MCQ on Departmental Accounting | Multiple Choice Questions and Answers | PAPER 5 FINANCIAL ACCOUNTING | CMA MCQ

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Departmental Accounting Multiple Choice Questions and Answers (MCQ)

1. Departmental Accounts are prepared to know separately the profits of each department.
2. Departmental Accounts are prepared to ascertain departmental efficiency.
3. Departments are located in:
a) Same place
b) Another city
c) Outside state
d) Foreign country
4. State the basis of allocation of expenses amongst various departments:

a)   Sales expenses as traveling salesman, salary and commission, selling expenses after sales service, discount allowed, bad debts, freight outwards, provision for discount on debtors, sales manager’s salary and other benefits, Advertisement.
a) Sales of each department

b)   All expenses relating to building as rent, rates, taxes, air conditioning expenses, heating, insurance building etc.
b) Area or value of floor space

c)    Lighting
c)  Light points
d)   Insurance on stock
d) Average stock carried
e)   Insurance on plant & machinery
e) Value of plant & machinery
f)    Group insurance premium
f)  Direct wages
g)   Power
g) H.P or H.P x Hours worked
h)   Depreciation, Renewals & Repairs
h) Value of assets in each department
i)     Canteen expenses, Labour welfare expenses
i)   No. of employees
j)     Works manager’s salary
j)   Time spent in each department
k)   Carriage inwards
k) Purchases of each department
5. There are two methods for preparing departmental accounts – Independent accounting and columnar form.                True
6. When the accounts of all departments are maintained together, in columnar form, it is known as:
a) Unitary method
b) Independent form
c) Single entry
d) Columnar form
7. In departmental accounting, where separate books are kept for each Department, it is commonly referred to as:
a) Independent accounting
b) Columnar accounting
c) Consolidated accounting
d) Single entry system
8. Sales are the basis of apportionment in the case of:
a) Travelling salesman’s commission
b) Freight outwards
c) After sales service
d) All of the above
9. Find the Loading which is 20% of the invoice price of goods if the cost price of goods is 40,000:
a) 4,000
b) 6,000
c) 10,000 (40,000*20/80)
d) 12,000
10. If the Invoice price of closing stock is Rs3, 60,000 what amount should be transferred to Stock Reserve given Loading is 20% of Invoice price:
a) 60,000 (3, 60,000*20/120)
b) 1, 20,000
c) 40,000
d) 10,000
11. Departmental Accounting facilitates:
a) Comparison of trading results
b) Intelligent planning and control
c) Evaluating departmental performance
d) All of the above
12. Expenses which cannot be reasonably allocated to any particular department are taken in:
a) Debtors account
b) Creditors book
c) Balance sheet
d) General Profit and Loss Account
13. Difference between Independent accounting and columnar method:
Independent method
Columnar method
1. Followed by very large organisation like insurance companies
1. Followed by small concerns
2. Each department is treated as a separate unit and accounts are kept independently
2. Under this method, the entire account are maintained by a central accounts department
3. This method is costly and rarely used.
3. This method is less costly.
14. There are two types of department – Dependent and independent department.      True
15. Dependent department are those which transfer goods from one department to another department for further processing. Here, the output of one department becomes the input for the other department.                True
16. Independent Department is those departments which work independently of each other and have negligible inter departmental transfer. True
17. When one department transfer goods to another department, the journal entry to be passed: Receiving department account debited and supplying department credited.    
18. When goods are transferred from one department to another department at market price, unrealised profit in the unsold goods must be transferred to stock reserve account.
19. Expenses which are shown in General Profit and loss Account: a) Debenture interest b) Dividend c) Unrealised profit on closing stock (Debited) d) Unrealised profit on opening stock (Credited)
20. Dual pricing System: In dual pricing system, buying department is debited with the cost price and selling department credited with the market price.

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