Managerial Accounting MCQ Set-20

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.

341. If opening stock is £3,000, closing stock £5,000, sales £40,000 and margin 20 per cent, then stock turn is:

1. 7 ½ times
2. 8 times
3. 5 times
4. 6 times

Correct answer: (B)
8 times

342. Which of the following should be charged in the Profit and Loss Account?

1. Carriage on raw materials
2. Work in progress
3. Office rent
4. Direct materials

Correct answer: (C)
Office rent

343. You are to buy an existing business which has assets valued at buildings £50,000, Motor vehicles £15,000, Fixtures £5,000 and Stock £40,000. You are to pay £140,000 for the business. This means that:

1. You have made an arithmetical mistake
2. You are paying £40,000 for Goodwill
3. Buildings are costing you £30,000 more than their value
4. You are paying £30,000 for Goodwill

Correct answer: (D)
You are paying £30,000 for Goodwill

344. A company wishes to pay out all available profits as dividends. Net profit is £26,600. There are 20,000 8% Preference shares of £1 each, and 50,000 Ordinary shares of £1 each. £5,000 is to be transferred to General Reserve. What Ordinary dividends are to be paid, in percentage terms?

1. 40 per cent
2. 60 per cent
3. 10 per cent
4. 20 per cent

Correct answer: (A)
40 per cent

345. Which of the following is not an asset?

1. Buildings
2. Debtors
3. Loan from K Harris
4. Cash balance

Correct answer: (C)
Loan from K Harris

346. Which of the following best describes the meaning of ‘Purchases’?

1. Goods bought on credit
2. Goods paid for
3. Goods bought for resale
4. Items bought

Correct answer: (C)
Goods bought for resale

347. Which of the following best describes a trial balance?

1. Shows all the entries in the books
2. It is a list of balances on the books
3. Shows the financial position of a business
4. It is a special account

Correct answer: (B)
It is a list of balances on the books

348. The descending order in which current assets should be shown in the balance sheet is:

1. Debtors, Stock, Bank, Cash
2. Cash, Bank, Debtors, Stock
3. Stock, Debtors, Cash, Bank
4. Stock, Debtors, Bank, Cash

Correct answer: (D)
Stock, Debtors, Bank, Cash

349. The Sales Day Book is best described as:

1. Containing customers’ accounts
2. Containing real accounts
3. Part of the double entry system
4. A list of credit sales

Correct answer: (D)
A list of credit sales

350. A debit balance of £100 in a cash account shows that:

1. There was £100 cash in hand
2. The total of cash received was less than £100
3. £100 was the total of cash paid out
4. Cash has been overspent by £100

Correct answer: (A)
There was £100 cash in hand