Download Calicut University M.Com Latest 2020 Accounting for Managerial Decisions Question Bank

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M.Com First Semester- MCQs on AMD

First semester M.Com (SDE), University of Calicut

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Accounting for Managerial Decisions–MCQs with Answers

Prepared by:

Praveen MV

Asst.Professor of commerce

Govt. College Madappally

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1. Who coined the concept of management accounting?
1. Robert Anthony
2. James H Bliss
3. J. Batty
4. Michael Porter

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2. The main role of management accounting is:
1. Decision making
2. Planning
3. Direction
4. Provision of information to management.

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3. The term management accounting was first coined in:
1. 1960
2. 1930
3. 1950
4. 1910

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4. The use of management accounting is:
1. Compulsory
2. Optional
3. Mandatory
4. Any of the above

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5. Which of the following is not a predictive tool of management accounting?
1. Simulation
2. Balanced score card
3. Cash flow analysis
4. KPIs

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6. Which of the following is not an analytical tool of management accounting?
1. Ratio analysis
2. Standard costing
3. Budgetary control
4. Cash flow analysis

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7. “Management Accounting is concerned with accounting information which is useful to management"-whose definition?
1. Robert Anthony
2. James H Bliss
3. J. Batty
4. Michael Porter

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8. Which of the following is not included in the scope of management accounting?
1. Financial accounting
2. Cost accounting
3. Tax accounting
4. None of these.

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9. Which of the following is not a feature of management accounting?
1. Accounting information
2. Future oriented
3. Management oriented
4. Compulsory accounting.

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10. The process of quantifying the efficiency and effectiveness of past actions is called:
1. Simulation
2. Decision accounting
3. Revaluation accounting
4. Performance measurement.

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11. Which of the following is/are the tools of financial performance measures?
1. ROI
2. EVA
3. Residual income
4. All of these.

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12. Which of the following is not a tool for financial performance measure?
1. EVA
2. Balanced score card
3. Residual income
4. ROI

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13. “NOPAT-(Capital Employed x WACC)”=?
1. ROI
2. EVA
3. Residual income
4. EBIT

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14. Net profit before Tax-(average capital employed x Desired minimum rate of return) =?
1. ROI
2. EVA
3. Residual income
4. EBIT

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15. Operating profit ratio X Capital turnover ratio=?
1. ROI
2. EVA
3. Residual income
4. EBIT

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16. Return on Investment (ROI) was developed by:
1. Michael Porter
2. Du Pont Company
3. Taichi Okno
4. None of these

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17. Which of the following is a tool of financial as well as non-financial performance measure?
1. Economic Value Added
2. Residual income
3. NOPAT
4. Balanced Score card

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18. The term Balanced Score Card coined by:
1. Jimmy Carter
2. Art Schneiderman
3. Taichi Okno
4. Robert Anthony

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19. ---------- Integrates financial and non- financial performance measures.
1. Economic value added
2. WACC
3. Balanced Score card
4. SCBA

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20. SCBA stands for----------
1. Strategic Control for Business Administration
2. Strategic Cost and Benefit Administration
3. Social Cost Benefit Analysis
4. Socially Controlled Benefit Analysis.

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21. Which of the following is not a perspective of balanced score card?
1. Internal process
2. Customer
3. Financial perspective
4. Value chain

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22. Customer retention and warranty claims are tools of performance measure in balance score card under------------- perspective.
1. Financial perspective
2. Internal process
3. Customer
4. Learning and growth.

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23. Employees training and number of patents are tools of performance measure in balance score card under------------- perspective.
1. Financial perspective
2. Internal process
3. Customer
4. Learning and growth.

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24. Defect rates and lead times are tools of performance measure in balance score card under- ---------- perspective.
1. Financial perspective
2. Internal process
3. Customer
4. Learning and growth.

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25. Operating income and sales growth are tools of performance measure in balance score card under------------- perspective.
1. Financial perspective
2. Internal process
3. Customer
4. Learning and growth.

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26. Zero based budgeting is also known as:
1. Scratch based budgeting
2. De nova budgeting
3. Priority based budgeting
4. All of these

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27. Zero based budgeting was first applied by:
1. Abraham Lincon
2. Jimmy Carter
3. Peter A phyrr
4. Alex Ouchy

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28. ZBB coined out by :
1. Art Schneiderman
2. Jimmy Carter
3. Peter A phyrr
4. Taichi Okno

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29. ---------- budgeting pay more attention on overhead costs.
1. ZBB
2. ABB
3. Performance budgeting
4. Traditional budgeting

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30. --------- budgets are prepared after justifying the cost drivers.
1. ZBB
2. ABB
3. Flexible budget
4. Cost budget

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31. The difference between actual sales and break even sales is:
1. Contribution
2. Profit volume rate
3. Margin of safety
4. Gross margin

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32. Net Avoidable fixed cost divided by Contribution per unit is equal to:
1. PV ratio
2. Break Even point
3. Contribution
4. Shutdown point

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33. Marginal cost does not include----------
1. Variable cost
2. Fixed cost
3. Variable Overhead
4. Direct expenses

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34. In marginal costing, stock of finished goods valued at---------
1. Fixed cost
2. Cost or market price whichever is less
3. Market price
4. Variable cost

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35. At break Even Point--- is equal to fixed cost.
1. Profit
2. Loss
3. Contribution
4. Sales

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36. The BEP -------- when selling price is increased.
1. Increases
2. Decreases
3. Remain unchanged
4. Any of the above.

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37. Under marginal costing product cost is equal to-----------
1. Prime cost
2. Prime cost + variable overhead
3. Cost of production
4. Cost of sales

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38. An increase in the variable cost----------
1. Increases PV ratio
2. Decreases PV ratio
3. Increases Profit
4. Increases contribution

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39. Sales x PV ratio is equal to---------
1. Profit
2. Contribution
3. BEP
4. Margin of Safety

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40. Contribution / PV ratio is equal to-------
1. BEP
2. Sales
3. Fixed cost
4. Variable cost

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41. Profit/PV ratio is equal to-
1. Net profit
2. Contribution
3. BEP
4. Margin of Safety

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42. Sales price per unit Rs.10, Variable cost Rs.8 per unit and fixed cost is Rs.20,000, then BEP in units is----------
1. 10,000
2. 16,000
3. 2,000
4. 2,500

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43. The difference between gross profit and gross margin is----------
1. Fixed cost
2. Variable cost
3. Net profit
4. Net loss

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44. Actual sales is Rs.5,00,000 and BEP sales is 3,00,000, then margin of safety percentage is:
1. 20%
2. 40%
3. 33.33%
4. 25%

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45. If sales is Rs.2,50,000 and PV ratio is 40%, contribution will be:
1. 80,000
2. 50,000
3. 1,00,000
4. 25,000

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46. Margin of safety x Profit volume ratio is
1. BEP
2. Angle of incidence
3. Margin of safety in units
4. Profit.

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47. Contribution is also known as:
1. Share Capital
2. Gross profit
3. Gross margin
4. Margin of safety

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48. -----------is formed as curve by the intersection of total cost and total revenue.
1. BEP
2. Angle of incidence
3. Margin of safety
4. Key factor

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49. Variable cost of a product is Rs.10 and firm has an overall PV ratio @ 60%, what will be its selling price?
1. Rs.60
2. Rs.6
3. Rs.25
4. Rs.16

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50. While making make or buy decision under marginal costing, external purchase price of the articles must be compared with:
1. Its Fixed cost
2. Its total cost
3. Its variable cost
4. Its prime cost.

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51. Shut down cost is:
1. Avoidable fixed cost
2. Unavoidable fixed cost
3. Avoidable Variable cost
4. Unavoidable variable cost.

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52. Profit volume ratio can be improved by:
1. Reducing variable cost
2. Reducing the selling price
3. Increasing the fixed cost
4. Increasing the key factor

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53. Profit volume ratio cannot be calculated by using:
1. Profit/volume of sales
2. Profit/volume of costs
3. Changes in profit / changes in sales
4. Changes in profit / changes in contribution

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54. Fixed cost Rs.50,000, Profit Rs.30,000, cost of goods sold Rs.170,000, what is PV ratio?
1. 25%
2. 50%
3. 20%
4. 40%

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55. Cost of capital is the -------- rate of return expected by the investors.
1. Maximum
2. Average
3. Minimum
4. Zero

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56. In relation to cost of capital, k = ro +----------+-----------
1. p,d
2. b,f
3. e, p
4. Any of the above.

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57. According to traditional approach cost of capital is effected by--------
1. Debt-equity mix
2. Dividend
3. EBIT
4. EAT

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58. ---------- is the opportunity cost of dividend foregone by the shareholders.
1. Cost of equity
2. Cost of retained earnings
3. Cost of debt
4. Cost of preference shares.

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59. Which of the following is/ are the method of calculating cost of equity?
1. Dividend yield method
2. Earning yield method
3. Realized yield method
4. All of these.

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60. ------------- is the rate of return the firm requires from investment in order to increase the value of the firm in the market place
1. Net Present Value
2. Internal Rate of Return
3. Average Rate of Return
4. Cost of capital.

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61. ---------- is the weighted average cost of capital.
1. Specific cost
2. Marginal cost
3. Composite cost
4. Any of these.

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62. The span of time within which the investment made for the project will be recovered by the net returns of the project is known as:
1. Period of return
2. Payback period
3. Span of return
4. None of the above

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63. Projects with -------- are preferred
1. Lower payback period
2. Normal payback period
3. Higher payback period
4. Any of the above

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64. --------- on capital is called 'Cost of capital'.
1. Lower expected return
2. Normally expected return
3. Higher expected return
4. None of the above

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65. The values of the future net incomes discounted by the cost of capital are called:
1. Average capital cost
2. Discounted capital cost
3. Net capital cost
4. Net present values

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66. Under Net present value criterion, a project is approved if
1. Its net present value is positive
2. The funds are unlimited
3. Both (A) and (B)
4. None of the above

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67. The internal Rate of Return (IRR) criterion for project acceptance, under theoretically infinite funds is: accept all projects which have:
1. IRR equal to the cost of capital
2. IRR greater than the cost of capital
3. IRR less than the cost of capital
4. Both a&b above

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68. Which of the following is non-discounting method in capital budgeting?
1. Net present value
2. Profitability index
3. Internal Rate of Return
4. Accounting Rate of return

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69. The project is accepted:
1. If the profitability index is equal to one
2. If the profitability index is less than one
3. If the profitability index is greater than one
4. Both (b) and (c)

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70. Where capital availability is unlimited and the projects are not mutually exclusive, for the same cost of capital, following criterion is used.
1. Net present value
2. Internal Rate of Return
3. Profitability Index
4. Any of the above

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71. A project is accepted when:
1. Net present value is greater than zero
2. Internal Rate of Return will be greater than cost of capital
3. Profitability index will be greater than unity
4. Any of the above

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72. With limited finance and a number of project proposals at hand, select that package of projects which has:
1. The maximum net present value
2. Internal rate of return is greater than cost of capital
3. Profitability index is greater than unity
4. Any of the above

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73. A project may be regarded as high risk project when:
1. It has smaller variance of outcome but a high initial investment
2. It has larger variance of outcome and high initial investment
3. It has smaller variance of outcome and a low initial investment
4. It has larger variance of outcome and low initial investment

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74. Following is (are) the method(s) for adjustment of risks.
1. Risk-adjusted Discounting Rate
2. Risk Equivalence Coefficient Method
3. Both (a) and (b)
4. None of the above

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75. Profitability Index is also known as:
1. Sensitivity index
2. Benefit cost ratio
3. Profit volume Ratio
4. All of these

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76. ---------- is the point at which Net Present Value becomes zero;
1. Break Even point
2. Average Rate of return
3. Internal Rate of return
4. Profitability index

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77. Which of the following is not a method of capital budgeting, under risk and uncertainty?
1. Probability assignment
2. Risk adjusted discount rate
3. Certainty equivalent
4. Discounted pay back

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78. Under which method, three types of cash flows such as optimistic, pessimistic and most likely cash flows are estimated?
1. Probability assignment
2. Risk adjusted discount rate
3. Certainty equivalent
4. Sensitivity analysis

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79. --------- is graphical representation of alternative courses of action and the possible outcomes and the risk associated with each action.
1. Pivot table
2. Sensitivity analysis
3. Decision tree
4. All of these.

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80. Risk free cash flow /risky cash flow =------------.
1. Expected cash flow
2. Probable cash flow
3. Net terminal Value
4. CE Co-efficient

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81. An investment appraisal approach which gives a precise measure of risk associated with a project is:
1. Probability assignment
2. Sensitivity analysis
3. Profitability index
4. Standard deviation.

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82. ----------- provides absolute measure of risk in a project.
1. Standard deviation
2. Sensitivity analysis
3. Profitability index
4. Probability assignment.

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83. The higher the co-efficient of variation, higher is the-------- in the project
1. Profitability
2. Return
3. Risk
4. Capital

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84. ------------ is a comprehensive view of all the possibilities associated with a proposed project.
1. Co-efficient of variation
2. Probability assignment
3. Sensitivity analysis
4. Decision tree.

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85. Activity Based Costing is developed by:
1. Kaplan & Cooper
2. Ouchy
3. Taichi Okno
4. Moulin

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86. --------- is a technique of costing which is based on the benefit received from indirect costs.
1. Life Cycle costing
2. Target costing
3. Activity based costing
4. Standard costing.

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87. In Activity based costing, the cost of an activity in called:
1. Cost driver
2. Target cost
3. Cost pool
4. Cost object.

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88. In activity based costing, ---------are the factors which influences the cost.
1. Cost pool
2. Cost centre
3. Cost driver
4. Cost object.

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89. ------------- is the technique of estimating permissible market driven cost.
1. Life Cycle costing
2. Target costing
3. Activity based costing
4. Standard costing.

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90. ---------- Technique of costing considers all the cost to be incurred during the entire life of the project.
1. Life Cycle costing
2. Target costing
3. Activity based costing
4. Standard costing.

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91. ------------ is the difference between target selling price and desired profit margin.
1. Activity cost
2. Upstream cost
3. Downstream cost
4. Target cost

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92. Under -------- total cost are classified into upstream cost, manufacturing cost and downstream cost.
1. Life Cycle costing
2. Target costing
3. Activity based costing
4. Standard costing.

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93. Traditional costing is also known as:
1. Full costing
2. Volume based costing
3. Proportion based costing
4. All of these.

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94. ------------ refers to the system of cost reduction based on a series of gradual and small improvements rather than drastic changes in the manufacturing process.
1. Throughput costing
2. Quality costing
3. Kaizen costing
4. Transaction costing

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95. Which of the following is also known as transaction costing/accounting?.
1. Throughput costing
2. Quality costing
3. Kaizen costing
4. Activity based costing

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96. Under 'throughput costing', only --------- is treated as direct cost.
1. Direct material
2. Direct labour
3. Direct expense
4. Indirect cost

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97. Which of the following Japanese concept means “Change for better'?
1. Kan Ban
2. Kaizen
3. JIT
4. TQM

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98. 'Theory of Constraints' was developed by:
1. Robert S Kaplan
2. Robin Cooper
3. Goldratt and J.Cox
4. Waldron

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99. Under life cycle costing, research and development cost, design cost etc., are considered as:
1. Activity cost
2. Upstream cost
3. Downstream cost
4. Target cost

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100. ----------- is a practice of identifying, studying and building upon the best practices of organizational role models.
1. Core competency
2. Bench marking
3. Spying
4. Conglomerating

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101. Which of the following is not a component of Quality costing?
1. Cost of failure
2. Cost of quality maintenance
3. Appraisal cost
4. None of these

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102. Which of the following is/ are the primary activities under Porter's Value chain?
1. Inbound logistics
2. Procurement
3. Marketing and selling
4. All of these.

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103. Which of the following is/are considered as supportive activities under Porter's Value Chain?
1. Infrastructure
2. HRM
3. Procurement
4. All of these.

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104. Cost of new debentures incorporates:
1. Floatation cost
2. No floatation cost
3. Only a part of floatation cost
4. None of these.

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105. ----------- Method of capital budgeting also known as ‘trial and error' method.
1. ARR
2. NPV
3. BCR
4. IRR

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106. The process of selecting a combination of investment proposals for the purpose of effectively utilizing firm's limited fund is known as:
1. Capital budgeting
2. Project screening
3. Capital rationing
4. Capital expending

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107. Which of the following is not statistical technique of capital budgeting?
1. Sensitivity analysis method
2. Co-efficient of variation method
3. Probability assignment method
4. Certainty equivalent method

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108. The philosophy of “Just in Time” developed by:
1. Robert S Kaplan
2. Michael Porter
3. R.Cooper
4. Taichi Okno

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109. ---------- System advocates ‘Zero Inventory System'.
1. TQM
2. JIT
3. VED system
4. Flexible manufacturing system.

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110. Which of the following is/are not discounting techniques of capital budgeting?
1. IRR
2. Benefit Cost Ratio
3. Discounted Payback
4. Average rate of return

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111. Which of the following is not a benefit of implementing JIT?
1. Cost reduction
2. Variability increase
3. Work in process reduction
4. Quality improvement.

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112. Kan ban is associated with all of the following except:
1. Signaling when it is time for next batch
2. Reducing set up time
3. Reducing batch size
4. Increasing material handling

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113. The word "Kanban" means
1. Low inventory
2. Employee empowerment
3. Card
4. Continuous improvement.

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114. which one of the following is not a requirement of JIT system
1. quality deliveries on time
2. low set up time
3. employee empowerment
4. Strong job specialization.

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115. "Fish bone diagram is also known as:
1. Cause and effect diagram
2. Poke-yoke diagram
3. Kaizen diagram
4. Taguchi diagram

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116. ............is the practice of charging all costs, both variable and fixed, to operations, processes, or products.
1. Marginal costing
2. Absorption costing
3. Differential costing
4. None of these

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117. In absorption costing, managerial decision making is based upon
1. Profit
2. Contribution
3. Costs
4. None of these

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118. Given sales = Rs.1,50,000, Fixed costs = Rs.30,000, Profit =Rs. 40,000. The variable cost is Rs.....
1. 110000
2. 80000
3. 120000
4. 10000

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119. The Profit/Volume ratio or marginal ratio expresses the relation of to sales.
1. Profit
2. Marginal cost
3. Contribution
4. None of these

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120. Which of the following measures helps to increase the P/V Ratio?
1. increasing the selling price per unit
2. reducing the variable or marginal cost
3. changing the sales mixture
4. all of these

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121. Given sales = 1,00,000, Profit = 10,000, variable cost = 70%. The sales required to earn a profit of Rs.400000 is----------
1. 1,40,000
2. 14,00,000
3. 20,00,000
4. 2,00,000

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122. Marginal cost is the ..........cost of producing an additional unit of output
1. variable
2. fixed
3. semi variable
4. all of these

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123. Gross margin is the another name of-----
1. Contribution
2. Net Profit
3. Gross Sales
4. none of these

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124. Which of the following shows the shows the degree of profitability?
1. Angle of contribution
2. Angle of incidence
3. Margin of safety
4. Both b and c above

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125. At Breakeven point contribution will be equal to----------
1. Variable cost
2. Fixed price
3. Profit
4. None of these

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126. The ratio of profit(gross) to Volume of sales called----------
1. GP Ratio
2. NP Ratio
3. PV Ratio
4. OP ratio

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127. Marginal cost is the aggregate of prime cost and
1. Fixed overheads
2. Variable overheads
3. Contribution
4. Work cost

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128. When fixed cost is deducted from contribution, the balance will be--------
1. Variable cost
2. Gross profit
3. Total cost
4. sales

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129. When sales are Rs.30000 and P/V ratio is 20% then contribution will be--------
1. 2000
2. 4000
3. 6000
4. 8000

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130. When fixed costs are Rs.4000 and Gross margin ratio is 25%, then breakeven point will be--------
1. 40000
2. 20000
3. 16000
4. 10000

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131. When Profit is Rs.5000 and P/v ratio is 20%, Margin of safety is---------
1. 10000
2. 25000
3. 30000
4. 50000

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132. Fixed costs Rs.6000, Profit required Rs.4000 and P/v ratio is 50%, then sales required will be---------
1. 6000
2. 4000
3. 10000
4. 20000

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133. Variable cost ratio is 60% Sales Rs.20000 and fixed cost Rs.5000, then profit will be



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