Managerial Accounting MCQ Set-1

How Managerial Accounting Works

Managerial accounting encompasses many facets of accounting aimed at improving the quality of information delivered to management about business operation metrics. Managerial accountants use information relating to the cost and sales revenue of goods and services generated by the company. Cost accounting is a large subset of managerial accounting that specifically focuses on capturing a company’s total costs of production by assessing the variable costs of each step of production, as well as fixed costs. It allows businesses to identify and reduce unnecessary spending and maximize profits.

Managerial Accounting MCQ Set-1

1. Creating Provision against fluctuation in the price of investment is an example of which accounting convention

1. Convention of conservatism
2. Convention of full disclosure
3. Convention of materiality
4. Convention of consistency

Correct answer: (A)
Convention of conservatism

2. Return of goods by a customer should be debited to

1. Customers account
2. Sales return account
3. Goods account
4. Purchase account

Correct answer: (B)
Sales return account

3. Cash discount allowed to a debtor should be credited to

1. Discount account
2. Customer’s account
3. Sales account
4. Cash account

Correct answer: (B)
Customer’s account

4. The concept of separate entity is applicable to which of following types of businesses?

1. Sole proprietorship
2. Corporation
3. Partnership
4. All of them

Correct answer: (D)
All of them

5. Accounting principles are generally based upon:

1. Practicability
2. Subjectivity
3. Convenience in recording
4. None of the above

Correct answer: (A)
Practicability

6. Debit the receiver credit the giver rule for

1. Real a/c
2. Personal a/c
3. Nominal a/c
4. None of these

Correct answer: (B)
Personal a/c

7. Managerial accounting information is generally prepared for

1. Shareholders
2. Creditors
3. Managers
4. Regulatory agencies

Correct answer: (C)
Managers

8. True & fair profit and loss a/c of a company know by

1. Preparing trial balance
2. Preparing respective ledger of account
3. Preparing trading a/c
4. Preparing trading & profit & loss a/c

Correct answer: (D)
Preparing trading & profit & loss a/c

9. Which one of the following items would fall under the definition of a liability

1. Cash
2. Debtor
3. Owner’s equity
4. None of these

Correct answer: (C)
Owner’s equity

10. The basic sequence in the accounting process can best be described as:

1. Transaction, journal entry, source document, ledger account, trial balance.
2. Source document, transaction, ledger account, journal entry, trial balance.
3. Transaction, source document, journal entry, trial balance, ledger account.
4. Transaction, source document, journal entry, ledger account, trial balance.

Correct answer: (D)
Transaction, source document, journal entry, ledger account, trial balance.

11. Amount brought in by proprietor should be credited to

1. cash account
2. capital account
3. drawings account
4. creditors account

Correct answer: (B)
capital account

12. Which of the following is a real (permanent) account?

1. Goodwill
2. Sales
3. Accounts Receivable
4. Both Goodwill and Accounts Receivable

Correct answer: (D)
Both Goodwill and Accounts Receivable

13. Which of the following errors will be disclosed in the preparation of a trial balance?

1. Recording transactions in the wrong account.
2. Duplication of a transaction in the accounting records.
3. Posting only the debit portion of a particular journal entry.
4. Recording the wrong amount for a transaction to both the account debited and the account credited.

Correct answer: (C)
Posting only the debit portion of a particular journal entry.

14. Management Accounting provides invaluable services to management in performing

1. All management function
2. Interpret financial data
3. Controlling function
4. None of these

Correct answer: (A)
All management function

15. If closing stock appears in the trial balance, it should be

1. Credited to the trading account
2. Credited to the profit and loss account
3. Deducted from the purchases in the trading account
4. Shown on the liability side of the Balance sheet

Correct answer: (A)
Credited to the trading account

KEY TAKEAWAYS Managerial Accounting MCQ set-1