Multiple choice questions of management accounting. Some simple and basic questions for students.#b.com, #business, #commerce, #commerce students, #correct my mistake, #m.com, #management accounting, #pune university, #student, #teacher

1. Multiple choice question
for
Management Accounting
Guided by : Dr. Sheetal Lakde
By – Purva Shivajirao Shinde
M.Com First year

2. Which of this are tools of management Accounting ?
i) Financial Statement Analysis
ii) Fund Flow Analysis
iii) Cash Flow Analysis
iv) All the above
Q.1
ANS-iv)

3. Tools and Techniques of Management accounting
1. Financial Statement Analysis
2.Fund flow analysis
3.Cash Flow Analysis
4.Costing Techniques
5.Budgetary Control
6.Statistical and Operational Research Techniques
7.Responsibility Accounting
8.Management Accounting

4. Q.2
The primary objective of management accounting is
i) To provide shareholders and potential investors with useful information
for decision making.
ii) To provide banks and other creditors with information useful in making
credit decisions.
iii) To provide management with information useful for planning
and control of operations.
iv) To provide the relevant taxation authorities with information about
taxable income.
ANS-iii)

5. Q.3
Management accounting is the branch of accounting
concerned with reporting to
i) Internal managers.
ii) Shareholders.
iii) The government.
iv) Bankers.
ANS-i)

6. MANAGEMENT ACCOUNTING
Anglo – American Council on Productivity :
“The presentation of accounting information in
such a way as to assist management to the
creation of policy and in the day-to-day
operation of an undertaking.”
Robert N. Anthony :
“Management accounting is concerned with
accounting information that is useful to
management.”

7. Q.4
Which of the following characteristics does NOT pertain to
management accounting?
i) Provides information and estimates about future activity
ii) Generates specific-purpose financial statements and reports.
iii) Provides financial and operating data multidisciplinary
in scoped.
iv) Has externally imposed standards
ANS-iv)

8. Q.5
Cost accounting record rules ,report rules and
guidelines are issued by ICWAI.
i) True
ii) False
ANS-i)

9. Q.6
Management accounting assists the
management
i) In planning, direction and control
ii) Only in planning
iii) Only in direction
iv) Only in control
ANS-i)

10. Q.7
Fixed Cost – Rs.50,000
Sales – Rs.2,00.000
Variable Cost – Rs.1,00,000
Find Out Profit Value Ratio?
i) 40%
ii) 50%
iii) 60%
iv)30%
ANS-ii)

11. Contribution = sales – Variable Cost
= 2,00,000 – 1,00,000
= 1,00,000
P/V Ratio = Contribution
sales
= 1,00,000
2,00,000
= 50%
100
100

12. Q.8
What is break even point ?
i) Point at which total revenue is equal to total cost means
no profit no loss.
ii) Point at which total sales is less than total purchase.
iii) Point at which profit is less than loss.
iv) None of the above .
ANS-i)

13. Break-even-point is the point at which total
revenue is equal to total cost. It is the level of
output where there is no profit or no loss. The
organization starts earning profit when the
output or sales activity crosses this point.
Output below this profit results in loss.

14. Q.9
Fixed cost – Rs.40,000
Variable Cost – Rs.2 per unit
Estimated Sales – Rs.2,00,000
Selling Price – Rs.10 per unit
Find out Break-even-point
i) Rs.30,000
ii) Rs.40,000
iii) Rs.50,000
iv) None of the above
ANS-iii)

15. Contribution = sales – Variable Cost
= 10 – 2
= 8
P/V Ratio = Contribution
sales
= 8
10
= 80%
B.E.P = Fixed cost
PV Ratio
= 40000
80%
= Rs.50000
100
100

16. Q.10
The Break-even-chart is a graphical representation of
which ________ cost.
i) Marginal Cost
ii) Variable Cost
iii) Fixed Cost
iv) None of this above
ANS-i)

17. The break-even-chart is a graphical representation of marginal
costing. It indicates the graphic relationship between costs , volume
and profits.
Break-even-chart indicates the following information
1) Fixed cost
2)Variable cost
3)Total cost
4)Sales value
5)Profit or loss
6)Break-even-point
7)Margin of safety

18. Q.11
Who indicates the graphic relationship between
costs, volume , profits ?
i) Break-even-point
ii) Profit volume ratio
iii) Break-even-chart
iv) None of this above
ANS-iii)

19. Q.12
Management accounting reports are prepared
i) To meet the needs of decision makers within the firm.
ii) Whenever shareholders request them.
iii) According to guidelines prepared by the shares and
Financial Services Authority.
iv) According to financial accounting standards.
ANS-i)

20. Q.13
Decisions regarding usage of material, kind and
changes in plant processing are a part of
i) help management
ii) future management
iii) cost management
iv) past management
ANS-iii)

21. Q.14
Which budget approve this statement ‘This budget remains
the same irrespective of changed situations. It remains
inflexible even if volume of business is changed’?
i) Flexible budget
ii) Fixed Budget
iii) Purchase Budget
iv) None of the above
ANS-ii)

22. Q.15
In fixed budget ,forecasting of accurate results is
difficult.
i) True
ii) False
ANS-i)

23. A fixed budget is one which rigidly specifies the
targets for a particular level of activity. Fixed or
static budgets can serve the purpose only if the
budgets can be prepared with a high degree of
accuracy and budget period is short because the
forecast for a short period can be made with
reasonable degree of accuracy.

24. Q.16
From above which is not approved by flexible budget
i) A flexible budget is recast to suit the changed
circumstances. Suitable adjustments are made if the
situation so demands.
ii) Flexible budget is changed if level of activity varies.
iii) In flexible budget, the costs are studied as per their
nature i.e. fixed, variable and semi-variable.
iv) Under changed circumstances , costs cannot be
ascertained .
ANS-iv)

25. Q.17
What are the aspects of working capital
management?
i) inventory management
ii) receivable management
iii) cash management
iv) all of the above
ANS-iv)

26. Inventory Management
Inventory constitutes an important item in the working capital of many business
concerns. Net working capital is the difference between current assets and current
liability. Inventory is a major item of current assets.
Receivable Management
Receivable mean the book debts or debtors and these arise, if the goods are sold
credit. Debtors from about 30% of current assets in India. Debt involves an element
of risk and bad debts also. Hence, it calls for careful analysis and proper
management .
Cash Management
Cash management is one of the key areas of working capital management. Cash is
the most liquid current assets.

27. Q.18
Under which of the following method of budgeting,
all activities are re-evaluated each time a budget is
set
i) Materials budget
ii) Zero base budgeting
iii) Sales budget
iv) Overheads budget
ANS-ii)

28. Q.19
In Rise Ltd., cash sales is 25% and credit sales 75%. Sales for
November 2014 is ₹ 15,00,000, December 2014 ₹ 14,00,000, January
2015 ₹ 16,00,000, February 2015 ₹ 10,00,000 and March 2015 ₹
9,00,000. 60% of the credit sales are collected in the next month after
sales, 30% in the second month and 10% in the third month. No bad
debts are anticipated. The cash collected – in the month of March, 2015
from debtors is
i) ₹ 14,60,000
ii) ₹ 14,20,000
iii) ₹ 12,20,000
iv) ₹ 9,15,000
ANS-iv)

29. Particular Nov Dec Jan Feb March
Sales 15,00,000 14,00,000 16,00,000 10,00,000 9,00,000
-cash sales 3,75,000 3,50,000 4,00,000 2,50,000 2,25,000
-credit sales 11,25,000 10,50,000 12,00,000 7,50,000 6,75,000
Collection
-60% 6,75,000 6,30,000 7,20,000 4,50,000
-30% 3,37,000 3,15,500 3,60,000
-10% 1,12,500 1,05,000
9,15,000
ANSWER :

30. Q.20
A budget that gives a summary of all the
functional budgets and budgeted statement of
profit and loss is called
i) Flexible budget
ii) Master budget
iii) Performance budget
iv) Zero base budget
ANS-ii)

31. The master budget is a summary budget
of the function budgets. Various
functional budgets are incorporated into
master budget . The ICWA. London
denies a “ Master Budget as the summary
budget incorporating its components
functional budget, which is finally
approved, adopted and employed”

32. Q.21
Working capital is also known as___ capital.
i) Current asset
ii) Operating
iii) Projecting
iv) Operation capital
ANS-ii)

33. Q.22
Gross Working Capital is also known as _______.
i) Quantitative concept
ii) Qualitative concept
iii) Current assets working capital
iv) None of the above
ANS-i)

34. Q.23
i) the company has no current assets at all
ii) the company currently is unable to meet its short-term liabilities
iii) the company has negative earnings before interest and tax
iv) the company currently is able to meet its short-term liabilities
A negative working capital means that -………..
ANS-ii)

35. Q.24
i) To maintain the optimum levels of investment in current assets.
ii) To reduce the levels of current liabilities.
iii) Improve the return on capital employed.
iv) All of the above
One of the important objective(s) of working capital
management is/are –
ANS-iv)

36. i) The amount utilized at the time of contingencies.
ii) The firm’s investment in current assets.
iii) The capital which is required at the time of the commencement of
business.
iv) The working capital which is necessary on a continuous and
uninterrupted basis.
Q.25
Gross working capital refers to –
ANS-ii)

37. Current assets are those assets –
i) Which can be sold by the companies.
ii) Which are less important from production angle.
iii) Which are held by the companies to pay-off current liabilities.
iv) Which are converted in to cash within a period of one year.
Q.26
ANS-iv)