Management Accounting MCQs [Multiple Choice Questions and Answers]

Management Accounting MCQs 
Multiple Choice Questions and Answers
for B.Com / BBA / MBA / CMA / CA / CS examination

In this exclusive page, you will get chapter wise Management Accounting MCQs for various exams such B.Com, BBA, MBA, CMA, CS and ICAI. In this post you will also get Introduction to Management Accounting MCQs, management accounting MBA MCQ, management accounting MCQs questions Chapter wise.

You can also go through various links given below in the article for Chapter wise Management Accounting MCQs.

Introduction to Management Accounting

The term management accounting refers to accounting for the management. Management accounting provides necessary information to assist the management in the creation of policy and in the day-to-day operations. 

It enables the management to discharge all its functions i.e. planning, organization, staffing, direction and control efficiently with the help of accounting information.

In the words of R.N. Anthony “Management accounting is concerned with accounting information that is useful to management”.

From the above explanations, it is clear that management accounting is that form of accounting which enables a business to be conducted more efficiently.

Multiple choice questions and answers (50 Questions)

1. Management accounting deals with what kind of information?

a) Qualitative

b) Quantitative

c) Both

d) None of the above

Ans: c) Both Qualitative and Quantitative information

2. Management accounting provides valuable services to management in performing:

a) Coordinating

b) Controlling

c) Planning

d) All managerial functions

Ans: d) All managerial functions

3. Which of the following are tools of management accounting?

a) Standard Costing

b) Marginal Costing

c) Budget and Budgetary control

d) All of the above

Ans: d) All of the above

4. Which of the following are not the tools of management accounting?

a) Funds flow statement

b) Cash Flow Statement

c) Ratio analysis

d) Process costing

Ans: d) Process costing

5. Which of the following are tools of management accounting?

a) Financial Planning

b) Analysis of financial statements

c) Historical cost accounting

d) All of the above

Ans: d) All of the above

6. Management accounting is suitable for:

a) Small trading organization

b) Large industrial and trading organization

c) NPOs

d) Co-operative societies

Ans: b) large industrial and trading organization

7. Management accounting is a structure for:

a) Cost Accounting

b) Financial accounting

c) Decision making

d) Budgeting

Ans: c) Decision making

8. Management accounting and cost accounting are:

a) Contradictory in nature

b) Complementary in nature

c) Neutral in effect

d) None of the above

Ans: b) Complementary in nature

9. Who coined the concept of management accounting?

a) James H. Bliss

b) R. N. Carter

c) Philip Cotler

d) F. W. Taylor

Ans: a) James H. Bliss

10. Management accounting maintains

a) Journal

b) Ledger

c) Trial Balance

d) None of these

Ans: d) None of these

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11. Management accounting provides invaluable services to management in performing:

(a) all management functions

(b) interpret the financial data

(c) controlling functions

(d) none of the above

Ans: (a) all management functions

12. Management accounting is the branch of accounting concerned with reporting to:

a) internal managers

b) shareholders

c) the government

d) bankers

Ans: a) internal managers

13. Which of the following is not an objective of managerial accounting?

a) To help in planning and decision making

b)  To provide data about the latest position of the firm

c) To help in policy formulation

d) To find profit or loss of the firm

Ans: d) To find profit or loss of the firm

14. Which of the following statement is true about management accounting?

a) Management accounting is mainly concerned with future.   True

b) The use of management accounting is compulsory. 

c) Management accounting is objective in nature.         

d) Management Accounting and Cost Accounting are Synonymous.     

Ans: a) Management accounting is mainly concerned with future.   

15. The branch of accounting which primarily deals with processing and presenting accounting data for internal use in a concern is:

a) management accounting

b) financial accounting

c) cost accounting

d) inflation accounting

Ans: a) management accounting

16. Management accounting provides valuable services to management in performing:

a) planning function

b) controlling function

c) co-coordinating functions

d) all managerial functions

Ans: d) all managerial functions

17. Which statement is prepared in the process of funds flow analysis?

a) Schedule of changes in working capital

b) Funds Flow statement

c) Calculation of funds from operations

d) All of the above

Ans: d) All of the above

18. Which of the following are not the tools of management accounting?

a) fund flow statement

b) process costing

c) cash flow statement

d) ratio analysis

Ans: b) process costing

19. Which of the following is not a tool of management an accounting?

a) marginal costing

b) p/l account

c) standard costing

d) variance analysis

Ans: b) p/l account

20. Which of the following is a scope of management accounting?

a) budgeting

b) forecasting

c) cost accounting

d) all of the above

Ans: d) all of the above

21. Which of the following statement is not true about management accounting?

a) It is future oriented

b) Not based on double entry system of accounting

c) It has been done for internal users

d) Management accounting is based on historical records

Ans: b) Not based on double entry system of accounting

22. Management accounting analyses accounting data with the help of

a) auditors

b) statutory forms

c) tools and techniques

d) none of these

Ans: c) tools and techniques

23. The sales objective are stated in:

a) quantitative term

b) qualitative term

c) both (a) & (b)

d) none of these

Ans: c) both (a) & (b)

24. Which one of the following is not mandatory according to the laws?

a) financial accounting

b) cost accounting

c) management accounting

s) none of the above

Ans: c) management accounting

25. Management accounting is related with

a) the problem of choice making

b) recording of transactions

c) cause and effect relationships

Option:

a) A and b

b) A, B and C

c)  A and C

d) A only

Ans: c) A and C

26. Accounting is basically concerned with select one:

a) forecasting

b) measurement

c) management

d) none of the above

Ans: c) management

27. Management accounting helps management in:

a) preparation of final accounts

b) raising finance

c) filing tax returns

d) decision making

Ans: d) decision making

28. The functions of management accounting include:

a) Collection of data.

b) Analysis of data.

c) Presentation of data.

d) All of the above.

Ans: d) All of the above.

29. Balance sheet is a statement of:

a) Assets & Liabilities.

b) Working Capital.

c) Operating Results.

d) None of the above.

Ans: a) Assets & Liabilities.

30. Comparative Statement shows:

a) One year’s performance.

b) Financial performance.

c) Comparative performance.

d) Profitability performance.

Ans: c) Comparative performance.

31. Current Ratio shows:

a) Short term financial position.

b) Collection efficiency.

c) Financial stability.

d) Higher profitability.

Ans: a) Short term financial position.

32. Working Capital is the capital required to finance:

a) Day to day operations.

b) Purchase of fixed assets.

c) Settlement of long term liabilities.

d) None of the above.

Ans: a) Day to day operations.

33. Long term decisions are called as:

a) Profit volume analysis.

b) Working capital decisions.

c) Future decisions.

d) Capital budgeting decisions.

Ans: d) Capital budgeting decisions.

34. The basic function of management accounting is:

a) To serve Government.

b) To serve the management in performing it’s function effectively.

c) To serve the public.

d) None of the above

Ans: b) To serve the management in performing it’s function effectively.

35. The term funds refers to:

a) Cash and cash equivalents

b) Working capital

c) Reserves and Surplus

d) Fixed assets

Ans: b) Working capital

36. Which of the following are applications of funds?

a) Purchase of fixed assets

b) Increase in working capital

c) Payment of dividend

d) All of the above.

Ans: d) All of the above.

37. Which of the following are sources of funds?

a) Issue of shares and debentures

b) Sale of assets

c) Decrease in working capital

d) All of the above

Ans: d) All of the above.

38. Cash flow statement is based upon:

a) Cash basis

b) Accrual Basis

c) Accounting Equation

d) Both cash and accrual basis

Ans: a) Cash basis

39. Cash Flow statement is prepared for financial planning of:

a) Long Range

b) Medium Range

c) Short Range

d) Very long Range

Ans: c) Short Range

40. Which cost is more useful for decision making?

a) Marginal cost

b) Fixed cost

c) Total cost

d) Opportunity cost

Ans: a) Marginal cost

41. Budgetary control system acts as a friend, philosopher and guide to the:

a) Management

b) Shareholders

c) Creditors

d) Employees

Ans: a) Management

42. The process of budgeting helps in the control of:

a) Cost of Production

b) Short term liquidity position

c) Capital Expenditure

d) All of the above

Ans: d) All of the above

43. Which of the following is not an advantage of budgeting?

a) It defines the objective of the organisation

b) It indicates the efficiency of the organisation

c) It helps in measuring productive efficiency

d) It creates coordination between various levels of management

Ans: d) It creates coordination between various levels of management

44. Which of the following statements about budgeting is false?

a) Budgetary control and standard costing are same.   

b) Budgetary control does not facilitate introduction of ‘Management by Exception’.   

c) Budgeting may be said to be the art of building a budget.

d) A key factor or principal factor does not influence the preparation of all other budgets.

Ans: b) Budgetary control does not facilitate introduction of ‘Management by Exception’.   

45. Which of the following statement is correct?

a) Standard cost is an estimated or predetermined cost of performing an operation or producing a good or service, under normal conditions.

b) Standard costing is a control technique that reports variances by comparing actual costs to pre-set standards so facilitating action through management by exception.

c) Both a & b

d) None of the above

Ans: c) Both a & b

46. Cost control is also known as:

a) Cost Management

b) Cost containment

c) Both a & b

d) None of the above

Ans: c) Both a & b

47. Marginal costing is the most useful technique for the:

a) Management

b) Creditors

c) Shareholders

d) Government

Ans: a) Management

48. Which of the following statements are true?

a) Marginal costing is not an independent system of costing.

b) In marginal costing all elements of cost are divided into fixed and variable components.

c) In marginal costing fixed costs are treated as product cost.

d) Marginal costing is not a technique of cost analysis.

Ans: b) In marginal costing all elements of cost are divided into fixed and variable components.

49. Variable costing is more appropriate than absorption costing when the decision:

a) Relates to production planning within the capacity limits in the short run.

b) Does not involve analysis of contribution margin

c) Involves reducing fixed costs that are controllable by the upper management

d) Does not involve analysis of profitability based on sales mix

Ans: a) Relates to production planning within the capacity limits in the short run.

50. Standard costing is a yard stick for:

a) Measuring efficiency

b) Controlling prices

c) Reducing losses of business

d) Planning business activities

Ans: a) Measuring efficiency

Management Accounting MCQs

Fill in the blanks (64 Questions)

1.         Management accounting is related with presentation of accounting data.

2.         Management accounting assists the management in creation of policy.

3.         Management accounting is suitable for large industrial and trading organizations.

4.         Management accounting is a structure for decision making.

5.         Management accounting is an offshoot (branch on a plant) of cost and financial accounting.

6.         Management accounting is also known as managerial accounting.

7.         Management accounting is simply a use of financial and cost accounting data in taking various managerial decisions.

8.         management accounting is also called managerial accounting.

9.         The use of management accounting is optional.

10.     Management accounting is subjective in nature.

11.     Management accounting is basically concerned with accounting information which is useful to management.

12.     Management Accounting is based on accounting information.

13.     Financial accounting is governed by GAAP.

14.     Management accounting is a tool of management but not a substitute of management.

15.     Management accounting analysis accounting data with the help of tools and techniques.

16.     Management accounting deals with both quantitative and qualitative information.

17.     Only Quantitative information is recorded in accounting.

18.     Accounting is an art of recording financial transactions.

19.     Management Accountant is Superior in position to Cost Accountant.

20.     Management accounting and cost accounting are complementary in nature.

21.     Accounting information is analyzed and interpreted to make it useful.

22.     Management Accounting supplies information to the management so that later may be able to discharge all its functions properly.

23.     the focus of management accounting is on future growth.

24.     Standard costing is a cost control method used in management accounting.

25.     Management accounting helps in analysis and interpretation of data.

26.     Management accounting uses no fixed norms in its function.

27.     The accounting data are analyzed by the management for effective planning and decision making.

28.     The management accountant is a member of management team.

29.     Management accounting system cannot be installed without financial and cost accounting system.

30.     The scope of management accounting is wider than that of cost accounting.

31.     Management accounting assures maximum return on capital employed.

32.     Revaluation accounting is also known as replacement or price level accounting.

33.     Publication of Management Accounting Report is not compulsory.

34.     The term management accounting refers to accounting for managers.

35.     In a Funds Flow Statement, all receipts are treated as source of funds.

36.     Purchase of plant will mean decrease in working capital.

37.     Funds flow statement is also known as a statement of Sources and Applications of funds.

38.     Issue of equity shares in a cash flow from financing activities.

39.     Income from investment is a cash flow from Investing activities.

40.     Cash receipt from issue of shares is a Financing activity.

41.     Repayment of borrowing causes cash Outflow.

42.     Decrease in creditor is outflow of cash.

43.     Goodwill is a non-cash transaction.

44.     Fixed cost per unit Decreases when volume of production increases.

45.     Variable cost per unit remains same/increases/decreases due to increase in production.

46.     The practice of charging all costs to product is marginal costing/absorption costing/standard costing.

47.     P/V ratio exhibits the percentage of contribution included in Sales

48.     Margin of safety can be improved by reducing the variable cost.

49.     Contribution is the difference between sales and variable.

50.     Margin of safety can be improved by reducing the Variable cost.

51.     P/V ratio exhibits the percentage of contribution included in Sales.

52.     In marginal costing system, fixed cost is considered as Period cost.

53.     In marginal costing system, variable cost is considered as product cost.

54.     Any transaction that increases working capital is a application of fund.

55.     Repayment of borrowing causes cash Outflow.

56.     Funds flow statements are based upon accrual basis of accounting.

57.     Master budget is a summary of all functional budgets.

58.     Budgetary Control is a system of controlling Cost.

59.     A budget manual spells out Duties and Responsibilities of various executives concerned with budget.

60.     Flexible budget is a capacity budget.

61.     Budgetary control is a system of controlling cost.

62.     Zero-base budgeting was first used by carter.

63.     Standard cost is a predetermined cost.

64.     Direct Labour Cost Variance = Standard Cost for actual production x actual Cost of Production.

Management Accounting MCQs

State whether the following statements are True or False (59 Questions):

1.         The origin of management accounting is due to limitations of financial accounting and cost accounting. True

2.         The term management accounting was first coined in the year 1981.               False, 1950

3.         Management accounting is basically concerned with accounting information which is useful to management.                        True (Definition by R. N. Anthony)

4.         Management Accounting and Cost Accounting are Synonymous.      False

5.         Management accounting provides decision to management.              False, information

6.         Management accounting provides only data which is helpful to the management in decision making, not the decisions.    True

7.         Management accounting is a technique of selective nature.                True

8.         Management accounting is not helpful to management in discharging its functions. False

9.         Management accounting is based on the past records provided by financial and cost accounting for making decision for the future. True

10.     Management accounting is mainly concerned with future.   True

11.     The use of management accounting is compulsory. False

12.     Who coined the concept of management accounting? James H. Bliss

13.     Management accounting is objective in nature.         False

14.     Publication of management accounting statement is mandatory

15.     Management Accounting is concerned with accounting information that is useful to the management.  True

16.     Management accounting deals only with the information which is useful to the management. True

17.     In management accounting, only those figures are used which can be measured in monetary terms.         False

18.     Management accounting deals with both qualitative and quantitative information. True

19.     Management accounting will not provide information in a prescribed Proforma like that of financial accounting.                        True

20.     Management accounting analyze the effect of different variables on the profits and profitability of the concern.      True

21.     The main objective of management accounting is to help the internal management.               True

22.     Management accounting is a structure of decision making.  True

23.     In management accounting no emphasis is given to the actual figures.           True

24.     Management accounting uses historical data for planning and forecasting.   True

25.     Management accounting is not bound by the accounting standards.                True

26.     Period of reporting in management accounting may be weekly, fortnightly and monthly.      True

27.     Auditing of management accounting is compulsory.                False

28.     Management accounting needs cost and financial accounting as its base for its installation.  True

29.     Management accountant is senior in position to cost accountant.     True

30.     Maintaining management accounts are a statutory requirement for all limited companies. False

31.     Management accounting information is used by the management only.        True

32.     In management accounting, approximate figures presented timely are more important than accurate figures presenting late. True

33.     Management accounting is based on double entry system. False

34.     Financial statements are only interim reports.            True

35.     Management accounting is only a blend of financial and cost accounting.      True

36.     Accountability is one of the concepts of management accounting.    True

37.     Machinery sold for cash is an application of fund.         False, source

38.     Building sold on credit is a source of fund.                 False

39.     Depreciation of machinery is a source of funds.         True

40.     Cash flow statement is useful for short-term financial analysis.          True

41.     Cash Flow Statement is a substitute of Cash Account.             False

42.     Cash Flow Statement is based upon accrual basis of accounting.        False, Cash Basis

43.     Cash Flow Statement is a statement of sources and application of cash during a particular period of time.      True

44.     Cash flow statement is also known as statement of cash flows.          True

45.     Contribution is the difference between sales and total cost of sales.               False, sales -vc

46.     In marginal costing, the problem of over and under absorption of overhead is avoided.         True

47.     Margin of Safety = Fixed Cost/PV Ratio.        False

48.     P/V ratio can be improved by reducing the fixed cost.    False

49.     Material Cost Variance = Material Price Variance x Material Usage Variance.                False

50.     Marginal Cost = Total Cost – Variable Cost.      False, Fixed Cost

51.     Idle Time Variance = Idle Hours x Standard Rate.           False

52.     The difference between actual cost and standard cost is known as differential cost.   Variance

53.     Profit changes in the same proportion of the changes in contribution.   False

54.     At break-even point, the company earns only a marginal profit.        False

55.     Break-even analysis is also known as CVP analysis.  True

56.     Budget is related to a definite future period.        True

57.     Budgeting may be said to be an act of determining costing standards.             False     

58.     A system of budgetary control cannot be used in an organization where standard costing is in use.   False

59.     Budgetary control is a system of controlling cost.        True

FAQ

1. What do you mean by Management Accounting?

Ans: Management accounting is the presentation of accounting information is such a way as to assist management in the creation of policy and in the day-to-day operations of an undertaking.

2. Who coined the concept of management accounting?

Ans: The term Management Accounting was first introduced in the year 1950 by James H. Bliss.

3. What are the tools of Management Accounting?

Ans: Main tools of management accounting are Marginal Costing, Budgetary control, Standard costing, ratio analysis, Cash flow statement and funds flow statement.

4. What are the 4 main functions of  Management Accoutning?

Ans: Main 4 functions of Management Accounting are Planning for control, reporting to management, planing and co-ordination of various managerial activities.

5. What are the main branches of accounting?

Ans: There are three branches of accouting - Financial accounting, Cost accounting and Management accounting.