Cost Accounting MCQs (TYBCom Sem VI )

Multiple Choice Questions 35 Pages

University of Mumbai

bachlor of commerce

VDC

Contributed by

Veena Dhanush Chandran

Manan Prakashan 1
CHAPTER - 1 : COST CONTROL ACCOUNTS
MULTIPLE CHOICE QUESTIONS
1. Materials Requisition Note
(a) authorises and records the issue of materials for use
(b) records the return of unused materials
(c) records the transfer of materials from one store to another
(d) a classified record of materials, issues, returns and transfers
2. Materials Transfer Note
(a) authorises and records the issue of materials for use
(b) records the return of unused materials
(c) records the shifting of materials from one store to another
(d) a classified record of materials, issues, returns and transfers
3. A document which is a classified record of material issues, returns and transfers
(a) Materials Requisition Note (b) Materials Return Note
(c) Materials Transfer Note (d) Materials Issue Analysis Sheet
4. This is essential to make the cost ledger 'self-balancing’.
(a) General Ledger Adjustment Account (b) Stores Ledger Control Account
(c) Work-in-Progress Ledger (d) Finished Goods Control Account
5. This is debited with all purchases of materials for the stores and credited with all issues of
materials
(a) General Ledger Adjustment Account (b) Stores Ledger Control Account
(c) Work-in-Progress Ledger (d) Finished Goods Control Account
6. In this, cost of materials, wages and overheads of each job undertaken is posted.
(a) General Ledger Adjustment Account (b) Stores Ledger Control Account
(c) Work-in-Progress Ledger (d) Finished Goods Control Account
7. This represents the total value of finished goods in stock.
(a) General Ledger Adjustment Account (b) Stores Ledger Control Account
(c) Work-in-Progress Ledger (d) Finished Goods Control Account
8. Material amounting to ` 58,300 is purchased on credit.
The entry in Cost Ledger under non-integrated System is
(a) Purchases A/c Dr. 58,300
To Sundry Creditors 58,300
(b) Stores Ledger Control A/c Dr. 58,300
To General Ledger Adjustment A/c 58,300
(c) Purchases A/c Dr. 58,300
To Cost Ledger Control A/c 58,300
(d) Work-in-Progress Control A/c Dr. 58,300
To General Ledger Adjustment A/c 58,300
9. Salaries and wages amounting to ` 62,100 gross and earned by the employees, and deductions
of ` 5,400 as provident fund. ` 2,400 as ESIC and ` 4,300 as Income Tax are made from the
gross amount.
The entry in Cost Ledger under non-integrated System is
(a) Salaries and Wages Control A/c Dr. 62,100
To General Ledger Adjustment A/c 62,100
(b) Salaries and Wages Control A/c Dr. 50,000
To General Ledger Adjustment A/c 50,000
(c) Salaries and Wages Control A/c Dr. 62,100
To Cost Ledger Adjustment A/c 62,100
T.Y.B.COM. - COST ACCOUNTING
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2 Cost Accounting (T.Y.B.Com.: SEM-VI)
(d) Salaries and Wages Control A/c Dr. 62,100
To Provident Fund A/c 5,400
To E.S.I.C. A/c 2,400
To Income-tax A/c 4,300
To General Ledger Adjustment A/c 50,000
10. A concern has a non-integrated costing system. Salaries and wages analysis book indicates the
following breakup :
Direct wages ` 38,600
Indirect factory wages ` 9,500
Administrative salaries ` 9,700
Selling and distribution salaries ` 4,300
Which of the following statements is false-
(i) No additional entry is passed in financial books for break-up.
(ii) Work-in-progress Ledger Control A/c will be debited with ` 38,600.
(iii) Salaries and Wages Control A/c will be debited with ` 62,100.
(a) only (i) (b) All
(c) only (iii) (d) None
11. In a non-integrated system of accounting, the emphasis is on,
(a) Personal accounts (b) Real accounts
(c) Nominal accounts (d) All of these
12. Cost and financial accounts are required to be reconciled under
(a) Integral system (b) Cost control accounts system
(c) Under both (a) and (b) (d) None of these
13. Which of the following accounts makes the cost ledger self-balancing ?
(a) Overhead adjustment account (b) Costing P & L account
(c) Cost ledger control account (d) None of the above
14. Purchases for special jobs is debited under non-integrated system to
(a) Work-in-progress ledger control account (b) Cost ledger control account
(c) Stores ledger control account (d) Purchases account
15. Journal entry for absorption of production overheads in non-integrated accounts is
(a) Production Overhead Account Dr.
Cost Ledger Control Account Cr.
(b) Work-in-Progress Account Dr.
Production Overhead Control Account Cr.
(c) Overhead Adjustment Account Dr.
Production Overhead Account Cr.
16. Journal entry for the absorption of Selling and Distribution overhead account in non-integrated
accounts is
(a) Cost of Sales Account Dr.
Selling and Distribution Overhead Control Account Cr.
(b) Finished Goods Ledger Control Account Dr.
Selling and Distribution Overhead Account Cr.
(c) Cost Ledger Control Account Dr.
Selling and Distribution Overhead Account Cr.
(d) None of these
17. Journal entry for over-absorbed administrative overhead amount in non-integrated accounts is
(a) Costing Profit and Loss Account Dr.
Cost Ledger Control Account Cr.
(b) Overhead Adjustment or Suspense Account Dr.
Administration Overhead Control Account Cr.
(c) Administration Overhead Account Dr.
Overhead Adjustment or Suspense Account Cr.
(d) No entry is required
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Manan Prakashan 3
18. Journal entry for issuing materials to production in non-integrated accounts is
(a) Stores Ledger Control Account Dr.
Cost Ledger Control Account Cr.
(b) Cost Ledger Control Account Dr.
Stores Ledger Control Account Cr.
(c) Work-in-Progress Control Account Dr.
Stores Ledger Control Account Cr.
(d) No entry is required
19. Journal entry for payment of wages in non-integrated accounts is
(a) Wages Control Account Dr.
Cash Account Cr.
(b) Wages Control Account Dr.
Cost Ledger Control Account Cr.
(c) Wages Account Dr.
Cash Account Cr.
20. Payment to creditors for supplies made. Journal entry in non-integrated accounts will be
(a) Sundry Creditors Account Dr.
Cash A/c Cr.
(b) Sundry Creditors Account Dr.
Cost Ledger Control Account Cr.
(c) Sundry Creditors Account Dr.
Costing Profit and Loss Account Cr.
(d) No entry is required
21. In a period ` 50,000 was incurred on indirect labour. In a Cost Ledger, the double entry will be:
(a) Wages Control Account Dr.
Overhead Control Account Cr.
(b) WIP Control Account Dr.
Wages Control Account Cr.
(c) Overhead Control Account Dr.
Wages Control Account Cr.
(d) Wages Control Account Dr.
WIP Control Account Cr.
22. At the end of a financial period, accounting entries for under absorbed overheads would be
(a) WIP Control Account Dr.
Overhead Control Account Cr.
(b) Profit and Loss Account Dr.
WIP Control Account Cr.
(c) Profit and Loss Account Dr.
Overhead Control Account Cr.
(d) Overhead Control Account Dr.
Profit and Loss Account Cr.
23. The double entry for factory cost of production in a cost ledger is
(a) Cost of Sales Account Dr.
Finished Goods Control Account Cr.
(b) Finished Goods Control Account Dr.
WIP Control Account Cr.
(c) Costing Profit and Loss Account Dr.
Finished Goods Control Account Cr.
(d) WIP Control Account Dr.
Finished Goods Control Account Cr.
24. What is an interlocking bookkeeping system?
(a) A single, combined system containing both cost accounting and financial accounting records
(b) A system combining cost accounting and management accounting
(c) A system with high secured access
(d) A system where separate accounts are kept for cost accounting and for financial accounting
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4 Cost Accounting (T.Y.B.Com.: SEM-VI)
25. The following documents are used in accounting for raw materials:
(i) Goods received note (ii) Materials returned note
(iii) Materials requisition note (iv) Delivery note
Which of the documents may be used to record raw materials sent back to stores from production?
(a) (i) and (ii) (b) (i) and (iv)
(c) (ii) only (d) (ii) and (iii)
26. When production has been completed what double-entry would be made in a cost accounting
system ?
Debit Credit
(a) Cost of Sales Finished Goods
(b) Finished Goods Work-in-Progress
(c) Finished Goods Cost of Sales
(d) Work-in-Progress Finished Goods
27. The raw materials issued to a job were overestimated and the excess is being sent back to the
materials store. What document is required?
(a) Stores credit note (b) Stores debit note
(c) Materials returned note (d) Materials transfer note
28. When goods are sold, what double-entry would be made to record the transfer of costs?
Debit Credit
(a) Finished Goods Account Cost of Sales Account
(b) Sales Account Cost of Sales Account
(c) Cost of Sales Account Sales Account
(d) Cost of Sales Account Finished Goods Account
29. The stores ledger control account for a period contained the following summary information :
` '000
Supplier deliveries into stores 321
Indirect materials issued from stores 13
Returns to suppliers 8
Opening inventory in stores 46
Closing inventory in stores 59
There were no inventory discrepancies in the period.
What accounting entry correctly records the issue of direct materials from stores ?
Debit ` Credit `
(a) Stores Ledger Account 2,87,000 Work-in-Progress Account 2,87,000
(b) Work-in-Progress Account 2,87,000 Stores Ledger Account 2,87,000
(c) Stores Ledger Account 3,13,000 Work-in-Progress Account 3,13,000
(d) Work-in-Progress Account 3,13,000 Stores Ledger Account 3,13,000
30. What is a cost ledger control account?
(a) An account in the cost ledger to record financial accounting items
(b) An account in the financial ledger to record cost accounting items
(c) An account that summarises outstanding payables balances
(d) An account that summarises outstanding receivables balances
31. The advantages of maintaining cost control accounts include the following:
(a) facilitate prompt preparation of costing profit and loss account
(b) help management in policy formulation
(c) facilitate internal check
(d) all of the above
32. The Work-in-Progress Control Account is not debited with :
(a) direct materials and direct labour (b) direct expenses
(c) production overheads (recovered) (d) selling and distribution overheads
33. The application of factory overheads usually would be recorded as an increase in
(a) Cost of goods sold (b) Work-in-progress control
(c) Factory overheads control (d) Finished goods control
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Manan Prakashan 5
34. Production overheads incurred ` 10,000
Production overheads recovered ` 12,000
The entry for over-recovery of overheads is
(a) Production Overheads Control A/c Dr.
To Overheads Adjustment A/c
(b) Overheads Adjustment A/c Dr.
To Production Overheads A/c
(c) Work-in-Progress A/c Dr.
To Overheads Adjustment A/c
(d) Overheads Adjustment A/c Dr.
To Work-in-Progress A/c
35. Loss of stores (normal) is recorded in cost accounts as
Stores Ledger Production Overheads Costing P/L A/c
(a) Debit Credit Nothing
(b) Credit Debit Nothing
(c) Nothing Debit Credit
(d) Credit Nothing Debit
36. In a typical cost ledger, the double entry for indirect labour charges incurred during a period is
Debit Credit
(a) Wages control account Overheads control account
(b) WIP control account Wages control account
(c) Overheads control account Wages control account
(d) Wages control account WIP control account
37. In the cost ledger, the double entry for factory cost of finished production for a period is
Debit Credit
(a) Cost of sales account Finished goods control account
(b) Finished goods control account Work-in-progress control account
(c) Costing profit and loss account Finished goods control account
(d) Work-in-progress control account Finished goods control account
38. Stores issued to factory repair order is recorded as
(a) Stores Ledger A/c Dr.
To Production Overheads A/c
(b) Profit and Loss A/c Dr.
To Stores Ledger A/c
(c) Production Overheads Control A/c Dr.
To Stores Ledger A/c
(d) Stores Ledger A/c Dr.
To Profit and Loss A/c
39. The debit balance of the overheads adjustment account may be transferred to
(a) Cost of sales account (b) Profit and loss account
(c) Finished goods account (d) Work-in-progress account
40. Materials lost in stores due to fire is
(a) a part of normal loss and hence part of cost
(b) capitalized
(c) a part of abnormal loss and hence excluded from cost
(d) transferred to the next period
41. A credit to Work in Process Inventory represents
(a) work still in process
(b) raw material put into production
(c) the application of overhead to production
(d) the transfer of completed items to Finished Goods Inventory
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6 Cost Accounting (T.Y.B.Com.: SEM-VI)
42. A journal entry includes a debit to Work in Process Inventory and a credit to Raw Material Inventory.
The explanation for this would be that
(a) indirect material was placed into production
(b) raw material was purchased on account
(c) direct material was placed into production
(d) direct labour was used for production
43. The journal entry to apply overhead to production includes a credit to Manufacturing Overhead
control and a debit to
(a) Finished Goods Inventory (b) Work in Process Inventory
(c) Cost of Goods Sold (d) Raw Material Inventory
44. The use of indirect material would usually be reflected as an increase in
(a) Stores control (b) Work in process control
(c) Manufacturing overhead applied (d) Manufacturing overhead control
45. A credit to the Manufacturing overhead control account represents the
(a) actual cost of overhead incurred
(b) actual cost of overhead paid this period
(c) amount of overhead applied to production
(d) amount of indirect material and labour used during the period
46. When employees assemble products
(a) Cost of goods manufactured decreases (b) Work in process inventory increases
(c) Work in process inventory decreases (d) Manufacturing overhead decreases
47. W Corporation’s production department used ` 64,000 of materials to manufacture products
during May. Which one of the following is one effect of recording this transaction?
(a) Raw materials increases by ` 64,000
(b) Manufacturing overhead increases by ` 64,000
(c) Cost of goods sold increases by ` 64,000
(d) Work in process increases by ` 64,000
48. The Finished Goods account contains the cost of all units
(a) Unfinished at a given point in time (b) Completed at a given point in time
(c) Produced during a particular period (d) Produced and sold during a particular period
49. The work in process account is credited when
(a) Production of product is completed (b) Products are sold to customers
(c) Completed goods are shipped to buyers (d) Costs of production are incurred
50. Which account balances will decrease as a result of completing products during the month?
(a) Only work-in-process inventory
(b) Only finished goods inventory
(c) Both work-in-process and finished goods ending balances will decrease
(d) Neither account ending balance would increase; both would increase
51. T Company completed two jobs whose costs total to ` 1,20,000. Which one of the following is
one effect of this transaction?
(a) Manufacturing Overhead increases by ` 1,20,000
(b) Cost of Goods Sold increases by ` 1,20,000
(c) Work in Process decreases by ` 1,20,000
(d) Finished Goods decreases by ` 1,20,000
52. N Corporation incurred ` 8,000 indirect labour and ` 42,000 direct labour. Which one of the
following is one effect of recording this transaction?
(a) Indirect labour increases by ` 8,000
(b) Work in process increases by ` 50,000
(c) Manufacturing costs increase by ` 42,000
(d) Manufacturing overhead increases by ` 8,000
53. The balance of the Work in Process account is equal to
(a) The total costs of the jobs completed
(b) The total costs of the jobs completed and sold
(c) The total manufacturing costs incurred during the period
(d) The total costs of the incomplete jobs
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Manan Prakashan 7
54. What entry should be made when a job is completed?
(a) A debit to Finished Goods Inventory, and a credit to Work in Process Inventory
(b) A debit to Work in Process Inventory, and a credit to Direct Materials, Direct Labour and
Manufacturing Overhead
(c) A debit to Finished Goods Inventory and a credit to Direct Materials, Direct Labour, and
Manufacturing Overhead
(d) A debit to Cost of Goods Sold Inventory, and a credit to Work in Process Inventory
55. When indirect materials are requisitioned the
account is increased.
(a) Manufacturing Overhead Control (b) Work-in-Process Control
(c) Materials Control (d) Accounts Payable Control
56. The Manufacturing Overhead Control account
(a) is increased by allocated manufacturing overhead
(b) is credited with amounts transferred to Work-in-Process
(c) is decreased by allocated manufacturing overhead
(d) is debited with actual overhead costs
57. A company’s accounting system operates so that the cost accounts are independent of the
financial accounts. The two sets of accounts are reconciled on a regular basis to keep them
continuously in agreement. This type of accounting system is known as
(a) Independent accounts (b) Interlocking accounts
(c) Reconciled accounts (d) Integrated accounts
58. In May, material requisitions were ` 44,000 (` 39,000 of these were direct materials), and raw
material purchases were ` 57,700. The end of month balance in raw materials inventory a/c was
` 24,300. What was the beginning raw materials inventory a/c balance?
(a) ` 10,600 (b) ` 43,000
(c) ` 72,400 (d) ` 25,300
59. Overallocated manufacturing overhead results when
(a) production is less than last year
(b) estimated overhead is less than actual overhead
(c) actual overhead is less than allocated overhead
(d) actual overhead is less than expected
60. Determining how much manufacturing overhead is overallocated or underallocated
(a) is done before the period starts (b) is done during the period
(c) can be done at any time (d) is done at the end of the period
61. The journal entry to record the use of direct materials on jobs is to debit work in process inventory
and credit
(a) raw materials inventory (b) finished goods inventory
(c) manufacturing overhead (d) wages payable
62. Cost of goods sold is debited and finished goods inventory is credited for
(a) purchase of goods on account
(b) transfer of goods to the finished goods storeroom
(c) transfer of materials into work in process inventory
(d) the sale of goods to a customer
63. Under which of the following situations is finished goods inventory debited and work in process
inventory credited?
(a) Transfer of goods to the finished goods storeroom
(b) Purchase of goods on account
(c) Transfer goods out of the factory
(d) Transfer of material to work in process inventory
64. Under which of the following situations is raw materials inventory credited and work in process
inventory debited?
(a) We ship goods to the customer (b) Material is transferred to the factory
(c) We transfer goods to the storeroom (d) We purchase goods on account
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8 Cost Accounting (T.Y.B.Com.: SEM-VI)
65. The cost of direct materials used in production is debited to
(a) either manufacturing overhead or work in process
(b) finished goods inventory
(c) work in process
(d) manufacturing overhead
66. The cost of direct labour used in production is recorded as a
(a) debit to work in process (b) debit to manufacturing overhead
(c) debit to wages expense (d) debit to wages payable
67. The cost of indirect labour used in the factory is recorded as a
(a) credit to work in process (b) debit to manufacturing overhead
(c) credit to wages payable (d) debit to wages expense
68. The journal entry needed to record the completion of a job includes a
(a) credit to work in process (b) credit to finished goods inventory
(c) debit to work in process inventory (d) debit to cost of goods sold
69. The journal entry needed to record the completion of a job includes a
(a) debit to cost of goods sold (b) debit to work in process
(c) debit to finished goods inventory (d) debit to raw materials inventory
70. The journal entry to issue ` 600 of direct materials and ` 40 of indirect materials involves a debit
to
(a) manufacturing overhead for ` 640
(b) work in process for ` 640
(c) work in process for ` 600 and a credit to manufacturing overhead for ` 40
(d) work in process for ` 600 and a debit to manufacturing overhead for ` 40
71. To record the costs of indirect labour, which of the following would be debited?
(a) Work in process (b) Manufacturing overhead
(c) Finished goods inventory (d) Wages payable
72. To record direct labour costs incurred, which of the following would be debited?
(a) Finished goods inventory (b) Manufacturing overhead
(c) Work in process (d) Wages payable
73. To record the requisition of direct materials, which of the following would be debited?
(a) Finished goods inventory (b) Work in process
(c) Raw materials inventory (d) Cost of goods manufactured
74. The journal entry to record ` 300 of depreciation expense on factory equipment involves a
(a) debit to accumulated depreciation for ` 300
(b) debit to manufacturing overhead for ` 300
(c) debit to depreciation expense for ` 300
(d) credit to manufacturing overhead for ` 300
75. Actual manufacturing overhead for the period is ` 20,000 while allocated manufacturing overhead
is ` 18,000. What entry will close the manufacturing overhead balance?
(a) Debit manufacturing overhead and credit work in process for ` 2,000
(b) Debit manufacturing overhead and credit cost of goods sold for ` 2,000
(c) Debit cost of goods sold and credit finished goods inventory for ` 2,000
(d) Debit cost of goods sold and credit manufacturing overhead for ` 2,000
76.A company has overallocated manufacturing overhead by ` 1,500. The entry to close
manufacturing overhead account would be to
(a) debit manufacturing overhead and credit cost of goods sold for ` 1,500
(b) debit manufacturing overhead and credit work in process for ` 1,500
(c) debit cost of goods sold and credit manufacturing overhead for ` 1,500
(d) debit cost of goods sold and credit finished goods inventory for ` 15,000
77. Manufacturing overhead has an underallocated balance of ` 6,200; raw materials inventory
balance is ` 50,000; work in process inventory is
` 30,000; finished goods inventory is ` 20,000;
and cost of goods sold is ` 1,00,000.
Which of these accounts would have a closing credit balance?
(a) Raw materials inventory (b) Finished goods inventory
(c) Work in process inventory (d) None of the above
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Manan Prakashan 9
78. The entry to record cost of goods sold includes a credit to
(a) Cost of Goods Sold (b) Finished Goods Inventory
(c) Sales (d) Work in Process Inventory
ANSWERS
1. (a) 13. (c) 25. (c) 37. (b) 49. (a) 61. (a) 73. (b)
2. (c) 14. (a) 26. (b) 38. (c) 50. (a) 62. (d) 74. (b)
3. (d) 15. (b) 27. (c) 39. (b) 51. (c) 63. (a) 75. (d)
4. (a) 16. (a) 28. (d) 40. (c) 52. (d) 64. (b) 76. (a)
5. (b) 17. (c) 29. (b) 41. (d) 53. (d) 65. (c) 77. (d)
6. (c) 18. (c) 30. (a) 42. (c) 54. (a) 66. (a) 78. (b)
7. (d) 19. (b) 31. (d) 43. (b) 55. (a) 67. (b)
8. (b) 20. (d) 32. (d) 44. (d) 56. (d) 68. (a)
9. (a) 21. (c) 33. (b) 45. (c) 57. (b) 69. (c)
10. (c) 22. (c) 34. (a) 46. (b) 58. (a) 70. (d)
11. (c) 23. (b) 35. (b) 47. (d) 59. (c) 71. (b)
12. (b) 24. (d) 36. (c) 48. (b) 60. (d) 72. (c)
Hints :
58. [X + ` 57,700 – 44,000 = ` 24,300; X = ` 10,600]
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10 Cost Accounting (T.Y.B.Com.: SEM-VI)
CHAPTER - 2 : CONTRACT COSTING
MULTIPLE CHOICE QUESTIONS
A. Conceptual
1. Contract costing is a basic method of
(a) Historical costing (b) Specific order costing
(c) Process costing (d) Standard costing
2. Contract costing is a variant of
Costing.
(a) Job (b) Process
(c) Unit (d) Batch
3. Contract costing usually applicable in
(a) Constructional Works (b) Textile Mills
(c) Cement Industries (d) Chemical Industries
4.
is the person for whom the Contract job is undertaken.
(a) Contractor (b) Contractee
(c) Sub-contractor (d) Job-worker
5. Which one of the following is not a contract cost ?
(a) Direct wages (b) Depreciation of plant
(c) Sub-contractors’ fees (d) Architects’ certificates
6. The degree of completion of work is determined by comparing the work certified with
(a) Contract price (b) Work in progress
(c) Cash received on contract (d) Retention money
7. In contract costing credit is taken only for a part of the profit on
(a) Completed contract (b) Incomplete contract
(c) Work uncertified (d) Work Certified
8. In contract costing payment of cash to the contractor is made on the basis of
(a) Uncertified work (b) Certified work
(c) Work in progress (d) Retention Money
9. The cost of any sub-contracted work is
(a) A direct expense of a contract and is debited to the contract account
(b) An indirect expense of a contract and is debited to the contract account
(c) A direct expense of a contract and is debited to the client account
(d) An indirect expense of a contract and is debited to the client account
10. Progress payments received by the contractor from the client are
(a) Debited to the contract account (b) Credited to the contract account
(c) Debited to the client account (d) Credited to the client account
11. Retention Money is equal to
(a) Work certified Less Work uncertified
(b) Contract price Less Work certified
(c) Work certified Less Payment received by contractor
(d) None of the above
12. Material supplied by the Contractee
(a) is debited to the Contract Account (b) is ignored in the Contract Account
(c) is credited to the Contract Account (d) is debited to the Contractee’s Account
13. Cost of material lost or destroyed
(a) is credited to the Contract Account
(b) is debited to the Contract Account
(c) is debited to the Costing Profit and Loss Account
(d) is credited to the Costing Profit and Loss Account
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Cost Accounting MCQs (TYBCom Sem VI )

Cost Accounting MCQs (TYBCom Sem VI )

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