Are you looking for an effective way to review your knowledge of accounting and financial management? These multiple-choice questions and answers can be a great tool to help you assess your understanding of the subject matter.
These MCQs with Answers in Accounting and Financial Management are important for exams like MBA, BBA, BCA, MCA, BMS, UPSC, CA, CS, CMA, CPA, CFA, NET, Banking, and other accounts department exams.
55 Accounting and Financial Management MCQs with Answers
1. ___ accounting is concerned with accounting information that is useful to management.
a. Financial
b. Cost
c. Management
d. All of the above
Answer (C)
2. Sunk cost is relevant cost –
a. True
b. False
Answer (B)
3. Quick Ratio is also known as –
a. Liquid ratio
b. Acid test ratio
c. Both of above
d. Current ratio
Answer (C)
4. COGS = Opening stock + Purchase + ___ – closing stock.
a. Direct income
b. Direct expenses
c. Indirect expenses
d. Indirect income
Answer (B)
5. On the basis of traceability, costs are classified as –
a. Fixed cost & variable cost
b. Direct & indirect cost
c. Relevant & opportunity cost
d. Incremental & documented cost
Answer (B)
6. ___ Defined as the allotment of whole items of costs to the cost centre or cost unit.
a. Apportionment
b. Distribution
c. Allocation
d. Overheads
Answer (C)
7. ___ cost increases with the increase in the number of batches.
a. Set-up cost
b. Carrying cost
c. Holding cost
d. Total cost
Answer (A)
8. ___ work is executed outside the premises of the contractor.
a. Job
b. Contract
c. Process
d. Batch
Answer (B)
9. Escalation clause included in the contract to reduce the element of risk by fluctuation.
a. True
b. False
Answer (A)
10. Normal loss may be in the form of –
a. Normal waste
b. Normal spoilage
c. Normal scrap
d. All of the above
Answer (D)
11. Two or more products separated in processing, each having a sufficiently high saleable value to merit recognition as the main product is known as –
a. Joint product
b. By-Product
c. Batch product
d. Combined product
Answer (A)
12. Which method is also known as an arbitrary method –
a. Standard cost method
b. Physical unit method
c. Average unit cost method
d. Survey method
Answer (D)
13. Higher current ratio, i.e. more than 2:1 indicate a sound solvency position while a higher quick ratio i.e. more than 1:1 indicate a sound financial position.
a. True
b. False
Answer (A)
14. Which of the following is true –
a. C = S – VC
b. C = F + P
c. S – VC = F + P
d. All of the above
Answer (D)
15. Margin of safety = Sales ___.
a. Break-even point
b. Break-even sales
c. Profit volume
d. Contribution
Answer (B)
16. ___ is a formal expression of anticipated income & expenditure for a definite future period.
a. Budgeting
b. Budgetary
c. Budgetary control
d. Budget
Answer (D)
17. On the basis of efficiency, the budget is categorized as –
a. Functional & master budget
b. Fixed & flexible budget
c. Long-term & short-term budget
d. All of the above
Answer (B)
18. Budgetary control encourages productive competition among employees through an incentive scheme.
a. True
b. False
Answer (A)
19. Standard cost is similar to estimated cost –
a. True
b. False
Answer (B)
20. ___ is the difference between the actual cost and the standard cost incurred during a period.
a. Variance
b. Controlling
c. Standard budgeting
d. Budgetary control
Answer (A)
21. Which of the following statement is not true –
a. SY > AY = (A)
b. SY < (AY = (B)
c. MCV = MUV + MPV
d. MUV = MCU + MPV
Answer (D)
22. ___ is the excess of units produced over the expected units of production. Over units of production.
a. Abnormal loss
b. Abnormal gain
c. Supernormal loss
d. Supernormal gain
Answer (B)
23. Liquid Assets = Current Assets = Quick Assets
a. True
b. False
Answer (B)
24. Larger the angle of incidence, the higher the profit.
a. True
b. False
Answer (A)
25. Fund includes:
a. Cash
b. Total current assets
c. Networking Capital
d. All of the above
Answer (D)
26. Which of the following statement shows major sources & uses of cash:
a. Fund flow statement
b. Cash flow statements
c. Balance sheet
d. Income expenditure
Answer (B)
27. ___ cost is a cost that can be influenced by the action of a specified member of an undertaking.
a. Joint
b. Controllable
c. Common
d. Direct
Answer (B)
28. Controllable cost, variable cost, and direct cost are synonymous
a. True
b. False
Answer (B)
29. The worker who works directly with the raw materials in covering them to finished goods represents ___.
a. Direct expenses
b. Direct labour
c. Direct material
d. None of the above
Answer (B)
30. PRIME COST + Factory overheads = PRODUCTION COST.
a. True
b. False
Answer (B)
31. Which of the following stems are not included in the cost sheet?
a. Preliminary expenses are written off
b. Profit on sale of fixed assets
c. None of the above
d. Both a & b
Answer (D)
32. Unproductive wages in an item of –
a. OFFICE overheads
b. Factory overheads
c. DIRECT LABOR
d. PRODUCTION overhead
Answer (B)
33. Insurance overheads are allocated on the basis of –
a. Floor area
b. Capital value
c. Value of stock
d. Kilowatt
Answer (C)
34. Percentage of direct wage = Factory overhead X 100
Direct Wage
a. True
b. False
Answer (A)
35. Consolidated summary of the various functional budget is known as:
a. Common budget
b. Summarized budget
c. Master budget
d. Both b & c
Answer (D)
36. Depreciation is a type of ___ cost.
a. Incremental
b. Non-cash
c. Sunk
d. Imputed
Answer (B)
37. P/V ratio stands for profit/value ratio.
a. True
b. False
Answer (B)
38. The amount at any given volume of output by which the aggregate costs are changed in the volume of output is increased or decreased by one unit, is called.
a. Abruption
b. Marginal costing
c. Variable costing
d. CUP analysis
Answer (A)
39. Which o the following is the advantage of budgetary control –
a. Maximize output
b. Ensure teamwork
c. Controls expenditure
d. All of the above
Answer (D)
40. ___ Accounting to be made compulsory by law but ___ Accounting is adopted to increase efficiency without any legal force.
a. Management, Financial
b. Cost, Financial
c. Financial, Management
d. None of the above
Answer (C)
41. Cash from the operation can be expressed as Net Profit + Increase in ___ – Decrease in ___.
a. Current Assets, Current liability
b. Current liability, Current Assets
c. Non-operating income
d. None of the above
Answer (B)
42. Which of the following statement are true?
i. Allocation is defined as the allotment of whole items of cost to the cost centre or cost units
ii. Apportionment means the allotment of proportions of items of cost to cost centres or cost units
a. Both I and ii
b. Only i
c. Only ii
d. None of the above
Answer (A)
43. A company has a current ratio of 4.5 to 1 and a liquidity ratio of 3 to 1 of merchandise inventory is Rs.24,000. Find out total current liabilities.
a. Rs.20,000
b. Rs.16,000
c. Rs.15,000
d. Rs.26,000
Answer (B)
44. COGS = Opening stock + ___ – ___.
a. Purchase, direct expenses
b. Direct expenses, direct income
c. Purchases, closing stock
d. Closing stock, purchases
Answer (C)
45. Which o the following statement is not true:
i. Abnormal costs are those costs. Which are not normally incurred at a given level of output.
ii. Relevant costs are the future costs that differ between alternatives
iii. Opportunity cost is the cost of opportunity lost
a. Both i & ii
b. Both ii & iii
c. All i, ii & iii
d. Neither of the above
Answer (C)
46. Which of the following feature is applied for job costing?
i. Work is executed at the premises of the contract
ii. The contract price is paid in installments depending upon the program of work
iii. Price is decided on the basis of the pricing policy of the manufacturer
a. All i, ii & ii
b. Only i
c. Both i & iii
d. Neither of the above
Answer (C)
47. Which of the following statements is true –
i. The value of the by-product is negligible
ii. The value of both joint & by-product are significant
iii. The value of both joint & by-product are negligible
iv. The value of joint & by-product is negligible
a. Both i & ii
b. ii & iii
c. ii & iv
d. i & iii
Answer (A)
48. Marginal Cost = ___
a. Prime cost
b. Prime cost + total variable cost
c. Fixed cost
d. All of the above
Answer (B)
49. P/V ratio is used in the determination of:
a. Break-Even point
b. Profit at any volume of sales
c. Sales volume to earn the desired profit
d. All of the above
Answer (D)
50. In the Break Even chart, the horizontal axis represents ___ and the vertical axis represents ___.
a. Output, sales revenue
b. Cost of production output
c. Cost of production, sales revenue
d. Output, costing
Answer (A)
51. Which of the following statement is correct-
a. B.E.P is the point at which the total cost line cuts the total sales line
b. B.I.P is the point where the contribution is just equal to fixed costs
c. Both a & b
d. Neither a nor b
Answer (C)
52. ___ is the projection of cost accounting and ___ is the projection of financial accounting.
a. Budgetary control, standard costing
b. Standard costing, marginal costing
c. Standard costing, budgetary costing
d. Marginal costing, standard costing
Answer (B)
53. Which of the following statement are true –
i. Variable cost is one which in the aggregate varies in direct proportion to the volume of production
ii. Fixed cost is charged to finished stock or work in the program as it is treated as a period cost
iii. In small contracts, the contract price is given by the contractee on the completion of the contract
iv. Data accumulation is done through financial accounting & cost accounting system
a. i & iv
b. ii & iii
c. i, ii & iii
d. i, iii & iv
Answer (D)
54. M/s Jacob ltd is committed to supplying 24000 bearings per annum to the EBQ is:
a. 3200 units
b. 3600 units
c. 24,000 units
d. 324 units
Answer (B)
55. Arrange the following steps of budgetary control include.
i. Appointment of the budget committee
ii. Determination of budgeted period
iii. Establishment of a budget centre
iv. Preparation of organizational chart
v. Determination of key factors
vi. Preparation of budget manual
a. i, ii, iv, iii, vi, v
b. ii, iii, iv, vi, v, I
c. iv, iii, I, vi, ii, v
d. iv, I, vi, v, ii, iii
Answer (C)
55. The following information is given: Standard quantity – 250 units. Actual quantity – 260 units. Standard price Rs.5 per unit, Actual price Rs.5.5 per unit. Calculate material variances.
The material variance is –
a. Rs.150 (A)
b. Rs.180 (A)
c. Rs.30 (F)
d. Rs.80 (A)
Answer (B)
Accounting and Financial Management Quiz!
This quiz will test your knowledge of accounting and financial management fundamentals. Find out if you have what it takes to tackle the world of accounting and financial management. Put your knowledge to the test and see if you have what it takes to be a successful accountant or financial manager.
Multiple Choice Questions in Probability and Statistics
Conclusion
The Accounting and Financial Management Multiple Choice Questions and Answers provide a valuable resource for those seeking to gain a better understanding of the topics involved in accounting and financial management. With detailed explanations of each question and answer, this resource will help ensure that students, professionals, and other interested parties have a solid foundation of knowledge in this area. These questions are only for your study purposes. If you like these MCQs, please share them on social media.
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