Q.1 Cost Accounting primarily deals with?
Recording revenues
Recording costs
Recording only cash transactions
Recording assets
Explanation - Cost Accounting focuses on recording, analyzing, and controlling costs to help in decision-making and cost control.
Correct answer is: Recording costs
Q.2 Which of the following is NOT a main objective of cost accounting?
Cost ascertainment
Cost control
Tax computation
Decision-making
Explanation - Tax computation is a function of financial accounting, not cost accounting.
Correct answer is: Tax computation
Q.3 Cost Accounting is mainly useful for?
Shareholders
Government
Management
Creditors
Explanation - Cost accounting provides detailed cost data to assist management in planning, control, and decision-making.
Correct answer is: Management
Q.4 Which of the following is a limitation of cost accounting?
Helps in cost control
Assists management
Expensive to implement
Determines selling price
Explanation - Cost accounting can be costly to maintain as it requires additional records and analysis.
Correct answer is: Expensive to implement
Q.5 Which branch of accounting provides information for internal use?
Financial Accounting
Cost Accounting
Tax Accounting
Auditing
Explanation - Cost Accounting provides internal information to management for planning and control.
Correct answer is: Cost Accounting
Q.6 Which of these is NOT an element of cost?
Materials
Labour
Overheads
Dividends
Explanation - Dividends are distributions to shareholders and not part of cost elements.
Correct answer is: Dividends
Q.7 Direct costs can be easily traced to?
Overheads
Cost units
Future profits
Shareholders
Explanation - Direct costs are specifically traceable to a cost unit such as a product or service.
Correct answer is: Cost units
Q.8 Which of the following is an indirect cost?
Direct materials
Direct wages
Factory rent
Special raw material
Explanation - Factory rent is incurred for the overall production and cannot be traced to specific units.
Correct answer is: Factory rent
Q.9 Which is a function of cost accounting?
Tax assessment
Providing cost data
Maintaining share capital
Declaring dividends
Explanation - Cost accounting functions include recording and providing cost-related information to management.
Correct answer is: Providing cost data
Q.10 Which type of cost changes with production volume?
Fixed cost
Variable cost
Sunk cost
Opportunity cost
Explanation - Variable costs vary directly with the level of production.
Correct answer is: Variable cost
Q.11 Cost Accounting helps in setting?
Dividend rates
Selling prices
Tax rates
Interest rates
Explanation - Cost accounting data helps management to determine the selling price by analyzing cost per unit.
Correct answer is: Selling prices
Q.12 The main difference between financial accounting and cost accounting is?
Cost accounting is for internal use
Financial accounting is for management only
Cost accounting records assets
Financial accounting ignores costs
Explanation - Financial accounting is for external reporting, while cost accounting is primarily for internal decision-making.
Correct answer is: Cost accounting is for internal use
Q.13 Which of the following is a fixed cost?
Wages of workers
Raw material costs
Depreciation on machinery
Power consumption
Explanation - Depreciation is a fixed cost as it does not change with production level.
Correct answer is: Depreciation on machinery
Q.14 Cost centers are used for?
Tax reporting
Cost control
Financial reporting
Dividend distribution
Explanation - Cost centers help track and control costs by assigning them to specific departments or activities.
Correct answer is: Cost control
Q.15 Which cost is not relevant for decision-making?
Marginal cost
Opportunity cost
Sunk cost
Variable cost
Explanation - Sunk costs are already incurred and cannot be changed, hence irrelevant for decision-making.
Correct answer is: Sunk cost
Q.16 What type of information does cost accounting provide?
Historical only
Future only
Both historical and future
Legal only
Explanation - Cost accounting provides past cost records and future estimates for planning and control.
Correct answer is: Both historical and future
Q.17 Which system records costs as they are incurred?
Job costing
Batch costing
Process costing
Historical costing
Explanation - Historical costing records actual costs incurred for production.
Correct answer is: Historical costing
Q.18 Marginal cost mainly includes?
Fixed costs
Variable costs
Sunk costs
Capital costs
Explanation - Marginal cost refers to additional cost incurred for producing one more unit, which is mainly variable.
Correct answer is: Variable costs
Q.19 Which costing method is most suitable for construction projects?
Job costing
Batch costing
Process costing
Operating costing
Explanation - Job costing is suitable for projects where costs can be identified with specific jobs like construction.
Correct answer is: Job costing
Q.20 Opportunity cost refers to?
Past costs
Cost of next best alternative forgone
Fixed overheads
Depreciation
Explanation - Opportunity cost is the benefit lost from the next best alternative not chosen.
Correct answer is: Cost of next best alternative forgone
Q.21 Which of these is NOT a cost unit?
A tonne of steel
A liter of milk
A customer’s dividend
A room-night in hotel
Explanation - Cost unit is a unit of product or service for which costs are ascertained. Dividend is not a cost unit.
Correct answer is: A customer’s dividend
Q.22 The technique of analyzing costs into fixed and variable is called?
Marginal costing
Standard costing
Process costing
Job costing
Explanation - Marginal costing divides costs into fixed and variable for decision-making.
Correct answer is: Marginal costing
Q.23 Cost Accounting data is presented to?
Government
Creditors
Management
Investors
Explanation - The primary users of cost accounting data are internal managers.
Correct answer is: Management
Q.24 Which of the following is a controllable cost?
Factory rent
Manager’s salary
Raw materials used
Depreciation
Explanation - Raw materials can be controlled by the manager by reducing wastage, hence a controllable cost.
Correct answer is: Raw materials used
Q.25 Prime cost is the sum of?
Direct material and direct labor only
Direct material, direct labor, direct expenses
Direct labor and overheads
Direct expenses and fixed costs
Explanation - Prime cost includes all direct costs: material, labor, and direct expenses.
Correct answer is: Direct material, direct labor, direct expenses