Corporate and Management Accounting

JKPSC Assistant Professor (Commerce) · Commerce · 88 practice questions with answers and explanations: 48 Easy, 39 Medium, 1 Hard.

Sample questions

Sample Easy question 1

Prime cost consists of:

  1. Indirect costs
  2. Administrative costs
  3. Direct material, direct labour and direct expenses
  4. Selling costs
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Answer: C. Overheads are added to arrive at the factory cost.

Sample Easy question 2

Contribution is equal to:

  1. Sales minus variable costs
  2. Sales minus fixed costs
  3. Profit minus fixed costs
  4. Sales minus total costs
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Answer: A. It covers fixed costs and profit.

Sample Easy question 3

The margin of safety is:

  1. Actual sales minus break-even sales
  2. Variable cost plus profit
  3. Break-even sales minus actual sales
  4. Fixed cost minus sales
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Answer: A. It shows how far sales can fall before a loss.

Sample Medium question 4

Overheads absorbed are the amounts:

  1. Charged to production using an absorption rate
  2. Written off
  3. Paid in advance
  4. Incurred in actual
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Answer: A. Over- or under-absorption is adjusted later.

Sample Medium question 5

Current assets are ₹300000 and current liabilities are ₹150000. The current ratio is:

  1. 0.5
  2. 1
  3. 150000
  4. 2
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Answer: D. Current ratio = current assets/current liabilities = 300000/150000 = 2.

Sample Medium question 6

Current assets are ₹400000, stock is ₹200000 and current liabilities are ₹100000. The quick ratio is:

  1. 2
  2. 0.5
  3. 4
  4. 1
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Answer: A. Quick ratio = (current assets − stock)/current liabilities = (400000 − 200000)/100000 = 2.

Sample Hard question 7

Garner v. Murray rule applies to:

  1. Admission of a partner
  2. Insolvency of a partner
  3. Retirement
  4. Goodwill
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Answer: B. Solvent partners bear the deficiency in the capital ratio.

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