.
a. Materiality
b. Double aspect
c. Consistency
d. Conservatism
19. IFRS apply to ___________ and consolidated
financial statements.
a. Conglomerate
b. Private firms
c. Individual company
d. Public sector units

20. ____________ can be measured in terms of money, goodwill or patent rights.

a. Intangible accounts
b. Assets
C. Income
d. Tangible accounts
21. According to traditional approach, which of these falls under personal account?
a. Capital account
b. Cash
c. Purchases
d. Interest received
22. Which amongst the following form a part of the format of a sales book?
a. Purchase invoice number
b. Name of the supplier
c. Credit period
d. Ledger folio
23. The subsidiary books are maintained for transactions that occur most repeatedly and are
____________.
a. Most voluminous
b. High in value
c. Not recorded in final accounts
d. Rarely noticed
24. Rectification entries are recorded in _________________ If the errors
such as wrong posting, wrong casting, wrong calculation etc., are
committed in the books of original entry or ledger.
a. General journal
b. Suspense account
c. Trading Account
d. Trial balance
25. The accounts of _________________ will not be closed because
they continue to exist further.
a. Assets and liabilities
b. Salaries Expenses
c. Revenue from Services
d. Telephone Expenses
26. Which amongst the following is recorded as credit to the trading account?

a. Depreciation
b. Bad debts
c. Reserves for discount on debtors
d. Closing stock
27. The excess of direct incomes over direct expenses is called ____________.
a. Net profit
b. Profit
c. Gross profit
d. Balance
28. Which function of management accounting needs various departments to be consulted
and
is responsible for policy decisions?
a. Forecasting
b. Planning
c. Co-ordination
d. Controlling
29. Who amongst the following are the primary users of management accounting?
a. Shareholders
b. Lower level managers
c. Creditors
d. Government authorities
30. Horizontal analysis is also referred to as ________________.
a. Common size statements
b. Trend analysis
c. Comparative statements
d. Income statements
31. In which analysis, the sales are converted into 100 and the components are
proportionately
converted?
a. Vertical analysis
b. Trend analysis
c. Ratio analysis
d. Horizontal analysis
32. As per The Institute of Chartered Accountants of India ( ICWAI), preparation of cash flow
statement every year and presenting it along with financial statements is mandatory for the

companies listed on a stock exchange with a turnover of _________________.

a. Rs.10 crore or more
b. Rs.25 crore or more
c. Rs.50 crore or more
d. Rs.100 crore or more
33. Which of the following is a source of funds?
a. A decreased in account payable.
b. A decreased in account receivable.
c. Cash dividends paid in the period.
d. Investment in new plant.
34. What do you define the the cost of indirect materials, indirect labour, and indirect
expenses?
a. Factory overhead
b. Distribution overhead cost
c. Fixed cost
d. Variable cost
35. ________________ is the cost that has already been incurred and it is generally
unavoidable
because this cost cannot be changed once incurred.
a. Relevant cost
b. Sunk cost
c. Opportunity cost
d. Period cost
36. The change in costs and revenues is ___________ to the change in volume (number of
units
sold).
a. Indirectly proportional
b. Equal
c. Proportionate
d. Not related
37. Functional budget is also known as _________________.
a. Subsidiary budget
b. Fixed budget
c. Flexible budget
d. Cash budget

38. Cash budget is a _________________.

a. Short-term budget
b. Medium-term budget
c. Long-term budget
d. Weekly budget
39. Standard costing may be used as a basis for price fixing and ___________.
a. Cost control
b. Cost revision
c. Evaluating cost
d. Decision making
40. The difference between the standard cost and actual cost is called as ____________.
a. Margin
b. Variance
c. Differential cost
d. Deviation
41. The claims on assets will always be equal to the ____________.
a. Assets
b. Liabilities
c. Equity
d. Capital
42. Which account deals with the amount charged for goods sold or services rendered?
a. Capital account
b. Liabilities account
c. Revenue account
d. Expenses account
43. For preparation of which book, do we need to know about the bill of exchange?
a. Sales return book
b. Bills receivable book
c. Purchases return book
d. Sales book
44. Treating income as liabilities is _________________.
a. An error of omission
b. An error of commission
c. An error of principle
d. Compensating Error

45. If the errors such as wrong posting, wrong casting, wrong calculation etc., are committed
in
the books of original entry or ledger, it is said to be _________________.
a. Compensating errors
b. An error of principle
c. Complete omission
d. An error of commission
46. Which process responds to divergences from the plan?
a. Planning process
b. Control process
c. Leading process
d. Organising process
47. Which ratio is also known as acid test ratio?
a. Current ratio
b. Quick ratio
c. Cash ratio
d. leverage ratio
48. Analysing and interpreting accounts requires skill, knowledge and __________.
a. Expertise
b. Experience
c. Intelligence
d. Practice
49. Which costing method is used to accumulate costs for different components of the
product and then combine them?
a. Batch costing
b. Contract costing
c. Composite costing
d. Unit costing
50. Costs are classified according to the __________ of the cost, in case of marginal costing.
a. Functional basis
b. Administrative cost
c. Behaviour
d. Operational basis
51. Consider the following statements:
I. A/An ____________ in a company is one of the units into which the total capital of the

company is divided.
II. In ______________ transactions, there is no cash inflow or outflow, but adjustment is made
only in the records.
a. 1- Sole trader, 2- Partnership
b. 1- Asset 2- Paper
c. 1- Entity, 2- Capital
d. 1- Share, 2- Paper
52. Consider the following statements:
1. In case of any changes in the accounting policies, if the change has a material effect in
current
period and the effect of change is ascertainable, the amount of change should be disclosed.
2. In convention of double aspect, the claims of owners are called Equity or Capital, the
claims of
outsiders are called materiality.
State True or False:
a. 1- False, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- True, 2- False
53._____________ and ___________ are the two basic words in accounting.
a. Debit, expenses
b. Credit, liability
c. Asset, capital
d. Debit, credit
54. Consider the following statements:
1. Purchases returns refer to goods returned to the supplier out of purchases made from him.
2. Cash discount may vary with the quantity purchased.
State True or False:
a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True
d. 1- False, 2- False
55. If the errors ________ and ________ are committed in the books of original entry or ledger,
it
is said to be error commission.

a. Wrong posting, wrong calculation

b. Wrong casting, omission
c. Inadequate depreciation, insufficient provision for bad and doubtful debts
d. Wrong calculation, omission
56. 1. The other name for provision for doubtful debts is __________.
2. The provision for bad debts is a charge against profit it must be debited to the ___________
account.
a. 1- Reserve for bad debts, 2- profit and loss
b. 1- Provision for bad debts, 2- profit and loss
c. 1- Reserve for bad debts, 2- trading
d. 1- Provision for bad debts, 2- trading
57. Consider the following statements:
1. It may be done with a balance sheet (comparative balance sheet) as well as with profit
and loss
a/c or income statement (Comparative Profit and Loss a/c / Income Statement.)
2. One of the advantage of ratio analysis is that it helps in assessing firms progress and
performance and inter-firm comparison with industry average.
State True or False:
a. 1- True, 2- True
b. 1- False, 2- False
c. 1- False, 2- True
d. 1- True, 2- False
58.________ and ________ are the examples of operating activities.
a. Cash receipts from royalties, Cash receipts from sale of goods
b. Cash receipts from royalties, Cash receipts from disposal of fixed assets
c. Cash receipts from disposal of fixed assets, Cash proceeds from issuing shares
d. Cash payments to employees, Cash proceeds from issuing shares
59. Consider the following statements:
1. _________________ is the volume of activity or sales when the organisations revenues and
expenses are equal.
2. ______________ analysis provides the management with a comprehensive overview of the
effects on revenue and costs of all types of short run financial changes.
a. 1- Marginal Costing, 2- Break-Even Chart
b. 1- Margin of Safety (MOS), 2- Break-Even Analysis
c. 1- Target Profit, 2- Profit Volume Ratio (MCSR or C/S ratio)

d. 1- Break-Even Point, 2- Cost Volume Profit (CVP)

60.1. The aggregate of indirect materials, indirect labour, and indirect expenses is called
_____________.
2. The standard fixed overhead rate is computed by dividing the budgeted fixed overheads
with
_______________.
a. 1- Administrative cost, 2- sales output.
b. 1- Factory overhead, 2- budgeted output.
c. 1- Mixed cost, 2- standard output.
d. 1- Costing elements, 2- actual output.
61. 1. A/An _______________ creditor is a person to whom the business owes money for
goods purchased from him or her on credit.
2. A _________________ is the financial statement, which shows the amount and nature of
business assets, liabilities and owner's equity at a specific point in time.
a. 1- Expenses, 2- Opening stock
b. 1- Creditor for asset purchased, 2- Bill of exchange
c. 1- Trade, 2- Balance sheet
d. 1- Loan, 2- Trial balance
62.Consider the following statements:
1. Income earned for an accounting period must be _____________ in that accounting period
regardless of whether it is actually received in that accounting period or not.
2. Apart from the mandatory disclosures, the company may give additional disclosures.
These are
called ______________ disclosures.
a. 1- Revised, 2- Materiality
b. 1- Shared 2- Prudence
c. 1- Deleted, 2- Involuntary
d. 1- Recorded, 2- Voluntary
63. Consider the following statements:
1. Events happen as a result of internal policies or external needs.
2. In credit transaction cash flows immediately.
State True or False:
a. 1- True, 2- False
b. 1- False, 2- True
c. 1- True, 2- True

d. 1- False, 2- False
64.Consider the below mentioned statements:
1. An error in a trial balance is an unintentionally committed mistake.
2. Errors of casting, posting to wrong side of an account or posting a wrong amount can be
detected by trial balance.
State True or False:
a. 1-False, 2-False
b. 1-True, 2-True
c. 1-False, 2-True
d. 1-True, 2-False
65. The reasons for depreciation could be permanent fall of market price, ________________
and _____________.
a. Wear and tear, devaluation
b. Sensex downfall, heavy usage
c. Wear and tear, outdated technology
d. Heavy usage, devaluation
66. Consider the following statements:
1. A process of comparing the ratios to industry averages to show how the company can be
compared with firms of the same size in its industry is known as ________________.
2. ______________ ratio/s are concerned with measuring the efficiency in asset management.
a. 1- Trend analysis, 2- Assets turnover
b. 1- Horizontal Analysis, 2- Creditor's turnover
c. 1- Vertical Analysis, 2- Stock turnover
d. 1- Cross-sectional analysis, 2- Turnover
67. Cost of goods sold = Cost of production + ____________- ____________.
a. Closing WIP, opening WIP
b. Opening WIP, Closing finished goods
c. Closing finished goods, Opening WIP
d. Opening finished goods, Closing finished goods
68. Consider the following statements with respect to Profit Volume Ratio (MCSR or C/S
ratio):
1. Products having low C/S ratio can be continued and the products having high C/S ratio can
be improved to catch up in the market to increase the profitability.
2. The C/S ratio may be computed using the following formulae.:
State True or False:

a. 1- False, 2- True
b. 1- True, 2- False
c. 1- True, 2- True
d. 1- False, 2- False
69. Consider the below mentioned statements with respect to the objectives of budgetary
control.
1. To decentralize management control.
2. To help in controlling cash.
State True or False:
a. 1-True, 2-True
b. 1-False, 2- False
c. 1-False, 2-True
d. 1-True, 2-False
70. 1. Variance analysis is the process of analyzing variances by sub-dividing the total
variance in such a way that the management can assign responsibility for
___________performance.
2. When the actual cost is less than the standard cost, the difference is termed as
___________ Variance.
a. 1- Average, 2- adverse.
b. 1- Expected, 2- debit.
c. 1- Unacceptable, 2- unfavorable.
d. 1- Off-standard, 2- credit.
71. "Consider the following statements:
1. The earliest attempt towards harmonization of accounting practices at the international
level was made by the International Accounting Standards Committee (IASC).
2. In India, the Institute of Chartered Accountants of India (ICAI) established Accounting
Standards
Board (ASB) in 1977."
State True or False:
a. 1- True, 2- True
b. 1- False, 2- False
c. 1- False, 2- True
d. 1- True, 2- False
72.1. __________________ book is meant for recording purchases.
2. _______________ does not appear in the books of accounts.

a. 1- Bills payable, 2- Credit period

b. 1- Purchases returns, 2- Debit account
c. 1- Purchases, 2- Trade discount
d. 1- Sales, 2- Cash discount
73. 1. One of the objectives of cost management system is to provide cost information for
____________ control.
2. Cost management system is used to identify and evaluate new activities that can improve
the future
__________ of an organization."
a. 1- Management, 2- strategies
b. 1- Operational, 2- performance
c. 1- Directional, 2- profits
d. 1- Functional, 2- goals
74. Consider the following statements:
1. Marginal cost per unit remains unchanged irrespective of the level of activity or output. It
is also
known as variable cost.
2. The marginal cost of producing a unit declines as output increases."
State True or False:
a. 1- True, 2- True
b. 1- False, 2- False
c. 1- False, 2- True
d. 1- True, 2- False
75. As per the needs of the management, only ____________ may be prepared.
2. Budgetary control compares the actual cost with __________."
a. 1- Operational budget, 2- planned cost.
b. 1- Functional budget, 2- pre-determined standards.
c. 1- Quarterly budget, 2- historical data.
d. 1- Annual budget, 2- marginal cost.