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MCQ – CASH FLOW, FUND FLOW, RATIO ANALYSIS

MCQ – CASH FLOW, FUND FLOW, RATIO ANALYSIS

 

1.  Financial Accounting deals with ________.

 

A.  Determination of costs

B.  Determination of profits

C.  Determination of prices

D.  Determination of transactions

ANSWER: B

 

2.  The ratios which reveal the final result of the managerial policies and performance is__________.

 

A.  turnover ratios.

B.  profitability ratios.

C.  short term solvency ratio.

D.  long term solvency ratio.

 

ANSWER: B

 

3.  Which of the following is not a tool of management accounting?

 

A.  Ratio analysis

B.  budget and budgetary control

C.       marginal costing D. unit casting

ANSWER: D

 

4.  Retained earnings statement depicts __________.

 

A.  appropriation of profits

B.  estimated profits

C.       estimated costs D. estimated prices

 

ANSWER: A

 

5.  The ratio which measures the profit in relation to capital employed is known as __________.

 

A.  return on investment.

B.  gross profit ratio.

C.  operating ratio.

D. operating profit ratio.

 

ANSWER: A

 

6.  Prepaid expenses is an example of _________.

 

A.  fixed assets.

B.  current assets.

C.       fictitious assets. D. current liabilities.


ANSWER: B

 

7.  Stock velocity ratio is known as ___________.

 

A.  turnover ratio.

B.  solvency ratio.

C.       liquidity ratio. D. profitability ratio.

 

ANSWER: A

 

8.  Which ratio is calculated to ascertain the efficiency of inventory management?

 

A.  Stock velocity ratio.

B.  Debtors velocity ratio.

C.  Creditors velocity ratio.

D. Working capital turnover ratio.

 

ANSWER: A

 

9.  Sales - Gross Profit =_________.

 

A.  net profit.

B.  cost of production.

C.  administrative expenses.

D.  cost of goods sold.

ANSWER: D

 

10.  Which ratio measures the number of times the receivables are rotated in a year in terms of sales?

 

A.  Stock turnover ratio.

B.  Debtors turnover ratio.

C.  Creditors velocity ratio.

D.  Working capital turnover ratio.

 

ANSWER: B

 

11.  The ratio which indicates the number of times the payables are rotated in a year is ____________.

 

A.  stock turnover ratio.

B.  stock turnover ratio.

C.  creditors velocity ratio.

D. working capital turnover ratio.

 

ANSWER: C

 

12.  Current assets - current liabilities =_______.

 

A.  fixed capital.

B.  working capital.

C.       opening capital. D. closing capital.

 

ANSWER: B

 

13.  The ratio of current assets to current liabilities is called_______.

 

A.  liquid ratio.

B.  acid test ratio.

C.  current ratio.

D. cash position ratio.

 

ANSWER: C

 

14.  Management accounting is also called as _________.

 

A.  price level accounting

B.  historical cost accounting


C. inflation accounting

 

D. decision accounting

ANSWER: D

 

15.  Current assets - (stock + prepaid expenses) =______________.

 

A.  current assets.

B.  fixed assets.

C.       liquid assets. D. fictitious assets.

 

ANSWER: C

 

16.  Operating profit to sales gives us ____________.

 

A.  Gross Profit ratio

B.  Net Profit ratio

C.  Operating ratio

D. Operating profit ratio

 

ANSWER: D

 

17.  An ideal debt equity ratio is________.

 

A.  1:1

B.  2:1

C.       3:1 D. 4:1

ANSWER: A

 

18.  Capital gearing ratio is also known as___________.

 

A.  leverage ratio.

B.  fixed assets turnover ratio.

C.       proprietary ratio. D. debt equity ratio.

 

ANSWER: A

 

19.  Shareholders funds + Long-term loans =_____________.

 

A.  current assets.

B.  current liabilities.

C.  fixed assets.

D. capital employed.

 

ANSWER: D

 

20.  Net capital employed is equal to_________.

 

A.  total assets minus total liabilities.

B.  fixed assets plus net-working capital.

C.  total assets minus long-term liabilities. D. total assets.

 

ANSWER: B

 

21.  All those assets which are converted into cash in the normal course of business within one year are known as _________.

A.  current assets.

B.  fixed assets.

C.       fictitious assets. D. wasting assets.

 

ANSWER: A


22.  All those liabilities which are payable in cash in the normal course of business within a period of one year are called _________.

A.  long term liabilities.

B.  outside liabilities

C.       short term loans. D. current liabilities.

 

ANSWER: D

 

23.  Any transaction between a current item and another current item does not affect __________.

 

A.  profit.

B.  funds.

C.       working capital. D. capital.

 

ANSWER: B

 

24.  Principle for preparation of working capital statement -Increase in current asset _______.

 

A.  increases working capital.

B.  decreases working capital.

C.       decrease fixed capital. D. increase fixed capital.

 

ANSWER: A

 

25.  Principle for preparation of working capital statement - Decrease in current asset ______________.

 

A.  increases working capital.

B.  decreases working capital.

C.       decrease fixed capital. D. increase fixed capital.

 

ANSWER: B

 

26.  Principle for preparation of working capital statement -Decrease in current liability _____________.

 

A.  increases working capital.

B.  decreases working capital.

C.       decrease fixed capital. D. increase fixed capital.

 

ANSWER: A

 

27.  Principle for preparation of working capital statement -Increase in current liability ___________.

 

A.  increases working capital.

B.  decreases working capital.

C.       decrease fixed capital. D. increase fixed capital.

 

ANSWER: B

 

28.  Depreciation on fixed assets is _________.

 

A.  non operating income.

B.  operating expense.

C.  operating income.

D. non operating expense.

 

ANSWER: D

 

29.  Provision for Income tax is ____________.

 

A.  non operating income.

B.  operating expense.

C.  operating income.


D. appropriation of profits.

 

ANSWER: D

 

30.  Profit on sale of fixed assets is __________.

 

A.  non trading income.

B.  operating income.

C.       non trading gains. D. long term gain.

 

ANSWER: C

 

31.  In fund flow statement, issue of shares is ________.

 

A.  sources of funds.

B.  applications of funds.

C.  sources of cash.

D. applications of cash.

 

ANSWER: A

 

32.  In funds flow statement, sale of fixed assets is ___________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: D

 

33.  In funds flow statement, funds from operations is _________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: D

 

34.  In funds flow statement, increase in working capital is ________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: A

 

35.  In funds flow statement, decrease in working capital is _________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: D

 

36.  In funds flow statement, repayment of long-term loans is ________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: A

 

37.  In funds flow statement, purchase of fixed assets is _________. A. sources of cash.


B. applications of funds.

 

C. applications of cash.

D. sources of funds.

 

ANSWER: B

 

38.  A cash flow statement is a statement which portrays the changes in the cash position between _______.

 

A.  two accounting periods.

B.  three accounting periods.

C.       four accounting periods. D. five accounting periods.

ANSWER: A

 

39.  The term cash in the context of cash flow analysis includes the cash balance and the __________.

 

A.  working capital.

B.  bank balance.

C.  capital.

D. fixed assets

 

ANSWER: B

 

40.  Cash flow analysis is based on the ______.

 

A.  capital.

B.  fixed assets.

C.       cash concept of funds. D. working capital.

 

ANSWER: C

 

41.  For the calculation of trend percentage which year is considered 100 percent?

 

A.  first year

B.  second year

C.       third year D. last year

 

ANSWER: A

 

42.  Management accounting information is used by _______.

 

A.  management

B.  banks

C.       creditors D. government

 

ANSWER: A

 

43.  Financial statements are classified into _____ statements.

 

A.  four

B.  three

C.       two D. five

 

ANSWER: A

 

44.  Which one of the following is not management accounting tool?

 

A.  Standard costing

B.  Marginal costing

C.  budgeting

D. process costing

 

ANSWER: D


45.  Which one of the following is not mandatory according to the laws?

 

A.  Financial accounting

B.  cost accounting

C.       Management accounting D. none of the above

 

ANSWER: C

 

46.  If working capital is Rs. 1,00,000 and current ratio is 2:1, then the amount of current asset is _________.

 

A.  Rs.1,00,000

B.  Rs. 2,00,000

C.       Rs. 1,50,0000 D. Rs. 2,50,000

 

ANSWER: B

 

47.  Types of financial statements are ____.

 

A.  three

B.  four

C.       five D. two

 

ANSWER: B

 

48.  Which one of the following is not the determinant of the working capital?

 

A.  size of the firm

B.  operating cycle

C.       terms of credit D. competitors

ANSWER: D

 

49.  Permanent working capital ___

 

A.  will vary at all times

B.  will vary with volumes

C.  fixed at all times

D.  fluctuates according to the season

ANSWER: C

 

50.  Which one of the following is correct?

 

A.  Cost of goods sold=sales -gross profit

B.  cost of goods sold= op. stock- purchases + clo. stock

C.  cost of goods sold= op. stock+ purchases + clo. stock

D.  cost of goods sold= op. stock- purchases - clo. stock

ANSWER: A

 

51.  Operating costs include cost of goods sold and _____.

 

A.  purchases

B.  sales

C.  gross profit

D.  other operating expenses

 

ANSWER: D

 

52.  In common size income statement analysis, which is taken as 100 percent?

 

A.  sales

B.  cost of goods sold

C.       purchases D. total assets


ANSWER: A

 

53.  Profit on sale of fixed assets is __________.

 

A.  non trading income.

B.  operating income.

C.       non trading gains. D. long term gain.

 

ANSWER: A

 

54.  In fund flow statement, issue of shares is ________.

 

A.  sources of funds.

B.  applications of funds.

C.  sources of cash.

D. applications of cash.

 

ANSWER: A

 

55.  In funds flow statement, funds from operations is _________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: D

 

56.  In funds flow statement, increase in working capital is ________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: A

 

57.  In funds flow statement, decrease in working capital is _________.

 

A.  applications of funds.

B.  sources of cash.

C.       applications of cash. D. sources of funds.

 

ANSWER: D

 

58.  A cash flow statement is a statement which portrays the changes in the cash position between _______.

 

A.  two accounting periods.

B.  three accounting periods.

C.       four accounting periods. D. five accounting periods.

ANSWER: A

 

59.  While preparing working capital requirement, tax paid in advance is considered as _________.

 

A.  current asset

B.  current liability

C.  capital.

D. fixed assets.

 

ANSWER: A

 

60.  Cash flow analysis is based on the ______.

 

A.  capital.

B.  fixed assets.


C. cash concept of funds.

 

D. working capital.

ANSWER: C

 

61.  In cash flow statement, issue of shares is _______

 

A.  cash from financing activities

B.  cash from operating activities

C.  cash from investment activities D. none of the above

 

ANSWER: A

 

62.  In cash flow statement, sale of fixed assets is ________.

 

A.  cash from financing activities

B.  cash from operating activities

C.  cash from investment activities D. none of the above

 

ANSWER: C

 

63.  In fund flow statement, Increase in debtors is ___________.

 

A.  cash from financing activities

B.  cash from operating activities

C.  cash from investment activities D. none of the above

 

ANSWER: B

 

64.  Decrease in current liabilities is ___________.

 

A.  cash raised from operating activity

B.  cash raised from financing activity

C.  cash raised form investment activities D. none of the above

 

ANSWER: A

 

65.  Increase in current assets is _______.

 

A.  cash used i9n operating activities

B.  cash used in financing activity

C.  cash used in investment activities D. none of the above

 

ANSWER: A

 

66.  The basic function of management accounting is _________.

 

A.  to record busi. transaction

B.  to interpret the financial data

C.  to classify the accounts

D.  to assists management in performing their functions

ANSWER: D

 

67.  Management accounting involves

 

A.  preparation of financial statements

B.  analysis and interpretation of data

C.  recording of busi. transaction

D.  none

 

ANSWER: B

 

68. Management accounting provides services to management in performing


A. all management functions

 

B. coordinating functions

C. controlling functions

D. HRD functions

 

ANSWER: A

 

69.  Which one is the main reason for the introduction of management accounting?

 

A.  limitation of financial accounting

B.  limitations of cost accounting

C.  limitations of HRD accounting D. Limitations of inflation accounting

 

ANSWER: A

 

70.  When the analysis is done by external people, it is known as

 

A.  internal analysis

B.  external analysis

C.  vertical analysis

D. horizontal analysis

 

ANSWER: B

 

71.  Which one of the following is not a tool of financial analysis?

 

A.  Trend percentages

B.  common size statement analysis

C.  comparative financial analysis D. budgeting

 

ANSWER: D

 

72.  The statement which shows the net result of business is

 

A.  income statement

B.  balance sheet

C.       fund flow statement D. cash flow statement

ANSWER: A

 

73.  The statement which shows the financial position of the business is

 

A.  income statement

B.  balance sheet

C.       fund flow statement D. cash flow statement

ANSWER: B

 

74.  The statement which shows the movement of funds between two periods of the business is

 

A.  income statemen

B.  balance sheet

C.       fund flow statement D. cash flow statement

ANSWER: C

 

75.  Comparative statement analysis is

 

A.  vertical analysis

B.  horizontal analysis

C.  either vertical or horizontal analysis D. neither vertical nor horizontal analysis

 

ANSWER: B


76.  The term fixed assets include

 

A.  cash

B.  marketable investment

C.       plant D. debtors

ANSWER: C

 

77.  The term fixed assets does not include

 

A.  plant

B.  machinery

C.       land D. stock

ANSWER: D

 

78.  For the purpose of analysis, the liabilities are grouped into _____ categories.

 

A.  three

B.  two

C.       four D. five

 

ANSWER: A

 

79.  A low capital gearing ratio indicates _______.

 

A.  under capitalization.

B.  over capitalization.

C.       borrowed capital. D. long term funds.

ANSWER: B

 

80.  Low turnover of stock ratio indicates ________.

 

A.  solvency position.

B.  monopoly situation.

C.  overinvestment in inventory. D. liquidity position.

ANSWER: C

 

81.  Sale of goods on credit results in __________.

 

A.  increase in working capital

B.  decrease in working capital

C.  increase or decrease in working capital D. none of the above

 

ANSWER: D

 

82.  The difference between actual and planned results is referred to as a(n):

 

A.  variance.

B.  exception

C.       budget. D. life cycle.

ANSWER: A

 

83.  P/V ratio 50%; variable cost of the produce Rs.25, then selling price is _______.

 

A.  Rs. 50

B.  Rs. 40

C.  Rs. 30


D. Rs. 55

 

ANSWER: A

 

84.  Which of the following is/are the tool/s of financial statement analysis?

 

A.  Comparative statement analysis

B.  Common size statement analysis

C.       Trend analysis D. All the above

ANSWER: D

 

85.  Formula for Calculating Cash from Operations

 

A.  Net Profit + non cash and non -operating items which are debited in profit and loss account - Cash and Operating items which are credited in profit and loss account

 

B.  Cash sales - ( Cash purchase + Cash operating expenses )

C.  Cash Sales - Credit Purchase - Non Cash and Non-operating expenses. D. Credit Sales - Cash purchase - cash operating expenses

 

ANSWER: A

 

86.  Adjusted profit and loss a/c is prepared to know __________.

 

A.  funds from operation

B.  inflows of funds from financing activities

C.  outflows of funds from financing activities D. changes in working capital

 

ANSWER: A

 

87.  In fund flow statement, redemption of preference capital is

 

A.  source of funds

B.  source of cash

C.       application of funds D. application of cash

ANSWER: D

 

88.  In working capital calculation, when cost of goods sold is Rs. 1,50 ,000 p.a and finished goods are in stock for 15 days, the amounts to be invested in finished goods is

A.  6250

B.  7500

C.       12500 D. 75000

 

ANSWER: A

 

89.  Which one of the following is not a method to find working capital requirement?

 

A.  percent of sales method

B.  working capital components method

C.       operating cycle method D. physical method

 

ANSWER: D

 

90.  Which one is the long term solvency ratio?

 

A.  current ratio

B.  net profit ratio

C.  debt equity ratio

D. debtors turnover ratio

 

ANSWER: C


91.  Production cost under marginal costing includes _________.

 

A.  prime cost only.

B.  prime cost and fixed overhead.

C.  prime cost and variable overhead.

D.  prime cost, variable overhead and fixed overhead.

ANSWER: C

 

92.  Marginal cost considers only the _________ for reporting to management.

 

A.  variable cost

B.  fixed cost

C.  standard cost

D.  production cost

 

ANSWER: A

 

93.  One of the primary differences between marginal costing and absorption costing regarding the treatment of

 

__________.

A.  prime cost.

B.  fixed overheads.

C.       variable overheads. D. direct materials.

 

ANSWER: C

 

94.  Absorption costing differs from marginal costing is the ________.

 

A.  fact that standard costs can be used with absorption costing but not with marginal costing.

B.  amount of costs assigned to individual units of products.

C.  kind of activities for which each can be used. D. amount of fixed costs that will be incurred.

 

ANSWER: B

 

95.  Contribution margin is also known as ________.

 

A.  marginal income.

B.  gross profit.

C.       net profit. D. net loss.

 

ANSWER: A

 

96.  Period costs are ___________.

 

A.  overhead costs.

B.  prime cost.

C.       variable cost. D. fixed costs.

ANSWER: D

 

97.  Contribution margin is equal to ________.

 

A.  fixed cost+Profits

B.  profit + variable cost.

C.       sales - fixed cost- profit. D. sales - profit.

 

ANSWER: A

 

98.  P/V Ratio is an indicator of ________.

 

A.  the rate at which goods are sold.

B.  the volume of sales.

C.  the volume of profit.


D. the rate of profit.

 

ANSWER: D

 

99.  Margin of Safety is the difference between _______.

 

A.  planned sales and planned profit.

B.  actual sales and break-even sales.

C.  planned sales and actual sales.

D. planned sales and planned expenses.

 

ANSWER: B

 

100.  An increase in variable costs _______.

 

A.  increases p/v ratio.

B.  increases the profit.

C.  reduces contribution.

D.  increase margin of safety.

ANSWER: C

 

101.  An increase in selling price ________.

 

A.  increases the break-even point.

B.  decreases the break-even point.

C.  does not affect the break-even point.

D.  optimize the break even point.

ANSWER: B

 

102.  A high margin of safety indicates ______.

 

A.  over production.

B.  over capitalization.

C.  the soundness of the business.

D.  under capitalization.

 

ANSWER: C

 

103.  Angle of incidence is ________.

 

A.  the angle between the sales line and the total cost line.

B.  the angle between the sales line and the y-axis.

C.  the angle between the sale and the x-axis. D. the angle between the sale and total.

 

ANSWER: A

 

104.  CVP analysis is most important for the determination of _______.

 

A.  relationship between revenues and costs at various levels of operations.

B.  sales revenue necessary to equate fixed costs.

C.  variable revenues necessary to equal fixed costs. D. volume of operations necessary to Break-even.

 

ANSWER: B

 

105.  The conventional Break-even analysis does not assume that _______.

 

A.  selling price per unit will remain fixed.

B.  total fixed costs remain the same.

C.  variable cost per unit will vary.

D. productivity per worker will remain unchanged.

 

ANSWER: B

 

106.  1f` fixed costs decrease while variable cost per unit remains constant, the new B.E.P in relation to the old B.E.P will be _______.


A.  lower.

 

B.  higher.

C.  unchanged.

D.  indeterminate.

ANSWER: B

 

107.  If fixed costs decrease while the variable cost per unit remains constant, the new contribution margin in relation to the old contribution margin will be ______.

A.  lower.

B.  unchanged.

C.  higher.

D.  indeterminate.

 

ANSWER: B

 

108.  Selling price per unit Rs. 10; Variable cost Rs. 8 per unit; Fixed cost Rs. 20,000; Break-even production in units _______.

A.  10,000.

B.  16,300.

C.       2,000. D. 2,500.

 

ANSWER: A

 

109.  Sales Rs. 25,000; Variable cost Rs. 8,000; Fixed cost Rs. 5,000; Break-even sales in value ________.

 

A.  Rs. 7,936.

B.  Rs. 7,353.

C.       Rs. 8,333. D. Rs. 9,090.

 

ANSWER: B

 

110.  Fixed cost Rs. 80,000; Variable cost Rs. 2 per unit; Selling price_Rs. 10 per unit; Turnover required for a profit target of Rs. 60,000 will be _______.

A.  Rs. 1,75,000.

B.  Rs. 1,17,400.

C.       Rs. .57,000. D. Rs. 1,86,667.

 

ANSWER: A

 

111. Sales Rs. 25,000; Variable cost Rs. 15,000; Fixed cost Rs .4,000; P/V Ratio is ______.

 

A.  40 percent

B.  80 percent

C.       15 percent D. 30 percent

ANSWER: A

 

112.  Sales Rs. 50,000; Variable cost Rs. 30,000; Net profit Rs. 6,000; fixed cost is__________.

 

A.  Rs. I0,000.

B.  Rs.l4,000.

C.       Rs. 12,000. D. Rs. 8,000.

 

ANSWER: B

 

113.  Actual sales Rs .4,00,000; Break-even sales Rs. 2,50,000; Margin of Safety in percentage is_______.

 

A.  33.3 percent

B.  66.67 percent


C. 37.5 percent

 

D. 76.33 percent

ANSWER: C

 

114.  P/V Ratio 50%; Variable cost of the produce Rs. 25; Selling price is________.

 

A.  Rs. 50.

B.  Rs. 40.

C.       Rs. 30. D. Rs. 55.

 

ANSWER: A

 

115.  Fixed cost Rs. 2,00,000; Sales Rs. 8,00,000; P/V Ratio 30%; the amount of' profit is________.

 

A.  Rs. 50,000.

B.  Rs. 40,000.

C.       Rs. 35,000. D. Rs. 45,000.

 

ANSWER: B

 

116.  P/V Ratio is 25% and Margin of Safety is Rs; 3,00,000, the amount of profit is_____.

 

A.  Rs. 1,00,000.

B.  Rs. 80,000.

C.       Rs. 75,000. D. Rs. 60,000.

 

ANSWER: C

 

117.  Total sales Rs. 20,00,000; Fixed expenses Rs. 4,00,000; P/V Ratio 40 percent Break-even capacity in percentage is_______.

A.  40

B.  60

C.       50 D. 45

 

ANSWER: C

 

118.  Break - even point occurs at 40 percent of` total capacity, margin of safety will be _____ percent.

 

A.  40

B.  60

C.       80 D. 85

 

ANSWER: B

 

119.  If the P/V Ratio of a product is 30 percent and selling price is Rs. 25 per unit, the marginal cost of the product would be ___________.

A.  Rs.18.75.

B.  Rs.16.

C.       Rs. 15. D. Rs.20.

 

ANSWER: A

 

120.  Absorption costing is also known as ______.

 

A.  historical costing.

B.  real costing.

C.       marginal costing. D. real costing.

ANSWER: A


121.  Under marginal costing, stock are valued at _________.

 

A.  cost less

B.  cost more.

C.       variable cost. D. market price.

ANSWER: C

 

122.  Absorption costing lays emphasis on _____.

 

A.  production.

B.  sales.

C.       marketing. D. advertising.

ANSWER: A

 

123.  Marginal costing lays emphasis on ___________.

 

A.  production.

B.  sales.

C.       marketing. D. advertising.

ANSWER: B

 

124.  Selling price - marginal cost =____________.

 

A.  fixed cost.

B.  semi-variable cost.

C.  contribution.

D. break-even point.

 

ANSWER: C

 

125.  Total sales - total variable cost ________.

 

A.  fixed cost.

B.  semi-variable cost.

C.  contribution.

D. break-even point.

 

ANSWER: C

 

126.  Fixed cost + net profit =__________.

 

A.  BEP

B.  semi-variable cost.

C.       margin of safety. D. contribution.

ANSWER: D

 

127.  A high P/V ratio indicates_____.

 

A.  high profitability.

B.  low profitability.

C.       high loss. D. break even.

 

ANSWER: A

 

128.  Fixed cost / P/V ratio =___________.

 

A.  Contribution

B.  Margin of safety.

C.  Break even point.


D. Variable cost.

 

ANSWER: C

 

129.  Profit / P/V ratio =_____________.

 

A.  Break even point.

B.  Margin of safety.

C.       Contribution. D. Variable cost.

ANSWER: B

 

130.  When, sales:Rs. 80,000; Variable cost: Rs. 50,000 the P/V ratio is _____ percent.

 

A.  37.5

B.  40

C.  25

D. 27.5

 

ANSWER: A

 

131.  The budget is a________.

 

A.  post-mortem analysis.

B.  substitute of management.

C.       an aid to management. D. calculation.

 

ANSWER: C

 

132.  One of the most important tools of cost planning is_________.

 

A.  budget.

B.  direct cost.

C.       unit cost. D. cost sheet.

 

ANSWER: A

 

133.  Sales budget is a______.

 

A.  functional budget.

B.  expenditure budget.

C.  master budget.

D.  flexible budget.

ANSWER: A

 

134.  The budget which usually takes the form of budgeted profit and loss account and balance sheet is known as _________.

A.  flexible budget.

B.  master budget.

C.  cash budget.

D.  purchase budget.

 

ANSWER: B

 

135.  Which of the following is usually a long-term budget?

 

A.  Fixed budget.

B.  Cash budget.

C.  Sales budget.

D. Capital expenditure budget.

 

ANSWER: D

 

136. The fixed and variable cost classification has a special significance in the preparation of ______.


A. capital budget.

 

B. cash budget.

C. master budget.

D. flexible budget.

 

ANSWER: D

 

137.  The budget, which is prepared first of all is_________.

 

A.  master budget.

B.  cash budget.

C.       budget for key factor. D. none of these.

 

ANSWER: C

 

138.  Preparing budget figures for different levels of activity within a range under flexible budgeting is_____________.

A.  formula method.

B.  multi-activity method.

C.  budget cost allowance method. D. none of these.

 

ANSWER: B

 

139.  What type of budget is designed to take into account forecast change in costs, prices, etc?

 

A.  master budget.

B.  rolling budget.

C.       flexible budget. D. functional budget.

ANSWER: B

 

140.  Operation budgets normally cover a period of ________.

 

A.  one to ten years.

B.  one to two years.

C.       one to five years. D. one year or less.

 

ANSWER: D

 

141.  The entire process of preparing the budgets is known as _______.

 

A.  planning.

B.  organizing.

C.       budgeting. D. controlling.

 

ANSWER: C

 

142.  Which one is to be known for preparation of production budget?

 

A.  Estimated sales

B.  estimated opening stock of raw materials

C.  estimated closing stock of raw materials D. cost of raw materials

 

ANSWER: A

 

143.  Budgetary control ends with _______.

 

A.  planning.

B.  organizing.

C.       budgeting. D. control.


ANSWER: D

 

144.  Budget designed to remain constant irrespective of the level of activity attained is called ________.

 

A.  fixed budget.

B.  flexible budget

C.  sales budget.

D. production budget.

 

ANSWER: A

 

145.  Long-term budgets are prepared for ________.

 

A.  1 year.

B.  1-3 years

C.       1-5 years. D. 5-10 years.

ANSWER: D

 

146.  The budget prepared for various levels of activity by classification of expenditure under fixed, variable and semi fixed categories is __________.

A.  fixed budget.

B.  flexible budget.

C.  sales budget.

D. production budget.

 

ANSWER: B

 

147.  Budget which shows quantity of finished products to be sold and price at which they are to be sold is____________.

A.  fixed budget.

B.  flexible budget.

C.  sales budget.

D. production budget.

 

ANSWER: C

 

148.  The budget which shows the budgeted quantity of output to be produced during a specific period is_____________.

A.  fixed budget

B.  flexible budget.

C.  sales budget.

D. production budget.

 

ANSWER: D

 

149.  Material consumption budget is prepared on the basis of ________.

 

A.  sales budget.

B.  production budget.

C.       fixed budget. D. flexible budget.

ANSWER: B

 

150.  Budget of indirect costs in the form of indirect wages, indirect material and indirect expenses in the factory is ______.

A.  production overhead budget.

B.  administration overhead budget.

C.  selling and distribution overhead budget. D. master budget.

 

ANSWER: A



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