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Account for Manager Online Assignment Set 9
Q1. Accounting records all the transactions which can be expressed either in …………….. .
Answer: money or money’s worth
Q2. Every financial transaction of the business has …………….. and recorded at two places.
Answer: dual effect
Q3. …………….. enables the comparison of the profit or performance of a business in a year with the performance of another year.
Answer: Horizontal Consistency
Q4. The revenues are recognized only at the moment of …………….. .
Answer: realization
Q5. Book Value = Gross (Original) value of the asset …………….. .
Answer: Accumulated depreciation
Q6. The …………….. are the persons who owe to an enterprise an amount for receiving goods or services on credit.
Answer: debtors
Q7. …………….. is a liability which arises only on the happening of an uncertain event.
Answer: Contingent liability
Q8. …………….. = total assets – total liabilities
Answer: Capital
Q9. Three key activities of the accounting function are identifying transactions, recording, transactions, and communicating transactions. The proper order for these activities is considered to be which of the following?
(a) Communicating, recording, and identifying.
(b) Recording, communicating, and identifying.
(c) Identifying, communicating, and recording.
(d) Identifying, recording, and communicating.
(e) None of the above
Answer: (d)
Q10. Which one of the following users of accounting information is considered to be an external user of accounting information rather than an internal user of accounting information?
(a) Sales staff
(b) Company managers
(c) Company customers
(d) Officers and directors
(e) Budget officers
Answer: (c)
Q11. All of the following people can properly be called managers. Which one of the following individuals is not considered an internal user of accounting information?
(a) Service manager
(b) Research and development manager
(c) Production manager
(d) Partner in CA firm charged with conducting the company’s external audit
(e) Human resources manager
Answer: (d)
Q12. A college student pays 150 cash for her textbook. In the student’s opinion, the textbook is worth 50. In accounting, however, the value of the textbook is assumed to be and is recorded at the 150 amount. The accounting principle that is most demonstrated by this example is:
(a) The cost principle
(b) The going-concern principle
(c) The business entity principle
(d) The monetary unit principle
(e) The conservatism principle
Answer: (a)
Q13. The basic accounting equation is Assets = Liabilities + Equity. The Equity term of the equation can be further broken down into several other terms. Assume that the entity is a sole proprietorship. Which of the following statements is correct?
(a) Additional investments by the business owner will increase equity; and revenues will decrease equity.
(b) Additional investments by the business owner will decrease equity; and revenue will increase equity.
(c) Increases in expenses will decrease equity; and owner withdrawals will decrease equity.
(d) Revenues will increase equity; and owner withdrawals will increase equity.
(e) Revenues will decrease equity; and owner withdrawals will increase equity.
Answer: (c)
Q14. If at the end of the accounting period the company’s liabilities total 19,000 and its equity totals 40,000, then what must be the total of assets?
(a) 14,000
(b) 40,000
(c) 21,000
(d) 59,000
(e) None of the above
Answer: (d)
Q15. If during the current accounting period the company’s assets increased by 24,000 and equity increased by 5,000, then how did liabilities change?
(a) Increased by 29,000
(b) Increased by 24,000
(c) Decreased by 5,000
(d) Decreased by 19,000
(e) Increased by 19,000
Answer: (e)
Q16. Capital is a ……………………
Answer: Personal
Q17. Drawings are a ……………………
Answer: Personal
Q18. Furniture is a ……………………
Answer: Real
Q19. State Bank of India is a ……………………
Answer: Personal
Q20. Rent paid is a ……………………
Answer: Nominal
Q21. Journal is a ………………… of original entries for accounting data.
Answer: Primary Book
Q22. The journal is known as the ………………… .
Answer: Book of Original Entry
Q23. The process of transferring the entries from Journal to Ledger accounts is called ………………
Answer: Posting
Q24. ……………… is a statement which shows balances of all accounts on a particular date.
Answer: Trial Balance
Q25. The balances of all the liabilities and capital accounts are recorded in the ……………… of the Trial Balance.
Answer: Credit side
Q26. The balances of all incomes and gains are disclosed in the ……………… of the Trial Balance.
Answer: Credit side
Q27. Outstanding rent A/c is an example for:
(a) Nominal account
(b) Personal account
(c) Representative personal account
(d) None of these
Answer: (a)
Q28. The giving aspect in a transaction is called as:
(a) Debit aspect
(b) Credit aspect
(c) Neither of the two
(d) Both of them
Answer: (a)
Q29. Only …………………………… are recorded in the cash book.
Answer: cash transactions
Q30. Cash payments are recorded on the ………………………… of the cash book.
Answer: credit side
Q31. According to the rules of accounting, all the business transactions are firstly recorded in journal and then posted in …………………………………..
Answer: ledger
Q32. The ……………………………. is an incentive given or received for prompt payment.
Answer: discount
Q33. The ……………………… records all the transactions which are very small in terms of money.
Answer: petty cash book
Q34. An ……………………………… is given to the buyer when sales are made on credit
Answer: invoice
Q35. Purchase return book is also known as ……………………………..
Answer: Return outward book
Q36. Cash book is to record the:
(a) Cash receipts
(b) Cash Payments
(c) Both (a) & (b)
(d) Cash receipts, payment, Bank Receipts, payments, Discount received and paid
Answer: (d)
Q37. Sales book is to record the:
(a) The entire sales volume
(b) The cash sales only
(c) The credit sales only
(d) The credit sales with the discounts
Answer: (c)
Q38. When equity (net assets) is subtracted from total assets the amount remaining is known as which of the following?
(a) Total revenue
(b) Total liabilities
(c) Total expenses
(d) Net income or net loss
(e) All of the above
Answer: (b)
Q39. Trade unions are the part of ………………… of financial statement.
Answer: Internal users
Q40. The creditors want to see two things (i) Regularity of income and (ii) …………………
Answer: Solvency of the Business
Q41. ………………… help while computing National Income statistics etc.
Answer: Financial Statements
Q42. ………………… are meant for dealing in share/securities.
Answer: Stock Exchanges
Q43. Discount on the issue of shares/debentures is ………………………………………
Answer: Capital expenditure
Q44. Preliminary expenses are shown in the balance sheet as ………………………………
Answer: Iintangible assets
Q45. All the nominal accounts of the ………………………………… are used to prepare the Trading and Profit & Loss Account.
Answer: Trial Balance
Q46. Trading Account shows the …………………………… which is the difference of sales and cost of sale.
Answer: Gross profit
Q47. The excess of credit side over debit side is called………………………..
Answer: Net profit
Q48. The Balance Sheet depicts the …………………………….. of the business on a fixed date.
Answer: Financial position
State whether the following are true or false:
Q49. Rent outstanding is a nominal account.
Answer: False
Q50. Insurance prepared is a personal account.
Answer: True
Q51. Interest received is an asset.
Answer: False
Q52. Interest accrued is an asset.
Answer: True
Q53. Bad Debts are personal account.
Answer: False
Q54. Fixed cost is the cost under the classification of
(a) Variability
(b) Normality
(c) Controllability
(d) Functions
Answer: (a)
Q55. Standard costing is brought under the classification of
(a) Controllability
(b) Functions
(c) Planning and control
(d) Both (a) & (c)
Answer: (c)
Q56. Marginal costing is classified on the basis of
(a) Variability
(b) Managerial decisions
(c) Time
(d) Both (a) & (b)
Answer: (a)
Q57. Electricity charges incurred by the firm is
(a) Fixed cost
(b) Semi-variable cost
(c) Variable cost
(d) None of the above
Answer: (b)
Q58. Cost is
(a) An expense incurred
(b) An expenditure incurred
(c) An income received
(d) None of the above
Answer: (a)
Q59.Cost is
(a) Direct cost only
(b) Indirect cost only
(c) Both (a) & (b)
(d) None of the above
Answer: (c)
Q60. Direct cost is
(a) Direct Materials
(b) Direct labour
(c) Direct Expenses
(d) Prime cost
Answer: (d)
Q61. Factory cost is the total of
(a) Direct and indirect costs
(b) Product and administrative costs
(c) Cost of sales
(d) Profit margin
Answer: (a)
Q62. Selling price is the summation of
(a) Direct and indirect costs
(b) Product and administrative costs
(c) Cost of sales and profit margin
(d) Direct materials, direct labour and direct expenses
Answer: (c)
Q63. Prime cost is the summation of
(a) Direct and indirect costs
(b) Product and administrative costs
(c) Cost of sales and profit margin
(d) Direct materials, direct labour and direct expenses
Answer: (d)
Q64. Production cost is the summation of
(a) Direct and indirect costs
(b) Product and administrative costs
(c) Cost of sales and profit margin
(d) Direct materials, direct labour and direct expenses
Answer: (b)
Q65.Service center is the center which normally incurs
(a) Direct and indirect costs
(b) Product and administrative costs
(c) Cost of sales and profit margin
(d) Direct materials, direct labour and direct expenses
Answer: (a)
Q66.Which of the following is ascertained at the product center?
(a) Price
(b) Cost
(c) Variability
(d) Semi-variable cost
Answer: (b)
Q67. Profit center is a responsibility center for profits and
(a) Variability and controllability
(b) Planning and control
(c) Cost and revenue
(d) All of these
Answer: (c)
Q68. The statement prepared for the computation of a product/service cost is known as
(a) Standard Costing
(b) Marginal Costing
(c) Prime Costing
(d) None of these
Answer: (d)
Q69. Financial statement analysis is to
(a) Inter firm comparison
(b) Intra firm comparison
(c) Industrial average comparison
(d) (a), (b) & (c)
Answer: (d)
Q70. Comparative financial statement analysis is into
(a) Comparison of income and position statements
(b) Common size statements
(c) Trend percentage analysis
(d) (a), (b) & (c)
Answer: (d)
Q71. Ratio is an expression of
(a) Quotient
(b) Time
(c) Percentage
(d) Fraction
(e) All of these
Answer: (a)
Q72. Accounting ratios are to study
(a) Accounting relationship among the variables
(b) The relationship in between the variables of financial statements
(c) The relationship in between the variables of financial statements for analysis and interpretations
(d) None of the above.
Answer: (c)
Q73. Accounting ratios are of
(a) Income statement ratios
(b) Positional statement ratios
(c) Both (a) & (b)
(d) None of the above
Answer: (c)
Q74. Solvency position of the firm studied and interpreted through
(a) Short-term solvency ratios
(b) Long-term solvency ratios
(c) Coverage ratios
(d) (a), (b) & (c)
Answer: (d)
Q75. Efficiency and effectiveness of the firm is studied through
(a) Liquidity ratios
(b) Leverage ratios
(c) Turnover ratios
(d) Profitability ratios
Answer: (d)
Q76. Profitability ratios to study the potential to earn profits
(a) On Assets
(b) On Capital employed
(c) On Sales
(d) (a), (b) & (c)
Answer: (c)
Q77. Standard norm of the current ratio is
(a) 2:1
(b) 1:5
(c) 1:2
(d) 3:1
Answer: (a)
Q78. Super quick assets do not include
(a) Closing stock
(b) Prepaid expenses
(c) Sundry debtors
(d) Both (a) & (b)
Answer: (d)
Q79. Standard norm of the Debt to Capital
(a) 1:2
(b) 1:1
(c) 2:1
(d) 1:5
Answer: (c)
Q80. The term accounting is used to describe relationships significantly which exist in between figures shown in a
(a) Balance sheet
(b) Profit & Loss A/c
(c) Trading A/c
(d) All of these
Answer: (d)
Q81. Which of the following is not a purpose of the Ratio Analysis?
(a) To study the liquidity of the firm
(b) To study the leverage position of the firm
(c) To interpret the profit earning capacity of the firm
(d) To identify the turnover of the firm
Answer: (d)
Q82. Ratio analysis is an outcome of analysis of historical transactions known as
(a) Premortem Analysis
(b) Postmortem Analysis
(c) Antimortem Anlaysis
(d) Mortem Analysis
Answer: (b)
Q83. Which of the following is not a ratio account on the basis of Financial Statements?
(a) Income Statement Ratios
(b) Positional Statement Ratios
(c) Composite Mixture of Ratios
(d) None of these
Answer: (d)
Q84. Which of the following is not a short-term solvency ratio?
(a) Current Assets Ratio
(b) Defensive Interval Ratio
(c) Super Quick Assets Ratio
(d) None of these
Answer: (d)
Q85. Fund flow means a study of
(a) Working capital change
(b) Cash position change
(c) Long investment change
(d) Change in the current liabilities
Answer: (a)
Q86. Normally, working capital means
(a) Current assets — Current liabilities
(b) Current assets
(c) Gross working capital
(d) Net working capital
Answer: (a)
Q87. Increase in working capital
(a) Increase in current assets
(b) Increase net working capital
(c) Increase in current liabilities
(d) Increase in long-term source of financing
Answer: (a)
Q88. Adjusted profit and loss account is prepared for
(a) Determining the fund from operations
(b) Determining the fund lost in operations
(c) Either (a) or (b)
(d) None of the above
Answer: (c)
Q89. Fund flow statement is categorized into two parts
(a) Fund inflow and Fund outflow
(b) Cash inflow and Cash outflow
(c) Sources and Applications
(d) None of the above
Answer: (a)
Q90. Fund from operations is
(a) Sources of the firm
(b) Applications of the firm
(c) Neither sources nor applications
(d) None of the above
Answer: (a)
Q91. Purchase of plant and machinery 10 lakh through the issue of 1 Lakh shares at 10 per share; affect the following accounts:
(a) Non-current asset and Non-current liabilities accounts
(b) Non-current asset and Current liabilities accounts
(c) Current asset account and Non-current liabilities accounts
(d) Current asset and current liabilities accounts.
Answer: (a)
Q92. XYZ Ltd. has made a credit purchase of 1 lakh worth of goods led to 1 lakh worth of additional stock of tradable goods for the enterprise, leads to
(a) Increase in the working capital – Applications
(b) No change in the working capital position – Neither an application nor resource
(c) Decrease in the working capital – Resource
(d) None of the above
Answer: (b)
Q93. The meaning of the “To cash ( Tax paid)” entry posted in the Provision for taxation account is
(a) Last year taxation is paid through the current year provision
(b) Current year taxation is paid through the current year provision
(c) Last year tax is paid through the last year taxation
(d) Current year taxation is paid through the last year provision
Answer: (a)
Q94. Profit on sale of the fixed assets are considered to be
(a) Resource to the enterprise
(b) Non-operating income
(c) Application of the enterprise
(d) None of the above
Answer: (b)
Q95. The treatment of current year depreciation with the closing balance of profit in determining the fund from operations
(a) To be added
(b) To be multiplied
(c) To be deducted
(d) To be divided
Answer: (a)
Q96. The redemption bank term loan leads to change in the
(a) Non-current liability account and current asset account
(b) Current asset account and current liabilities account
(c) Non-current asset account and current liabilities account
(d) Non-current asset account and current liabilities account
Answer: (a)
Q97. Flow of funds means the change in
(a) Funds
(b) Working capital
(c) Either
(d) Both
Answer: (d)
Q98. Which of the following is not an objectives fund-flow analysis?
(a) It pinpoints the mobilization of resources and the further utilization of resources
(b) It highlights the financing of the general expansion of the business firms
(c) It exemplifies the utilization of debt finance in the structure of financing
(d) None of these.
Answer: (d)
Q99. Which of the following is not a source of fund?
(a) Purchase of Long-term Investments
(b) Acceptance of deposits
(c) Sale of Non-current Assets
(d) Decrease in Working Capital
Answer: (a)
Q100. Cash flow means
(a) Change in cash position
(b) Change in working capital position
(c) Change in current assets position
(d) Change in current liabilities position
Answer: (a)
Q101. Adjusted profit & loss account is to determine
(a) Cash from operations
(b) Cash lost in operations
(c) Cash from operations or cash lost in operations
(d) None of the above.
Answer: (c)
Q102. Comparison in between the current assets and current liabilities to determine
(a) Cash inflow
(b) Cash outflow
(c) Both (a) & (b)
(d) None of the above.
Answer: (c)
Q103. Non-current accounts are prepared for the cash inflows and cash outflows on the basis of following relationship
(a) Non-current asset account and cash
(b) Non-current liability account and cash
(c) Both (a) & (b) only
(d) None of the above.
Answer: (c)
Q104. Cash flow statement analysis is an analysis of short span of analysis due to
(a) Current assets position is only considered
(b) Super quick assets position only considered
(c) Working capital position is considered
(d) None of the above.
Answer: (d)
Q105. How cash flows are denominated in terms of both current assets and current liabilities?
(a) Increase in current assets and Decrease in current liabilities
(b) Decrease in current assets and Increase in current liabilities
(c) Increase in current assets and Increase in current liabilities
(d) Both (a) & (b).
Answer: (d)
Q106. Cash position at the opening and closing comprises of
(a) Cash in hand
(b) Cash at bank
(c) Both cash in hand and at bank
(d) None of the above.
Answer: (c)
Q107. Cash flow analysis superior than the fund flow analysis due to
(a) Shorter span of cash resources are considered
(b) Real cash flows only taken into consideration
(c) Opening and closing cash balances are only considered
(d) (a), (b) & (c).
Answer: (b)
Q108. Sale of the plant and machinery falls under the category of
(a) Non-current asset sale – cash in flow
(b) Current asset sale – cash out flow
(c) Non-current asset sale – cash out flow
(d) None of the above.
Answer: (a)
Q109. Which of the following cannot be included in financing cash flows?
(a) Payments of dividends
(b) Repayment of debt principal
(c) Sale or repurchase of the company’s stock
(d) Proceeds from issuing shares.
Answer: (c)
Q110. Which of the following cannot be included in cash outflows?
(a) Operating and capital outlays
(b) Family living expenses
(c) Loan payments
(d) None of these.
Answer: (d)
Q111. Which of the following is not a part to the Statement of Cash Flows (or Cash Flow Statement)?
(a) Operating Activities
(b) Investors’ Activities
(c) Financing Activities
(d) Supplemental Activities.
Answer: (b)
Q112. Which of the following is not included under operating activities?
(a) Receipts from income
(b) Payment for a new investment
(c) Payment for expenses and employees
(d) Funding of debtors.
Answer: (b)
Q113. Which of the following is included under cash outflows?
(a) Buying new assets
(b) Money the business borrows
(c) Proceeds from selling an investment
(d) None of these.
Answer: (a)
Q114. Which of the following is not judged about by the cash flow statements?
(a) Profitability
(b) Financial condition
(c) Financial management
(d) Movement of fund
Answer: (d)
Q115. Budget is a statement of
(i) Qualitative affairs
(ii) Quantitative affairs
(iii) Financial affairs
(iv) Both (b) & (c)
Answer: (iv)
Q116. Budgets can be classified into
(i) By functions
(ii) By time
(iii) By flexibility
(iv) (a), (b) & (c)
Answer: (iv)
Q117. Production budget is under the classification of
(i) By time
(ii) By flexibility
(iii) By function
(iv) None of the above
Answer: (iii)
Q118. Why opening stock is deducted in the production budget calculation?
(i) Current year opening stock
(ii) Closing stock is added
(iii) It is out of the yester production
(iv) None of the above
Answer: (iii)
Q119. What is a method in determining the cash balance of the respective period?
(i) Opening balance + Cash payments – Cash receipts
(ii) Cash receipts + Cash payments – Opening cash balance
(iii) Opening balance + Cash receipts – Cash payments
(iv) None of the above
Answer: (iii)
Q120. Which budget is inter related budget with production budget?
(i) Sales budget
(ii) Production budget
(iii) Flexible budget
(iv) Purchase budget
Answer: (i)
Q121. Sale overhead budget is the budget of
(i) Fixed overhead
(ii) Variable overhead
(iii) Both (a) & (b)
(iv) None of the above
Answer: (iii)
Q122. Budget is an estimate prepared for definite …………………… period.
Answer: Future
Q123. The preparation of the production budget is mainly dependent on the …………………… budget.
Answer: Sales
Q124. The production volume is connected to the …………………… environment of the firm.
Answer: Internal
Q125. …………………… budget takes place only after identifying the number of finished products expected to produce to the tune of production budget.
Answer: Materials/Purchase
Q126. …………………… Budget is one of the important sub functional budgets, prepared by the sales manager.
Answer: Sales Overhead
Q127. Cost control contains two different processes one is the …………………… of the budget and another one is the …………………… of the prepared budget.
Answer: preparation, control
Q128. …………………… budgeting considers the current year as a new year for the preparation of the budget but the yester period is not considered for consideration.
Answer: Zero base
Q129. …………………… overhead is the expense incurred for the promotion of the sales.
Answer: Variable sales
Q130. ………………………………… facilitates to ascertain the cost of a product which is connected with yester operations or with past.
Answer: Historical costing
Q131. Standards are classified into two categories, viz. ……………………………… and Cost standards.
Answer: Revenue standards
Q132. …………………………………. is introduced to state in figures an approved plan of action relating to a particular period.
Answer: Budgetary control
Q133. Estimated costs are calculated on the basis of ……………………………… adjusted in the light of anticipated changes in the future.
Answer: past performance
Q134. Standard costs are used as a regular system of accounts from which ……………………………… are found out.
Answer: variances
Q135. Basic standards are more idealistic whereas current standards are more ………………………..
Answer: realistic
Q136. The build-up of the standard cost of each item is recorded in …………………………………
Answer: standard cost sheet
Q137. Standard is ideally prepared for
(a) Fixed cost
(b) Variable cost
(c) Sales
(d) Variable cost and sales
Answer: (d)
Q138. If standard cost of the product is more than the actual cost
(a) Favourable
(b) Neither favourable nor unfavourable
(c) Unfavourable
(d) Both (a) & (c)
Answer: (a)
Q139. Standard is calculated for
(a) Volume
(b) Per batch
(c) Per unit
(d) Per batch or unit
Answer: (d)
Q140. Why the given standards are tuned to actual?
(a) To equate both of them
(b) To convert the standards at par with the actual performance
(c) To know the difference
(d) None of the above
Answer: (b)
Q141. Variance is identified in between
(a) Standard and budgeted figures
(b) Standard and actual figures
(c) Budgeted figures and actual
(d) None of the above
Answer: (b)
Q142. Variance is/are
(a) Cost variance
(b) Revenue variance
(c) Expense variance
(d) Both (a) & (b)
Answer: (d)
Q143. Cost variance is classified into
(a) Material variance
(b) Labour variance
(c) Expense variance
(d) (a), (b) & (c)
Answer: (d)
Q144. Variance analysis is for
(a) Cost planning
(b) Cost control
(c) Identification of variance and control deviations
(d) None of the above
Answer: (c)
Q145.When the revised standard mix of the materials will not vary with the standard mix of the materials ?
(a) Both standard and actual mix of materials are different
(b) Standard mix of materials are greater than the actual mix of materials
(c) Both are equivalent to each other
(d) None of the above
Answer: (c)
Q146.Why labour efficiency variance is denominated in terms of standard rate?
(a) Actual rate is not a measure
(b) Standard rate is free from the demand and supply of labour force
(c) Actual measure is a measure of demand and supply of labour force
(d) None of the above
Answer: (c)
Q147. Sales value variance is mainly due to
(a) Price variance
(b) Quantity variance
(c) Mix variance
(d) (a) (b) & (c)
Answer: (d)
Q148. Variance is tool of standard costing in determining the deviations of the enterprise from the early
(a) Estimates
(b) Budgets
(c) Costs
(d) Prices
Answer: (a)
Q149. The direct labour total variance is the difference between what the output should have cost and what it did cost, in terms of
(a) Cash
(b) Labour
(c) Material
(d) None of these
Answer: (b)
Q150. The selling price variance is a measure of the effect on expected
(a) Price
(b) Profit
(c) Labour
(d) None of these
Answer: (b)
Q151. Which of the following cannot be included among the reasons of variance
(a) Price increase
(b) Use of workers at rate of pay lower than standard
(c) Lost time in excess of standard allowed
(d) None of these
Answer: (d)
Q152. …………………………. technique is also known by other names as “Full costing” or “Traditional costing”.
Answer: Absorption costing
Q153. …………………………. is the cost nothing but a change occurred in the total cost due to changes taken place on the level of production i.e either an increase/decrease by one unit of product.
Answer: Marginal cost
Q154. The …………………………………. helps management in finding out the relationship of costs and revenues to profit.
Answer: Cost-Volume-Profit (CVP) analysis
Q155. The ratio or percentage of contribution margin to sales is known as …………………………..
Answer: P/V ratio.
Q156. Under marginal Cost pricing, selling price is determined by adding a …………………….. on total variable costs.
Answer: mark up or margin
Q157. The …………………… analysis is a tool to show the relationship between various ingredients of profit planning.
Answer: cost-volume-profit
Q158. …………………… is one of the important tools of management not only to take decision, but also to fix an appropriate price and to assess the level of profitability.
Answer: Marginal costing
State the following are true or false:
Q159. P/V ratio = Marginal contribution/Sales
Answer: True
Q160. Lower the P/V ratio more will be the profit and higher the P/V ratio, lesser will be the profit.
Answer: False
Q161. Break even analysis examines the relationship between the total revenue, total costs and total profits of the firm at various levels of output.
Answer: True
Q162. Break even point is that volume of sales where the total costs is higher than the total revenue.
Answer: False
Q163. If the supply of the material is considered to be scared in the market for two different units of production of ABC Ltd. How the worth of the units of production could be studied through Key factor analysis
(a) Contribution per unit
(b) Contribution per labour
(c) Contribution per hour
(d) None of the above
Answer: (a)
Q164. While accepting export order, which component of influence should not be taken into consideration:
(a) Direct material
(b) Direct expenses
(c) Direct labour
(d) Fixed cost
Answer: (d)
Q165. If Licon Co Ltd. wants to induct a product B along with the existing product line, what would be the deciding factor to undertake or reject
(a) Composite contribution
(b) Fixed cost
(c) Contribution margin per unit
(d) None of the above
Answer: (c)
Q166. Desired profit is a profit level desired by the firm to earn at the given level of …………………….
Answer: sales volume
Q167. A …………………………. decision is possible when the various factors, and relationships between them, are measurable.
Answer: quantitative
Q168. A ……………………………… involves the act of choice and the alternative chosen out of the available alternatives.
Answer: decision
Q169. …………………………… describes the process by which a course of action is selected as the way to deal with a specific problem.
Answer: Decision-making
Q170. If a machinery is required for a specific project and after that project there is no use of the machinery then company can decide to ……………………… the machinery for that project.
Answer: hire
Q171. Which of the following is not a method of pricing?
(i) Selling Price Plus
(ii) Rate of Return Pricing
(iii) Break-even Pricing
(iv) Minimum Pricing
Answer: (i)
Q172. What is the level of sales in Rupees at which the firm neither incurs a loss nor earns profit, know as?
(i) BEP (Units)
(ii) BEP (Volume)
(iii) BEP (Sales)
(iv) BEP (budget)
Answer: (iv)
Q173. Pricing ties very closely with the various stages of a …………………… .
Answer: Product Life Cycle
Q174. …………………… Cost Pricing is a traditional method of pricing a product.
Answer: Full
Q175. For minimum pricing, the selling price is the …………………… price that a company may sell its product.
Answer: lowest
Q176. …………………… is a useful method in situations where there is a lot of intense competition.
Answer: Minimum pricing
Q177. The target rate of return varies with …………………… or what management considers a fair return.
Answer: market norm
Q178. …………………… eliminates the difficulty of computing fixed costs into the products.
Answer: Marginal cost pricing
Q179. Multinational companies use ………………………. to minimize their worldwide taxes, duties, and tariffs.
Answer: transfer pricing
Q180.Full Cost Pricing is a …………………………… of pricing a product.
Answer: traditional method
Q181. Pricing ties very closely with the various stages of a ……………………………..
Answer: product life cycle
