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FINANCIAL & MANAGEMENT ACCOUNTING

MBA Ist MB0025 SESSION JUL 2010

Section A (2-Marks)
1. A business is an artificial entity distinct 6.A happening of consequence to an entity
from its proprietors. This is based on which known as--------------
concept?
a)event
a) accrual concept b)vouchers
b) money measurement concept c)books
c) entity concept d)journal
d) periodicity concept

7.Which of the following is a type of

2. --------------- has more than one owner vouchers ?
who have agreed to share profits of a
business, carried on by all or any of them a)receipt voucher
acting for all. b)payment vouchers
c)journal vouchers
a) Corporate entity d)all of these
b)partnership firm
c )all business entity
d)sole proprietorship firm 8. ----------------- is drawn to record all non-
cash transactions and events.

3. “Anticipate no profit but provide all a)receipt voucher

possible losses”. Which concept says so? b)payment vouchers
c)journal vouchers
a) the realization concept d) all of the above
b) the matching concept
c) concept of prudence
d)the accrual concept 9.FASB stands for:

a)financial accounting standard board

4.The valuation of assets & liabilities b)financial accounting state board
principle depends on which concept ? c) Both of them
d)none of the above
a)the cost concept
b)money measurement concept 10.Which of the following equation is correct
c)the periodicity concept ?
d)the going concern concept a) assets = liability + capital
b) liability =assets + capital
c) assets = capital – liability
5.According to the income tax law,1961 , d) none of the above
business unit should follow a uniform
accounting period i.e.:
11. ------------ is the residual interest of
a)fiscal year owners in assets over liabilities.
b)calendar year
c)both of the years a)assets
d)none. b)capital
c)capitalization
d) liability

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To cash a/c
12.The income and expenses should be To cash a/c
recognized as & when they are earned and c) Cash a/c Dr.
incurred , irrespective of whether the money d) Capital a/c Dr.
is received or paid in connection thereof. To Ram’s capital a/c To Ram’s a/c

a)accrual concept 19.Withdrew cash from bank for private use

b)cost concept Rs. 20,000.
c)cash basis The J.E is : Cash a/c Dr. To Bank a/c
d)none of the above a) true
b)false
13. If you pass in MBA. It will give you a
great deal of satisfaction .this expression 20.-------------- records daily cash & bank
can not be made in money term . This is receipt and payment.
because of which concept ?
a)cash book
a)accrual b)bank book
b)money measurement
c)cost concept 21. Cost sheet shows the total cost of
d)business entity concept _______ only.

14. ------------- is a book of first entry or a. Purchase

prime entry . b. Production
c. Sales
a)primary book d. All of above
b)secondary book
c)cash book 22. PRIME Cost + Factory overhead =?
d)all of above
a. Factory Cost
15. ------------- records credit sale of goods. b. Production Cost
a) purchase day book c. Selling & Distribution
b) sale day book d. Total Cost
c) journal day book
d) None 23 A Cost Sheet with sales & profit data are
called _________ .
16. ------------ is a documentary evidence in
writing , containing an unconditional a. Expert Cost Sheet
order signed by the maker , directing a certain b. Extended Cost Sheet
person to pay a certain sum of money to the c. Cost Sheet production
bearer of the instrument. d. None of above
a)B/E
b)B/R 24 _________ refers to the cost of
c)B/P materials, which become a major part of the
d)all finished product.

17. ------------- records goods returned to the a. Direct labor cost

suppliers. b. Direct expense cost
a)return inward c. Direct material cost
b)return outward d. All of above
c)sales return
d) none of the above 25 Sunk cost is relevant cost.
a. True
18.Ram commenced business with Rs. b. False
15000.
The J.E for this is: 26 Depreciation is a type of which cost.
a. Non-cash cost
a) Ram’s a/c Dr. b. Incremental cost
b)Ram’s capital a/c Dr. c. Sunk cost

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d. Imputed cost
27. Opportunity cost is also known as 36. Which of the following heads is not an
opportunity lost. application of marginal costing.
a. True
b. False a. Competition
b. Recession
28. A cost, which can be influenced by the c. Special customer
action of a specified number of an d. None of above
undertaking, is called.
37. The consolidated summary of various
a. Controllable cost functional budget is called:
b. Non-Controllable cost
c. Incremental a. Functional budget b. Flexible budget
d. Detrimental cost c. Master budget d. Fixed budget

29. P/V ratio = C/S 38. F.C = P/V X S – F.

a. True a. True
b. False b. False

30. Which of the following is correct. 39. Which of the following is correct.
a. C=S+VC
b. C=F+P a. P/V ratio = Change in profit X 100
c. S=C-VC b. P/V ratio = C/S Change in sales
d. All of the above c. P/C ratio = C/S
d. All of the above
31. P/V stands for profit/value ratio.
a. True 40. Graphical representation of cost &
b. False revenue showing their relations at different
volumes of output is called _________.
32.-------------- will have separate accounts
for each customer. a. Break even chart
b. Break-even point
a) journal ledger c. Margin of safety
b) creditor ledger d. Profit/volume ratio
c) debtor ledger
d) cash ledger Section B (2-Marks)
33. In a B.E. chart, the horizontal axis (x-
axis) represents _________ . Q. If: share – capital – 1,60,000
general reserves – 60,000
a. Cost of production profit & loss A/c – 1,00,000
b. Output loan @ 15% interest – 2,00,000
c. Input sales for the yr. – 5,60,000
d. Profit tax paid - 40,000
Profit for the current year after
34. Variable Cost = Marginal Cost. Interest & tax – 80,000
a. True 41. Debt – Equity ratio is:
b. False a. 3,20,000 b. 2,20,000
c. 1,80,000 d. 2,60,000
35. Sales - ____________ = Margin of
safety 42. Interest coverage ratio is:

a. Break even point a. 4 times b. 5 times

b. Break even sales c. 6 times d. 3 times
c. P/V ratio
d. Profit 43. Return coverage ratio is:

a. 28.9% b. 5 times
c. 6 times d. 3 times
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b) Outstanding income a/c Dr 24000
To interest on FD a/c 24000
44. Capital turnover ratio is:
a. 1.50 times b. 1.08 d) none of above
times
c. 1.80 times d. 2.02 51.In ______________ method,
times depreciation is calculated on cost of the
asset and in _________ method
45. The purpose of trail balance is to: depreciation is charged on the reducing
balance of the book value assets.
a. Check the arithmetical accuracy of ledger a) Diminishing balance, fixed
balances. installment
b. Have an overview of the operations of the b) Reducing balance, fixed installment,
business as on a particular date. c) Fixed installment, diminishing
c. Both a & b. balance
d. None of above. d) All of above

46. Calculate B.E.P from the following 52. _______, _________ and ___________
figures. are the turn used in the science of financial
TS = Rs 50,00,000 VC = Rs accounting.
2,75,000
N.P.= Rs 1,08,000 BEP= ? a. Book keeping, journal, ledgers
b. Book keeping, accounting,
a. Rs. 2,30,000 b. Rs. 2,60,000 accountancy
c. Rs. 3,00,000 d. Rs. 3,30,000 c. Journal, ledger, final accounts
d. All of the above
47. ------------- records credit purchases of
traded goods and ------------- records 53. Which of the following statement is not
credit sale of traded goods. true:
a) goods return , goods purchased
b) purchase day book , sale day book i. Purchase return take place when the
c) purchase return , sales return goods bought are not sold as for the
d) sales day book , purchase day book specification.
ii. Debit note is a document to slow the
48. State in which journal the following items supplier account being debited
would be recorded
A) cash purchase of goods 1) purchase a. Both I and ii
B) credit sale of goods 2) journal b. Only I
C) credit sale of furniture 3) sale c. Only ii
d. Neither I & ii
a) A,1 ; B,3 ; C,2
b) A,2 ; B,3 ; C,3 54. DER compares _________ with
c) A,1 ; B,2 ; C,3 ________.

49. For financial accounting the auditing a. Debenturer & Reserves

is________ & for management accounting b. Debt & Equity
thr auditing is _________. c. Current assets & current liabilities
a) rigid, flexible b) d. Redeemable & irredeemable
voluntary, legal
c) compulsory, voluntary 55. Which of the following statement are
d)objective ,subjective true.

50.interest accrued on fixed deposit of Rs. i. Increase in current assets will increase
20000 at 12% simple interest on 31-12-07, working capital
not yet received . the entry is: ii. Decrease in current liabilities will
a) Income a/c Dr. 24000 decrease working capital
To outstanding income a/c 24000
a. Both i & ii

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b. Only I
c. Only ii 61. Calculate stock turnover ratio:
d. Neither I & ii if opening stock = 75000, closing stock =1,00,000
Credit sales = 2,00,000, cash sales = Rs. 50,000
56. The WDV of a machinery at the Gross profit is 25%, STR is :
beginning and at the end were Rs. 2,00,000
and 1,75,000. An old machine whose written a. 2 times
down value was Rs. 12,000 was sold for Rs. b. 3 times
6,500. Rs. 3200 depreciation was charged c. 2.8 times
during the current year. The purchase price d. 2.1 times
is :
62. Journal proper contain which of the
a. Rs. 20,000 following aspects:
b. Rs. 19,000
c. Rs. 1,68,000 a. Opening journal entries
d. Rs. 1,56,000 b. Closing journal entries
c. Adjusting entries
57 Calculate the selling price if marginal cost d. Rectification entries
is Rs. 2,400 and MCSR is 20%. e. Transferring entries
f. Credit purchase of assets & sale of
a. Rs. 5,000 assets
b. Rs. 4,000 g. Withdrawal of goods by the
c. Rs. 3,000 proprietor for his personal use
d. Rs. 2,000 h. Loss of goods due to natural causes
58. __________ activities are the principal a. a, c, d, e, f
revenue producing activities of the b. a, b, c, d
enterprise & other activities that are not c. d, e, f, g
investing financing activities d. All from a-h
a. Financial 63. Match the following –
b. Operating
c. Investing I. Liquidity ratio
d. None of the above I. Gross profit, net profit
II. Solvency ratio
59. If the depreciation value is not given, it II. Current ratio, liquidity
has to be found out as: ratio
III. Activity ratio
Opening balance of fixed assets + III. Debt equity ratio
____________ - ___________ - closing IV. Profitability ratio
balance of fixed assets IV. Stock turn-over ratio
a. Purchase, direct expenses a. I-I, II-II, III-IV, IV-III
b. Purchases, fixed assets sold b. I-II, II-III, III-IV, IV-I
c. Fixed assets sold, sales c. I-II, II-IV, III-III, IV-I
d. Written of value, direct expenses d. I-IV, II-III, III-I, IV-II
60.________ is a separate statement 64. Which of the following statement:
proposed to test the accuracy of the ledger
balances. i. Goods taken by the proprietor personal
use are credited to sales account
a. Final Accounts
b. Trail Balance ii. Balance-sheet is an account because it is
c. Journal Entries included in the scope of final accounts iii.
d. Balance Sheet Stock at the end, if appear in the trial
balance is taken only to the balance-sheet
Section C (4-Marks)

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iv. Salary paid in advance is not an expense 69. The liquid Ratio is:
because it neither reduces assets not
increases liabilities a. 1:2
b. 2:1
a. i, iii, iv c. 1:1
b. I, ii d. 2:3
c. Ii, iii
d. Iii, iv
65. The increase in working capital is: 70. Debt equity ratio is:

a. 26,000 a. 1:2
b. 20,000 b. 0.75%
c. 19,000 c. 2:1
d. 21,000 d. 1:0.75

66. Which of the following are the 71. Capital gearing ratio is:
characteristics of fund flow statement:
a. 1:1
i. No opening or closing balances are b. 1:2
recorded c. 2:1
ii. It is prepared on the basis of ledger d. 0.7:1
principle
iii. “To” and “By” are indicated 72. Match the following –
iv. It is rigid
v. Only cash receipt & payments are A.
recorded I. According to ________ concept, revenue
vi. It is related with accrual basis is considered as being earned on the date
on which it is realized.
a. i, iii, iv, v II. According to _________ principle,
b. I, ii, iv, vi insignificant facts, which do not influence
c. I, iii, iv any decisions of the investors or any
d. I, iii, vi interested group need not communicated
III. According to _______ concept, the cost
67. Net cash loan for operating activities is – of applying a principle should not be more
than the benefits derived from.
a. Rs. 10,600 IV. According to _______ concept, Revenue
b. Rs. 65,400 earned during a period is compared with the
c. Rs. 67,400 expenditure incurred to earn that income.
d. Rs. 60,100
B.
68. Which of the following statement does I-Making cost & Revenue
not match with the concerned answer: II. Modifying
III. Income recognition
1. Error of omission can be detected only IV. Materially
after a careful review of ledger balance of
previous year - True a. I-I, II-II, III-IV, IV-III
2. Error of principle affects the value of b. I-III, II-IV, III-II, IV-I
revenue & capital items – False c. I-II, II-III, III-IV, IV-I
3. It is very difficult to find out the d. None of the above
compensating errors – False
4. Error of commission affects trial balance – 73. The Net Profit during the year is:
True
a. 2,10,000
a. 1, 2, 3 b. 1,11,800
b. 2, 3 c. 95,800
c. 2, 3, 4 d. 1,15,800
d. 1, 3
Ans. (d)

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74. Which of the following statements are
not correct:

i. S-V = F+P
ii. MUV = (SQ*SR) – (AQ*AP)
iii. Working capital = Current liabilities –
Current Assets
iv. Contribution = MCSR / * 100
v. Cost variance Standard cost – actual
cost

a. ii, iii, iv, v

b. I, ii, iii
c. Iii, iv
d. Ii, iii, iv

75. Which of the following A/c are debited:

1. Drawing A/c
2. Bills payable a/c
3. Debtors A/c
4. Outstanding income A/c
5. Loss on sale income A/c
6. Pre received income A/c
7. Reserve for future expenses or losses
8. Cash at bank

a. 3, 5, 6, 7, 8
b. 1, 2, 4, 5, 8
c. 1, 3, 4, 5, 8
d. 1, 3, 5, 6, 7, 8

Name:

Roll No:

Date:

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