P‐2:
Fundamentals of Accounting ‐ Bit Questions
62. True
63. False
64. False
65. False
66. True
67. True
68. True
69. True
70. False
71. True
72. False
ht
tp
s:
//m
FUNDAMENTALS OF COSTING
as
ho
I. Choose the correct answer from the given four alternatives:
or
1. Carriage outward is a part of
bo
(A) Office and Administrative overhead
(B) Factory overhead
ok
(C) Selling and Distribution overhead
(D) Prime Cost
s.
bl
2. Notional cost is also known as
(A) Variable cost
og
(B) Imputed cost
(C) Opportunity cost
sp
(D) Out of Pocket cost
ot
3. Which one of the following is not a cost unit?
.c
(A) Kilo watt hour
om
(B) Credit division
(C) Patient day
(D) Tonne-mile
/
4. Cost reduction -
(A) Long term phenomena
(B) It challenges the standards.
(C) It is carried out without compromising the quality.
(D) All of the above
5. Statement showing break up of costs is known as
(A) Cost sheet
(B) Tender
(C) Production account
(D) Statement of profit
6. Prime cost may be correctly termed as
The Institute of Cost Accountants of India 23
P‐2: Fundamentals of Accounting ‐ Bit Questions
(A) the total of all cost items which can be directly charged to product units.
(B) the sums of all direct materials and labour cost excluding all other cost.
(C) the total costs incurred in producing a finished unit.
(D) the sum of the large cost in product cost.
7. Which one is included in financial accounts but not in cost accounts?
(A) Royalty
(B) Dividend paid
(C) Excise duty
(D) Carriage and freight
8. Which of the following term is excluded from the cost accounts?
(A) Income tax
(B) Interest on debenture
(C) Cash discount
(D) All of the above
ht
9. Variable costs are fixed
tp
(A) depend upon the entity
(B) for a period
s:
(C) per unit
//m
(D) for a particular process of production
10. Costs are classified into fixed costs, variable costs and semi-variable costs, it is known as
as
(A) Behavioural classification
ho
(B) Classification according to controllability
(C) Functional classification
or
(D) Element wise classification
bo
11. The main purpose of cost accounting is to
(A) maximize profit
ok
(B) inventory valuation
(C) provide information for decision making.
s.
(D) fixation of selling price
bl
og
12. Process cost is very much applicable in
(A) Construction industry
sp
(B) Pharmaceutical industry
(C) Airline company
ot
(D) Printing industry
.c
13. All indirect costs are termed as
om
(A) Prime cost
(B) Factory cost
/
(C) Conversion cost
(D) Overheads
14. CAS-21 is related to
(A) Cost Accounting Standard on Overburden Removal Cost.
(B) Cost Accounting Standard on Interest and Financing Charges
(C) Cost Accounting Standard on Joint Cost
(D) Cost Accounting Standard on Quality Control
15. On the basis of “Relationship with accounting period” costs are classified as
(A) Historical Costs and Pre-determined Costs.
(B) Capital Costs and Commercial Costs.
(C) Capital Costs and Revenue Costs.
(D) Product Costs and Period Costs
The Institute of Cost Accountants of India 24
P‐2: Fundamentals of Accounting ‐ Bit Questions
16. Cost of staff services is an example of
(A) Committed Costs
(B) Policy and Managed Costs
(C) Discretionary Costs
(D) Step Costs
17. Which of the following is not a method of costing?
(A) Process Costing
(B) Batch Costing
(C) Direct Costing
(D) Operating Costing
18. The written down value of the abandoned plant less its salvage value is
(A) Imputed cost
(B) Sunk cost
(C) Avoidable Cost
(D) Opportunity cost
ht
tp
19. The costs are differentiated between fixed and variable costs under
(A) Marginal Costing
s:
(B) Direct Costing
//m
(C) Standard Costing
(D) Absorption Costing
as
20. Which of the following is a suitable cost unit for the BPO Services/Call Centers?
ho
(A) Cost per item
(B) Cost per hour
or
(C) Cost per account handled
(D) Cost per minute
bo
21. Interest on own capital is
ok
(A) Cash Cost
(B) Notional Cost
s.
(C) Part of Prime Cost
bl
(D) Semi-Variable Cost
og
22. Advertisement costs are termed as
sp
(A) Direct Expenses
(B) Cost of Production
ot
(C) Selling Overhead
(D) Distribution Overhead
.c
om
23. Direct Wages ` 2,05,000 and Factory Cost ` 5,60,000. If the ratio of direct wages and factory
overhead is 5 : 3 then Direct Material Cost will be
/
(A) ` 2,32,000
(B) ` 3,50,000
(C) ` 3,41,667
(D) ` 2,24,000
24. A technique and process of ascertaining costs is known as
(A) Cost
(B) Costing
(C) Cost Accounting
(D) Cost Accountancy
25. The branch of the accounting dealing with the classification, recording, allocation,
summarizing and reporting of current and prospective costs, is known as
(A) Financial Accounting
(B) Management Accounting
The Institute of Cost Accountants of India 25
P‐2: Fundamentals of Accounting ‐ Bit Questions
(C) Cost Accounting
(D) Cost Accountancy
26. Which of the following is not a function of Cost Accountancy?
(A) Cost Control
(B) Cost Ascertainment
(C) Cost Analysis
(D) Cost Accounting
27. Which of the following ‘CAS’ is related to “Pollution Cost”?
(A) CAS - 11
(B) CAS - 13
(C) CAS - 14
(D) CAS – 17
28. Costs are classified between direct and indirect costs according to method of classification
by
ht
(A) Nature or Element
tp
(B) Functions
(C) Degree of traceability to product
s:
(D) Change in Activity or Volume
//m
29. Depreciation on building is an example of
(A) Committed Costs
as
(B) Policy and Managed Costs
ho
(C) Discretionary Costs
(D) Step Costs
or
30. When the volume of output is increased then the per unit fixed cost will be
bo
(A) increase in the proportion of output.
(B) decrease in the reverse proportion of output
ok
(C) changed but not in proportion of output.
(D) unchanged
s.
bl
31. Which of the following costing method is suitable for Toy Making Industry?
og
(A) Contract Costing
(B) Process Costing
sp
(C) Job Costing
(D) Batch Costing
ot
32. Which of the following is not a technique of costing?
.c
(A) Managerial Costing
om
(B) Process Costing
(C) Standard Costing
/
(D) Budgetary Costing
33. Excise duty is an example of
(A) Chargeable expense
(B) Factory overhead
(C) Administrative overhead
(D) Non-cost item
34. Over which the following costs, management is likely to have least control?
(A) Wages cost
(B) Building Insurance cost
(C) Machinery Breakdown cost
(D) Advertisement cost
35. The works cost plus administration expenses represents
The Institute of Cost Accountants of India 26
P‐2: Fundamentals of Accounting ‐ Bit Questions
(A) Total cost
(B) Cost of Production
(C) Cost of sales
(D) Factory cost
36. Opportunity cost is the best example of
(A) Sunk cost
(B) Standard cost
(C) Relevant cost
(D) Irrelevant cost
37. Which method of costing is used for determination of costs for printing industry?
(A) Process costing
(B) Operating costing
(C) Batch costing
(D) Job costing
ht
38. Prime cost plus factory overheads is known as
tp
(A) Marginal Costing
(B) Conversion Cost
s:
(C) Commercial Cost
//m
(D) Factory Cost
39. From the following information, find out purchases when raw material consumed is ` 26,500;
as
Closing stock ` 4,500 and opening stock ` 3,000.
ho
(A) ` 26,500
(B) ` 25,000
or
(C) ` 28,000
(D) ` 34,000
bo
40. Bad debts are included as
ok
(A) Direct expenses
(B) Distribution overhead
s.
(C) Cost of production
bl
(D) Selling overhead
og
41. When re-ordering level is 200 units, minimum usage is 20 units, minimum lead time is 5 days,
sp
maximum stock is 400 units then re-ordering quantity will be:
(A) 400 units
ot
(B) 200 units
(C) 300 units
.c
(D) 100 units
om
42. In the situation of increasing prices, the valuation of closing stock is more under:
/
(A) Simple average
(B) Weighted average
(C) FIFO
(D) LIFO
43. Payment of Royalties is
(A) Direct Expenses
(B) Administrative Cost
(C) Charged to Profit & Loss A/c
(D) Factory Overheads
44. Which one of the following statement is true?
(A) Abnormal cost is not controllable
(B) Financial Expenses are included in Cost Sheet
(C) All overheads changes with the change in volume and in the same proportion.
The Institute of Cost Accountants of India 27
P‐2: Fundamentals of Accounting ‐ Bit Questions
(D) Primary packing is an item of prime cost.
45. Costing is a technique of
(A) Recording of Cost transactions
(B) Ascertaining Cost
(C) Preparation of final accounts
(D) Decision making
46. Which of following is appropriate Cost Unit for timber industry?
(A) Per tonne
(B) Per article
(C) Per Kg.
(D) Per foot
47. Which of the following is a Cost Control Technique?
(A) Marginal Costing
(B) Uniform Costing
ht
(C) Standard Costing
tp
(D) Absorption Costing
s:
48. Cost of free samples and gifts are included in
//m
(A) Prime Cost
(B) Factory Overhead
(C) Office and Administrative Overheads
as
(D) Selling & Distribution Overheads
ho
49. In behavioural analysis, costs are divided into
or
(A) Production and Non-Production costs
(B) Controllable and Non-Controllable costs
bo
(C) Direct and indirect costs
(D) Fixed and Variable costs
ok
50. Which of the following is a part of both Prime cost and Conversion cost?
s.
(A) Direct Material
bl
(B) Indirect Labour
og
(C) Direct Labour
(D) All of the above
sp
51. Which of the following is not a Relevant Cost?
ot
(A) Replacement Cost
(B) Sunk Cost
.c
(C) Marginal Cost
om
(D) Standard Cost
/
52. Direct Expenses are also known as
(A) Overhead Expenses
(B) Process Expenses
(C) Chargeable Expenses
(D) None of the above
53. Indirect material cost is a part of
(A) Prime Cost
(B) Factory Overhead
(C) Chargeable Expenses
(D) None of the above
The Institute of Cost Accountants of India 28
P‐2: Fundamentals of Accounting ‐ Bit Questions
Answer:
1. C 2. B 3. B 4. D 5. A
6. A 7. B 8. D 9. C 10. A
11. C 12. B 13. D 14. D 15. C
16. B 17. C 18. B 19. A 20. C
21. B 22 C 23 A 24 B 25 C
26 C 27 C 28 C 29 A 30 B
31 B 32 D 33 A 34 C 35 B
36 C 37 D 38 D 39 C 40 D
41 C 42 C 43 A 44 D 45 B
46 D 47 C 48 D 49 D 50 C
51 B 52 C 53 B
ht
tp
s:
//m
as
ho
or
bo
ok
s.
bl
og
sp
ot
.c
om
/
The Institute of Cost Accountants of India 29
